<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1999
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
PROVIDENT FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
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OHIO 6022 31-0982792
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification Number)
incorporation or organization) Classification Code Number)
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ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
(513) 579-2000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
--------------
MARK E. MAGEE, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
PROVIDENT FINANCIAL GROUP, INC.
ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
(513) 579-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
MARK A. WEISS, ESQ. TERRI REYERING ABARE, ESQ.
KEATING, MUETHING & KLEKAMP, P.L.L. VORYS, SATER, SEYMOUR AND PEASE LLP
1400 PROVIDENT TOWER SUITE 2100, ATRIUM TWO
ONE EAST FOURTH STREET 221 EAST FOURTH STREET
CINCINNATI, OHIO 45202 CINCINNATI, OHIO 45202
(513) 579-6411 (513) 723-4001
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the Acquisition described in the enclosed Proxy
Statement/Prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. |_|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE (2) REGISTRATION FEE (2)
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Common Stock, no par value 4,799,441 shares N/A $164,552,256 $45,746
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(1) Based upon the maximum number of shares of common stock that the
Registrant may be required to issue in the transaction, calculated as
the product of (i) 9,141,792, the aggregate number of shares of common
stock of Fidelity Financial of Ohio, Inc. ("Fidelity Financial")
outstanding and (ii) an assumed conversion number of 0.525 share of the
Registrant's common stock for each share of Fidelity Financial common
stock.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 and computed
pursuant to Rule 457(f)(1) thereunder on the basis of the market value
of Fidelity Financial common stock to be exchanged in the transaction,
computed, in accordance with Rule 457(c), as the product of (i) $18.00
(the average of the high and low prices per share of Fidelity Financial
common stock on October 3, 1999 as reported by the Nasdaq National
Market) and (ii) 9,141,792, the aggregate number of shares of common
stock of Fidelity Financial outstanding.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
FIDELITY FINANCIAL OF OHIO, INC.
5535 GLENWAY AVENUE
CINCINNATI, OHIO 45238
(513) 922-5959
________________________, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Fidelity Financial of Ohio, Inc. ("Fidelity Financial") at 2:00 p.m., Eastern
Time, on _______________ at ________________ (the "Special Meeting"). This is a
very important meeting regarding your investment in Fidelity Financial.
On August 16, 1999, Fidelity Financial entered into an Agreement of
Merger (the "Merger Agreement") with Provident Financial Group, Inc. ("Provident
Financial") which provides for the acquisition of Fidelity Financial by
Provident Financial. If the acquisition is approved by the holders of a majority
of Fidelity Financial shares and certain other conditions occur, Fidelity
Financial shareholders will become Provident Financial shareholders.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to adopt the Merger Agreement. Under the terms of the Merger Agreement,
Fidelity Financial shareholders will receive Provident Financial common stock.
The amount of Provident Financial common stock to be received in exchange for
each outstanding Fidelity Financial common share will be determined based on
Provident Financial's ten-day average closing price ending on the date on which
the parties receive the last regulatory approval required to consummate the
acquisition. Fidelity Financial shareholders will receive $21.00 worth of
Provident Financial common stock if the average per share price is between
$40.00 and $44.50. If the average Provident Financial share price is below
$40.00, each Fidelity Financial shareholder will receive 0.525 shares of
Provident Financial common stock for each share of Fidelity Financial common
stock. If this price is above $44.50, each Fidelity Financial shareholder will
receive 0.4719 shares of Provident Financial common stock for each share of
Fidelity Financial common stock.
Your board of directors has determined the Merger Agreement to be in
the best interests of Fidelity Financial and its shareholders and has
unanimously approved the Merger Agreement and the transactions contemplated by
it. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
ADOPTION OF THE MERGER AGREEMENT.
Enclosed are a proxy card, a Notice of Special Meeting of Shareholders
and a Proxy Statement/Prospectus which describes the proposed transaction, its
effects and its background. A copy of the Merger Agreement is included as Annex
A to the enclosed Proxy Statement/Prospectus. You are urged to read all of these
materials carefully.
It is very important that your shares be represented at the Special
Meeting. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE
SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER
AGREEMENT. Accordingly, even if you plan to be present at the Special Meeting,
you are requested to complete, date, sign, and return the proxy card in the
enclosed postage-paid envelope as soon as possible. If you decide to attend the
Special Meeting, you may vote your shares in person whether or not you have
previously submitted a proxy.
On behalf of the Board, I thank you for your attention to this
important matter.
Very truly yours,
Robert R. Sudbrook
President and Chief Executive Officer
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FIDELITY FINANCIAL OF OHIO, INC.
5535 GLENWAY AVENUE
CINCINNATI, OHIO 45238
(513) 922-5959
-----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders
(including any adjournment or postponements thereof, the "Special Meeting") of
Fidelity Financial of Ohio, Inc. ("Fidelity Financial") will be held at 2:00
p.m., Eastern Time, on ______________ at ___________________, Cincinnati, Ohio
for the following purposes:
1. To consider and vote upon a proposal to adopt an Agreement and
Plan of Merger, dated as of August 16, 1999 ("Merger
Agreement"), by and among Provident Financial Group, Inc.
("Provident Financial"), The Provident Bank, a wholly-owned
subsidiary of Provident Financial, Fidelity Financial,
Fidelity Acquisition Corporation ("FAC") (FAC being a
wholly-owned subsidiary of Fidelity Financial) and Centennial
Bank (Centennial Bank being a wholly-owned subsidiary of FAC).
The Merger Agreement provides for, among other things, the
acquisition of Fidelity Financial by Provident Financial
through the merger of Fidelity Financial with and into
Provident Financial and the merger of Centennial Bank with and
into The Provident Bank.
2. To transact such other business, if any, as may properly come
before the Special Meeting.
Pursuant to the Code of Regulations of Fidelity Financial, the board of
directors has fixed the close of business on ______________ as the record date
for the determination of shareholders entitled to notice of and to vote at the
Special Meeting. Only holders of common shares of Fidelity Financial of record
at the close of business on that date will be entitled to notice of and to vote
at the Special Meeting.
If the acquisition of Fidelity Financial by Provident Financial is
approved and consummated, holders of Fidelity Financial common shares will have
the right to dissent from the transaction and to obtain payment of the fair cash
value of their shares by complying with Section 1701.85 of the Ohio General
Corporation Law. A copy of Section 1701.85 of the Ohio General Corporation Law
is attached as Annex B to the accompanying Proxy Statement/Prospectus.
Your board of directors has determined the Merger to be in the best
interests of Fidelity Financial and its shareholders and has unanimously
approved the Merger Agreement and UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ADOPTION OF THE MERGER AGREEMENT.
By Order of the Board of Directors
Robert R. Sudbrook
President and Chief Executive Officer
Cincinnati, Ohio
<PAGE> 4
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. FAILURE TO
RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL
HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. ACCORDINGLY, EVEN
IF YOU PLAN TO BE PRESENT AT THE SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE,
DATE, SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS
SOON AS POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN
PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN
PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 5
PROXY STATEMENT
FOR SPECIAL MEETING OF
SHAREHOLDERS OF
FIDELITY FINANCIAL OF OHIO, INC.
Subject to certain conditions, Provident Financial Group, Inc. has agreed to
acquire Fidelity Financial (the "Acquisition") through the mergers of Fidelity
Financial into Provident Financial and Centennial Bank into The Provident Bank.
Shareholders of Fidelity Financial would become shareholders of Provident
Financial.
On __________ __, 1999, the last reported sales prices on the Nasdaq National
Market of Fidelity common stock and Provident Financial common stock were $___
and $____ per share, respectively.
The Acquisition cannot occur unless the holders of a majority of Fidelity
Financial shares approve it. The Fidelity Financial board of directors has
scheduled a special meeting of Fidelity Financial stockholders ("Special
Meeting") to vote on the Acquisition as follows:
_________ __, ______
2:00 p.m. Eastern Time
PROSPECTUS
OF
PROVIDENT FINANCIAL GROUP, INC.
COMMON STOCK
This proxy statement/prospectus provides you with detailed information about the
proposed Acquisition. Fidelity Financial has provided the information concerning
Fidelity Financial and Provident Financial has provided the information
concerning Provident Financial. Please see "Where You Can Find More Information"
for additional information about Fidelity Financial and Provident Financial on
file with the Securities and Exchange Commission ("SEC"). This document also
incorporates important business and financial information about Fidelity
Financial and Provident Financial that is not delivered with this document. You
may obtain documents incorporated by reference in this proxy statement/
prospectus by requesting them in writing or by telephone from Fidelity Financial
and Provident Financial at the following addresses:
Fidelity Financial of Ohio, Inc. Provident Financial Group, Inc.
5535 Glenway Avenue One East Fourth Street
Cincinnati, Ohio 45238 Cincinnati, Ohio 45202
Attn: Paul D. Staubach Attn: Mark E. Magee
(513) 922-5959 (513) 579-2000
Please request documents from Fidelity Financial or Provident Financial by
______________ to receive them before the Fidelity Financial Special Meeting. If
you request any such documents, the companies will mail them to you by
first-class mail, or other equally prompt means, within one business day of
receipt of your request.
This proxy statement/prospectus and proxy card are being mailed to shareholders
of Fidelity Financial beginning about _________________________.
--------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED
THE PROVIDENT FINANCIAL COMMON STOCK TO BE ISSUED UNDER THIS PROXY
STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD BE AWARE THAT THIS IS A COMPLICATED TRANSACTION. WE URGE FIDELITY
FINANCIAL STOCKHOLDERS TO READ AND CONSIDER CAREFULLY THIS PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY, INCLUDING THE MATTERS REFERRED TO UNDER
"RISK FACTORS" BEGINNING ON PAGE 17.
The date of this proxy statement/prospectus is __________________
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE ACQUISITION............................................................................. - 2 -
SUMMARY................................................................................................................. - 4 -
The Companies..................................................................................................... - 4 -
Recent Developments............................................................................................... - 4 -
Reasons For the Acquisition....................................................................................... - 4 -
Recommendation to Shareholders.................................................................................... - 4 -
The Acquisition................................................................................................... - 4 -
Conditions to Completing the Acquisition.......................................................................... - 5 -
Termination of the Merger Agreement............................................................................... - 5 -
Stock Option Agreement............................................................................................ - 6 -
Certain Federal Income Tax Considerations......................................................................... - 6 -
Comparative Stock Prices.......................................................................................... - 6 -
Accounting Treatment.............................................................................................. - 6 -
Required Regulatory Approvals..................................................................................... - 6 -
Dissenters' Rights................................................................................................ - 6 -
Interests of Certain Persons...................................................................................... - 7 -
Vote Required..................................................................................................... - 7 -
PROVIDENT FINANCIAL SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA..................................................... - 8 -
FIDELITY FINANCIAL SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA..................................................... - 10 -
COMPARATIVE PER SHARE DATA............................................................................................. - 12 -
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION....................................................................... - 14 -
FORWARD LOOKING STATEMENTS............................................................................................. - 15 -
RISK FACTORS........................................................................................................... - 17 -
THE SPECIAL MEETING.................................................................................................... - 20 -
Introduction..................................................................................................... - 20 -
Matters to be Considered; Board of Directors Recommendation...................................................... - 20 -
Record Date and Voting........................................................................................... - 20 -
Vote Required.................................................................................................... - 21 -
Revocability of Proxies.......................................................................................... - 22 -
Solicitation of Proxies.......................................................................................... - 22 -
Adjournment of the Special Meeting............................................................................... - 22 -
Dissenters' Rights............................................................................................... - 22 -
THE ACQUISITION........................................................................................................ - 23 -
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Form of the Acquisition.......................................................................................... - 23 -
Background and Reasons for the Acquisition....................................................................... - 23 -
Opinion of Fidelity Financial's Financial Advisor................................................................ - 24 -
Interests of Certain Persons..................................................................................... - 34 -
Federal Income Tax Consequences.................................................................................. - 34 -
Federal Securities Law Consequences.............................................................................. - 35 -
Certain Effects of the Acquisition............................................................................... - 36 -
Conduct of Business if Acquisition Not Consummated............................................................... - 36 -
Regulatory Filings and Approvals................................................................................. - 36 -
Terms of the Acquisition......................................................................................... - 37 -
Exchange of Certificates......................................................................................... - 39 -
Dissenter's Rights............................................................................................... - 40 -
Representations and Warranties................................................................................... - 40 -
Conduct of Business Pending the Merger .......................................................................... - 41 -
Additional Agreements............................................................................................ - 43 -
Conditions to the Merger......................................................................................... - 44 -
RIGHTS OF DISSENTING SHAREHOLDERS...................................................................................... - 47 -
STOCK OPTION AGREEMENT BETWEEN PROVIDENT FINANCIAL AND FIDELITY FINANCIAL.............................................. - 49 -
Exercise of Stock Option......................................................................................... - 49 -
Termination of Stock Option...................................................................................... - 49 -
Adjustment of Number of Shares Subject to Option................................................................. - 50 -
Repurchase of Option Shares...................................................................................... - 50 -
Registration Rights.............................................................................................. - 50 -
Effect of Stock Option Agreement................................................................................. - 50 -
PROVIDENT FINANCIAL GROUP, INC......................................................................................... - 51 -
General ........................................................................................................ - 51 -
Recent Development............................................................................................... - 51 -
DESCRIPTION OF PROVIDENT FINANCIAL CAPITAL STOCK....................................................................... - 52 -
General ........................................................................................................ - 52 -
Classified Board of Directors.................................................................................... - 53 -
Number of Directors.............................................................................................. - 53 -
Removal of Directors............................................................................................. - 53 -
Vacancies........................................................................................................ - 54 -
Special Meetings................................................................................................. - 54 -
Cumulative Voting................................................................................................ - 54 -
Advance Notice Provisions for Shareholder Nominations and Shareholder Proposals.................................. - 54 -
Amendments to Charter Documents.................................................................................. - 54 -
Transactions with Interested Shareholders........................................................................ - 55 -
Appraisal Rights................................................................................................. - 57 -
Liability of Directors and Executive Officers.................................................................... - 57 -
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................................... - 58 -
LEGAL MATTERS.......................................................................................................... - 60 -
EXPERTS................................................................................................................ - 60 -
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING.......................................................................... - 60 -
WHERE YOU CAN FIND MORE INFORMATION.................................................................................... - 60 -
Fidelity Financial SEC Filings:.................................................................................. - 61 -
Provident Financial SEC Filings:................................................................................. - 61 -
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ANNEX A Agreement and Plan of Merger dated as of August 16, 1999
ANNEX B Sections 1701.84 and 1701.85 of the Ohio General Corporation Law
ANNEX C Stock Option Agreement dated as of August 17, 1999
ANNEX D Opinion of Sandler O'Neill & Partners, L.P.
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INDEX OF DEFINED TERMS
Page No.
Acquisition 4
Cash-Out Amount 50
Common Exchange Value 38
Fair Cash Value 48
Fidelity Financial 1
Interested Shareholder 56
Market/Offer Price 50
Merger Agreement 1
Option Exchange Ratio 38
Per Share Consideration 38
Provident Financial 1
Redemption Amount 50
Related Person 55
Securities and Exchange Commission 4
Special Meeting 1
Stock Option Agreement 4
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QUESTIONS AND ANSWERS ABOUT THE ACQUISITION
Q. WHY DO FIDELITY FINANCIAL AND PROVIDENT FINANCIAL WANT TO MERGE?
A. Fidelity Financial believes that shareholder value will be maximized
and that its customers will benefit through an affiliation with
Provident Financial. Provident Financial wants to better serve its
customers in Fidelity Financial's service areas and to expand Provident
Financial's presence in those markets.
Q. HOW WILL I BENEFIT?
A. The Fidelity Financial board of directors believes that you will
benefit by becoming a shareholder of a bank holding company with a
strong financial performance record. The Fidelity Financial board also
believes that you will benefit from the opportunity for potential
future appreciation of Provident Financial shares.
Q. WHAT WILL I RECEIVE FOR MY FIDELITY FINANCIAL SHARES?
A. We will determine the amount of Provident Financial common stock you
will receive in exchange for each Fidelity Financial share you own
based on Provident Financial's ten-day average closing price ending on
the date on which we receive the last regulatory approval required to
consummate the Acquisition. You will receive $21.00 worth of Provident
Financial common stock for each Fidelity Financial share if the average
Provident Financial share price is between $40.00 and $44.50. If the
average Provident Financial share price is below $40.00, you will
receive 0.525 shares of Provident Financial common stock for each
Fidelity Financial share. If this price is above $44.50, you will
receive 0.4719 shares of Provident Financial common stock for each
Fidelity Financial share you own. As of _____, 1999, the average
Provident Financial share price for the last ten trading days was $___
which would result in you receiving ___ shares of Provident Financial
with an equivalent value of $____. We urge you to obtain current price
quotations for Provident Financial common stock before casting your
vote regarding the Merger Agreement. You may obtain current stock
quotations for Provident Financial common stock from newspapers, the
internet or your broker.
Q. WILL I OWE ANY FEDERAL INCOME TAX AS A RESULT OF THE ACQUISITION?
A. In general, you will not recognize any gain or loss for federal income
tax purposes as a result of the Acquisition, except to the extent of
any gain for any cash payment you receive instead of any fractional
share of Provident Financial common stock.
Q. WHEN DO YOU EXPECT THE ACQUISITION TO BE COMPLETED?
A. We plan to complete the transaction as soon as possible after the
Special Meeting, assuming we obtain the required shareholder approval.
The transaction is also subject to the approval of federal and state
banking regulatory authorities and the satisfaction of other closing
conditions. We expect to complete the transaction in February, 2000.
Q. WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
A. Fidelity Financial will hold the Special Meeting at 2:00 p.m. Eastern
Time on ___________ at ________________, Cincinnati, Ohio.
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Q. WHAT IS THE VOTE REQUIRED AT THE SPECIAL MEETING?
A. Fidelity Financial's shareholders must adopt the Merger Agreement by a
vote of a majority of the outstanding shares.
Q. WHAT DO I NEED TO DO NOW?
A. Just mail your completed, signed and dated proxy card in the enclosed
return envelope as soon as possible so that your shares will be
represented at the Special Meeting.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A. Your broker will vote your Fidelity Financial shares only if you
provide instructions on how to vote. You should follow the directions
provided by your broker regarding how to instruct your broker to vote
your shares.
Q. MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A. Yes. You can change your vote at any time before your proxy is voted at
the Special Meeting. You can do this in three ways. First, you can send
Fidelity Financial a written statement that you would like to revoke
your proxy. Second, you can send Fidelity Financial a new signed and
later-dated proxy card. Third, you can attend the Special Meeting and
vote in person. However, your attendance at the Special Meeting alone
will not revoke your proxy.
Q. HOW WILL MY SHARES BE VOTED IF I RETURN A BLANK PROXY CARD?
A. If you sign and send in your proxy and do not indicate how you want to
vote, your proxy will be counted as a vote in favor of the Acquisition.
Q. WHAT WILL BE THE EFFECT IF I DO NOT VOTE?
A. Not voting will have the same effect as voting against the Acquisition.
Q. DO I HAVE THE RIGHT TO DISSENT FROM THE ACQUISITION?
A. Yes. Under Ohio law, Fidelity Financial shareholders of record who do
not vote in the favor of the Acquisition may dissent from the
Acquisition and may receive the fair cash value of their Fidelity
Financial shares.
Q. SHOULD I SEND IN MY STOCK CERTIFICATE NOW?
A. No. If the Acquisition is completed, you will receive written
instructions for exchanging your stock certificates.
Q. WHO CAN ANSWER MY QUESTIONS ABOUT THE ACQUISITION?
A. If you have more questions about the Acquisition, please call
_________, at (513) 922-5959.
In addition, the firm of Kissel-Blake will be assisting Fidelity
Financial in soliciting proxies for the Special Meeting. Any questions
you have regarding the Acquisition can also be directed to Kissel-Blake
at (800) 498-2628.
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<PAGE> 12
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the Acquisition more fully and for a complete
description of the legal terms of the Acquisition, you should read carefully
this entire document and the documents we have referred to you. See the section
of this proxy statement/prospectus entitled "Where You Can Find More
Information" appearing on page 60.
Throughout this proxy statement/prospectus, the term "Acquisition"
refers to Provident Financial's acquisition of Fidelity Financial through the
mergers of Fidelity Financial into Provident Financial and Centennial Bank,
Fidelity Financial's wholly-owned subsidiary, into The Provident Bank, Provident
Financial's wholly-owned subsidiary. The term "Merger Agreement" refers to the
Agreement and Plan of Merger dated as of August 16, 1999, a copy of which is
included at the back of this proxy statement/prospectus as Annex A. The term
"Stock Option Agreement" refers to the Stock Option Agreement dated as of August
17, 1999, a copy of which is included at the back of this proxy
statement/prospectus as Annex C.
THE COMPANIES
FIDELITY FINANCIAL OF OHIO, INC.
5535 Glenway Avenue
Cincinnati, Ohio 45238
(513) 922-5959
Fidelity Financial is a holding company for Centennial Bank. Centennial Bank is
an Ohio- chartered savings bank which conducts business through fifteen
full-service offices located in the Greater Cincinnati, Ohio area.
PROVIDENT FINANCIAL GROUP, INC.
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2000
Provident Financial is a Cincinnati-based commercial banking and financial
services company with full service banking operations in Ohio, northern Kentucky
and southwestern Florida.
RECENT DEVELOPMENTS
On August 3, 1999, Provident Financial announced its agreement to acquire OHSL
Financial Corp. for approximately $57 million. OHSL Financial Corp., with $284
million in assets, operates six full-service banking offices in Cincinnati, Ohio
through its subsidiary, Oak Hills Savings and Loan Company, F.A.
REASONS FOR THE ACQUISITION
Fidelity Financial and Provident Financial have proposed the Acquisition in
order to strengthen Provident Financial and to serve the long-term interests of
Fidelity Financial and its shareholders.
RECOMMENDATION TO SHAREHOLDERS
The Fidelity Financial board of directors unanimously recommends that Fidelity
Financial shareholders adopt the Merger Agreement at the Special Meeting so that
the Acquisition may be completed.
THE ACQUISITION
In the Acquisition, Fidelity Financial will merge into Provident Financial, and
Centennial Bank will merge into The Provident Bank. The shareholders of Fidelity
Financial will become shareholders of Provident Financial. For a description of
what Fidelity Financial shareholders will receive in the Acquisition, see "The
Merger Agreement - Terms of the Acquisition" on page ____ of this proxy
statement/prospectus. Based on the last reported sales price of Provident
Financial common stock ($____ per share as of the trading day immediately
preceding the date of this proxy statement/prospectus), the total shares of
Provident Financial common stock to be issued in the Acquisition to Fidelity
Financial shareholders would be ____________. The
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<PAGE> 13
actual number of shares will depend upon the average of the daily closing prices
of Provident Financial common stock for the ten trading days ending the day that
the parties receive the final regulatory approval of the Acquisition. We
encourage you to read the Merger Agreement because it is the legal document that
governs the Acquisition.
CONDITIONS TO COMPLETING THE ACQUISITION
Completion of the Acquisition depends upon satisfaction of a number of
conditions, including the following, among others:
o Fidelity Financial's shareholders must adopt the Merger Agreement by a
vote of a majority of the outstanding shares; and
o The Federal Reserve Board and Ohio Division of Financial Institutions
must approve the Acquisition; and
o Provident Financial's tax counsel must provide a tax opinion that the
Acquisition will be a tax-free reorganization to the shareholders of
Fidelity Financial; and
o The unaudited financial statements of Fidelity Financial at closing
must reflect shareholders' equity of at least $97,605,000 after
disregarding certain costs of the Acquisition and other specified
items.
o The pre-closing financial statements as at the end of the month prior
to the Closing Date shall report that the deposit accounts of
Centennial Bank meet a certain stated amount.
To the extent permitted by law, the parties may waive certain of the closing
conditions. The Fidelity Financial board of directors does not currently intend
to resolicit shareholder approval for its waiver of any of the conditions
mentioned above.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated for a number of reasons including, among
others, the following:
o by mutual agreement of Provident Financial and Fidelity Financial;
o by breach of the representations and warranties by any party to the
Merger Agreement;
o if regulatory approval of the Acquisition is denied or if a regulatory
approval imposes a condition, requirement or restriction which the
board of directors of Provident Financial reasonably determines in good
faith would materially adversely impact the Acquisition;
o if Fidelity Financial shareholder approval is denied or Fidelity
Financial's board of directors withdraws or modifies its recommendation
for the Acquisition;
o if the companies have not completed the Acquisition by June 30, 2000;
o if the average of the closing sale prices per share for Provident
Financial common stock during the ten consecutive trading-days ending
on the date on which the last regulatory approval required to
consummate the Acquisition as granted, is less than $36.23 unless
either the value of Provident Financial common stock remains, within
designated limits, comparable to the stock values of a stated group of
companies used as a benchmark for Provident Financial or Provident
Financial exercises its option to increase the consideration to be paid
to Fidelity Financial stockholders under the Merger Agreement; or
o if an unsolicited offer to consummate a competing transaction is
received by the
- 5 -
<PAGE> 14
board of directors of Fidelity Financial at a price per share (or
equivalent) higher than $21.00 and Fidelity Financial proceeds to close
the competing transaction on the terms of the unsolicited offer.
STOCK OPTION AGREEMENT
As an inducement and condition to Provident Financial's entering into the Merger
Agreement, Fidelity Financial granted Provident Financial an option to purchase
up to 1,819,216 Fidelity Financial common shares at a price of $15.75 per share,
on certain terms and conditions. The option is exercisable only upon certain
events causing termination of the Merger Agreement or the board of directors of
Fidelity Financial or Centennial Bank recommending, approving or entering into a
merger or material transfer or sale of assets with a party other than Provident
Financial.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Fidelity Financial and Provident Financial structured the Acquisition to qualify
as a tax-free reorganization for federal income tax purposes. Assuming that the
Acquisition so qualifies, none of Provident Financial, Fidelity Financial nor
their shareholders will recognize any gain or loss for federal income tax
purposes in the Acquisition except for any gain recognized for cash payment
received instead of a fractional share of Provident Financial common stock. We
will not seek a ruling from the Internal Revenue Service regarding the federal
income tax consequences of the Acquisition. TAX MATTERS ARE VERY COMPLICATED AND
THE TAX CONSEQUENCES OF THE ACQUISITION TO YOU WILL DEPEND ON THE FACTS OF YOUR
OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR TO UNDERSTAND FULLY THE
TAX CONSEQUENCES OF THE ACQUISITION TO YOU.
COMPARATIVE STOCK PRICES
Provident Financial common stock is traded on the Nasdaq National Market under
the symbol "PFGI". Fidelity Financial common stock is traded on Nasdaq under the
symbol "FFOH". On August 13, 1999, the last trading day ending prior to the
public announcement of the proposed Acquisition, the last reported Nasdaq sales
price for Fidelity Financial common stock was $12.3125 and for Provident
Financial common stock was $42.625. On __________, 1999, the day before we
printed this prospectus/proxy statement, the last reported sales price for
Fidelity Financial common shares was $_____ and for Provident Financial common
stock was $_____.
Provident Financial will file an application to list on Nasdaq the shares of
Provident Financial common stock to be issued in the Acquisition.
ACCOUNTING TREATMENT
The Acquisition will be accounted for as a pooling of interests. Under this
method, the companies will be treated as if they had always been combined for
accounting and financial reporting purposes.
REQUIRED REGULATORY APPROVALS
Consummation of the Acquisition is subject to approval by the Federal Reserve
Board and the Ohio Division of Financial Institutions.
DISSENTERS' RIGHTS
Under Ohio law, you may dissent from the Acquisition and have the fair cash
value of your shares paid to you. To exercise this right, you must follow
certain procedures. These procedures include filing a demand for payment of the
fair cash value of your shares and not voting in favor of the Acquisition. For
more information on how to exercise these rights, see "Rights of Dissenting
Shareholders" on page __ and Annex B.
The Acquisition cannot occur if the value of amounts paid to dissenting
shareholders exceed the limits under the pooling of interests method of
accounting.
- 6 -
<PAGE> 15
INTERESTS OF CERTAIN PERSONS
Fidelity Financial and Centennial Bank have entered into employment agreements
with Robert Sudbrook, John Reusing, Joseph Hughes, Paul Staubach, Gregory
Niesen, Thomas Schiller and Elaine Schmidt that provide for payments to those
officers if their employment is terminated following a change in control of
Fidelity Financial or Centennial Bank.
VOTE REQUIRED
The affirmative vote of holders of at least a majority of the outstanding
Fidelity Financial common shares, or _____ shares, is required to adopt the
Merger Agreement. Directors and executive officers of Fidelity Financial are
entitled to vote _______ shares or approximately ____% of the outstanding
Fidelity Financial common shares.
If you owned Fidelity Financial shares on ______, 1999, you are entitled to vote
at the Special Meeting.
OPINION OF FINANCIAL ADVISOR
In deciding to approve the Acquisition, Fidelity Financial's board of directors
considered, among other things, the opinion of its financial advisor, Sandler
O'Neill & Partners, L.P., that the consideration to be received by Fidelity
Financial shareholders in the Acquisition was fair, from a financial point of
view, as of August 16, 1999. The updated opinion of Sandler O'Neill & Partners,
L.P. dated _______, 1999, is attached as Annex __ to this proxy
statement/prospectus. We encourage you to read this opinion.
- 7 -
<PAGE> 16
PROVIDENT FINANCIAL
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following is a summary of selected financial data for Provident
Financial and its subsidiaries for the six month periods ended June 30, 1999 and
June 30, 1998 and the five years ended December 31, 1998. This summary should be
read in conjunction with the financial statements and their notes which are
incorporated by reference to this document.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
-------------------------- ---------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ------------ ------------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Total Interest Income $ 320,368 $ 302,485 $ 633,760 $ 571,812 $ 520,325 $ 462,396 $ 345,829
Total Interest Expense (168,943) (166,982) (347,067) (309,212) (280,257) (259,747) (163,871)
---------- ------------ ----------- ---------- ---------- ---------- ---------
Net Interest Income 151,425 135,503 286,693 262,600 240,068 202,649 181,958
Provision for Loan
and Lease Losses (20,950) (10,000) (31,200) (44,750) (47,000) (14,000) (12,000)
Non-Interest Income 123,484 106,536 222,987 172,658 101,437 61,837 38,468
Non-Interest Expense (146,959) (135,535) (302,406) (225,978) (175,162) (143,320) (120,889)
---------- ------------ ----------- ---------- ---------- ---------- ---------
Income Before Income
Taxes 107,000 96,504 176,074 164,530 119,343 107,166 87,537
Applicable Income Taxes (37,719) (33,454) (61,122) (57,093) (41,198) (35,306) (29,871)
---------- ------------ ----------- ---------- ---------- ---------- ---------
Net Income (1) $ 69,281 $ 63,050 $ 114,952 $ 107,437 $ 78,145 $ 71,860 $ 57,666
========== ============ =========== ========== ========== ========== =========
Per Common Share Data:
Basic Earnings (1) $ 1.62 $ 1.46 $ 2.66 $ 2.59 $ 1.96 $ 1.98 $ 1.56
Diluted Earnings (1) 1.56 1.40 2.56 2.45 1.87 1.75 1.40
Dividends Paid 0.44 0.40 0.80 0.72 0.54 0.47 0.42
Book Value 16.66 15.91 16.29 14.69 12.54 10.78 9.16
Balances at Period End:
Total Investment Securities $1,628,309 $ 1,550,187 $ 1,514,153 $1,381,707 $1,028,207 $ 959,904 $ 685,920
Total Loans and Leases 5,841,836 5,588,006 5,623,505 5,051,842 5,311,448 4,896,076 4,204,538
Total Managed Loans
and Leases 10,303,408 7,334,855 8,843,543 6,584,528 5,568,709 4,896,076 4,204,538
Reserve for Loan and
Lease Losses 80,122 75,472 75,907 71,980 66,693 60,235 51,979
Total Assets 8,492,353 7,841,942 8,134,987 7,106,859 6,824,388 6,205,351 5,411,491
Non-Interest Bearing
Deposits 862,771 573,458 669,840 605,166 554,262 523,631 452,458
Interest Bearing Deposits 4,888,578 4,208,391 4,657,481 4,091,132 4,042,218 3,654,920 3,616,191
Total Deposits 5,751,349 4,781,849 5,327,321 4,696,298 4,596,480 4,178,551 4,068,649
Long-Term Liabilities 1,014,916 766,949 1,033,173 786,974 949,913 820,083 383,433
Total Shareholders' Equity 717,044 692,153 703,854 626,341 513,750 432,537 359,351
Other Statistical
Information (2):
Return on Average Assets (1) 1.58% 1.67% 1.45% 1.56% 1.23% 1.29% 1.24%
Return on Average Equity (1) 19.12 19.14 16.61 19.13 17.03 18.37 16.64
Dividend Payout Ratio 27.31 27.91 30.72 28.15 28.12 26.17 30.62
Net Interest Margin 3.86 3.93 3.93 4.03 3.96 3.82 4.10
Net Interest Spread 3.34 3.33 3.36 3.34 3.33 3.17 3.57
</TABLE>
(footnotes on next page)
- 8 -
<PAGE> 17
<TABLE>
<CAPTION>
Six Months Ended June 30, Years Ended December 31,
------------------------- --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Ratios at Period End:
Total Equity to Total Assets 8.44% 8.83% 8.65% 8.81% 7.53% 6.97% 6.64%
Tier 1 Leverage Ratio 10.32 9.85 9.00 9.94 8.97 7.13 7.21
Tier 1 Capital to Risk-
Weighted Assets 9.75 10.19 8.55 9.67 9.19 7.52 7.86
Tier 2 Capital to Risk-
Weighted Assets 2.12 3.13 2.60 3.44 3.81 4.25 4.99
Total Risk-Based Capital
to Risk-Weighted Assets 11.87 13.32 11.15 13.11 13.00 11.77 12.85
Loan Quality Ratios at
Period End:
Reserve for Loan and Lease
Losses to Total Loans
and Leases 1.37 1.35 1.35 1.42 1.26 1.23 1.24
Reserve for Loan and Lease
Losses to Nonperforming
Loans 140.82 112.44 178.30 153.82 304.51 142.57 714.29
Nonperforming Loans to
Total Loans and Leases 0.97 1.20 0.76 0.93 0.41 0.86 0.17
Nonperforming Assets to
Total Loans, Leases and
Other Real Estate Owned 1.02 1.26 0.81 1.17 0.54 0.98 0.25
Net Charge-Offs to Average
Net Loans and Leases (2) 0.55 0.25 0.48 0.78 0.85 0.13 0.02
</TABLE>
(1) Selected Financial Data on Operating Income follows: [excludes Special
Charges and Exit Costs (12/31/98) and One-Time Deposit Insurance Charge
(12/31/96)]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income $ 69,281 $ 63,050 $ 129,255 $ 107,437 $ 83,450 $ 71,860 $ 57,666
Basic Earnings 1.62 1.46 2.99 2.59 2.09 1.98 1.56
Diluted Earnings 1.56 1.40 2.88 2.45 1.99 1.75 1.40
Return on Average Assets 1.58% 1.67% 1.63% 1.56% 1.31% 1.29% 1.24%
Return on Average Equity 19.12% 19.14% 18.67% 19.13% 18.18% 18.37% 16.64%
</TABLE>
(2) June 30, 1999 and 1998 ratios have been annualized where applicable.
- 9 -
<PAGE> 18
FIDELITY FINANCIAL SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following is a summary of selected financial data for Fidelity
Financial and its subsidiaries for the six month periods ended June 30, 1999 and
June 30, 1998 and the five years ended December 31, 1998. This summary should be
read in conjunction with the financial statements and their notes which are
incorporated by reference to this document. The following financial information
for the five years ended December 31, 1998, and for the six months ended June
30, 1998, have been restated to give effect to the merger of equals between
Fidelity Financial and Glenway Financial Corporation as if the merger had been
completed as of January 1, 1994.
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------------------- ----------------------------------------------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL
CONDITION DATA:
Total Assets $808,551 $835,258 $814,664 $839,721 $778,639 $509,746 $476,177
Federal funds sold and interest-
bearing deposits 8,517 20,659 23,315 27,730 21,351 4,037 2,771
Investment securities
available for sale-at
market 15,686 4,871 838 6,020 16,120 11,138 8,268
Investment securities at cost -- 8,069 7,079 8,558 6,556 6,556 8,489
Mortgage-backed securities
available for sale-at market 52,152 34,295 29,432 34,623 42,231 45,987 11,208
Mortgage-backed securities-at
cost 23,157 40,866 38,234 25,819 25,769 14,301 49,887
Loans receivable, net (1) 669,756 686,055 676,043 693,711 625,224 398,955 372,044
Goodwill and other intangible
assets 6,738 7,511 7,124 7,925 8,794 686 908
Deposits 607,668 639,043 629,158 660,774 636,912 397,023 374,539
FHLB advances 97,972 94,280 78,752 76,119 39,316 44,680 39,917
Stockholders' equity-net 97,262 95,236 98,300 92,580 93,549 56,321 53,316
</TABLE>
(footnotes on next page)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------ -------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------------------ -------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Total interest income $28,600 $30,451 $60,195 $59,834 $43,193 $36,311 $31,583
Total interest expense (15,912) (18,167) (35,798) (35,298) (24,643) (21,717) (17,038)
--------------------------- -------------------------------------------------------------------
Net interest income 12,688 12,284 24,397 24,536 18,550 14,594 14,545
Provision for losses on loans (175) (247) (397) (369) (298) (137) (148)
--------------------------- -------------------------------------------------------------------
Net interest income after
provision for losses on
loans 12,513 12,037 24,000 24,167 18,252 14,457 14,397
Other income 919 1,248 2,467 2,241 955 1,065 1,303
General, administrative and
other expenses (11,533) (7,422) (14,913) (15,174) (15,315) (10,406) (10,093)
--------------------------- -------------------------------------------------------------------
Earnings before income taxes 1,899 5,863 11,554 11,234 3,892 5,116 5,607
Federal income taxes (1,081) (2,086) (4,079) (3,956) (1,415) (1,811) (1,970)
--------------------------- -------------------------------------------------------------------
Net earnings $818 $3,777 $7,475 $7,278 $2,477 $3,305 $3,637
=========================== ===================================================================
Earnings per share
Basic $0.09 $0.43 $0.84 $0.83 $0.32 $0.44 $0.48
=========================== ===================================================================
Diluted $0.09 $0.42 $0.83 $0.81 $0.32 $0.44 $0.48
=========================== ===================================================================
</TABLE>
(footnotes on next page)
- 10 -
<PAGE> 19
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------------------- --------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING RATIOS
AND OTHER DATA (2):
Return on average equity(3)(4) 1.67% 8.03% 7.83% 7.67% 3.20% 6.03% 6.89%
Return on average assets (3)(4) 0.24 0.90 0.90 0.90 0.42 0.68 0.80
Tangible equity to tangible
assets 11.29 10.60 11.29 10.18 11.01 10.93 11.03
Interest rate spread(5) 2.80 2.62 2.60 2.71 2.75 2.61 2.95
Net interest margin(5) 3.26 3.05 3.05 3.16 3.31 3.10 3.35
Non-performing loans to
total loans at end of
period(6) 0.38 0.31 0.35 0.17 0.31 0.28 0.73
Non-performing assets to
total assets at end of
period(6) 0.34 0.28 0.29 0.15 0.31 0.31 0.67
Allowance for loan losses
to non-performing loans at
end of period 122.43 129.29 125.64 220.13 111.72 152.81 52.34
Average interest earning
assets to average interest-
bearing liabilities 111.20 109.70 110.07 109.99 112.84 110.53 110.40
General, administrative and
other expenses to average
total assets (3)(4) 2.86 1.77 1.79 1.87 2.62 2.13 2.23
</TABLE>
(1) Includes loans classified as held for sale
(2) With the exception of end of period ratios, ratios are based on average
monthly balances during the period and are annualized where
appropriate.
(3) Before consideration of non-recurring charges incurred during the six
months ended June 30, 1999, as a result of Fidelity Financial's merger
of equals with Glenway Financial Corporation, the ratios set forth
below would have been as follows:
Return on average equity 8.10%
Return on average assets 0.98%
General, administrative and other
expenses to average total assets 1.82%
(4) Before consideration of non-recurring charges incurred in 1996,
including the SAIF recapitalization assessment and expenses related to
Fidelity Financial's acquisition of Circle Financial Corporation, the
ratios set forth below would have been as follows:
Return on average equity 5.52%
Return on average assets 0.92%
General, administrative and other
expenses to average total assets 1.91%
(5) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average rate
on interest-bearing liabilities. Net interest margin represents net
interest income as a percentage of average interest-earning assets.
(6) Non-performing loans consist of non-accrual loans and accruing loans
that are contractually past due 90 days or more, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure or deed-in-lieu thereof.
- 11 -
<PAGE> 20
COMPARATIVE PER SHARE DATA
Set forth below are net income, cash dividends and book value per common
share data shown separately for both companies on a historical basis, for
Provident Financial on a pro forma basis, for both companies on a pro forma
combined basis and on a pro forma combined basis per Fidelity Financial
equivalent share. The relative exchange ratios for the business combination are
as follows:
o 0.525 Provident Financial shares for one Fidelity Financial share
assumes the average Provident Financial share price is less than
$40.00
o 0.497 Provident Financial shares for one Fidelity Financial share
assumes the average Provident Financial share price is $42.25
o 0.4719 Provident Financial shares for one Fidelity Financial share
assumes the average Provident Financial share price is greater than
$44.50
The Fidelity Financial equivalent share pro forma information shows the
effect of the Acquisition from the perspective of an owner of Fidelity Financial
common shares. The information was computed by multiplying the pro forma
combined information by the above respective exchange ratios.
You should read the respective audited and unaudited consolidated
financial statements and related notes of Provident Financial and Fidelity
Financial incorporated by reference into this proxy statement/prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------------- ------------------------------------------------
1999 1998 1998 1997 1996
------------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Provident Financial historical.................. $1.62 $1.46 $2.66 2.59 $1.96
Pro forma (using Provident Financial
historical) assuming the average Provident
Financial share price of:
Less than $40.00.......................... 1.47 1.40 2.56 2.49 1.84
$42.25.................................... 1.48 1.41 2.57 2.50 1.85
Greater than $44.50....................... 1.49 1.41 2.58 2.52 1.85
Fidelity Financial historical................... .09 .43 .84 .83 .32
Pro forma (using Provident Financial
historical) per Fidelity Financial equivalent
common share and assuming the average
Provident Financial share price of:
Less than $40.00.......................... .77 .73 1.34 1.31 .96
$42.25.................................... .74 .70 1.28 1.24 .92
Greater than $44.50....................... .70 .67 1.22 1.19 .87
DILUTED EARNINGS PER SHARE:
Provident Financial historical.................. 1.56 1.40 2.56 2.45 1.87
Pro forma (using Provident Financial
historical) assuming the average Provident
Financial share price of:
Less than $40.00.......................... 1.43 $1.34 $2.47 $2.37 $1.76
$42.25.................................... 1.43 $1.35 $2.48 $2.38 $1.76
Greater than $44.50....................... 1.44 $1.36 $2.49 $2.39 $1.77
</TABLE>
- 12 -
<PAGE> 21
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
JUNE 30 DECEMBER 31,
-------------------------------- ------------------------------------------------
1999 1998 1998 1997 1996
--------------- ---------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Fidelity Financial historical................... $.09 $.42 $.83 $.81 $.32
Pro forma (using Provident Financial
historical) per Fidelity Financial equivalent
common share and assuming the average
Provident Financial share price of:
Less than $40.00.......................... .75 .71 1.29 1.24 .92
$42.50.................................... .71 .67 1.23 1.18 .88
Greater than $44.50....................... .68 .64 1.18 1.13 .84
DIVIDENDS PER SHARE:
Provident Financial historical.................. .44 .40 .80 .72 .54
Pro forma assuming the average Provident
Financial share price of:
Less than $40.00.......................... .43 .39 .78 .81 .53
$42.50.................................... .43 .39 .79 .82 .53
Greater than $44.50....................... .44 .40 .79 .82 .54
Fidelity Financial historical................... .21 .16 .31 .88 .23
Pro forma (using Provident Financial
historical) per Fidelity Financial equivalent
common share and assuming the average
Provident Financial share price of:
Less than $40.00.......................... .23 .21 .41 .43 .28
$42.50.................................... .22 .20 .39 .41 .27
Greater than $44.50....................... .21 .19 .37 .39 .25
BOOK VALUE PER SHARE:
Provident Financial historical.................. 16.66 15.91 16.29 14.69 12.54
Pro forma assuming the average Provident
Financial share price of:
Less than $40.00.......................... 17.02 16.32 16.72 15.18 13.28
$42.50.................................... 17.12 16.41 16.81 15.26 13.35
Greater than $44.50....................... 17.20 16.49 16.89 15.33 13.42
Fidelity Financial historical................... 10.66 10.55 10.83 10.27 10.32
Pro forma (using Provident Financial
historical) per Fidelity Financial equivalent
common share and assuming the average
Provident Financial share price of:
Less than $40.00.......................... 8.94 8.57 8.78 7.97 6.97
$42.50.................................... 8.51 8.15 8.35 7.58 6.64
Greater than $44.50....................... 8.12 7.78 7.97 7.23 6.33
</TABLE>
- 13 -
<PAGE> 22
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
Fidelity Financial common stock is traded on Nasdaq under the symbol
"FFOH." Provident Financial common stock is traded on Nasdaq under the symbol
"PFGI."
The following table sets forth, for the calendar quarters indicated, the
high and low sales prices per share of Fidelity Financial common stock and
Provident Financial common stock as quoted on Nasdaq, and the dividends per
share declared during such quarter.
<TABLE>
<CAPTION>
FIDELITY FINANCIAL COMMON STOCK PROVIDENT FINANCIAL COMMON STOCK
--------------------------------------- -----------------------------------------
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
------------ ------------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter................................. $13.75 $11.50 $.06 $39.38 $33.50 $.16
Second Quarter................................ 15.00 12.38 .07 47.00 33.50 .16
Third Quarter................................. 16.50 14.50 .07 52.25 43.13 .20
Fourth Quarter................................ 16.25 14.25 .08 52.50 43.25 .20
1998
First Quarter................................. 18.25 15.50 .07 53.00 45.00 .20
Second Quarter................................ 19.88 15.19 .08 56.00 45.63 .20
Third Quarter................................. 16.38 11.88 .08 50.50 38.25 .20
Fourth Quarter................................ 14.25 12.38 .08 44.00 27.06 .20
1999
First Quarter................................. 13.50 12.25 .12 41.94 35.31 .22
Second Quarter................................ 13.125 11.25 .09 44.38 35.56 .22
Third Quarter (through September 30, 1999).... 19.50 11.50 .09 45.88 39.81 .22
</TABLE>
On _________, 1999 the last reported sales prices for Provident Financial
common stock and Fidelity Financial common stock on Nasdaq were $_______ and
________ , respectively, per share. As of ________ , 1999 there were
approximately _____________ holders of record of Fidelity Financial common
stock.
- 14 -
<PAGE> 23
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor from civil litigation for certain forward-looking statements.
Forward-looking statements include the information concerning future results of
operations, cost savings and synergies of Provident Financial and Fidelity
Financial after the Acquisition set forth in "Questions and Answers About the
Acquisition," "Summary" and "The Acquisition," and those preceded by, followed
by or that otherwise include the statements "should," "believe," "expect,"
"anticipate," "intend," "may," "will," "continue," "estimate" and other
expressions that indicate future events and trends. Although Fidelity Financial
and Provident Financial believe that in making such statements their
expectations are based on reasonable assumptions, such statements may be
influenced by risks and uncertainties which could cause actual results and
trends to be materially different from historical results or those anticipated
depending on a variety of factors. These factors include, without limitation:
o expected cost savings from the Acquisition and Provident
Financial's acquisition of OHSL Financial Corp. may not be
fully realized or realized within the expected time frame;
o revenues following the Acquisition and Provident Financial's
acquisition of OHSL Financial Corp. may be lower than expected
or deposit withdrawals, operating costs or customer loss and
business disruption following the Acquisition may be greater
than expected;
o competitive pressures among depository and other financial
services companies may increase significantly;
o costs or difficulties related to the integration of the
businesses acquired by Provident Financial may be greater than
expected;
o changes in the interest rate environment may reduce interest
margins, cause an increase in the prepayment rate on mortgages
held and securitized and other loans or reduce the demand for
new loans;
o general economic or business conditions, either
internationally or nationally or in the states in which the
combined company will be doing business, may be less favorable
than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for
credit;
o legislation or regulatory requirements or changes may
adversely affect the businesses in which Provident Financial
is engaged;
o technology-related changes, including "Year 2000" data systems
compliance issues, may be harder to make or more expensive
than expected; and
o changes in the securities markets.
You should understand that these factors, in addition to those discussed
elsewhere in this document and in documents which have been incorporated by
reference, could affect the future results of Provident
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<PAGE> 24
Financial and Fidelity Financial, and could cause those results to be materially
different from those expressed in their forward-looking statements. Provident
Financial and Fidelity Financial do not undertake any obligation to update any
forward looking statements to reflect events or circumstances arising after the
date of this proxy statement/prospectus.
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RISK FACTORS
In considering whether to adopt the Merger Agreement, you should consider,
in addition to the other information contained in this proxy statement/
prospectus, the following matters. Certain capitalized terms used in this
section are defined in other sections of this proxy statement/prospectus.
The Market Price of Provident Financial Common Stock after the Acquisition
is Uncertain. The number of shares of Provident Financial common stock which
will be issued to Fidelity Financial shareholders in the Acquisition is
determined by the "average closing price" of Provident Financial common stock
for the ten trading days ending on the day the last regulatory approval is
received. The actual market price of Provident Financial common stock after
completion of the Acquisition is likely to be different from this "average
closing price."
Provident Financial May be Unable to Maintain Volume of Securitizations.
Provident Financial's earnings have benefitted from the securitization and sale
of loans and leases. In the first six months of 1999, $1.3 billion of such loans
and leases were securitized and sold compared to $435 million of such loans in
the first half of 1998. This activity resulted in gains of $43.9 million in the
first six months of 1999 compared to $18.6 million in the first half of 1998.
This securitization activity is subject to a number of risks, including without
limitation, increased loan pre-payments should interest rates decrease; the
continued availability of markets into which securitized loans and leases may be
sold; the ability to securitize loans and leases; the spreads that can be
realized on securitizations; and the continued ability to originate and purchase
sufficient loans and leases to be sold in securitized transactions in the
volumes currently experienced.
Changing Economic Conditions and Geographic Concentration in One Market
May Unfavorably Impact Provident Financial. Provident Financial concentrates its
operations in the midwestern United States. Fidelity Financial concentrates its
operations southwestern Ohio. As a result of this geographic concentration,
Provident Financial's and Fidelity Financial's results depend largely upon
economic conditions in this area. A deterioration in economic conditions in this
area could:
o increase loan delinquencies;
o increase problem assets and foreclosures;
o increase claims and lawsuits;
o decrease the demand for Provident Financial's products and services;
and
o decrease the value of collateral for loans, especially real estate,
in turn reducing customers' borrowing power, the value of assets
associated with problem loans and collateral coverage.
Provident Financial May Be Unable to Integrate Successfully Operations or
to Achieve Expected Cost Savings. The earnings, financial condition and
prospects of Provident Financial after the Acquisition and the acquisition of
OHSL Financial Corp. will depend in part on Provident Financial's ability to
integrate successfully the operations of Fidelity Financial and OHSL Financial
Corp. and to
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continue to implement its own business plan. Among the issues which Provident
Financial could face are:
o unexpected problems with risks, operations, personnel, technology or
credit;
o loss of customers and employees of the acquired institution;
o difficulty in working with the acquired institution's employees and
customers;
o the assimilation of new operations, sites and personnel which could
divert resources from regular banking operations;
o operations acquired by Provident Financial may not generate enough
revenue to offset acquisition costs; and
o problems with instituting and maintaining uniform standards,
controls, procedures and policies.
Further, although Provident Financial's board of directors anticipates
cost savings as a result of the Acquisition and the acquisition of OHSL
Financial Corp. to be meaningful, Provident Financial may be unable to fully
realize any of the potential cost savings expected. Finally, any cost savings
which are realized may be offset by losses in revenues or other charges to
earnings.
A Downturn in the Real Estate Market Could Negatively Impact Provident
Financial's Business. As of June 30, 1999, approximately 24% of Provident
Financial's loan portfolio and 97% of Fidelity Financial's loan portfolio
consisted of loans secured by various types of real estate. Most of Provident
Financial's and Fidelity Financial's real property collateral is located in
their market areas. If real estate values decline significantly, especially in
Ohio, higher vacancies and other factors could harm the financial condition of
borrowers (and the collateral for loans would provide less security) and
Provident Financial would be more likely to suffer losses on defaulted loans.
Business Combinations. Provident Financial seeks additional expansion
opportunities and accordingly may enter into business combinations with banking
and non-banking entities involving the issuance of its shares or payment of cash
consideration which may not require a vote of holders of Provident Financial
common stock. Depending on their size and nature, such additional acquisitions
could involve risks and uncertainties similar to those present in this
transaction.
Changing Interest Rates May Reduce Provident Financial's Net Interest
Income. Banking companies' earnings depend largely on the relationship between
the cost of funds, primarily deposits, and the yield on earning assets. This
relationship, known as the interest rate spread, is subject to fluctuation and
is affected by economic and competitive factors which influence interest rates,
the volume and mix of interest-earning assets and interest-bearing liabilities,
and the level of nonperforming assets. Fluctuations in interest rates affect the
demand of customers for Provident Financial's and Fidelity Financial's products
and services. Provident Financial and Fidelity Financial are subject to interest
rate risk to the degree that their interest-bearing liabilities reprice or
mature more slowly or more rapidly or on a different basis than their
interest-earning assets. Given Provident Financial's and Fidelity Financial's
current volume and mix of interest-bearing liabilities and interest-earning
assets, Provident Financial's and Fidelity Financial's
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<PAGE> 27
interest rate spread could be expected to decrease during times of rising
interest rates and, conversely, to increase during times of falling interest
rates. Therefore, significant fluctuations in interest rates may have an adverse
effect on Provident Financial's results of operations.
Competition. Provident Financial and Fidelity Financial operate in highly
competitive markets. Competition in those markets is likely to increase in light
of the changing legislative and regulatory environment for financial
institutions. In addition, consolidation and acquisition in the banking industry
are expected to continue, resulting in stronger and more effective competitors.
Neither Provident Financial nor Fidelity Financial can predict the degree to
which competition in the industry will increase in the future or the effect
increased competition will have on the combined entity.
Uncertain Legislative and Regulatory Environment. The banking and
financial services businesses in which Provident Financial and Fidelity
Financial engage are highly regulated. The laws and regulations affecting these
businesses may be changed dramatically in the near future. Some changes could
affect the ability of banks to engage in nationwide branch banking and the
ability of bank holding companies to engage in non-banking businesses, such as
securities underwriting and insurance, in which they have been allowed to engage
only on a limited basis. Some changes may also affect the capital that banks and
bank holding companies are required to maintain, the premiums paid for, or the
availability of, deposit insurance or other matters directly affecting earnings.
Neither Provident Financial nor Fidelity Financial can predict what changes will
occur or the effect that any changes would have on the ability of the combined
entity to compete effectively or to take advantage of new opportunities after
the Acquisition.
Uncertain Economic Environment. Until recently, banks and financial
service companies in the Midwest have experienced a relatively long period of
price stability and a growing economy. Price stability enables banks to better
protect themselves against interest rate risks. A strong economy enhances the
opportunity of the commercial sector of the economy to improve earnings and
performance. It also provides an environment for financial institutions to
experience positive and profitable growth. Recent economic changes present
additional risks for all banks and financial service companies.
Rapid Technological Changes. Evolving technology will play a major role in
the processing and delivery of financial services. The effective use of new
technology will enable banking and financial service businesses to improve
information concerning their customers and markets. It will also enable them to
reduce overhead expenses while improving the quality of service to customers.
Communications technology will substantially improve the ability of financial
institutions to exchange information with their customers and employees. Banks
and financial institutions that are unwilling or unable to access this evolving
new technology could experience lower earnings and a loss of competitiveness.
Year 2000 Issues May Cause Computer Related Disruptions. Provident
Financial and Fidelity Financial rely heavily on computer and software programs
to accurately process and maintain customer financial records and transactions.
Year 2000 related failure of this hardware or software, especially if for an
extended period of time, could affect adversely their respective results of
operations, liquidity and financial condition.
Additionally, Year 2000 problems may negatively affect Provident
Financial's credit customers and vendors which, in turn, could negatively impact
Provident Financial. While Provident Financial has
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<PAGE> 28
taken a number of steps to mitigate these risks, no assurance can be given that
Year 2000 problems will not be experienced by Provident Financial's credit
customers and vendors nor that these problems will not negatively impact
Provident Financial.
THE SPECIAL MEETING
INTRODUCTION
This proxy statement/prospectus is being furnished to the shareholders of
Fidelity Financial in connection with the solicitation of proxies by the board
of directors of Fidelity Financial for use at the special meeting of Fidelity
Financial shareholders ("Special Meeting") to be held on _____________ at ____
p.m., Eastern Time, at _________________________, Cincinnati, Ohio , and at any
adjournments or postponements thereof. Each copy of this proxy statement/
prospectus mailed to Fidelity Financial shareholders is accompanied by a proxy
card furnished in connection with the solicitation of proxies by the Fidelity
Financial board of directors for use at the Special Meeting.
MATTERS TO BE CONSIDERED; BOARD OF DIRECTORS RECOMMENDATION
At the Special Meeting, Fidelity Financial shareholders will be asked to
(i) adopt the Merger Agreement and the transactions contemplated thereby, and
(ii) vote upon such other business as may properly come before the Special
Meeting or any adjournments or postponements thereof (including, without
limitation, adjournment or postponement of the Special Meeting in order to allow
for additional solicitation of shareholder votes in order to obtain a quorum or
in order to obtain more votes in favor of the Merger Agreement). The board of
directors knows of no business that will be presented for consideration at the
Special Meeting other than the Merger Agreement.
The Fidelity Financial board of directors has determined that the
Acquisition and the Merger Agreement are advisable and in the best interests of
Fidelity Financial shareholders and has unanimously approved the Acquisition and
the Merger Agreement. ACCORDINGLY, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ADOPTION OF THE MERGER AGREEMENT.
SHAREHOLDERS ARE REQUESTED TO PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. FAILURE TO RETURN
A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
RECORD DATE AND VOTING
Only the holders of record of Fidelity Financial common stock as of the
close of business on _________________ are entitled to notice of and to vote at
the Special Meeting. At the close of business on _________, 1999, there were
___________ shares of Fidelity Financial common stock outstanding and entitled
to vote, held by approximately ______ shareholders of record and beneficially by
approximately _____ shareholders. Directors and executive officers of Fidelity
Financial and its affiliates (as a group) were entitled to vote _____ shares of
Fidelity Financial common stock, or approximately
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<PAGE> 29
___% of the outstanding votes entitled to be cast at the Special Meeting.
Holders of record of Fidelity Financial common stock as of the close of business
on the Record Date are entitled to one vote per share on any matter voted on at
the Special Meeting.
The presence, either in person or by proxy, of the holders of a majority
of the outstanding shares of Fidelity Financial common stock as of the Record
Date is necessary to constitute a quorum at the Special Meeting. Broker
non-votes and abstentions count for the purpose of determining a quorum at the
Special Meeting.
SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS. IF THE ACQUISITION IS CONSUMMATED, STOCK CERTIFICATES SHOULD BE DELIVERED
IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL, WHICH WILL
BE SENT TO SHAREHOLDERS BY THE PROVIDENT BANK, CINCINNATI, OHIO IN ITS CAPACITY
AS THE EXCHANGE AGENT, WITHIN THREE DAYS AFTER THE EFFECTIVE TIME.
VOTE REQUIRED
The holders of at least a majority of the outstanding shares of Fidelity
Financial common stock entitled to vote on the matters to be acted upon, or
__________ shares, must vote to adopt the Merger Agreement. THE FAILURE TO
SUBMIT A PROXY CARD OR VOTE IN PERSON AT THE SPECIAL MEETING HAS THE SAME EFFECT
AS A VOTE AGAINST THE MERGER AGREEMENT. ABSTENTIONS AND BROKER NON-VOTES ALSO
HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. BROKERS WHO HOLD
SHARES OF FIDELITY FINANCIAL COMMON STOCK AS NOMINEES WILL NOT HAVE
DISCRETIONARY AUTHORITY TO VOTE SHARES WITH RESPECT TO THE MERGER AGREEMENT
ABSENT INSTRUCTIONS FROM THE BENEFICIAL OWNER. THEREFORE, BY NOT GIVING SUCH
INSTRUCTIONS YOU WILL IN EFFECT BE VOTING AGAINST THE ACQUISITION.
The proxy holders named in the enclosed proxy card will vote all of the
Fidelity Financial shares represented by proxy cards that are properly signed
and returned by shareholders in accordance with the instructions contained
therein. Specify your voting choices by marking the appropriate boxes on the
proxy card.
IF YOU PROPERLY SIGN AND RETURN THE PROXY CARD SENT TO YOU BY FIDELITY
FINANCIAL, BUT DO NOT SPECIFY YOUR VOTING CHOICES, YOUR SHARES WILL BE VOTED
"FOR" THE ADOPTION OF THE MERGER AGREEMENT AS RECOMMENDED BY THE BOARD OF
DIRECTORS.
The Fidelity Financial board of directors is not aware of any matters
other than the Acquisition that may be brought before the Special Meeting. If
any other matters properly come before the Special Meeting the persons named in
the accompanying proxy will vote the shares represented by all properly executed
proxies on such matters in their discretion, except that shares represented by
proxies which have been voted "against" the Merger Agreement will not be used to
vote "for" adjournment of the Special Meeting for the purpose of allowing
additional time for soliciting additional votes "for" the Merger Agreement.
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<PAGE> 30
REVOCABILITY OF PROXIES
A shareholder may revoke a proxy at any time prior to its exercise by (i)
delivering to Fidelity Financial of Ohio, Inc., Paul D. Staubach, Chief
Financial Officer, 5535 Glenway Avenue, Cincinnati, Ohio 45238, a written notice
of revocation prior to the Special Meeting, (ii) delivering, prior to the
Special Meeting, a duly executed proxy bearing a later date, or (iii) attending
the Special Meeting and voting in person. The presence of a shareholder at the
Special Meeting will not in and of itself automatically revoke such
shareholder's proxy.
SOLICITATION OF PROXIES
All expenses of Fidelity Financial's solicitation of proxies, including
the cost of mailing this proxy statement/prospectus to you, will be paid by
Fidelity Financial. In addition to solicitation by use of the mails, proxies may
be solicited from shareholders by directors, officers and employees in person or
by telephone, facsimile or other means of communication. These directors,
officers and employees will not receive additional compensation, but may be
reimbursed for their reasonable out-of-pocket expenses in connection with such
solicitation. Fidelity Financial will make arrangements with brokerage houses,
custodians, nominees and fiduciaries for the forwarding of proxy solicitation
materials to beneficial owners of shares held of record by such brokerage
houses, custodians, nominees and fiduciaries, and Fidelity Financial will
reimburse such brokerage houses, custodians, nominees and fiduciaries for their
reasonable expenses incurred in connection with such solicitation.
Fidelity Financial has retained Kissel-Blake, a proxy solicitation firm,
to assist Fidelity Financial in soliciting Fidelity Financial stockholders.
Fidelity Financial will pay Kissel-Blake a fee of $6,500, plus out-of-pocket
expenses, in connection with its proxy solicitation services.
ADJOURNMENT OF THE SPECIAL MEETING
A vote in person by a shareholder for adjournment of the Special Meeting,
or for the last proposal on the proxy card authorizing the named proxies to vote
the shares covered by such proxy in their discretion with respect to other
business properly coming before the Special Meeting, would allow such named
proxies in their discretion to vote to adjourn the Special Meeting. An
adjournment would allow for additional solicitation of shareholder votes in
order to obtain a quorum or in order to obtain more votes in favor of the Merger
Agreement.
DISSENTERS' RIGHTS
Under Ohio law, you may dissent from the Acquisition and be paid the fair
cash value of your shares. To exercise this right, you must follow certain
procedures. These procedures include filing a demand with Fidelity Financial and
not voting in favor of the Acquisition. For more information on how to exercise
these rights, see "Rights of Dissenting Shareholders" on page ___ and Ohio
Revised Code Sections 1701.84 and 1701.85 set forth in Annex B.
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<PAGE> 31
THE ACQUISITION
FORM OF THE ACQUISITION
If the Acquisition is completed, Provident Financial will acquire Fidelity
Financial through the merger of Fidelity Financial into Provident Financial and
the merger of Centennial Bank into The Provident Bank.
BACKGROUND AND REASONS FOR THE ACQUISITION
The merger of equals of Fidelity Financial and Glenway Financial
Corporation created the third largest financial institution headquartered in
Cincinnati, Ohio, with 15 offices throughout Greater Cincinnati, and assets of
$808.6 million, deposits of $607.7 million and shareholders' equity of $97.3
million as of June 30, 1999. The merger was conceived from the need of Fidelity
Financial to utilize its excess capital and seek growth opportunities and the
desire of Glenway Financial to expand its product lines and geographic markets
to create additional sources of income. The companies also recognized that
competition within the local banking and financial services industries had
intensified, especially for smaller institutions like Fidelity Financial and
Glenway Financial, and that as a combined entity the companies could increase
their market share and enhance their visibility throughout southwestern Ohio.
Earnings for Fidelity Financial's first post-merger quarter at June 30,
1999, increased $148,000, or 7.8%, over the combined earnings for the two
companies in the same quarter for 1998. With continued savings from the
elimination of duplicative services and increased income from expanded product
offerings, Fidelity Financial anticipated continued growth in earnings. The
increase in earnings due to the merger of equals, however, did not have the
positive impact on Fidelity Financial's share price which management and
investors anticipated. Prior to the release of earnings for the June 30, 1999
quarter on July 20, 1999, Fidelity Financial shares had traded at a high of
$12.63 on Nasdaq during the month of July 1999. After the earnings announcement,
the price of a Fidelity Financial share remained in the $11.81 to $12.38 range
from July 21, 1999 to August 13, 1999.
As part of its ongoing strategic planning process for Fidelity Financial,
management decided in July 1999 to examine what further steps could be taken to
enhance shareholder value, as well as to address continuing concerns regarding
interest rate risk, market area competition and earnings potential. In an effort
to focus attention on these matters, management began to organize a strategic
planning session for the directors and senior management officials of Fidelity
Financial.
In early July, Robert Sudbrook, the President and Chief Executive Officer
of Fidelity Financial, was contacted by an officer of a local bank holding
company. No specific terms were discussed, but the bank holding company
expressed a preliminary interest in discussing an acquisition of Fidelity
Federal. Mr. Sudbrook met with the representative and provided certain public
financial information regarding Fidelity Financial.
Following the positive response Mr. Sudbrook received from the first bank
holding company, Mr. Sudbrook and John R. Reusing, the Chairman of Fidelity
Financial, decided to pursue discussions with Provident Financial which had
recently expressed an interest in Fidelity Financial. On July 23, 1999, Mr.
Sudbrook and Mr. Reusing met with senior management officials of Provident
Financial, to discuss their
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respective companies and explore a possible transaction that could benefit
Fidelity Financial's shareholders. At the end of the meeting, the parties agreed
that Provident Financial would submit an acquisition proposal. One week later,
on July 30, 1999, the other bank holding company with whom Mr. Sudbrook had
first met indicated that it was not interested in pursuing a merger or other
transaction in the immediate future.
On August 3, 1999, Provident Financial announced that it had signed a
merger agreement with OHSL Financial Corp., a savings and loan holding company
with six full-service banking offices in Cincinnati, Ohio. In connection with
the merger, former OHSL Financial Corp. shareholders would receive Provident
Financial shares worth approximately $57.0 million.
On August 5, 1999, the board of directors of Fidelity Financial met in a
special meeting to discuss Provident Financial's initial indication of interest
in acquiring Fidelity Financial. Fidelity Financial's legal counsel reviewed
with the board its fiduciary obligations to shareholders and Fidelity
Financial's financial advisor, Sandler O'Neill & Partners, L.P., presented its
analyses of comparable transactions. After a thorough discussion and
consideration of the OHSL Financial Corp. acquisition, the tax-deferred impact
of the transaction on shareholders, the limited potential for more attractive
acquisition proposals, the ability of Fidelity Financial to provide its
shareholders with a return on their investment comparable to Provident
Financial's projected returns, and Sandler O'Neill's analyses, the board
authorized management of Fidelity Financial to negotiate the terms of a
definitive merger agreement with Provident Financial.
Following the August 5, 1999, board meeting, members of the management
teams of Fidelity Financial and Provident Financial and their respective legal
counsel and financial advisors conducted reciprocal due diligence analyses,
drafted the merger documents and continued to negotiate on an arm's length
basis. After completing its due diligence review of Fidelity Financial,
Provident Financial finalized its offer of $21.00 per share for the outstanding
shares of Fidelity Financial.
On August 15, 1999, the Fidelity Financial board of directors met in a
special meeting to consider the terms of the Provident Financial proposal and
the detailed terms and conditions of the Merger Agreement. Fidelity Financial's
legal counsel reviewed the terms of the Merger Agreement, the Stock Option
Agreement and the agreements to be signed by the affiliates of Fidelity
Financial. Fidelity Financial's financial advisor presented its analysis of the
financial terms of the Merger Agreement and issued its oral opinion that the per
share consideration was fair, from a financial point of view, to Fidelity
Financial shareholders. The board again discussed the issues it had discussed on
August 5, 1999, principally, the possibility of additional acquisition offers,
the short-term and long-term earnings projections for Fidelity Financial and the
opinion of Sandler O'Neill that the per share consideration was fair to Fidelity
Financial shareholders. After a thorough discussion, the Fidelity Financial
board of directors approved the Merger Agreement and authorized the execution
and delivery of the Merger Agreement on August 16, 1999, and the Stock Option
Agreement on August 17, 1999.
OPINION OF FIDELITY FINANCIAL'S FINANCIAL ADVISOR
By letter agreement dated as of July 16, 1999, Fidelity Financial
retained Sandler O'Neill as an independent financial advisor in connection with
Fidelity Financial's consideration of a possible business
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<PAGE> 33
combination with Provident Financial. Sandler O'Neill is a nationally recognized
investment banking firm whose principal business specialty is financial
institutions. In the ordinary course of its investment banking business, Sandler
O'Neill is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions.
Sandler O'Neill acted as financial advisor to Fidelity Financial in
connection with the Acquisition and participated in certain of the negotiations
leading to the Merger Agreement. At the request of the Fidelity Financial board
of directors, representatives of Sandler O'Neill attended the August 15, 1999
meeting of the Fidelity Financial board at which the board considered and
approved the Merger Agreement. At the meeting, Sandler O'Neill delivered to the
Fidelity Financial board its oral opinion, subsequently confirmed in writing as
of August 16, 1999, that the per share consideration was fair to the Fidelity
Financial shareholders from a financial point of view. Sandler O'Neill has also
delivered to the Fidelity Financial board a written opinion dated the date of
this proxy statement/prospectus which is substantially identical to the August
16, 1999 opinion. The full text of the Sandler O'Neill updated opinion is
attached as Annex D to this proxy statement/prospectus. The opinion outlines the
procedures followed, assumptions made, matters considered and qualifications and
limitations on the review undertaken by Sandler O'Neill in rendering the
opinion. The opinion is incorporated by reference into this description and this
description is qualified in its entirety by reference to the opinion. Fidelity
Financial shareholders are urged to carefully read the opinion in connection
with their consideration of the proposed merger.
Sandler O'Neill's opinion was directed to the Fidelity Financial board
and was provided to the board for its information in considering the terms of
the Acquisition. The opinion is directed only to the fairness of the per share
consideration to Fidelity Financial shareholders from a financial point of view.
It does not address the underlying business decision of Fidelity Financial to
engage in the Acquisition or any other aspect of the Acquisition and is not a
recommendation to any Fidelity Financial shareholder as to how such shareholder
should vote at the Special Meeting with respect to the Merger Agreement or any
other related matter.
In rendering its August 16, 1999 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting only certain factors and analyses, or attempting to ascribe relative
weights to some or all factors and analyses, could create an incomplete view of
the evaluation process underlying its opinion. Also, no company included in
Sandler O'Neill's comparative analyses described below is identical to Provident
Financial or Fidelity Financial and no transaction is identical to the
acquisition. Accordingly, an analysis of comparable companies or transactions is
not mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of Provident Financial and
Fidelity Financial and the companies to which they are being compared.
The earnings projections for Fidelity Financial and Provident Financial
relied upon by Sandler
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<PAGE> 34
O'Neill in its analyses were reviewed with management and were based upon
internal projections of Fidelity Financial and Provident Financial for the years
ending December 31, 1999 and 2000 provided to Sandler O'Neill. For periods after
2000, Sandler O'Neill assumed an annual growth rate on earning assets of 6% in
the case of Fidelity Financial and 10% in the case of Provident Financial. The
1999 and 2000 earnings projections furnished to Sandler O'Neill were prepared by
the senior managements of Fidelity Financial and Provident Financial for
internal purposes only and not with a view towards public disclosure. Those
projections were based on numerous variables and assumptions which are
inherently uncertain and accordingly, actual results could vary materially from
those set forth in such projections.
In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of Fidelity Financial, Provident Financial and Sandler
O'Neill. The analyses performed by Sandler O'Neill are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Sandler O'Neill prepared its
analyses solely for purposes of rendering its opinion and provided such analyses
to the Fidelity Financial board at the August 15th meeting. Estimates on the
values of companies do not purport to be appraisals or necessarily reflect the
prices at which companies or their securities may actually be sold. Such
estimates are inherently subject to uncertainty and actual values may be
materially different. Accordingly, Sandler O'Neill's analyses do not necessarily
reflect the value of Fidelity Financial common stock or Provident Financial
common stock or the prices at which Fidelity Financial common stock or Provident
Financial common stock may be sold at any time.
Summary of Proposal. Sandler O'Neill reviewed the financial terms of
the proposed transaction. Sandler O'Neill noted that the implied transaction
value per share of Fidelity Financial common stock was $21.00. The implied
aggregate transaction value was approximately $194 million, based upon 9,214,740
fully diluted shares of Fidelity Financial common stock outstanding, which was
determined using the treasury stock method at the implied value of $21.00. Based
upon Fidelity Financial's June 30, 1999 financial information and the implied
transaction value of $21.00 per share, Sandler O'Neill calculated the following
ratios:
Implied value/Book value 1.97x
Implied value/Tangible book value 2.12x
Implied value/Last quarter annualized EPS 22.83x
Implied value/Projected 2000 EPS 19.81x
For purposes of Sandler O'Neill's analyses, earnings per share were based on
fully diluted earnings per share. Sandler O'Neill noted that the implied
transaction value represented a 70.6% premium over the August 13, 1999 closing
price of Fidelity Financial common stock of $12.3125.
Stock Trading History. Sandler O'Neill reviewed the history of the
reported trading prices and volume of Fidelity Financial common stock and
Provident Financial common stock, and the relationship between the movements in
the prices of Fidelity Financial common stock and Provident Financial common
stock, respectively, to movements in certain stock indices, including the
Standard & Poor's 500 Index, the Nasdaq Bank Index and, in the case of Fidelity
Financial, the median performance of a composite group of publicly traded
regional savings institutions selected by Sandler O'Neill and, in the case of
Provident Financial, the median performance of a composite group of regional
commercial banks
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<PAGE> 35
selected by Sandler O'Neill. During the one year period ended August 10, 1999,
the Fidelity Financial and Provident Financial common stocks underperformed each
of the indices to which they were compared.
Comparable Company Analysis. Sandler O'Neill used publicly-available
information to compare selected financial and market trading information for
Fidelity Financial and two groups of savings institutions selected by Sandler
O'Neill. The regional group of savings institutions consisted of Fidelity
Financial and the following 10 publicly traded regional savings institutions:
CFS Bancorp, Inc. First Defiance Financial
First Northern Capital Corp. First Place Financial Corp.
HMN Financial, Inc. Home Federal Bancorp
Metropolitan Financial Corp. NASB Financial, Inc.
Ottawa Financial Corp. United Community Financial Corp.
The second group of savings institutions, the highly valued group, consisted of
the following seven publicly-traded savings institutions that had a return on
average equity (based on last twelve months' earnings) of greater than 15% and a
price to tangible book value of greater than 160%:
American Bank of Connecticut Andover Bancorp, Inc.
Home Federal Bancorp Matrix Bancorp, Inc.
MetroWest Bank NASB Financial, Inc.
People's Bancshares, Inc.
The analysis of Sandler O'Neill compared publicly-available financial
information for Fidelity Financial and the median data for each of the regional
and highly valued savings institution groups as of and for each of the years
ended December 31, 1994 through 1998, and as of and for the twelve months ended
June 30, 1999. The table below sets forth the comparative data as of and for the
twelve months ended June 30, 1999.
- 27 -
<PAGE> 36
<TABLE>
<CAPTION>
Fidelity Financial Regional Group Highly Valued
------------------ -------------- --------------
<S> <C> <C> <C>
Total assets $ 808,551 $ 808,551 $ 739,203
Annual growth rate
of total assets -0.75% 2.91% 7.45%
Total equity/
total assets 11.20% 10.07% 8.13%
Intangible assets/
total equity 6.93% 2.33% 1.27%
Net loans/total assets 82.83% 76.94% 74.37%
Cash & securities/
total assets 13.79% 15.35% 23.34%
Gross loans/
total deposits 110.73% 109.70% 106.01%
Total borrowings/
total assets 12.12% 15.57% 19.82%
Non-performing assets/
total assets .36% .49% 1.02%
Loan loss reserve/
gross loans .46% .73% .97%
Net interest margin 3.20% 3.19% 3.42%
Loan loss provision/
average assets .05% .08% .14%
Non-interest income/
average assets .21% .60% .92%
Non-interest expense/
average assets 1.93% 2.17% 2.17%
Efficiency ratio 51.88% 55.15% 47.46%
Return on average assets 1.01% .96% 1.29%
Return on average equity 8.42% 9.38% 18.68%
Price/tangible book
value per share 122% 122% 172%
Price/earnings per share 13.18x 14.81x 9.93x
Dividend yield 2.97% 1.90% 2.49%
Dividend payout ratio 39.13% 27.45% 27.45%
</TABLE>
Similarly, Sandler O'Neill used publicly-available information to
compare selected financial and market trading information for Provident
Financial and two groups of commercial banks listed below. The regional group of
commercial banks consisted of Provident Financial and the following eight
publicly-traded regional commercial banks:
Associated Banc-Corp. Commerce Bancshares, Inc.
Community First Bankshares First National of Nebraska
FirstMerit Corp. Old National Bancorp
TCF Financial Corp. UMB Financial Corp.
- 28 -
<PAGE> 37
The highly valued group of commercial banks consisted of Provident Financial and
the following 11 publicly-traded savings institutions that had a return on
average equity (based on last twelve months' earnings) of greater than 16% and a
price to tangible book value of greater than 250%:
Associated Banc-Corp CCB Financial Corp.
City National Corp. Cullen/Frost Bankers, Inc.
National Commerce Bancorp North Fork Bancorp
Old National Bancorp Synovus Financial Corp.
TCF Financial Corp. Valley National Bancorp
Wilmington Trust Corp.
The analysis compared publicly-available financial information for Provident
Financial and the median data for each of the regional and highly valued
commercial bank groups as of and for each of the years ended December 31, 1994
through 1998 and as of and for the twelve months ended June 30, 1999. The table
below sets forth the comparative data as of and for the twelve months ended June
30, 1999.
<TABLE>
<CAPTION>
Provident Financial Regional Group Highly Valued
------------------- -------------- --------------
<S> <C> <C> <C>
Total assets $ 8,492,353 $ 8,492,353 $ 7,324,046
Annual growth rate
of total assets 8.29% 7.96% 10.06%
Total equity/
total assets 8.04% 7.44% 7.63%
Intangible assets/
total equity 4.75% 7.25% 5.40%
Net loans/total assets 67.85% 66.98% 67.41%
Cash & securities/
total assets 22.21% 28.88% 27.03%
Gross loans/
total deposits 101.57% 90.91% 92.18%
Total borrowings/
total assets 18.56% 17.43% 18.45%
Non-performing assets/
total assets .70% .34% .27%
Loan loss reserve/
gross loans 1.37% 1.37% 4.47%
Loan loss provision/
average assets .49% .29% .20%
Non-interest income/
average assets 2.72% 2.07% 1.52%
Non-interest expense/
average assets 3.41% 3.41% 3.26%
Efficiency ratio 53.93% 56.25% 54.38%
Return on average assets 1.41% 1.30% 1.68%
Return on average equity 16.59% 14.93% 18.38%
</TABLE>
- 29 -
<PAGE> 38
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Price/tangible book
value per share 251% 272% 321%
Price/earnings per share 14.75x 14.97x 14.79x
Dividend yield 2.11% 2.11% 2.32%
Dividend payout ratio 31.11% 32.84% 40.42%
</TABLE>
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed
certain other transactions involving acquisitions of publicly-traded savings
institutions with transaction values greater than $15.0 million. Sandler O'Neill
reviewed 28 transactions announced nationwide from January 1, 1999 to August 8,
1999 and 12 transactions announced from January 1, 1999 to August 8, 1999 in the
Midwest region, comprised of Ohio, Michigan, Missouri, Wisconsin, Iowa, Indiana,
Illinois, Kansas, Kentucky, Minnesota, Nebraska, North Dakota and South Dakota.
Sandler O'Neill reviewed the ratios of transaction value to last four quarters'
earnings, transaction value to book value, transaction value to tangible book
value, tangible book premium to core deposits, transaction value to total assets
and premium to current market and computed high, low, mean and median ratios and
premiums for the respective groups of transactions. These multiples were applied
to Fidelity Financial's financial information as of and for the twelve months
ended June 30, 1999. As illustrated in the following table, Sandler O'Neill
derived an imputed range of values per share of Fidelity Financial common stock
of $16.37 to $21.83 based upon the median multiples for nationwide transactions
and $16.19 to $22.03 based upon the median multiples for midwest transactions.
<TABLE>
<CAPTION>
Nationwide Transactions Midwest Transactions
----------------------- --------------------
Median Implied Median Implied
Multiple Value Multiple Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Deal price/LTM EPS 24.00x $21.83 24.20x $22.03
Deal price/Book value 1.74x 18.52 1.81x 19.28
Deal price/Tangible
book value 1.74x 17.25 1.84x 18.28
Tangible book premium/
Core deposits 11.8% 17.72 13.7% 18.91
Deal price/Total assets 18.1% 16.37 20.5% 18.53
Premium to market 46.1% 17.35 36.4% 16.19
</TABLE>
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of Fidelity Financial through December 31, 2003 under various
circumstances, assuming Fidelity Financial's current dividend payout ratio and
that Fidelity Financial performed in accordance with the earnings forecasts
reviewed with management. To approximate the terminal value of Fidelity
Financial common stock at December 31, 2003, Sandler O'Neill applied
price/earnings multiples ranging from 10x to 25x and applied multiples of
tangible book value ranging from 50% to 300%. The dividend income streams and
terminal values were then discounted to present values using different discount
rates ranging from 9% to 15% chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of Fidelity Financial
common stock. As illustrated in the following table, this analysis indicated an
imputed range of values per share of Fidelity Financial common stock of $9.55 to
$26.77 when applying the price/earnings multiples and $5.85 to $30.10 when
applying multiples of tangible book value.
- 30 -
<PAGE> 39
<TABLE>
<CAPTION>
Price/Earnings Multiples Tangible Book Value Multiples
------------------------ -----------------------------
Discount Rate 10x 25x 0.5x 3.0x
------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
9% $12.06 $26.77 $7.23 $30.10
11 11.15 24.61 6.73 27.66
13 10.31 22.64 6.27 25.44
15 9.55 20.84 5.85 23.41
</TABLE>
In connection with its analysis, Sandler O'Neill considered and
discussed with the Fidelity Financial board how the present value analysis would
be affected by changes in the underlying assumptions, including variations with
respect to the growth rate of assets, net interest spread, non-interest income,
non-interest expenses and dividend payout ratio. Sandler O'Neill noted that the
discounted dividend stream and terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results.
Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential
pro forma effects of the Acquisition, based upon an implied exchange ratio of
.497, Provident Financial's and Fidelity Financial's current and projected
income statements and balance sheets, and assumptions regarding the economic
environment, accounting and tax treatment of the merger, charges associated with
the Acquisition, operating efficiencies and other adjustments discussed with the
senior managements of Fidelity Financial and Provident Financial. As illustrated
in the following table, this analysis indicated that the Acquisition would be
accretive to Fidelity Financial's projected earnings per share and dividend, but
dilutive to Fidelity Financial's tangible book value per share for the year
ending December 31, 2000. Also, the analysis indicated that the Acquisition
would be dilutive to Provident Financial's earnings and accretive to Provident
Financial's tangible book value per share for the year ending December 31, 2000.
The actual results achieved by Provident Financial and Fidelity Financial may
vary from projected results and the variations may be material.
<TABLE>
<CAPTION>
Year ending December 31, 2000 Provident Financial Fidelity Financial
- ----------------------------- --------------------- -------------------------
Stand-alone Pro Forma Stand alone Pro Forma(1)
----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Projected EPS $ 3.68 $ 3.62 $1.06 $ 1.80
Projected tangible book value 20.07 20.27 10.98 10.08
Projected dividend 1.01 1.01 .42 .50
Projected leverage capital ratio 11.53% 10.94% NM NM
</TABLE>
- -------------------
(1) Determined by multiplying the Provident Financial values by the implied
exchange ratio of .497.
Contribution Analysis. Sandler O'Neill reviewed the relative
contributions to be made by Fidelity Financial and Provident Financial to the
combined institution based on data at and for the twelve months ended June 30,
1999. This analysis indicated that the implied contributions to the combined
entity were as follows:
<TABLE>
<CAPTION>
Fidelity Financial Provident Financial
------------------ -------------------
<S> <C> <C>
Total assets 8.69% 91.31%
Total net loans 10.41 89.59
Goodwill 16.51 83.49
Total deposits 9.56 90.44
</TABLE>
- 31 -
<PAGE> 40
<TABLE>
<CAPTION>
<S> <C> <C>
Total borrowings 5.85 94.15
Tangible equity 11.70 88.30
Total equity 11.94 88.06
Estimated 1999 net income 5.77 94.23
Estimated 2000 net income 5.81 94.19
Percentage of pro forma
shares owned(1) 9.34 90.66
</TABLE>
- -----------------------
(1) Determined using an implied exchange ratio of .497.
In connection with rendering its August 15, 1999 opinion, Sandler
O'Neill reviewed, among other things:
o the Merger Agreement and exhibits thereto;
o the Stock Option Agreement, dated August 16, 1999, by and
between Fidelity Financial and Provident financial;
o certain publicly available financial statements of Fidelity
Financial and other historical financial information provided
by Fidelity Financial that they deemed relevant;
o certain publicly available financial statements of Provident
Financial and other historical financial information provided
by Provident Financial that they deemed relevant;
o certain internal financial analyses and forecasts of Fidelity
Financial prepared by and reviewed with management of Fidelity
Financial and the views of senior management of Fidelity
Financial, based on certain limited discussions with certain
members of senior management, regarding Fidelity Financial's
past and current business, financial condition, results of
operations and future prospects;
o certain internal financial analyses and forecasts of Provident
Financial prepared by and reviewed with management of
Provident Financial and the views of senior management of
Provident Financial, based on certain limited discussions with
certain members of senior management, regarding Provident
Financial's past and current business, financial condition,
results of operations and future prospects;
o the pro forma impact of the Acquisition;
o the publicly reported historical price and trading activity
for Fidelity Financial's and Provident Financial's common
stock, including a comparison of certain financial and stock
market information for Fidelity Financial and Provident
Financial with similar publicly available information for
certain other companies the securities of which are publicly
traded;
o the financial terms of recent business combinations in the
savings institution industry, to the extent publicly
available;
o the current market environment generally and the banking
environment in particular; and
- 32 -
<PAGE> 41
o such other information, financial studies, analyses and
investigations and financial, economic and market criteria as
they considered relevant.
In connection with rendering its updated opinion included as Annex D to
this proxy statement/prospectus, Sandler O'Neill confirmed the appropriateness
of its reliance on the analyses used to render its August 16, 1999 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the other factors considered
in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and
relied upon the accuracy and completeness of all the financial information,
analyses and other information that was publicly available or otherwise
furnished to, reviewed by or discussed with it, and Sandler O'Neill did not
assume any responsibility or liability for independently verifying the accuracy
or completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of Fidelity Financial or
Provident Financial or any of their respective subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals. Sandler O'Neill is not an expert in the evaluation of
allowances for loan losses and it has not made an independent evaluation of the
adequacy of the allowance for loan losses of Fidelity Financial or Provident
Financial, nor has it reviewed any individual credit files relating to Fidelity
Financial or Provident Financial. With Fidelity Financial's consent, Sandler
O'Neill has assumed that the respective allowances for loan losses for both
Fidelity Financial and Provident Financial are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity. In addition,
Sandler O'Neill has not conducted any physical inspection of the properties or
facilities of Fidelity Financial or Provident Financial. With respect to all
financial projections reviewed with each company's management and used by
Sandler O'Neill in its analyses, Sandler O'Neill assumed that they reflected the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of Fidelity Financial and
Provident Financial and that such performances will be achieved. Sandler O'Neill
expressed no opinion as to such financial projections or the assumptions on
which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of its opinion. Sandler O'Neill assumed, in all respects material to its
analysis, that all of the representations and warranties contained in the Merger
Agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements and that the conditions precedent in the Merger
Agreement are not waived. Sandler O'Neill also assumed, with Fidelity
Financial's consent, that there has been no material change in Fidelity
Financial's and Provident Financial's assets, financial condition, results of
operations, business or prospects since the date of the last publicly filed
financial statements available to them, that Fidelity Financial and Provident
Financial will remain as going concerns for all periods relevant to its
analyses, and that the merger will be accounted for as a pooling of interests
and will qualify as a tax-free reorganization for federal income tax purposes.
Fidelity Financial has agreed to pay Sandler O'Neill a transaction fee
in connection with the merger, a substantial portion of which is contingent upon
the closing of the merger. Fidelity Financial would pay Sandler O'Neill a
transaction fee of $600,000, of which $150,000 has been paid and the balance
will be paid when the merger is closed. Fidelity Financial has also agreed to
reimburse Sandler O'Neill for its reasonable out-of-pocket expenses incurred in
connection with its engagement and to indemnify Sandler O'Neill and its
affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
- 33 -
<PAGE> 42
Sandler O'Neill has in the past provided certain other investment
banking services to Fidelity Financial and has received compensation for such
services. In the ordinary course of its business as a broker-dealer, Sandler
O'Neill may also purchase securities from and sell securities to Fidelity
Financial and Provident Financial and may actively trade the equity or debt
securities of Fidelity Financial and Provident Financial and their respective
affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
INTERESTS OF CERTAIN PERSONS
Certain management officials of Fidelity Financial have employment
agreements with Fidelity Financial or Centennial Bank which create interests in
the Acquisition for these officials in addition to their interests solely as
Fidelity Financial shareholders. Each of these agreements provide for the
continuation of benefit plan coverage and the payment of a specified amount in
the event of a change in control of Fidelity Financial or Centennial Bank.
The Acquisition will qualify as a change in control of Fidelity
Financial and Centennial Bank under the agreements and the parties currently
anticipate that the executive officers will be entitled to change in control
payments under their agreements after the completion of the Acquisition. Subject
to parachute payment regulations of Section 280G of the Internal Revenue Code of
1986, as amended, the aggregate payments that will be made to Robert Sudbrook,
John Reusing, Joseph Hughes, Paul Staubach, Gregory Niesen, Thomas Schiller and
Elaine Schmidt under the employment agreements, as a result of the Acquisition,
will be approximately $________, $_________, $______________, $___________,
$_________, $_________and $_________.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income
tax consequences of the Acquisition to Fidelity Financial shareholders. The
discussion is based on the Internal Revenue Code, proposed, temporary and final
Treasury regulations promulgated thereunder, published administrative rulings
and pronouncements and judicial decisions in effect as of the date of this proxy
statement/prospectus, all of which are subject to change, possibly with
retroactive effect.
This discussion is for general information only and does not address
every aspect of the federal income tax laws that may be relevant to you in light
of your personal investment circumstances, nor does it address the effects of
any state, local or foreign tax laws on the Acquisition. The tax treatment for
you may vary depending upon your particular situation, and certain shareholders
(including, for example, insurance companies, tax-exempt organizations,
financial institutions and broker-dealers, and individuals who received Fidelity
Financial common stock pursuant to the exercise of employee stock options or
otherwise as compensation) may be subject to special rules not discussed below.
In addition, the discussion relates to persons who hold Fidelity Financial
common stock as capital assets.
One of the conditions to consummation of the Acquisition is Provident
Financial's and Fidelity Financial's receipt of an opinion from Keating,
Muething & Klekamp, P.L.L., counsel for Provident Financial, that the
Acquisition will constitute a reorganization within the meaning of Section 368
of the Internal Revenue Code. This opinion will be based on facts existing at
the time the Acquisition becomes effective and on certain representations as to
factual matters made by Provident Financial and Fidelity Financial. If the
representations are incorrect in any material respects, it could jeopardize the
conclusions reached in the opinion. Neither Provident Financial nor
- 34 -
<PAGE> 43
Fidelity Financial is aware of any facts or circumstances which would cause any
of its representations made to counsel to be untrue or incorrect in any material
respect. An opinion of counsel is not binding on the Internal Revenue Service or
the courts. Further, no ruling has been or will be sought from the Internal
Revenue Service as to the federal income tax consequences of the Acquisition. As
a result, the Internal Revenue Service may disagree with the federal income tax
consequences discussed below.
Based on the opinion discussed above, the material federal income tax
consequences that will result from the Acquisition are:
o A Fidelity Financial shareholder will not recognize any
income, gain or loss as a result of the receipt of Provident
Financial common stock pursuant to the Acquisition, except for
cash received instead of a fractional share of Provident
Financial common stock.
o The tax basis of a Fidelity Financial shareholder in the
Provident Financial common stock received in the Acquisition,
including any fractional share interest in Provident Financial
common stock for which cash is received, will equal the
Fidelity Financial shareholder's tax basis in the Fidelity
Financial common stock exchanged.
o The holding period of a Fidelity Financial shareholder for the
Provident Financial common stock received pursuant to the
Acquisition will include the holding period of the Fidelity
Financial common stock surrendered.
o A Fidelity Financial shareholder who receives cash instead of
a fractional share interest in Provident Financial common
stock in the Acquisition will be treated as if Provident
Financial actually issued the fractional shares as part of the
exchange and then redeemed the fractional shares by Provident
Financial for cash. The Internal Revenue Service will treat
these cash payments as having been received in exchange for
the redeemed fractional share interests under section 302(a)
of the Code. The receipt of these cash payments will generally
result in capital gain or loss in an amount equal to the
difference between the amount of cash received and the basis
of the fractional Provident Financial common stock.
o None of Fidelity Financial, Provident Financial or its
subsidiaries will recognize any income, gain or loss as a
result of the Acquisition.
This discussion is only a summary and is not a complete analysis or
listing of all potential tax effects relevant to a decision whether to vote in
favor of adoption of the Merger Agreement. You are urged to consult your own tax
advisor in determining the federal, state, local and foreign income tax
consequences, and any other tax consequences, of the Acquisition to you.
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of Provident Financial common stock received by Fidelity
Financial shareholders in the Acquisition will be freely transferable, except
for shares of Provident Financial common stock received by any person who is
deemed to be an "affiliate" (as such term is defined under the Securities Act of
1933) of Fidelity Financial prior to the Acquisition or of Provident Financial
after the Acquisition. Affiliates may sell their Provident Financial common
stock only in compliance with the volume and manner-of-sale requirements of
Rules 144 and
- 35 -
<PAGE> 44
145 under the Securities Act. Affiliates of Fidelity Financial generally include
individuals or entities that control, are controlled by, or are under common
control with, such party and may include certain officers and directors of such
party as well as principal shareholders of such party.
CERTAIN EFFECTS OF THE ACQUISITION
Fidelity Financial will merge with and into Provident Financial, and
Fidelity Financial shareholders will become Provident Financial shareholders. As
of the effective time of the Acquisition, Fidelity Financial common stock will
no longer be traded on Nasdaq, and the registration of Fidelity Financial common
stock under the Securities Exchange Act of 1934 will be terminated.
CONDUCT OF BUSINESS IF ACQUISITION NOT CONSUMMATED
If the Acquisition is not completed, Fidelity Financial will continue
its current operations. Fidelity Financial may, however, continue to explore
strategic alternatives, including a business combination or sale of Fidelity
Financial.
REGULATORY FILINGS AND APPROVALS
Provident Financial and Fidelity Financial have agreed to use their
reasonable best efforts to obtain all regulatory approvals required to
consummate the Acquisition, which include approval from the Board of Governors
of the Federal Reserve System and the Ohio Department of Financial Institutions,
and have completed the filing of these applications and notifications prior to
the date of this Proxy Statement/Prospectus. The Acquisition cannot proceed in
the absence of these regulatory approvals. There can be no assurance that these
regulatory approvals will be obtained, and, if obtained, there can be no
assurance as to the date of any such approvals or the absence of any litigation
challenging such approvals. Provident Financial and Fidelity Financial are not
aware of any other material governmental approvals or actions that are required
prior to the parties' consummation of the Acquisition other than those described
below.
Federal Reserve Board. The Acquisition is subject to approval by the
Federal Reserve Board pursuant to the Bank Holding Company Act of 1956 and the
Federal Reserve Act. Provident Financial has filed the required application and
notifications with the Federal Reserve Board for approval of the Acquisition.
Assuming Federal Reserve Board approval, the Acquisition may not be consummated
until thirty days after such approval, during which time the United States
Department of Justice ("DOJ") may challenge the Acquisition on antitrust
grounds. With the approval of the Federal Reserve Board and the DOJ, the waiting
period may be reduced to no less than fifteen days. The Federal Reserve Board is
prohibited from approving any transaction under the applicable statutes that
would result in a monopoly, or that would be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or that may have the effect in any section of
the United States of substantially reducing competition, or tending to create a
monopoly, or resulting in a restraint of trade, unless the Federal Reserve Board
finds that the anti-competitive effects of the transaction are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served.
In addition, in reviewing a transaction under the Bank Holding Company
Act, the Federal Reserve Board will consider the financial and managerial
resources of the companies and their subsidiary banks. It will also consider the
convenience and needs of the communities to be served. Under the Community
Reinvestment Act of
- 36 -
<PAGE> 45
1977, the Federal Reserve Board will take into account the performance record of
each of Provident Financial and Fidelity Financial in meeting the credit needs
of the entire community The Federal Reserve Board will furnish notice and a copy
of the application for approval of the Acquisition to the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, the
Office of Thrift Supervision and the appropriate state regulatory authorities.
These agencies have 30 days to submit their views and recommendations to the
Federal Reserve Board. The Federal Reserve Board must hold a public hearing if
it receives a written recommendation of disapproval of the application from any
of these agencies within the 30-day period. Furthermore, the Bank Holding
Company Act and Federal Reserve Board regulations require publication of notice
of, and the opportunity for public comment on, the application submitted by
Provident Financial for approval of the Acquisition, and authorize the Federal
Reserve Board to hold a public hearing or meeting in connection therewith if the
Federal Reserve Board determines that such a hearing or meeting would be
appropriate. Any hearing, meeting or comments from third parties could prolong
the review of our application.
If the DOJ were to commence an antitrust action, it would stay the
effectiveness of Federal Reserve Board approval of the Acquisition unless a
court specifically orders otherwise. In reviewing the Acquisition, the DOJ could
analyze the Acquisition's effect on competition differently than the Federal
Reserve Board. It is possible that the DOJ could reach a different conclusion
than the Federal Reserve Board regarding the Acquisition's competitive effects.
In particular, the DOJ may focus on the impact of the Acquisition on competition
for loans and other financial services to small and middle market businesses.
Failure of the DOJ to object to the Acquisition may not prevent private persons
or state attorneys general from filing antitrust actions.
Provident Financial's right to exercise its option under the Stock
Option Agreement also requires the prior approval of the Federal Reserve Board,
to the extent that the exercise of their options under such Stock Option
Agreement would cause Provident Financial to own more than 5% of the outstanding
shares of Fidelity Financial. In considering whether to approve Provident
Financial's right to exercise the option, the Federal Reserve Board would
generally apply the same statutory criteria it would apply to its consideration
of approval of the Acquisition.
State and Other Regulatory Authorities. A notification and application
have been filed with the Office of Thrift Supervision and the Ohio Department of
Financial Institutions, respectively. In addition, the Acquisition may be
reviewed by the attorneys general in the states where Provident Financial owns
banking subsidiaries. Such authorities may be empowered under the applicable
state laws and regulations to investigate and/or disapprove the Acquisition
under the circumstances and based upon the review procedures set forth in
applicable state laws and regulations.
THE MERGER AGREEMENT
The following description of the Merger Agreement is not complete. For
full information, you should read the Merger Agreement, a copy of which is
attached to this proxy statement/prospectus as Annex A.
TERMS OF THE ACQUISITION
The Acquisition. The Merger Agreement contemplates the acquisition of
Fidelity Financial by Provident Financial through the merger of Fidelity
Financial with and into Provident Financial and the merger of Centennial Bank, a
wholly-owned subsidiary of Fidelity Acquisition Corporation (Fidelity
Acquisition being a wholly-owned subsidiary of Fidelity Financial), with and
into The Provident Bank, a wholly-owned subsidiary of Provident Financial. As
soon as practicable after the completion of the Acquisition, Fidelity
Acquisition shall be dissolved
- 37 -
<PAGE> 46
and its separate existence shall cease (or, at the election of Provident
Financial, Fidelity Acquisition shall merge with and into Provident Financial or
The Provident Bank). Provident Financial and The Provident Bank will be the
surviving entities of these mergers and the separate existences of Fidelity
Financial and Centennial will cease.
Effective Time. As promptly as practicable after the satisfaction or
waiver of the conditions in the Merger Agreement, the parties will complete the
Acquisition by filing Certificates of Merger with the Secretary of State of
Ohio.
Conversion of Fidelity Financial Common Stock in the Acquisition. At
the completion of the Acquisition, each outstanding share of Fidelity Financial
common stock will be converted into the right to receive the Per Share
Consideration (defined below).
o The "Common Exchange Value" is the average of the closing sale
prices per share for Provident Financial common stock during
the ten (10) consecutive trading-day period during which the
Provident Financial common stock is traded on Nasdaq ending on
the date on which the last regulatory approval required to
consummate the Mergers is granted.
o "Per Share Consideration" is the number of shares of Provident
Financial common stock issuable with respect to each share of
the outstanding Fidelity Financial common stock determined by
dividing $21.00 by the Common Exchange Value rounded to four
decimal places. If the Common Exchange Value is equal to
$40.00, you shall receive 0.5250 shares of Provident Financial
common stock for each share of Fidelity Financial common stock
and if the Common Exchange Value is equal to $44.50, you shall
receive 0.4719 shares of Provident Financial common stock for
each share of Fidelity Financial common stock.
Illustrations of calculating of the Per Share Consideration are
provided below:
If the Common The Per Share
Exchange Value is: Consideration is:
------------------ -----------------
$44.50 0.4719 shares
$42.25 0.4970 shares
$40.00 0.5250 shares
Treatment of Stock Options. After completion of the Acquisition, each
option granted by Fidelity Financial to purchase shares of Fidelity Financial
common stock will be converted automatically into an option to purchase shares
of Provident Financial common stock. The number of shares of Provident Financial
common stock to be issued upon the exercise of the former Fidelity Financial
option shall be equal to the number of shares of Fidelity Financial common stock
subject to the former Fidelity Financial option immediately prior to the
completion of the Acquisition multiplied by the Option Exchange Ratio, with the
product rounded down to the next whole share. The "Option Exchange Ratio" is
equal to $21.00 divided by the Common Exchange Value. The per share exercise
price of such option shall be adjusted by dividing the exercise price per share
of Fidelity Financial common stock by the Option Exchange Ratio, with the
quotient rounded up to the next whole cent.
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Fractional Shares. Provident Financial will not issue any fractional
shares of Provident Financial common stock. Instead, Provident Financial shall
pay holders of fractional shares cash in an amount equal to the Common Exchange
Value.
EXCHANGE OF CERTIFICATES
Exchange Agent. The Provident Bank will act as exchange agent for the
exchange of stock certificates pursuant to the Acquisition.
Exchange Procedures. Within three days after the completion of the
Acquisition, Provident Financial will instruct The Provident Bank to mail to
each record holder of Fidelity Financial common stock at the completion of the
Acquisition a letter of transmittal and instructions for exchanging certificates
representing Fidelity Financial common stock for certificates evidencing
Provident Financial common stock. You will have to follow the instructions and
surrender your Fidelity Financial stock certificates, together with the properly
executed letter of transmittal, and any other required documents, to The
Provident Bank. You then will be entitled to receive:
o certificates for that number of whole shares of Provident
Financial common stock which you have the right to receive in
the Acquisition,
o any dividends or other distributions on the Provident
Financial common stock declared or made after the Effective
Time to which you may be entitled, and
o cash for any fractional share of Provident Financial common
stock.
Distributions With Respect to Unexchanged Shares. You will not receive
any dividends or other distributions on Provident Financial common stock until
you surrender your Fidelity Financial stock certificates. When you do surrender
your certificates, Provident Financial will pay you, without interest, any
dividends or other distributions previously paid to holders of Provident
Financial common stock with a record date after the completion of the
Acquisition.
Transfers of Ownership. If you want Provident Financial to issue any
certificate for shares of Provident Financial common stock in a name other than
that in which your Fidelity Financial certificate is registered, your Fidelity
Financial certificate must be properly endorsed and otherwise in proper form for
transfer. You also must pay to Provident Financial or its agent any resulting
transfer or other tax, or establish to the satisfaction of Provident Financial
that such tax has been paid or is not payable.
Escheat and Withholding. Neither Provident Financial nor Fidelity
Financial will be liable to you for any shares of Provident Financial common
stock which were delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Provident Financial or The Provident
Bank will deduct from the shares of Provident Financial common stock paid to you
any amounts that federal, state, local or foreign tax law require Provident
Financial or The Provident Bank to withhold.
Lost, Stolen or Destroyed Certificates. The Provident Bank will issue
Provident Financial common stock in exchange for a lost, stolen or destroyed
Fidelity Financial stock certificate upon receipt of an affidavit of that fact
by the owner of the certificate. However, Provident Financial will require you
to deliver a reasonable
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indemnity bond against any claim that may be made against Provident Financial or
The Provident Bank regarding a certificate alleged to have been lost, stolen or
destroyed.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO
FIDELITY FINANCIAL SHAREHOLDERS WITHIN THREE DAYS FOLLOWING THE COMPLETION OF
THE ACQUISITION EXPLAINING HOW TO EXCHANGE FIDELITY FINANCIAL CERTIFICATES FOR
PROVIDENT FINANCIAL CERTIFICATES. YOU SHOULD NOT SEND IN YOUR FIDELITY FINANCIAL
SHARE CERTIFICATES UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL.
DISSENTER'S RIGHTS
Fidelity Financial agrees to give Provident Financial prompt notice of
any written demands for payment for any Fidelity Financial common stock under
Ohio law, attempted withdrawals of such demands and any other instruments served
pursuant to Ohio law and received by Fidelity Financial relating to dissenter's
rights. Fidelity Financial also agrees to give Provident Financial the
opportunity to participate in all negotiations and proceedings with respect to
the exercise of dissenter's rights.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, each of Provident Financial, The Provident
Bank, Fidelity Financial, Centennial Bank and Fidelity Acquisition provide
customary representations and warranties relating to, among other things:
o Incorporation, good standing and corporate power;
o Capitalization;
o Subsidiaries;
o Absence of defaults;
o Financial information;
o Financial statements;
o Corporate authority;
o Litigation;
o Compliance with laws and regulations;
o Brokers and finders;
o Absence of material changes;
o SEC and banking regulatory reports;
o Year 2000 readiness;
o Other regulatory matters;
o Tax matters; and
o Undisclosed liabilities.
Fidelity Financial, Centennial Bank and Fidelity Acquisition also make
additional representations and warranties relating to, among other things:
o Non-permitted savings and loan activities of Fidelity
Financial and its subsidiaries;
o Fiduciary responsibilities;
o Fair lending and the Community Reinvestment Act;
o Employment agreements;
o Employee matters and employee benefit plans;
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<PAGE> 49
o Title to real property;
o Insurance;
o Intellectual property rights;
o Environmental matters;
o Certain operational matters;
o Interest Rate Risk Management Instruments;
o Pooling of Interests Accounting;
o Material contracts; and
o State takeover laws.
Additionally, Provident Financial provides a representation that it has
not been an "interested shareholder" during the last three years of Fidelity
Financial under Ohio law.
CONDUCT OF BUSINESS PENDING THE MERGER
Before the completion of the Acquisition, Fidelity Financial and its
subsidiaries will conduct their business in the ordinary and usual course,
consistent with past practice, and Fidelity Financial will seek to preserve
intact its business organization and goodwill and keep in full force and effect
all of its material rights. Specifically, the Merger Agreement provides that
Fidelity Financial and its subsidiaries will not, without the prior written
consent of Provident Financial:
o Issue any capital stock or any options, warrants, or other
rights to subscribe for or purchase capital stock or any
securities convertible into or exchangeable for capital stock
except for shares covered by stock options granted prior to
the execution of the Merger Agreement;
o Redeem, purchase or otherwise acquire any capital stock or
effect a reclassification, recapitalization, splitup, exchange
of shares, readjustment or other similar change;
o Amend its articles of incorporation, code of regulations or
other charter or governing documents;
o Increase the compensation payable to their employees except as
consistent with past practices or as required by law or by
contract;
o Adopt or make any material change in any existing employee
plan or bonus plan, except that management may continue to
accrue and pay bonuses in accordance with past practices and
may consider the impact of the Acquisition when awarding
bonuses;
o Borrow or agree to borrow any material amount of funds or
guarantee or agree to guarantee any material obligations of
others except in the ordinary course of business;
o Make or commit to make any new loan or letter of credit or any
new or additional discretionary advance under any existing
line of credit, except in the ordinary course of business;
o Purchase or otherwise acquire any investment security for its
own account except in a manner and pursuant to policies
consistent with past practices;
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<PAGE> 50
o Materially increase or decrease the rate of interest paid on
time deposits, or on certificates of deposit except in a
manner and pursuant to policies consistent with past
practices;
o Enter into any agreement, contract or commitment of a material
nature out of the ordinary course of business;
o Place on any of its material assets or properties any
mortgage, pledge, lien, charge, or other encumbrance of a
material nature, except in the ordinary course of business;
o Cancel or accelerate any material indebtedness, or any claims
which it may possess or waive any material rights regarding a
material indebtedness, except in the ordinary course of
business;
o Sell, assign, transfer, convey, license, subcontract, cancel,
amend or alter any loan servicing rights, except for sales on
the secondary market in the ordinary course of business and in
accordance with past practice;
o Except for its former branch office located at 3316 Glenmore
Avenue in Cincinnati, Ohio, sell any material real or personal
property, other than in the ordinary course of business and
other than properties acquired in foreclosure or otherwise in
the ordinary collection of indebtedness to Fidelity Financial
or any subsidiary;
o With respect to the branch operations of Centennial Bank, take
any action to close any existing branch or open or acquire new
branches;
o Foreclose upon or otherwise take title to or possession of or
control of any nonresidential real property without performing
an environmental audit;
o Commit any act or fail to do any act which would cause a
breach of any agreement, contract or commitment which would
have a material adverse effect on their financial condition,
the results of operations, the business or assets;
o Purchase any real or personal property or make any other
capital expenditure in excess of $50,000;
o Take, or cause to be taken, any action, whether before or
after the completion of the Acquisition, which would
disqualify the Acquisition as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code; or
o Take any action which would materially and adversely effect or
delay the ability of the parties to obtain approvals required
to consummate the Acquisition.
o Fidelity Financial has also agreed not to declare or pay any
dividend or distribution to its shareholders, except for
quarterly dividends of $0.09 per share paid in a manner
consistent with its past practices. Fidelity Financial and
Provident Financial will coordinate the payments of dividends
around the time of the completion of the Acquisition to
prevent any duplication of dividend benefit to Fidelity
Financial shareholders.
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<PAGE> 51
ADDITIONAL AGREEMENTS
Confidentiality. Each party will be afforded reasonable access to the
other parties' properties, books, contracts, commitments and records and will
furnish promptly to the other all information concerning its business,
properties and personnel as the other may reasonably request. Each party has
agreed to keep such information confidential.
No Solicitation. The Merger Agreement provides that Fidelity Financial
and Centennial Bank shall not, except as the Fidelity Financial board of
directors is required by its fiduciary duties to shareholders, directly or
indirectly, solicit, initiate or encourage or hold discussions or negotiations
with or provide any information to any person in connection with any proposal
from any person for the acquisition of all or any substantial portion of the
business, assets or securities of Fidelity Financial or its subsidiaries.
Fidelity Financial's board of directors may enter into negotiations with other
persons regarding such proposals if the board provides written notice to
Provident Financial and if the board is required to pursue such negotiations
pursuant to its fiduciary duties.
Employee Benefits. Provident Financial agrees to provide those
employees of Fidelity Financial who continue to be employed by Provident
Financial with the opportunity to participate in Provident Financial employee
benefit plans in effect generally for employees of Provident Financial's
subsidiaries if such employee would otherwise satisfy the eligibility
requirements of such plans, except for any pre-existing condition limitations or
eligibility waiting periods.
Regulatory Filings/Cooperation. Provident Financial will prepare and
file at its expense the appropriate applications and other documents with the
Board of Governors of the Federal Reserve System and the Ohio Division of
Financial Institutions, and any other governmental agencies as are required to
secure approval of the consummation of the transactions provided for in the
Merger Agreement.
Advisory Board. Provident Financial will establish an advisory board
comprised of the nine non-employee members of the Fidelity Financial board of
directors which will serve as an adjunct to Provident Financial's board of
directors. Members of the advisory board will be paid $900 per month and will
serve for at least two years after the closing of the Acquisition.
Treatment of Options. Options to purchase Fidelity Financial common
stock become rights to purchase shares of Provident Financial common stock as
discussed under "Terms of the Acquisition - Treatment of Stock Options" above.
Director and Officer Insurance. Provident Financial will provide
director and officer liability insurance to the former directors and executive
officers of Fidelity Financial and its subsidiaries for three years after
consummation of the Acquisition. This insurance will be comparable to Fidelity
Financial's director and officer liability insurance prior to the Acquisition.
Employment Agreements. Provident Financial will honor the terms of
existing employment agreements with the executive officers and certain other
employees of Fidelity Financial and Centennial Bank. Provident Financial will
also enter into a services agreement with Robert Sudbrook, President and Chief
Executive Officer of Fidelity Financial, which will include an option to acquire
10,000 shares of Provident Financial common stock at an exercise price equal to
the closing price of Provident Financial common stock on the date we complete
the Acquisition.
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<PAGE> 52
Fidelity Financial Employee Benefit Plans. Fidelity Financial is
authorized to take all steps appropriate to terminate the Centennial Bank
Employee Stock Ownership Plan and to request that the IRS issue a determination
letter to the effect that termination of this plan will not effect the plans
status as a tax-qualified retirement plan. Except as stated, Fidelity Financial
will continue to administer its plans until the completion of the Acquisition.
CONDITIONS TO THE MERGER
Conditions to Obligations of Provident Financial and The Provident
Bank. The obligations of Provident Financial and The Provident Bank to complete
the Acquisition are subject to the satisfaction or waiver of the following
conditions:
o The representations and warranties made by Fidelity Financial
and its subsidiaries in the Merger Agreement shall be true and
correct;
o Fidelity Financial and its subsidiaries shall have complied in
all material respects with their obligations under the Merger
Agreement;
o No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in
effect, nor shall any proceeding by any person seeking any of
the foregoing be pending;
o There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed
applicable to the Acquisition which makes the consummation of
the Acquisition illegal;
o All necessary regulatory approvals, consents, authorizations
and other approvals shall have been obtained and all waiting
periods required by law shall have expired, and no regulatory
authority shall have imposed any condition, requirement or
restriction which the board of directors of Provident
Financial reasonably determines in good faith would so
materially adversely impact the economic or business benefits
of the transactions contemplated by the Merger Agreement to
Provident Financial and its shareholders as to render
inadvisable the consummation of the Acquisition;
o Receipt of all documents required by the Merger Agreement from
Fidelity Financial and its subsidiaries and their officers,
directors and employees;
o Receipt of an opinion of its counsel, Keating, Muething &
Klekamp, P.L.L. regarding the tax effects of the Acquisition;
o The Acquisition will be accounted for as a pooling of
interests;
o Receipt from Ernst & Young, LLP of a letter in form and
substance satisfactory to Provident Financial stating that the
Acquisition will qualify for pooling of interests accounting
treatment;
o Receipt of an opinion of Fidelity Financial's counsel;
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<PAGE> 53
o Receipt of the unaudited financial statements from Fidelity
Financial and its subsidiaries as of September 30, 1999, and
for the quarter ended September 30, 1999;
o The unaudited financial statements, disregarding certain
expenses related to the Acquisition and other specified items,
shall reflect shareholders' equity, as of the Closing Date, of
not less than $97,605,000;
o Provident Financial shall have entered into non-solicitation
agreements with each of three senior officers of Fidelity
Financial and Centennial Bank;
o Receipt of written confirmation that, after the Acquisition,
Fidelity Financial's and its subsidiaries' leases will permit
continuation of activities as presently conducted and the
operation of branches and ATMs of The Provident Bank on all
leased premises at which a Centennial Bank branch is currently
operated; and
o Provident Financial shall have had an opportunity to have
experts review the computer systems, software and other
operations of Fidelity Financial and its subsidiaries, and
Provident Financial shall have received reasonably
satisfactory confirmation from such experts not later than
October 1, 1999 that Fidelity Financial and Centennial Bank
are Year 2000 compliant.
o The pre-closing financial statements as at the end of the
month prior to the Closing Date shall report that the deposit
accounts of Centennial Bank are the lesser of 95% of the
amount of such deposit accounts on August 31, 1999 or if the
deposit accounts at Provident Bank as of the end of the month
prior to the date the Acquisition is consummated are less than
the deposit accounts at Provident Bank on August 31, 1999, the
percentage reduction of such accounts at Centennial Bank does
not exceed the percentage reduction of such accounts at
Provident Bank.
Conditions to Obligations of Fidelity Financial and its Subsidiaries.
The obligations of Fidelity Financial and its subsidiaries to complete the
Acquisition shall be subject to the satisfaction or waiver of the following
conditions:
o The representations and warranties made by Provident Financial
and The Provident Bank in the Merger Agreement shall be true
and correct;
o Provident Financial and The Provident Bank shall have
performed and complied in all material respects with all of
its obligations required to be performed under the Merger
Agreement;
o No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in
effect, nor shall any proceeding by any person seeking any of
the foregoing be pending;
o All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of the
Merger Agreement by the shareholders of the parties hereto
shall have been obtained and all waiting periods required by
law shall have expired;
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<PAGE> 54
o Provident Financial shall have registered its common stock to
be issued to the Fidelity Financial shareholders with the SEC
pursuant to the Securities Act and with all applicable state
securities authorities; the Registration Statement covering
such common stock shall have been declared effective by the
SEC and all applicable state securities authorities and no
stop order shall have been issued; and the Provident Financial
common stock shall have been authorized for trading on Nasdaq
upon official notice of issuance;
o Receipt of all documents required by the Merger Agreement to
be received from Provident Financial or The Provident Bank;
o Since the date of the Merger Agreement, there shall not have
been any change in the financial condition, results of
operations or business of Provident Financial, The Provident
Bank and their subsidiaries that would have a material adverse
effect on Provident Financial, The Provident Bank or their
subsidiaries;
o Receipt of the opinion of Provident Financial's counsel,
addressed to Fidelity Financial, regarding certain tax
implications of the Acquisition; and
o Receipt of opinion of Provident Financial's counsel, addressed
to Fidelity Financial, regarding certain matters.
Termination. The Merger Agreement may be terminated:
o by mutual agreement of Provident Financial and Fidelity
Financial;
o in the event of the uncured breach of the representations and
warranties, by any party to the Merger Agreement;
o upon failure of conditions to completing the Acquisition;
o if regulatory approval is denied or if a regulatory approval
imposes a condition, requirement or restriction which the
board of directors of Provident Financial reasonably
determines in good faith would materially adversely impact the
Acquisition;
o if Fidelity Financial shareholders fail to approve the
Acquisition or if Fidelity Financial's board of directors
withdraws or modifies its recommendation for the Acquisition;
o if Fidelity Financial or any of its subsidiaries become
subject to an enforcement action which might have a materially
adverse effect on Fidelity Financial;
o if the Closing Date is later than June 30, 2000;
o if the Common Exchange Value is less than $36.23, unless
either the value of Provident Financial common stock remains,
within designated limits, comparable to the stock values of a
stated group of companies used as a benchmark for Provident
Financial or Provident Financial exercises its option to
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<PAGE> 55
increase the consideration to be paid to Fidelity Financial
shareholders under the Merger Agreement; or
o if an unsolicited offer to consummate a competing transaction
is received by the board of directors of Fidelity Financial at
price per share (or equivalent) higher than $21.00 and
Fidelity Financial proceeds to close the competing transaction
on the terms of the unsolicited offer.
RIGHTS OF DISSENTING SHAREHOLDERS
We describe below the steps which Fidelity Financial shareholders must
take if they wish to exercise dissenters' rights with respect to the
Acquisition. The description is not complete. You should read Section 1701.85 of
the Ohio General Corporation Law. This section is attached as Annex B to this
document. FAILURE TO TAKE ANY ONE OF THE REQUIRED STEPS MAY RESULT IN
TERMINATION OF THE SHAREHOLDER'S DISSENTERS' RIGHTS UNDER THE OHIO GENERAL
CORPORATION LAW. If you are a Fidelity Financial shareholder considering
dissenting, you should consult your own legal advisor.
To exercise dissenters' rights, you must satisfy five conditions:
o you must be a shareholder of record on __________;
o you must not vote dissenting shares in favor of the
Acquisition;
o you must deliver a written demand for "fair cash value" of
the dissenting shares within 10 days of the vote on the
Acquisition;
o if Provident Financial requests, you must send to Provident
Financial within 15 days of its request, your stock
certificates so that a legend may be added stating that a
demand for "fair cash value" has been made; and
o within three months of your written demand to receive "fair
cash value," you must file a complaint in court for a
determination of the "fair cash value" or you and Provident
Financial must have agreed on the "fair cash value."
Before completion of the Acquisition, all demands and deliveries should
be send to Fidelity Financial at the address on page __, and after the
completion of the Acquisition, all deliveries and other correspondence should be
sent to Provident Financial at the address on page __.
The following is a more detailed description of the conditions you must
satisfy to perfect dissenters' rights:
1. Must be a shareholder of record. To be entitled to dissenters'
rights, you must be the record holder of the dissenting shares as of
_____________. If you have a beneficial interest in shares of Fidelity Financial
common stock that are held of record in the name of another person, you must act
promptly to cause the shareholder of record to follow the required procedures.
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<PAGE> 56
2. No vote in favor of the Acquisition. You must not vote shares as to
which you seek "fair cash value" in favor of the approval and adoption of the
Merger Agreement at the Special Meeting. This requirement will be satisfied:
o if you submit a properly executed proxy with instructions to
vote "against" the adoption of the Merger Agreement or to
"abstain" from this vote,
o if you do not return a proxy and no vote is cast at the
Special Meeting in favor of the adoption of the Merger
Agreement, or
o if you revoke a proxy and later "abstain" from or vote
"against" the adoption of the Merger Agreement.
A VOTE FOR THE MERGER AGREEMENT IS A WAIVER OF DISSENTERS' RIGHTS. A proxy that
is returned signed but on which no voting preference is indicated will be voted
in favor of the adoption of the Merger Agreement and will constitute a waiver of
dissenters' rights. Voting "against" or not voting does not constitute a waiver
of dissenters' rights.
3. Filing a written demand. You must serve a written demand for the
"fair cash value" of dissenting shares upon Provident Financial on or before
__________, the tenth day after the shareholder vote approving the Acquisition.
Provident Financial will not inform shareholders of the expiration of the
ten-day period and Provident Financial advises you to retain this document. The
required written demand must specify your name and address, the number of
dissenting shares held of record on ___________ and the amount claimed as the
"fair cash value" of the dissenting shares. Voting against the Acquisition is
not a written demand as required by Section 1701.85 of the Ohio General
Corporation Law.
4. Delivery of certificates for legending. If Provident Financial
requests, you must submit your certificates for dissenting shares to Provident
Financial within fifteen days after Provident Financial sends its request for
endorsement on the certificates by Provident Financial of a legend that demand
for fair cash value has been made. The certificates will be returned promptly to
you by Provident Financial. Provident Financial intends to make this request to
dissenting shareholders.
5. Petitions to be filed in court. If you and Provident Financial
cannot agree on the "fair cash value" of the dissenting shares, you must, within
three months after service of your demand for "fair cash value," file a
complaint in the Court of Common Pleas of Hamilton County, Ohio, for a
determination of the "fair cash value" of the dissenting shares. The court, if
it determines that you are entitled to be paid the "fair cash value" of the
dissenting shares, may determine the value of those shares. The court will
determine the "fair cash value" per share. The costs of the proceeding,
including reasonable compensation to the appraisers, will be assessed as the
court considers equitable. "Fair cash value" is the amount that a willing
seller, under no compulsion to sell, would be willing to accept, and that a
willing buyer, under no compulsion to purchase, would be willing to pay. In no
event will the "fair cash value" be in excess of _________, the amount specified
in the dissenting shareholder's demand. Fair cash value is determined as of
_________, the day before the Special Meeting. The amount of the "fair cash
value" excludes any appreciation or depreciation in market value of your shares
resulting from the Acquisition. The "fair cash value" of your shares may be
higher, the same, or lower than the market value of the Fidelity Financial
common stock on the date of the Acquisition.
Your right to be paid the "fair cash value" of the dissenting shares
will terminate if:
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<PAGE> 57
o for any reason the Acquisition does not become effective,
o you fail to make a timely written demand on Provident
Financial,
o you do not, upon request of Provident Financial, timely
surrender your Fidelity Financial certificates for an
endorsement of a legend that demand for the "fair cash value"
of the dissenting shares has been made,
o you withdraw your demand, with the consent of Fidelity
Financial, or
o Provident Financial and you have not come to an agreement as
to the fair cash value of the dissenting shares and you have
not filed a complaint.
If Fidelity Financial shareholders exercise appraisal rights
representing 10% or more of the value of the Provident Financial common stock to
be received by Fidelity Financial shareholders, the ability of the Acquisition
to qualify as a pooling of interests for accounting and financial reporting
purposes may be adversely affected. This 10% threshold may be reduced. The
qualification of the Acquisition for pooling of interests accounting is a
condition to consummation of the Acquisition.
STOCK OPTION AGREEMENT BETWEEN
PROVIDENT FINANCIAL AND FIDELITY FINANCIAL
On August 17, 1999, Fidelity Financial and Provident Financial entered
into an option agreement providing for the purchase of up to 1,819,216 shares of
Fidelity Financial common stock, representing approximately 19.9% of the
outstanding shares of Fidelity Financial common stock, at a per share price of
$15.75. The option will become exercisable only upon the occurrence of certain
events described below.
EXERCISE OF STOCK OPTION
Provident Financial may elect to exercise the option in whole or in
part after the occurrence of any "competing transaction" which includes any
merger, consolidation, share exchange for a controlling interest, business
combination or similar transaction involving Fidelity Financial or its
subsidiaries and parties other than Provident Financial and The Provident Bank
or any sale, lease, exchange, mortgage, pledge, transfer or other disposition of
fifty percent or more of the assets of Fidelity Financial or any of its
subsidiaries in a single transaction or series of related transactions to
parties other than Provident Financial or The Provident Bank.
TERMINATION OF STOCK OPTION
The option will terminate and be of no further force or effect upon the
earliest to occur of:
o Consummation of the Acquisition;
o Termination of the Merger Agreement by its terms; or
o Eighteen months after termination of the Merger Agreement by
Fidelity Financial as a result of the consummation of a
competing transaction.
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ADJUSTMENT OF NUMBER OF SHARES SUBJECT TO OPTION
The number and type of securities subject to the option and the
purchase price of shares will be adjusted for any stock split, reverse split,
dividend, exchange of shares or similar transaction relating to the Fidelity
Financial common stock, so that Provident Financial will receive upon exercise
of the option the same number and type of securities as if the option had been
exercised immediately before the change in Fidelity Financial common stock.
REPURCHASE OF OPTION SHARES
Provident Financial can require that Fidelity Financial pay either the
"Cash-Out Amount" for the redelivery and cancellation without exercise of the
option or pay the "Redemption Amount" for the repurchase of optioned shares
obtained by Provident Financial as a result of the exercise of the option.
o The "Cash-Out Amount" means the amount, calculated as of the
date of Provident Financial's notice requesting repurchase,
equal to the number of shares then subject to this option
multiplied by the difference between the "Market/Offer Price"
of the Fidelity Financial common stock and the exercise price
of the option.
o The "Redemption Amount" means an amount, calculated as of the
date of Provident Financial's notice, equal to the number of
shares of Fidelity Financial common stock acquired upon the
exercise of the option multiplied by the "Market/Offer Price"
of the Fidelity Financial common stock.
o "Market/Offer Price" means, as of any date, the highest of:
(i) the average of the daily closing sales price for a share
of Fidelity Financial common stock on Nasdaq during the ten
trading days prior to the fifth trading day immediately
preceding the date, (ii) $21.00 per share; or (iii) the
highest price per share offered by any third party as of such
date pursuant to any tender or exchange offer or other public
offer for Fidelity Financial common stock.
REGISTRATION RIGHTS
Provident Financial has certain rights to require registration under
the securities laws of any shares of Fidelity Financial common stock purchased
pursuant to the Stock Option Agreement if necessary to enable Provident
Financial to sell such shares.
EFFECT OF STOCK OPTION AGREEMENT
The Stock Option Agreement is intended to increase the likelihood that
the Acquisition will be completed on the terms in the Merger Agreement. As a
result, certain aspects of the Stock Option Agreement may have the effect of
discouraging persons who might now or before the completion of the Acquisition
be interested in acquiring all of or a significant interest in Fidelity
Financial from considering or proposing such an acquisition, even if they were
prepared to offer consideration per share for Fidelity Financial common stock
higher than the consideration in the Merger Agreement.
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<PAGE> 59
PROVIDENT FINANCIAL GROUP, INC.
GENERAL
Provident Financial is a Cincinnati-based commercial banking and
financial services company with full service banking operations in Ohio,
northern Kentucky and southwestern Florida. At June 30, 1999, Provident had
total assets of $8.5 billion, loans and leases of $5.8 billion, deposits of $5.8
billion and shareholders' equity of $717 million. Provident also services an
additional $4.5 billion of loans and leases.
Provident Financial has expanded its franchise in recent years through
internal growth and acquisitions. Business units that have been expanded to
operate at a national level include Provident Capital Corp (a middle-market
structured finance products division), Provident Commercial Group and
Information Leasing Corporation (commercial leasing divisions) and Provident
Consumer Financial Services (a mortgage loan division). Provident Financial has
also expanded by acquisitions of Florida Gulfcoast Bancorp, Inc. located in
Sarasota, Florida and South Hillsborough Community Bank located in Hillsborough
County, Florida.
Provident Financial conducts its banking operations through The
Provident Bank and Provident Bank of Florida.
At June 30, 1999, Provident Financial and its subsidiaries employed
approximately 2,550 full-time- equivalent employees.
RECENT DEVELOPMENT
On August 3, 1999, Provident Financial announced its agreement to
acquire OHSL Financial Corp. OHSL Financial Corp., with $284 million in assets,
operates six full-service banking offices in Cincinnati, Ohio through its
subsidiary, Oak Hills Savings and Loan Company, F.A.
Under terms of the agreement, OHSL shareholders will receive shares of
Provident Financial common stock having an approximate value of $57 million. The
transaction, which will be accounted for as a purchase, is expected to close in
the fourth quarter of 1999.
FIDELITY FINANCIAL OF OHIO, INC.
Fidelity Financial is an Ohio corporation and the holding company for
Centennial Bank, a federally chartered savings bank which conducts business
through fifteen full-service offices located in the Cincinnati, Ohio
metropolitan area. Centennial Bank is primarily engaged in attracting deposits
from the general public through its offices and using those and other available
sources of funds to originate loans secured by single-family residences located
primarily in southwestern Ohio. Such loans amounted to $508.6 million, or 75.7%,
of Centennial's total loan portfolio (including loans held for sale) at June 30,
1999. To a lesser extent, Centennial originates loans secured by existing
multi-family residential and nonresidential real estate, which amounted to $50.2
million, or 7.5%, and $66.0 million, or 9.8%, respectively, of the total loan
portfolio (including loans held for sale) at June 30, 1999, as well as
construction loans, consumer loans and commercial loans which respectively
amounted to $28.9 million, or 4.3%, and $6.6 million, or 1.0% and $11.3 million,
or 1.7%, of the total loan portfolio (including loans held for sale) at such
date. Centennial Bank also invests in U.S. Government and federal agency
obligations and mortgage-backed securities which are insured by federal
agencies.
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<PAGE> 60
DESCRIPTION OF PROVIDENT FINANCIAL CAPITAL STOCK
The following is a summary of the provisions of Ohio General
Corporation Law and Provident Financial's Articles of Incorporation and Code of
Regulations which govern the terms of Provident Financial's common stock.
Common Stock
Provident Financial's Articles of Incorporation authorize the issuance
of 110,000,000 shares of common stock. At June 30, 1999 approximately 4,000
record holders owned the 42,610,338 outstanding shares, all of which are fully
paid, validly issued and non-assessable.
Holders of Provident Financial common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of shareholders.
Shareholders may cumulate their votes when electing directors.
Holders of Provident Financial common stock are entitled to share in the
dividends that the board of directors validly declares from legally available
funds. If Provident Financial liquidates, holders of Provident Financial common
stock also are entitled to participate ratably in the assets remaining after
Provident Financial pays its liabilities and preferred stock liquidation
preferences.
Holders of Provident Financial common stock do not have preemptive
rights or other rights to subscribe for or purchase additional shares of any
class of stock or any other securities of Provident Financial. Provident
Financial common stock has no redemption or sinking fund provisions. Approving
amendments to the Articles of Incorporation, certain mergers, reorganizations
and similar transactions requires the vote of the holders of two-thirds of all
outstanding shares of Provident Financial common stock. The Provident Bank
serves as Registrar and Transfer Agent for Provident Financial common stock.
Preferred Stock
Provident Financial's Articles of Incorporation authorize 5,000,000
shares of preferred stock which may be issued from time to time in series that
have been designated preferences, rights, qualifications and limitations that
the board of directors, in its sole discretion, may determine. The board of
directors can give preferred stock both voting and conversion rights which would
affect the voting power and equity of holders of Provident Financial common
stock. Preferred stock could also have preference to Provident Financial common
stock with respect to dividend and liquidation rights. The preferred stock could
have the effect of acting as an anti-takeover device to prevent a change of
control of Provident Financial. Provident Financial has 70,272 shares of
preferred stock, designated as its Series D Preferred Stock, outstanding. Each
share has a stated and liquidation value of $100, is convertible into 14.0625
shares of Provident Financial common stock, and pays an annual dividend equal to
the dividend payable on 14.0625 shares of Provident Financial common stock.
COMPARISON OF SHAREHOLDER RIGHTS
GENERAL
After the Acquisition, shareholders of Fidelity Financial will become
shareholders of Provident Financial. Their rights will then be governed by
Provident Financial's Articles of Incorporation, Provident Financial's Code of
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<PAGE> 61
Regulations and Ohio General Corporation Law. Presently, Fidelity Financial
shareholders' rights are governed by Fidelity Financial's Articles of
Incorporation, Fidelity Financial's Code of Regulations, and Ohio General
Corporation Law. The following summary, which is not a complete statement of all
differences between rights of the holders of Provident Financial common stock
and Fidelity Financial common stock, discusses differences between Fidelity
Financial's Articles of Incorporation and Code of Regulations and Provident
Financial's Articles of Incorporation and Code of Regulations. While Provident
Financial believes that the provisions of its Articles of Incorporation and its
Code of Regulations are in its shareholders' best interests, shareholders of
Fidelity Financial should be aware that these provisions could be
disadvantageous to them because their overall effect may be to render more
difficult or to discourage the removal of incumbent directors and management or
the assumption of effective control by other persons. For information as to how
to get the full text of each document, see "Where You Can Find More Information"
on page 60.
CLASSIFIED BOARD OF DIRECTORS
Provident Financial's entire board of directors is elected annually.
Fidelity Financial's board of directors is divided into three classes with each
class elected in staggered elections and serving a three-year term.
Classification of directors makes it more difficult for shareholders to
change the composition of the Fidelity Financial board of directors. At least
two annual meetings of shareholders, instead of one, will generally be required
to change the majority of the Fidelity Financial board of directors. If Fidelity
Financial were confronted by a holder attempting to force a proxy contest, a
tender or exchange offer or other extraordinary corporate transaction, this
classification and time period would allow the board of directors sufficient
time to review the proposal. The board of directors would also have the
opportunity to review any available alternatives to the proposal and to act in
what it believes to be the best interests of the shareholders. The
classification provisions could also discourage a third party from starting a
proxy contest, making a tender offer or otherwise attempting to obtain control
of Fidelity Financial in a transaction that could be beneficial to Fidelity
Financial or its shareholders.
NUMBER OF DIRECTORS
Provident Financial's board of directors consists of seven directors
and Fidelity Financial's board of directors consists of twelve directors.
REMOVAL OF DIRECTORS
Provident Financial's directors are subject to removal as provided by
Ohio General Corporation Law or by other lawful procedures.
Any Fidelity Financial director may be removed from office without
cause by an affirmative vote of 75% of the total votes eligible to be cast at a
meeting of shareholders called expressly for such purpose and may be removed
from office with cause by an affirmative vote of a majority of the total votes
eligible to be cast by shareholders. Cause for removal shall exist only if the
director whose removal is proposed has been either declared incompetent by an
order of a court, convicted of a felony or of an offense punishable by
imprisonment for a term of more than one year, or deemed liable by a court for
gross negligence or misconduct in the performance of such director's duties to
Fidelity Financial.
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<PAGE> 62
VACANCIES
Vacancies on Provident Financial's Board may be filled by two-thirds of
the remaining directors, although less than a quorum. Any director so elected
shall serve for the remainder of the unexpired term.
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors of Fidelity Financial may be filled by the
affirmative vote of two-thirds of the directors then in office, even if such
number is less than a quorum.
SPECIAL MEETINGS
Special meetings of Provident Financial's shareholders may be called by
the Chairman of the board of directors, the President, or by a majority of
directors or shareholders holding 35% of the voting power of Provident
Financial.
Special meetings of Fidelity Financial's shareholders may be called by
the Chairman of the Board, the President, the board of directors or shareholders
holding 50% of the voting power of Fidelity Financial.
CUMULATIVE VOTING
Provident Financial's shareholders may cumulate votes in the election
of directors. Fidelity Financial's shareholders are not entitled to cumulate
votes in the election of directors.
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER PROPOSALS
Provident Financial has no provisions regarding an advance notice
procedure.
For Fidelity Financial shareholders to properly introduce business to
be transacted at the annual or any special meeting of shareholders, a
shareholder of record must give written notice of any proposal, including
nominations for Fidelity Financial's board of directors, to Fidelity Financial's
corporate secretary not less than sixty days prior to the anniversary date of
the immediately proceeding annual meeting.
AMENDMENTS TO CHARTER DOCUMENTS
Provident Financial's Articles of Incorporation may be amended by the
vote of holders of shares representing two-thirds of the voting power. See
"Description of Provident Financial Capital Stock." Provident Financial's Code
of Regulations may be amended at a meeting by the vote of the holders of shares
representing a majority of Provident Financial's voting power or without a
meeting by the written consent of the holders of two-thirds of such voting
power.
Fidelity Financial's Articles of Incorporation may be amended by the
vote of a majority of the voting power of Fidelity Financial except for certain
specified provisions which require the affirmative vote of 75% of the voting
power of Fidelity Financial. Holders of two-thirds of the voting power of
Fidelity Financial entitled to vote at a meeting of shareholders called for that
purpose may amend Fidelity Financial's Code of Regulations.
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<PAGE> 63
MERGERS, ACQUISITIONS AND OTHER TRANSACTIONS
The vote of holders of two-thirds of Provident Financial's voting power
is required to approve mergers, dissolutions, dispositions of all or
substantially all of Provident Financial's assets and acquisitions and
combinations involving the issuance of shares representing one-sixth or more of
the voting power of the corporation other than so-called parent-subsidiary
mergers.
The affirmative vote of the holders of a majority of the voting power
of Fidelity Financial entitled to vote at a meeting of shareholders called for
that purpose is required to approve a proposed merger or consolidation of
Fidelity Financial with or into one or more other corporations or a proposed
combination or majority share acquisition involving the issuance of shares of
Fidelity Financial.
Notwithstanding the foregoing, the vote of holders of 80% of the voting
power of Fidelity Financial is required to approve:
o any merger, share exchange or consolidation with or into a
"Related Person" ("Related Person" is defined to include any
individual or person owning 10% or more of the outstanding
stock of Fidelity Financial);
o any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage, or any other
security device, of greater than 25% of the assets of Fidelity
Financial or of a subsidiary to a Related Person;
o any merger or consolidation of a Related Person with or into
Fidelity Financial;
o any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage, or any other capital
device, of all or more than 25% of the assets of a Related
Person to Fidelity Financial or a subsidiary;
o the issuance of any securities of Fidelity Financial or a
subsidiary to a Related Person;
o the acquisition by Fidelity Financial or a subsidiary of any
securities of a Related Person;
o any reclassification of the common stock of Fidelity
Financial, or any recapitalization involving the common stock
of Fidelity Financial; and
o any agreement, contract or other arrangement providing for any
of the above-mentioned transactions.
TRANSACTIONS WITH INTERESTED SHAREHOLDERS
Ohio has laws that delay or prevent unsolicited third party takeover
attempts. These statutes encourage an acquiring company to negotiate seriously
with a target company's board of directors in advance of a takeover attempt.
Merger Moratorium Statutes. Chapter 1704 of the Ohio Revised Code, the
Ohio Merger Moratorium Statute, applies to Provident Financial and Fidelity
Financial.
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<PAGE> 64
The Ohio Merger Moratorium Statute governs business combinations and
other transactions between an Ohio public company (such as Provident Financial
and Fidelity Financial) and an "interested shareholder." An interested
shareholder is a person who beneficially owns or has the right to vote 10% or
more of a company's outstanding shares and who acquired the shares or voting
rights without the prior approval of its board of directors.
For three years after a person becomes an interested shareholder, the
following transactions between the company and the interested shareholder or
persons related to that shareholder are prohibited:
o the sale or acquisition of any interest in assets,
o mergers and similar transactions,
o a voluntary dissolution,
o the issuance or transfer of shares or any rights to acquire
shares in excess of 5% of the company's outstanding shares,
o a transaction that increases the interested shareholder's
proportionate ownership of the company, and
o any other benefit that is not shared proportionately by all
shareholders.
After three years, transactions between the company and an interested
shareholder generally require:
o approval by at least a two-thirds majority shareholder vote,
including a majority of shares not owned or controlled by the
interested shareholder, or
o satisfaction of the statutory fair price requirements that
apply to shares held by persons other than the interested
shareholder.
Profit Recapture Provision. Section 1707.043 of the Ohio Revised Code
applies to Provident Financial and Fidelity Financial. This section provides
that:
o if a shareholder disposes of an Ohio company's stock for a
profit of more than $250,000 within 18 months after announcing
an intention to make a proposal to acquire control of the
company then the company may recover the profit unless the
shareholder proves in court that:
o its sole purpose in making the proposal was to acquire control
of the company and it had reasonable grounds to believe it
would succeed,
o it did not make the proposal for the purpose of manipulating
the market, increasing its profit or decreasing its loss, and
o the proposal did not have a material adverse effect on the
price or trading volume of the shares.
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<PAGE> 65
APPRAISAL RIGHTS
Dissenting shareholders of Provident Financial and Fidelity Financial
who dissent to mergers and similar transactions on which they vote are entitled
to appraisal rights if:
o an amendment to the articles of incorporation changes the
preference or dividend terms of issued shares, changes
substantially the purpose of the corporation or changes the
corporation into a nonprofit corporation,
o a merger or consolidation with another corporation occurs, or
o an acquisition of another corporation in a merger, combination
or majority share acquisition which involves the transfer to
the target of shares having one-sixth or more of the
acquiror's voting power occurs.
LIABILITY OF DIRECTORS AND EXECUTIVE OFFICERS
Under Ohio law, shareholders are entitled to bring suit, generally in
an action on behalf of the corporation, to recover damages caused by breaches of
the duty of care and the duty of loyalty owed to a corporation and its
shareholders by directors and, to a certain extent, executive officers. Ohio law
has codified the traditional business judgement rule. Ohio law provides that the
business judgement presumption of good faith may only be overcome by clear and
convincing evidence, rather than the preponderance of the evidence standard
applicable in most states.
Further, Ohio law provides specific statutory authority for directors
to consider, in addition to the interests of the corporation's shareholders,
other factors such as the interests of the corporation's employees, suppliers,
creditors and customers; the economy of the state and the nation; community and
societal considerations; the long-term and short-term interests of the
corporation and the shareholders; and the possibility that these interests may
be best served by the continued independence of the corporation.
Directors of Ohio corporations are, unless the corporation's articles
or regulations otherwise provide, liable to the corporation for money damages
for actions taken or failed to be taken as a director only if it is proven by
clear and convincing evidence that the act or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
reckless disregard for the best interests of the corporation.
Provident Financial's Code of Regulations provides that it shall
indemnify its directors and officers to the fullest extent provided by
applicable Ohio law as currently exists or may be broadened by amendment and
shall advance to officers and directors, under certain circumstances, funds for
expenses, liabilities and loss actually and reasonably incurred or suffered in
connection with defending pending or threatened suits. Additionally, Provident
Financial maintains insurance on behalf of its directors, officers, employees
and agents.
Fidelity Financial's Articles of Incorporation provide that it shall
indemnify its directors, officers, employees, or agents against expenses,
including attorney's fees, judgments, fines and amounts paid in settlements
incurred by such persons in connection with defending pending, threatened or
completed suits to the full extent permissible under Ohio law. Fidelity
Financial also maintains insurance on behalf of its directors, officers,
employees and agents.
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<PAGE> 66
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 1999, information
with respect to the beneficial ownership of Fidelity Financial common stock by
each person known by Fidelity Financial to be the beneficial owner of more than
five percent of the common stock, by each present director of Fidelity
Financial, by certain executive officers of Fidelity Financial and by all
directors and executive officers of Fidelity Financial as a group. Unless
otherwise indicated in the note to this table, the shareholders listed in the
table have sole voting and investment power with respect to shares beneficially
owned by them.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NO OF SHARES (1) PERCENT OF CLASS
------------------------ ---------------- ----------------
<S> <C> <C>
Employee Stock Ownership Plan Trust (2) 549,317 6.02%
Daniel W. Geeding (3) 47,778 0.52%
Joseph D. Hughes (4) 64,536 0.76%
Michael. W. Jordan (5) 22,578 0.27%
Kenneth C. Lichtendahl (6) 61,944 0.66%
David A. Lueke (7) 20,631 0.25%
Gregory P. Niesen (8) 17,627 0.19%
Constantine N. Papadakis (9) 18,444 0.23%
John R. Reusing (10) 113,685 1.24%
Edgar A. Rust (11) 115,105 1.26%
Thomas N. Spaeth (12) 23,497 0.26%
Thomas J. Schiller (13) 21,763 0.24%
Elaine M. Schmidt (14) 20,573 0.22%
Paul D. Staubach (15) 77,890 0.85%
Robert R. Sudrook (16) 67,484 0.83%
John L. Torbeck (17) 45,519 0.50%
Robert W. Zumbiel (18) 36,363 0.42%
</TABLE>
(1) Pursuant to rules promulgated by the Securities and Exchange Commission
("SEC") under the Exchange Act, a person or entity is considered to
beneficially own shares if the person or entity has or shares (i)
voting power, which includes the power to vote or to direct the voting
of the shares, or (ii) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, a person or entity has sole voting and sole investment power
with respect to the indicated shares. Shares which are subject to stock
options and which may be exercised within 60 days of September 30, 1999
are deemed to be outstanding for the purpose of computing the
percentage of Fidelity Financial shares beneficially owned by such
person.
(2) The Employee Stock Ownership Plan Trust was established pursuant to an
agreement between Fidelity Financial and 3 executive officers, who act
as trustees of the ESOP. As of September 30, 1999, 166,894 shares held
in the Trust were unallocated and 382,423 shares held in the Trust had
been allocated to the accounts of participating employees. Under the
terms of the ESOP, the Trustees will generally vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating employees, and unallocated shares and allocated shares
for which employees do not give instructions will generally be voted in
the same ratio on any matter as to those shares for which instructions
are given, subject in each case to the fiduciary duties of the ESOP
trustee and applicable law.
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<PAGE> 67
(3) Includes 1,470 shares as to which Mr. Geeding shares voting or
investment power and options to purchase 600 shares pursuant to
Fidelity Financial's 1990 Stock Option Plan.
(4) Includes 1,935 shares held by Fidelity Financial's ESOP for the
account of Mr. Hughes, 2,851 shares held in Fidelity Financial's 401(k)
Retirement Plan, options to purchase 6,244 shares pursuant to Fidelity
Financial's 1997 Stock Option Plan and options to purchase 5,000 shares
pursuant to Fidelity Financial's 1990 Stock Option Plan.
(5) Includes options to purchase 5,203 shares pursuant to Fidelity
Financial's 1997 Stock Option Plan and options to purchase 600 shares
pursuant to Fidelity Financial's 1990 Stock Option Plan.
(6) Includes 9,132 shares as to which Mr. Lichtendahl shares voting or
investment power and options to purchase 600 shares pursuant to
Fidelity Financial's 1990 Stock Option Plan.
(7) Includes options to purchase 6,244 shares pursuant to Fidelity
Financial's 1997 Stock Option Plan and options to purchase 600 shares
pursuant to Fidelity Financial's 1990 Stock Option Plan.
(8) Includes 1,415 shares held by Fidelity Financial's ESOP for the account
of Mr. Niesen, 1,478 shares held in Fidelity Financial's 401(k)
Retirement Plan and options to purchase 11,000 shares pursuant to
Fidelity Financial's 1990 Stock Option Plan.
(9) Includes options to purchase 8,244 shares pursuant to Fidelity
Financial's 1997 Stock Option Plan and options to purchase 600 shares
pursuant to Fidelity Financial's 1990 Stock Option Plan.
(10) Includes 337 shares as to which Mr. Reusing shares voting or investment
power, 3376 shares owned by Mr. Reusing's wife, options to purchase
11,438 shares pursuant to Fidelity Financial's 1992 Stock Inventive
Plan, options to purchase 6,804 shares pursuant to Fidelity Financial's
1997 Stock Option Plan, 21,270 shares held by Fidelity Financial's ESOP
for the account of Mr. Reusing and 12,880 shares held by Fidelity
Financial's 401(k) Retirement Plan.
(11) Includes 13,770 shares held in a trust for which Mr. Rust is the
trustee, 19,381 shares held by Fidelity Financial's ESOP for the
account of Mr. Rust, 24,915 shares held by Fidelity Financial's 401(k)
Retirement Plan and options to purchase 600 shares pursuant to Fidelity
Financial's 1990 Stock Option Plan.
(12) Includes 3,800 shares held in Mr. Spaeth's wife's IRA, options to
purchase 6,244 shares pursuant to Fidelity Financial's 1997 Stock
Option Plan and options to purchase 600 shares pursuant to Fidelity
Financial's 1990 Stock Option Plan.
(13) Includes options to purchase 15,000 shares pursuant to Fidelity
Financial's 1990 Stock Option Plan.
(14) Includes 551 shares held by Fidelity Financial's ESOP for the account
of Ms. Schmidt, 5,875 shares held in Fidelity Financial's 401(k)
Retirement Plan and options to purchase 14,000 shares pursuant to
Fidelity Financial's 1990 Stock Option Plan.
(15) Includes 650 shares held in trust for Mr. Staubach's children, for
which Mr. Staubach is custodian, options to purchase 6,289 shares
pursuant to Fidelity Financial's 1997 Stock Option Plan, 11,559 shares
held by Fidelity Financial's ESOP for the account of Mr. Staubach and
7,481 shares held by Fidelity Financial's 401(k) Retirement Plan.
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<PAGE> 68
(16) Includes options to purchase 31,500 shares pursuant to Fidelity
Financial's 1990 Stock Option Plan, 1,719 shares held by Fidelity
Financial's ESOP for the account of Mr. Sudbrook and 4,319 shares held
by Fidelity Financial's 401(k) Retirement Plan.
(17) Includes options to purchase 9,849 shares pursuant to Fidelity
Financial's 1990 Stock Option Plan.
(18) Includes options to purchase 6,244 shares pursuant to Fidelity
Financial's 1997 Stock Option Plan and options to purchase 600 shares
pursuant to Fidelity Financial's 1990 Stock Option Plan.
LEGAL MATTERS
The legality of the Provident Financial common stock offered hereby
will be passed upon for Provident Financial by Keating, Muething & Klekamp,
P.L.L., Cincinnati, Ohio. Members of that firm participating in matters related
to the Acquisition beneficially own approximately 114,323 shares of Provident
Financial common stock. Keating, Muething & Klekamp, P.L.L. has also delivered
opinions to Provident Financial as to certain tax matters.
EXPERTS
The consolidated financial statements of Provident Financial Group,
Inc. appearing in Provident Financial's Annual Report (Form 10-K) for the year
ended December 31, 1998 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon and incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Fidelity Financial as of
December 31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and
1996 appearing in Fidelity Financial's Annual Report on Form 10-K and
incorporated by reference into this proxy statement/prospectus have been audited
by Grant Thornton LLP, independent certified public accountants, as set forth in
their report thereon in reliance upon such reports given on the authority of
such firm as experts in accounting and auditing.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
In the event the Acquisition is not consummated prior to the 2000
Annual Meeting of Fidelity Financial, any shareholder proposal intended to be
presented at the 2000 Annual Meeting must have been received by Fidelity
Financial prior to December 14, 1999 in order to be considered in the proxy
materials for such meeting.
WHERE YOU CAN FIND MORE INFORMATION
Fidelity Financial and Provident Financial each file reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that Fidelity Financial and Provident
Financial file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. (The address of the public reference room
in Washington, D.C. is 450 Fifth Street, N.W., Washington, D.C. 20549). Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Fidelity Financial's and Provident Financial's public filings are also
available to the public from commercial document retrieval services and at the
Internet World Wide Web site maintained by the SEC at "http://www.sec.gov."
Reports, proxy statements and
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other information regarding Fidelity Financial and Provident Financial also may
be inspected at the offices of Nasdaq National Market, 9801 Washingtonian
Boulevard, Gaithersburg, Maryland 20878.
Provident Financial has filed a Registration Statement with the SEC to
register the shares of Provident Financial common stock to be issued to Fidelity
Financial shareholders in the Acquisition. This proxy statement/prospectus is a
part of the Registration Statement and constitutes a prospectus of Provident
Financial, as well as a proxy statement of Fidelity Financial for the Fidelity
Financial Special Meeting.
As allowed by SEC rules, this proxy statement/prospectus does not
contain all information that shareholders can find in the Registration Statement
or the exhibits to the Registration Statement.
The SEC allows Fidelity Financial and Provident Financial to
"incorporate by reference" information into this proxy statement/prospectus,
which means that Fidelity Financial and Provident Financial can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of this proxy statement/prospectus, except for any information
superseded by information contained directly in the proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Fidelity Financial and Provident Financial have previously
filed with the SEC. These documents contain important information about Fidelity
Financial and Provident Financial and their respective financial condition.
FIDELITY FINANCIAL SEC FILINGS:
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1998
2. Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1999 and June 30, 1999
3. Current Reports on Form 8-K dated March 19, 1999 and August
16, 1999
4. The description of the Fidelity Financial common stock
contained in the Registration Statement on Fidelity
Financial's Registration Statement on Form S-4 (File
No.333-69293) filed on December 18, 1998.
PROVIDENT FINANCIAL SEC FILINGS:
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1998
2. Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1999 and June 30, 1999
3. Current Reports on Form 8-K dated January 29, 1999 and June
25, 1999
4. The description of the Provident Financial common stock
contained in the Registration Statement on Form S-4, SEC File
No. 333-32423.
Fidelity Financial and Provident Financial are also incorporating by
reference additional documents that they may respectively file with the SEC
between the date of this proxy statement/prospectus and the date of the Fidelity
Financial Special Meeting. These include periodic reports, such as an Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on Form
8-K, and any amendments to these reports, as well as proxy statements.
If you are a shareholder of Fidelity Financial or Provident Financial,
you can obtain any of the documents incorporated by reference through Fidelity
Financial and Provident Financial, respectively, or from the SEC or the
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<PAGE> 70
SEC's Internet World Wide Web site described above. Documents incorporated by
reference are available from Fidelity Financial and Provident Financial without
charge, excluding all exhibits. Shareholders may obtain documents incorporated
by reference in this proxy statement/prospectus by requesting them in writing or
by telephone from Fidelity Financial and Provident Financial at the following
address:
Provident Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Mark E. Magee
(513) 579-2000
Fidelity Financial of Ohio, Inc.
5535 Glenway Avenue
Cincinnati, Ohio 45238
Attn: Paul D. Staubach, CFO
(513) 922-5959
If you would like to request documents from Fidelity Financial or
Provident Financial, please do so by ________________, 1999 to receive them
before the Fidelity Financial Special Meeting. If you request any such
documents, the companies will mail them to you by first-class mail, or other
equally prompt means, within one business day of receipt of your request.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE YOUR SHARES AT THE FIDELITY
FINANCIAL SPECIAL MEETING. FIDELITY FINANCIAL AND PROVIDENT FINANCIAL HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THE PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE OF THIS PROXY STATEMENT/PROSPECTUS, AND NEITHER THE
MAILING OF THIS PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF
PROVIDENT FINANCIAL'S SECURITIES IN THE ACQUISITION SHALL CREATE ANY IMPLICATION
TO THE CONTRARY.
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<PAGE> 71
ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
among
PROVIDENT FINANCIAL GROUP, INC.
an Ohio corporation,
THE PROVIDENT BANK
an Ohio banking corporation,
FIDELITY FINANCIAL OF OHIO, INC.
an Ohio corporation,
FIDELITY ACQUISITION CORPORATION
an Ohio corporation
and
CENTENNIAL BANK,
an Ohio savings bank
Dated August 16, 1999
================================================================================
<PAGE> 72
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 TERMS OF MERGERS AND CLOSING...........................................................2
Section 1.1 Definitions. ..........................................................................2
Section 1.2 Merger Transactions. ..................................................................5
Section 1.3 Merging ...............................................................................5
Section 1.4 Surviving Corporations.................................................................5
Section 1.5 Effect of Mergers......................................................................6
Section 1.6 Conversion of Stock....................................................................6
Section 1.7 Share Adjustments......................................................................8
Section 1.8 Closing. .............................................................................8
Section 1.9 Exchange Procedures; Surrender of Certificates.........................................8
Section 1.10 Closing Date and Effective Time........................................................9
Section 1.11 Closing Deliveries....................................................................10
Section 1.12 Dissenter's Rights....................................................................12
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF FIDELITY............................................12
Section 2.1 Organization and Capital Stock........................................................13
Section 2.2 Authorization.........................................................................15
Section 2.3 Subsidiaries..........................................................................16
Section 2.4 No Defaults...........................................................................16
Section 2.5 Financial Information.................................................................16
Section 2.6 Absence of Changes....................................................................17
Section 2.7 Litigation and Related Matters........................................................17
Section 2.8 Regulatory Matters....................................................................17
Section 2.9 Reports...............................................................................18
Section 2.10 Non-Banking Activities of Fidelity and Subsidiaries...................................18
Section 2.11 Fiduciary Responsibilities............................................................18
Section 2.12 Fair Lending; Community Reinvestment Act..............................................19
Section 2.13 Employment Agreements.................................................................19
Section 2.14 Employee Matters and ERISA............................................................19
Section 2.15 Title to Properties; Insurance........................................................21
Section 2.16 Intellectual Property Rights..........................................................21
Section 2.17 Environmental Matters.................................................................22
Section 2.18 Year 2000 Compliance..................................................................23
Section 2.19 Certain Operational Matters...........................................................23
Section 2.20 Material Contracts and Agreements.....................................................23
Section 2.21 Interest Rate Risk Management Instruments.............................................24
Section 2.22 State Takeover Laws...................................................................24
Section 2.23 Tax Matters...........................................................................25
Section 2.24 Brokerage.............................................................................25
Section 2.25 Compliance with Law...................................................................26
Section 2.26 No Undisclosed Liabilities............................................................26
</TABLE>
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<TABLE>
<S> <C> <C>
Section 2.27 Pooling...............................................................................26
Section 2.28 Statements True and Correct...........................................................26
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PFGI AND
PROVIDENT BANK........................................................................26
Section 3.1 Organization and Capital Stock........................................................26
Section 3.2 Authorization.........................................................................27
Section 3.3 Subsidiaries..........................................................................28
Section 3.4 No Defaults...........................................................................28
Section 3.5 Financial Information.................................................................28
Section 3.6 Absence of Changes....................................................................28
Section 3.7 Litigation and Related Matters........................................................29
Section 3.8 Regulatory Matters....................................................................29
Section 3.9 Reports...............................................................................29
Section 3.10 Tax Matters...........................................................................29
Section 3.11 Brokerage.............................................................................29
Section 3.12 Compliance With Law...................................................................29
Section 3.13 No Undisclosed Liabilities............................................................30
Section 3.14 Statements True and Correct...........................................................30
Section 3.15 Year 2000 Compliance..................................................................30
Section 3.16 Interested Shareholder Provision......................................................31
Section 3.17 Accounting Changes....................................................................31
ARTICLE 4 AGREEMENTS OF FIDELITY AND ITS SUBSIDIARIES ..........................................31
Section 4.1 Business in Ordinary Course...........................................................31
Section 4.2 Breaches..............................................................................34
Section 4.3 Submission to Management and Shareholders.............................................35
Section 4.4 Consents to Contracts and Leases......................................................35
Section 4.5 Consummation of Agreement.............................................................35
Section 4.6 Employee Benefit Plans................................................................36
Section 4.7 Access to Information.................................................................38
Section 4.8 Plan of Merger........................................................................38
Section 4.9 Cooperation...........................................................................39
ARTICLE 5 AGREEMENTS OF PFGI AND PROVIDENT BANK.................................................39
Section 5.1 Regulatory Approvals; Other Agreements................................................39
Section 5.2 Breaches..............................................................................40
Section 5.3 Consummation of Agreement.............................................................40
Section 5.4 Employee Benefits.....................................................................40
Section 5.5 Advisory Board........................................................................41
Section 5.6 Director and Officer Matters..........................................................42
Section 5.7 Access to Information.................................................................42
</TABLE>
<PAGE> 74
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<TABLE>
<S> <C> <C>
Section 5.8 Employment Agreements.................................................................43
ARTICLE 6 CONDITIONS PRECEDENT TO MERGER........................................................43
Section 6.1 Conditions to Obligations of PFGI and Provident Bank..................................43
Section 6.2 Conditions to Obligations of Fidelity and its Subsidiaries............................46
ARTICLE 7 TERMINATION OR ABANDONMENT............................................................48
Section 7.1 Mutual Agreement......................................................................48
Section 7.2 Breach of Agreements..................................................................48
Section 7.3 Failure of Conditions.................................................................48
Section 7.4 Regulatory Approval Denial; Burdensome Condition......................................48
Section 7.5 Shareholder Approval Denial; Withdrawal/Modification of Board
Recommendation........................................................................49
Section 7.6 Regulatory Enforcement Matters........................................................49
Section 7.7 Outside Closing Date..................................................................49
Section 7.8 Termination for Materially Improved Offer.............................................49
Section 7.9 Upset Provision.......................................................................50
Section 7.10 Effect of Termination.................................................................51
ARTICLE 8 GENERAL...............................................................................51
Section 8.1 Disclosure Schedule...................................................................51
Section 8.2 Confidential Information..............................................................52
Section 8.3 Publicity.............................................................................52
Section 8.4 Return of Documents...................................................................52
Section 8.5 Notices...............................................................................52
Section 8.6 Liabilities and Expenses..............................................................53
Section 8.7 Survival of Representations and Warranties............................................54
Section 8.8 Entire Agreement......................................................................54
Section 8.9 Headings and Captions.................................................................54
Section 8.10 Waiver, Amendment or Modification.....................................................55
Section 8.11 Rules of Construction.................................................................55
Section 8.12 Counterparts. ........................................................................55
Section 8.13 Successors and Assigns................................................................55
Section 8.14 Severability..........................................................................55
Section 8.15 Governing Law; Assignment. ...........................................................56
Section 8.16 Enforcement of Agreement..............................................................56
Section 8.17 Objections under Antitrust Laws.......................................................56
Section 8.18 Current Information...................................................................56
Section 8.19 Integration of Operations.............................................................56
Section 8.20 Option Agreement......................................................................57
</TABLE>
<PAGE> 75
EXHIBITS
Exhibit 1.4 Names and Addresses of the Directors of The Provident Bank
Exhibit 1.11(a) Legal Opinion from Counsel for Fidelity
Exhibit 1.11(b) Legal Opinion from Counsel for PFGI
Exhibit 6.1(g) Pooling Affiliate Letter
Exhibit 7.9 List of Index Companies
Exhibit 8.20 Form of Stock Option Agreement
SCHEDULES
Disclosure Schedule
<PAGE> 76
INDEX TO DEFINITIONS
Aggregate Merger Consideration...........................................2
Agreement ...............................................................1
Allocated Shares .......................................................36
AMEX ....................................................................2
BHCA ...................................................................16
Burdensome Condition ...................................................44
Centennial ..............................................................1
Centennial Common Shares ................................................2
Centennial ESOP ........................................................36
Certificates ............................................................7
Closing .................................................................8
Closing Date ............................................................9
Code ....................................................................1
Common Exchange Value ...................................................2
Competing Transaction ...................................................2
Continued Employee .....................................................41
Contract ................................................................2
CRA ....................................................................19
CSLSC ...................................................................2
Disclosure Schedule ....................................................51
Disqualified Individual ................................................25
Effective Termination Date .............................................50
Effective Time .........................................................10
Environmental Laws .....................................................22
ERISA ..................................................................19
Exchange Act ...........................................................16
Exchange Agent ..........................................................8
FDIC ....................................................................2
Federal Reserve Board ..................................................16
Fidelity ................................................................1
Fidelity Acquisition ....................................................1
Fidelity Common Shares ..................................................2
Fidelity Employee Plans ................................................19
Fidelity Financial Statements...........................................17
Final Index Price .......................................................3
Final PFGI Price ........................................................3
Forfeited Shares .......................................................36
Holding Company Merger ..................................................1
HSR Act ................................................................16
Index Companies .........................................................3
Index Ratio ............................................................50
Initial Exchange Value ..................................................3
Initial Index Price .....................................................3
Injunction .............................................................43
IRS .....................................................................3
Material Adverse Effect .................................................3
Material Contracts .....................................................24
Maximum Exchange Value ..................................................3
Merger Consideration ....................................................3
Merger Letter of Transmittal.............................................9
Mergers .................................................................3
Minimum Exchange Value ..................................................4
NASDAQ ..................................................................4
NYSE ....................................................................4
OGCL ....................................................................5
Option Exchange Ratio ...................................................7
OTS .....................................................................4
Outstanding Centennial Shares............................................4
Outstanding Fidelity Shares..............................................4
Per Share Consideration .................................................4
Person ..................................................................4
PFGI ....................................................................1
PFGI Common Shares ......................................................4
PFGI Employee Plans ....................................................41
PFGI Financial Statements ..............................................28
PFGI Ratio .............................................................50
Pledged PFGI Shares ....................................................36
Pledged Shares .........................................................36
Pre-Closing Financial Statements........................................45
Provident Bank ..........................................................1
Registration Statement ..................................................4
Regulatory Agency .......................................................4
Regulatory Agreement ...................................................18
Required Regulatory Actions.............................................16
SEC .....................................................................5
Securities Act ..........................................................5
SGFSC ...................................................................5
Share Adjustment ........................................................8
Shareholders' Meeting ..................................................35
Stock Option Agreement ..................................................5
Subsidiaries ............................................................5
Subsidiary Merger .......................................................1
Tax Return ..............................................................5
Taxes ...................................................................5
Year 2000 Compliant ....................................................23
<PAGE> 77
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made as of
August 16, 1999, among PROVIDENT FINANCIAL GROUP, INC., an Ohio corporation
("PFGI"), THE PROVIDENT BANK, an Ohio banking corporation ("PROVIDENT BANK"),
FIDELITY FINANCIAL OF OHIO, INC., an Ohio corporation ("FIDELITY"), FIDELITY
ACQUISITION CORPORATION, an Ohio corporation ("FIDELITY ACQUISITION") and
CENTENNIAL BANK, an Ohio savings bank ("CENTENNIAL").
RECITALS
A. The respective Boards of Directors of PFGI, Provident Bank,
Fidelity, Fidelity Acquisition and Centennial have approved, and deem it
advisable and in the best interests of their respective shareholders to
consummate, the business combination transactions provided for herein in which
Centennial shall, subject to the terms and conditions set forth herein, merge
with and into Provident Bank, a subsidiary of PFGI (the "SUBSIDIARY MERGER") and
Fidelity shall, subject to the terms and conditions set forth herein, merge with
and into PFGI (the "HOLDING COMPANY MERGER").
B. The respective Boards of Directors of PFGI, Provident Bank,
Fidelity, Fidelity Acquisition and Centennial have each determined that the
Mergers and the other transactions contemplated by this Agreement are consistent
with, and in furtherance of, their respective business strategies and goals and
in the best interests of the shareholders of the respective companies.
D. For federal income tax purposes, it is intended that the Mergers
shall constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and, as such,
shareholders of Fidelity will receive certain federal income tax- deferral
benefits with respect to shares of PFGI received in the Holding Company Merger.
This Agreement shall constitute a "plan of reorganization" for purposes of the
Code.
E. For accounting purposes, it is intended that the Mergers shall be
accounted for under the pooling of interests method of accounting.
F. PFGI, Provident Bank, Fidelity, Fidelity Acquisition and Centennial
desire to make certain representations, warranties and agreements in connection
with the Mergers and also to prescribe certain conditions to the Mergers.
G. In consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, PFGI,
Provident Bank, Fidelity, Fidelity Acquisition and Centennial hereby agree as
follows:
<PAGE> 78
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ARTICLE 1
TERMS OF MERGERS AND CLOSING
SECTION 1.1 DEFINITIONS. In addition to terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated:
"AMEX" shall mean the American Stock Exchange.
"AGGREGATE MERGER CONSIDERATION" shall mean the aggregate consideration
payable in respect of the Outstanding Fidelity Shares at the Effective Time.
"CSLSC" shall mean Centennial Savings and Loan Services Corporation, an
Ohio corporation and a wholly-owned Subsidiary of Centennial.
"CENTENNIAL COMMON SHARES" shall mean the shares of common stock of
Centennial, par value $.01 per share.
"COMMON EXCHANGE VALUE" shall mean the average of the closing sale
prices per share for PFGI Common Shares as reported on the NASDAQ and published
in The Wall Street Journal (or if not published therein, as published by another
authoritative source) during the ten (10) consecutive trading-day period during
which the PFGI Common Shares are traded on the NASDAQ ending on the date on
which the last regulatory approval required to consummate the Mergers is
granted, but the per share Common Exchange Value so determined shall be not less
than the Minimum Exchange Value and not greater than the Maximum Exchange Value.
"COMPETING TRANSACTION" shall mean any of the following involving
Fidelity or its Subsidiaries (other than the transaction contemplated by this
Agreement): (a) any merger, consolidation, share exchange for a controlling
interest, business combination or other similar transaction; or (b) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of Fifty
Percent (50%) or more of the assets of Fidelity or any of its Subsidiaries in a
single transaction or series of related transactions.
"CONTRACT" shall mean, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract, lease or other commitment to
which such person is a party or by which it is bound or to which any of its
properties is subject.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FIDELITY COMMON SHARES" shall mean the shares of common stock of
Fidelity, par value $.10 per share.
<PAGE> 79
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"FINAL INDEX PRICE" shall mean the weighted average of the average
closing prices per share of each of the common stocks of the Index Companies as
reported on NYSE, NASDAQ or AMEX for the trading days during which the Common
Exchange Value is determined, with the weighting percentages as set forth on
Exhibit 7.9.
"FINAL PFGI VALUE" shall mean the Common Exchange Value of PFGI Common
Shares determined without regard to the Minimum Exchange Value.
"INDEX COMPANIES" shall mean the companies listed on Exhibit 7.9;
provided, however, that any company shall be excluded from the Index Companies
(and thus not used in the computation of the Initial Index Price and Final Index
Price) as to which, between the date of this Agreement and the last trading day
of the period in which the Final Index Price is determined, any of the following
either occurs or is announced: (a) a proposed merger, acquisition, or business
combination in which that company is not or will not be the survivor, or (b) a
tender offer, exchange offer, or other transaction or involving the acquisition
of a majority of that company's common stock or assets.
"INITIAL EXCHANGE VALUE" shall mean the closing price per share of PFGI
Common Shares as of the same date the Initial Index Price is determined.
"INITIAL INDEX PRICE" shall mean the weighted average of the closing
prices per share of each of the common stocks of the Index Companies as reported
on the NYSE, NASDAQ or AMEX on August 13, 1999, subject to adjustment as
provided in this Agreement, with the weighting percentages as set forth on
Exhibit 7.9.
"IRS" shall mean the United States Internal Revenue Service.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on the financial condition, the results of operations,
the business or assets of such Person.
"MAXIMUM EXCHANGE VALUE" shall mean a value fixed for setting the
maximum Common Exchange Value equal to Forty-Four and 50/100 Dollars ($44.50)
per PFGI Common Share.
"MERGER CONSIDERATION" shall mean the Per Share Consideration and cash
to be payable in exchange for any fractional share of PFGI Common Shares which
would otherwise be distributable to a holder of Outstanding Fidelity Shares as
provided in Section 1.6(b) of this Agreement.
"MERGERS" shall mean the Holding Company Merger and the Subsidiary
Merger.
<PAGE> 80
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"MINIMUM EXCHANGE VALUE" shall mean a value fixed for setting the
minimum Common Exchange Value equal to Forty Dollars ($40.00) per PFGI Common
Share.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System National Market.
"NYSE" shall mean the New York Stock Exchange.
"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury and its predecessor, the Federal Home Loan Bank
Board, or any successor thereto.
"OUTSTANDING CENTENNIAL SHARES" shall mean, as of any given date, the
shares of common stock of Centennial issued and outstanding.
"OUTSTANDING FIDELITY SHARES" shall mean, as of any given date, the
shares of common stock of Fidelity issued and outstanding.
"PER SHARE CONSIDERATION" shall mean the number of PFGI Common Shares
issuable with respect to each of the Outstanding Fidelity Shares, rounded to
four decimal places, determined by dividing Twenty-One and 00/100 Dollars
($21.00) by the Common Exchange Value. If the Common Exchange Value is equal to
the Minimum Exchange Value, the Per Share Consideration shall be .5250 PFGI
Common Shares and if the Common Exchange Value is equal to the Maximum Exchange
Value, the Per Share Consideration shall be .4719 PFGI Common Shares.
"PERSON" means any individual, bank, corporation, limited liability
company, partnership, association, joint-stock company, business trust or
unincorporated organization.
"PFGI COMMON SHARES" shall mean shares of the common stock of PFGI, no
par value.
"REGISTRATION STATEMENT" shall mean a registration statement on Form
S-4 relating to the PFGI Common Shares to be issued to the shareholders of
Fidelity in connection with the Holding Company Merger.
"REGULATORY AGENCY" shall mean any federal or state agency engaged in
the insurance of bank or savings and loan deposits or charged with the
supervision or regulation of banks or bank holding companies, savings banks or
savings bank holding companies, savings and loans or savings and loan holding
companies, mortgage brokerage companies, or insurance agencies, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to any
of PFGI, Provident Bank, Fidelity or its Subsidiaries.
<PAGE> 81
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"SEC" means the United States Securities and Exchange Commission.
"SGFSC" shall mean Spring Garden Financial Service Corp., an Ohio
corporation and a wholly-owned Subsidiary of Fidelity.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"STOCK OPTION AGREEMENT" shall mean the Stock Option Agreement between
PFGI and Fidelity entered into in accordance with Section 8.20 hereof.
"SUBSIDIARIES" shall mean, in reference to any party, any bank,
corporation, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, that is consolidated with such party for
financial reporting purposes.
"TAX RETURN" shall mean any return, declaration, estimate, statement or
report, information return or other document (including any related or
supporting information) with respect to Taxes.
"TAXES" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or
undisputed.
SECTION 1.2 MERGER TRANSACTIONS. Pursuant to the terms and provisions
set forth herein, the Ohio General Corporation Law (the "OGCL"), and other
applicable federal and state laws and regulations, Fidelity shall merge with and
into PFGI and Centennial shall merge with and into Provident Bank. The
Subsidiary Merger shall occur following the Holding Company Merger.
SECTION 1.3 MERGING CORPORATIONS. Fidelity shall be the merging
corporation under the Holding Company Merger and its corporate identity and
existence, separate and apart from PFGI, shall cease upon consummation of the
Holding Company Merger. Centennial shall be the merging corporation under the
Subsidiary Merger and its corporate identity and existence, separate and apart
from Provident Bank, shall cease upon consummation of the Subsidiary Merger.
SECTION 1.4 SURVIVING CORPORATIONS. PFGI shall be the surviving
corporation in the Holding Company Merger. The Holding Company Merger shall not
cause, result in or require any changes in the Articles of Incorporation or Code
of Regulations of PFGI. Provident Bank shall be the surviving corporation in the
Subsidiary Merger. The place in Ohio where the surviving corporation's principal
place of business is to be located is One East Fourth Street, Cincinnati, Ohio,
<PAGE> 82
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and the names and addresses of the directors of Provident Bank are set forth on
Exhibit 1.4. The Subsidiary Merger shall not cause, result in or require any
changes in the Articles of Incorporation or Code of Regulations of Provident
Bank. Neither of the Mergers shall result in any change to the composition of
the Boards of Directors of PFGI or Provident Bank or in the corporate officers
appointed to serve PFGI or Provident Bank.
SECTION 1.5 EFFECT OF MERGERS. The Mergers shall have all of the
effects provided for in this Agreement, the OGCL, and under other applicable
state and federal law. Without limiting the generality of the foregoing, at the
Effective Time (as hereinafter defined): the separate existence of Fidelity and
Centennial shall cease; PFGI shall possess all assets and property of every
description, and every interest therein, wherever located, and the rights,
privileges, immunities, powers, franchises and authority, of a public as well as
of a private nature, of both Fidelity and PFGI; subject to the provisions of
Ohio Revised Code Section 1115.11(H), Provident Bank shall possess all assets
and property of every description, and every interest therein, wherever located,
and the rights, privileges, immunities, powers, franchises and authority, of a
public as well as of a private nature, of both Centennial and Provident Bank;
all of the separate rights and obligations of both Fidelity and PFGI shall
become the rights and obligations of PFGI after the Effective Time; and all of
the separate rights and obligations of both Provident Bank and Centennial shall
become the rights and obligations of Provident Bank after the Effective Time,
without impairing the rights of any of the constituent corporations to the
Mergers. As soon as practicable after the Effective Time, Fidelity Acquisition
shall be dissolved and its separate existence shall cease (or, at the election
of PFGI, Fidelity Acquisition shall be merged with and into PFGI or Provident
Bank).
SECTION 1.6 CONVERSION OF STOCK.
(a) At the Effective Time, by virtue of the Holding Company Merger and
without any action on the part of any of the parties to this Agreement or their
respective shareholders, each of the Outstanding Fidelity Shares shall be
converted into and become the right to receive, the Per Share Consideration
subject only to adjustment as set forth in Section 1.7 hereof. At the Effective
Time, by virtue of the Subsidiary Merger and without any action on the part of
any of the parties to this Agreement or their respective shareholders, each of
the Outstanding Centennial Shares shall be canceled and the Centennial Common
Shares shall be extinguished.
(b) No fractional PFGI Common Shares shall be issued. PFGI shall, in
lieu of issuing fractional shares to which the holder of Outstanding Fidelity
Shares would otherwise be entitled (after taking into account all Outstanding
Fidelity Shares held by such holder), pay such holder an amount in cash equal to
the product of such fractional share interest and the Common Exchange Value.
(c) At the Effective Time, all of the Fidelity Common Shares, by virtue
of the Holding Company Merger and without any action on the part of the holders
thereof, shall no longer be
<PAGE> 83
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outstanding and shall be canceled and retired and shall cease to exist, and each
holder of any certificate or certificates which immediately prior to the
Effective Time represented Outstanding Fidelity Shares (the "CERTIFICATES")
shall thereafter cease to have any rights with respect to such shares, except
the right of such holders to receive, without interest, the Per Share
Consideration upon the surrender of such Certificate or Certificates in
accordance with Section 1.9 hereof.
(d) At the Effective Time, each Fidelity Common Share, if any, held in
the treasury of Fidelity immediately prior to the Effective Time shall be
canceled and not converted into PFGI Common Shares.
(e) At the Effective Time, each option granted by Fidelity to purchase
shares of Fidelity Common Shares which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
Fidelity Common Shares and shall be converted automatically into an option to
purchase PFGI Common Shares. The number of PFGI Common Shares to be issued upon
the exercise of such option shall be equal to the number of Fidelity Common
Shares subject to such option immediately prior to the Effective Time multiplied
by the Option Exchange Ratio, with the product rounded down to the next whole
share. The "OPTION EXCHANGE RATIO" shall equal Twenty-One and 00/100 Dollars
($21.00) divided by the Common Exchange Value. The per share exercise price of
such option shall be adjusted by dividing the exercise price per share of
Fidelity Common Shares by the Option Exchange Ratio, with the quotient rounded
up to the next whole cent.
References in any Fidelity Stock Option Plan to a Compensation
Committee or Stock Option Committee shall be deemed to refer to a similar
committee presently constituted, or which will be constituted, by the Board of
Directors of PFGI. Further, any "incentive stock option" for federal income tax
purposes shall be adjusted as required by Section 424 of the Code so as not to
constitute a modification, extension or renewal of the option within the meaning
of Code Section 424(h). Otherwise the duration and other terms of the new option
shall be the same as the original option except that all references to Fidelity
or its Subsidiaries (or their corporate predecessors) shall be deemed to be
references to PFGI. Nothing in this Agreement shall be deemed to limit or
restrict the ability of any holder of options to acquire Fidelity Common Shares
to exercise such options at any time prior to the Effective Time in accordance
with, and to the extent permissible under, the agreements and plans governing
the issuance of such options.
(f) PFGI Common Shares to be issued in exchange for options for
Fidelity Common Shares shall be covered by an effective registration statement
of PFGI and PFGI shall maintain the effectiveness of such registration statement
until all such options have been exercised. As and when PFGI Common Shares are
issued upon the exercise of any such options for Fidelity Common Shares, such
PFGI Common Shares shall be duly authorized, validly issued, fully paid and
nonassessable and not subject to, or issued in violation of, any preemptive
rights. PFGI shall reserve sufficient PFGI Common Shares for issuance with
respect to such options. PFGI shall take any reasonable
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action required to be taken under applicable state Blue Sky or securities laws
in connection with the issuance of such shares. After the Effective Time, each
option for PFGI Common Shares shall be subject to adjustment in the manner
provided in the existing agreement or plan pursuant to which such option was
issued (or, if no provision is made for adjustment, in the manner provided in
Section 1.7) to reflect any recapitalization, splitup, exchange of shares, stock
dividend, or similar transaction.
(g) All of the capital stock of PFGI and Provident Bank, and any
options, warrants or other rights to receive the stock or securities of PFGI and
Provident Bank, outstanding immediately prior to the Effective Time shall remain
outstanding and unaffected by the Mergers.
SECTION 1.7 SHARE ADJUSTMENTS.
(a) If, after the commencement of the period during which the Common
Exchange Value is determined and before the Effective Time, the number of PFGI
Common Shares shall be changed (a "SHARE ADJUSTMENT") by reason of
recapitalization, splitup, exchange of shares or readjustment, or stock
dividend, then the number of PFGI Common Shares into which each Fidelity Common
Share shall be converted pursuant to Section 1.6(a) hereof shall be
appropriately and proportionately adjusted so that each shareholder of Fidelity
shall be entitled to receive such number of PFGI Common Shares as such
shareholder would have received had such Share Adjustment immediately followed
the Effective Time.
(b) At the Effective Time, the stock transfer agent for Fidelity shall
deliver to PFGI a written certification of the number of Outstanding Fidelity
Shares as of the Effective Time and a copy of either the stock transfer ledger
of Fidelity or a complete list of shareholders. If the number of Fidelity Common
Shares certified as outstanding by the stock transfer agent plus the number of
Fidelity Common Shares issuable upon the exercise of options unexercised as of
the Effective Time shall be greater than 9,416,611, then the Per Share
Consideration shall be appropriately and proportionately decreased to take into
account such additional issued and outstanding, and issuable, pursuant to
outstanding options, Fidelity Common Shares.
SECTION 1.8 CLOSING. The closing of the Mergers (the "CLOSING") shall
take place at the offices of PFGI at such time as the parties may reasonably
agree on the Closing Date described in Section 1.10 hereof.
SECTION 1.9 EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.
(a) Provident Bank shall act as Exchange Agent in the Holding Company
Merger (the "EXCHANGE AGENT").
(b) As soon as reasonably practicable after the Effective Time, not
later than three (3) business days after the Effective Time, the Exchange Agent
shall mail to each record holder of
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Outstanding Fidelity Shares a letter of transmittal (the "MERGER LETTER OF
TRANSMITTAL") and instructions for use in effecting the surrender of
Certificates in exchange for the Merger Consideration. The Merger Letter of
Transmittal shall specify that delivery of share Certificates shall be effected,
and risk of loss and title to such Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as PFGI may reasonably specify. Upon surrender to the
Exchange Agent of a Certificate, together with a Merger Letter of Transmittal
duly executed and any other required documents, the holder of such Certificate
shall be entitled to receive in exchange therefor solely the Per Share
Consideration, plus dividends paid with respect to such consideration having a
record date after the Effective Time as provided in Section 1.9(c) hereof. No
interest on any consideration payable upon the surrender of the Certificates
shall be paid or accrued for the benefit of holders of Certificates. If any of
the Merger Consideration is to be issued to a person other than a person in
whose name a surrendered Certificate is registered, it shall be a condition of
issuance that the surrendered Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
issuance shall pay to the Exchange Agent any required transfer taxes or other
taxes or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable.
(c) No dividends that are otherwise payable on PFGI Common Shares
constituting the Merger Consideration shall be paid to persons entitled to
receive such PFGI Common Shares until such persons surrender their Certificates.
Upon such surrender, there shall be paid to the person in whose name the PFGI
Common Shares shall be issued any dividends which shall have become payable with
respect to such PFGI Common Shares (without interest and less the amount of
taxes, if any, which may have been imposed thereon), between the Effective Time
and the time of such surrender.
(d) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by PFGI in its sole discretion,
the posting by such person of a bond in such amount as PFGI may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration deliverable
in respect thereof.
(e) At or after the Effective Time there shall be no transfers on the
stock transfer books of Fidelity of any Fidelity Common Shares. If, after the
Effective Time, Certificates are presented for transfer, they shall be canceled
and exchanged for the Merger Consideration as provided in, and subject to the
provisions of, this Section 1.9.
SECTION 1.10 CLOSING DATE AND EFFECTIVE TIME. At PFGI's election, the
Closing shall take place on the Friday following the last business day of the
month following the month in which each of the conditions in Sections 6.1(d) and
6.2(d) hereof is satisfied or waived by the appropriate party or on such other
date after such satisfaction or waiver as Fidelity and PFGI may agree (the
"CLOSING
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DATE"). The parties shall use their best efforts to effectuate a Closing Date of
March 3, 2000, but in any event the Closing Date shall not occur later than June
30, 2000. Each of the Mergers shall be effective only after receipt of any
required approval from Regulatory Agencies and then upon the completion of
filing of all required certificates of merger with the Secretary of State of the
State of Ohio (the "EFFECTIVE TIME"), which the parties shall use their best
efforts to cause to occur as of the Closing Date.
SECTION 1.11 CLOSING DELIVERIES.
(a) At the Closing, Fidelity, Fidelity Acquisition and Centennial shall
deliver to PFGI and Provident Bank:
(i) certified copies of the Articles of Incorporation, Code of
Regulations or Bylaws and minutes of Fidelity and similar charter
documents and minutes of each Fidelity Subsidiary;
(ii) certificates signed by appropriate officers of Fidelity,
Fidelity Acquisition and Centennial stating that, to their best
knowledge and belief, (A) each of the representations and warranties
contained in Article 2 hereof is true and correct at the time of the
Closing with the same force and effect as if such representations and
warranties had been made at Closing (except that representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct only as of such date), and
(B) all of the conditions set forth in Sections 6.1(b) and 6.1(d)
hereof have been satisfied or waived as provided therein;
(iii) certified copies of the resolutions of the Boards of
Directors of Fidelity, Fidelity Acquisition and Centennial and their
shareholders as required for valid approval of the execution of this
Agreement and the consummation of the Mergers and the other
transactions contemplated by this Agreement;
(iv) certificates of the Secretary of State of the State of
Ohio, dated not more than 30 days prior to Closing, stating that
Fidelity and its Subsidiaries are in good standing;
(v) certificates of merger executed by Fidelity and Centennial
in proper form for filing with the Secretary of State of the State of
Ohio, the OTS (if required) and with the Ohio Superintendent of
Financial Institutions in order to cause the Mergers to become
effective; and
(vi) a legal opinion from counsel for Fidelity and its
Subsidiaries, in form reasonably acceptable to counsel to PFGI and
Provident Bank, opining with respect to the matters listed on Exhibit
1.11(a) hereto.
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(b) At the Closing, PFGI and Provident Bank shall deliver to Fidelity,
Fidelity Acquisition and Centennial:
(i) certified copies of the Articles of Incorporation and Code
of Regulations of PFGI and similar charter documents of Provident Bank;
(ii) certificates signed by appropriate officers of PFGI and
Provident Bank stating that, to their best knowledge and belief, (A)
each of the representations and warranties contained in Article 3
hereof is true and correct at the time of the Closing with the same
force and effect as if such representations and warranties had been
made at Closing (except that representations and warranties that by
their terms speak as of the date of this Agreement or some other date
shall be true and correct only as of such date), and (B) all of the
conditions set forth in Section 6.2(b) and 6.2(d) hereof (but excluding
the approval of Fidelity's shareholders) have been satisfied or waived
as provided therein;
(iii) certified copies of the resolutions of the Boards of
Directors of PFGI and Provident Bank and their respective shareholders
as required for valid approval of the execution of this Agreement and
the consummation of the transactions contemplated by this Agreement;
(iv) a legal opinion from counsel for PFGI and Provident Bank,
in form reasonable acceptable to counsel for Fidelity and its
Subsidiaries, opining with respect to the matters listed on Exhibit
1.11(b) hereto;
(v) certificates of the Secretary of State of the State of
Ohio, dated not more than 30 days prior to Closing, stating that PFGI
and Provident Bank are in good standing;
(vi) Certificates of merger executed by PFGI and Provident
Bank, reflecting the terms and) provisions hereof and in proper form
for filing with the Secretary of State of the State of Ohio, the OTS
(if required) and with the Ohio Superintendent of Financial
Institutions, in order to cause the Mergers to become effective; and
(vii) evidence that PFGI shall have delivered to the Exchange
Agent so much of the Aggregate Merger Consideration as is required to
effect the delivery of the Per Share Consideration to the holders of
Outstanding Fidelity Shares as contemplated by Section 1.9
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hereof and a statement, in which Fidelity has concurred, showing the
manner in which the Aggregate Merger Consideration and Common Exchange
Value have been calculated.
SECTION 1.12 DISSENTER'S RIGHTS. Fidelity agrees to either (i) furnish
PFGI with an opinion of its legal counsel to the effect that Fidelity
shareholders are not entitled to dissenter's rights under the OGCL or pursuant
to any provision in the Articles of Incorporation of Fidelity, or (ii) include
in the notice of meeting to approve the Holding Company Merger, a statement
sufficient under Ohio law to inform Fidelity's shareholders of any entitlement
to dissenter's rights pursuant to the OGCL Sections 1701.84 and 1701.85. If
there are any Outstanding Fidelity Shares held by shareholders entitled to
assert, and who have perfected their rights to assert, their dissenter's rights
under OGCL Sections 1701.84 and 1701.85 as to their shares, such holders shall
cease at the Effective Time to have any of the rights of a shareholder in
respect of their Outstanding Fidelity Shares, such shares shall not be converted
into or be exchangeable for the right to receive the Merger Consideration
(unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their appraisal rights under the OGCL), and shall
only have the right to be paid the fair cash value of such shares under OGCL
Section 1701.85 and such other rights as may be granted by the OGCL. If any such
holder shall have failed to perfect or shall have effectively withdrawn or lost
such dissenter's rights, such holder's Fidelity Common Shares shall thereupon be
converted into and become exchangeable for the right to receive, as of the
Effective Time, the Merger Consideration, as applicable, without interest.
Fidelity shall give PFGI (i) prompt notice of any written demands for
payment for any Fidelity Common Shares under OGCL Sections 1701.84 and 1701.85,
attempted withdrawals of such demands, and any other instruments served pursuant
to the OGCL and received by Fidelity relating to dissenter's rights, and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to the exercise of dissenter's rights under the OGCL. Fidelity shall not, except
with the prior written consent of PFGI, voluntarily make any payment with
respect to any demands for payment for Fidelity Common Shares under the OGCL,
offer to settle or settle any such demands or approve any withdrawal of any such
demands.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF FIDELITY, FIDELITY ACQUISITION
AND CENTENNIAL
Fidelity, Fidelity Acquisition and Centennial hereby make the following
representations and warranties:
<PAGE> 89
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SECTION 2.1 ORGANIZATION AND CAPITAL STOCK.
(a) Fidelity is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio and has the corporate power to
own all of its property and assets, to incur all of its liabilities and to carry
on its business as now being conducted.
(b) Fidelity Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and has the
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted.
(c) Centennial is a savings bank duly organized, validly existing and
in good standing under Chapter 1161 of the Ohio Revised Code and has the
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted.
(d) CSLSC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has the corporate power to own
all of its property and assets, to incur all of its liabilities and to carry on
its business as now being conducted.
(e) SGFSC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has the corporate power to own
all of its property and assets, to incur all of its liabilities and to carry on
its business as now being conducted.
(f) True, complete and correct copies of the articles of incorporation,
code of regulations, bylaws, constitutions and similar charter documents of
Fidelity and its Subsidiaries, as amended and as in effect on the date of this
Agreement, have been previously delivered to PFGI by Fidelity.
(g) The authorized capital stock of Fidelity consists of (i) 15,000,000
common shares, par value $.10 each, of which as of the date hereof, 9,125,406
are issued and outstanding and 291,205 are subject to outstanding stock option
agreements and (ii) 5,000,000 serial preferred, par value $.10 each, of which as
of the date hereof, none are issued and outstanding. All of the Outstanding
Fidelity Shares are duly and validly issued and outstanding and are fully paid
and non-assessable and free of preemptive rights. None of the Outstanding
Fidelity Shares has been issued in violation of any preemptive rights of the
current or past shareholders of Fidelity. To the best knowledge of Fidelity,
each Certificate issued by Fidelity in replacement of any Certificate
theretofore issued by it which was claimed by the record holder thereof to have
been lost, stolen or destroyed was issued by Fidelity only upon receipt of an
affidavit of lost stock certificate and indemnity agreement of such shareholder
indemnifying Fidelity against any claim that may be made against it on account
of the alleged loss, theft or destruction of any such Certificate or the
issuance of such replacement Certificate.
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(h) The authorized capital stock of Fidelity Acquisition consists of
1,000 common shares, par value $.10 each, all of which as of the date hereof are
wholly owned by Fidelity, free and clear of all liens, encumbrances, rights of
first refusal, options or other restrictions of any nature whatsoever. Fidelity
Acquisition has no assets or liabilities other than the common shares of
Centennial.
(i) The authorized capital stock of Centennial consists of 3,000,000
common shares, par value $.01 each, all of the issued and outstanding shares of
which as of the date hereof are wholly owned by Fidelity Acquisition free and
clear of all liens, encumbrances, rights of first refusal, options or other
restrictions of any nature whatsoever.
(j) The authorized capital stock of CSLSC consists of 500 common
shares, no par value, all of the issued and outstanding shares of which as of
the date hereof are wholly owned by Centennial, free and clear of all liens,
encumbrances, rights of first refusal, options or other restrictions of any
nature whatsoever.
(k) The authorized capital stock of SGFSC consists of 1,000 common
shares, no par value, all of the issued and outstanding shares of which as of
the date hereof are wholly owned by Fidelity, free and clear of all liens,
encumbrances, rights of first refusal, options or other restrictions of any
nature whatsoever.
(l) Except as described in this Section, (i) there are no shares of
capital stock or other equity securities of Fidelity or its Subsidiaries
outstanding and no outstanding options, warrants, rights to subscribe for,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any capital stock of Fidelity or
any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which any of Fidelity or any of its Subsidiaries is or may be
obligated to issue additional shares of its capital stock or options, warrants
or rights to purchase or acquire any additional shares of its capital stock, and
(ii) there are no outstanding stock appreciation, phantom stock or similar
rights.
(m) Except as set forth in Section 2.1(m) of the Disclosure Schedule,
Fidelity and its Subsidiaries are not a party to any partnership or joint
venture arrangement and do not own an equity interest in any other business or
enterprise.
(n) Except for minutes of meetings held after June 30, 1999, none of
which shall reflect any corporate action taken inconsistent with or in
contravention of this Agreement, the minute books of Fidelity and each of its
Subsidiaries accurately reflect all corporate actions held or taken by their
respective shareholders and Boards of Directors (including board committees)
since each was originally organized.
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SECTION 2.2 AUTHORIZATION.
(a) The respective Boards of Directors of Fidelity, Fidelity
Acquisition and Centennial have, by all appropriate action, approved this
Agreement and the Mergers and have authorized the due execution, delivery and
performance hereof by their respective officers. Fidelity's Board of Directors
has directed that this Agreement and the transactions contemplated by this
Agreement, including the Holding Company Merger, be submitted to the
shareholders of Fidelity for approval at a specially-called meeting of the
Fidelity shareholders (as provided in Section 4.3 hereof). Fidelity, in its
capacity as the sole shareholder of Fidelity Acquisition, has duly adopted and
approved this Agreement and the Subsidiary Merger. Fidelity Acquisition, in its
capacity as the sole shareholder of Centennial, has duly adopted and approved
this Agreement and the Subsidiary Merger Except for the adoption and approval of
this Agreement by the affirmative vote of the holders of a majority of the
Outstanding Fidelity Shares, no other corporate acts or proceedings are required
to be taken by Fidelity or its Subsidiaries to authorize the execution, delivery
and performance of this Agreement and to consummate the Mergers and the other
transactions contemplated by this Agreement.
(b) This Agreement has been duly and validly executed and delivered by
Fidelity, Fidelity Acquisition and Centennial and constitutes a legal, valid and
binding obligation of Fidelity, Fidelity Acquisition and Centennial, enforceable
against them in accordance with its terms, except to the extent that (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance of other laws relating to or from time to time
affecting the enforcement of creditors' rights generally or the rights of
creditors of savings and loan holding companies or savings banks, the accounts
of whose subsidiaries are insured by the Federal Deposit Insurance Corporation;
and (ii) the availability of certain remedies may be precluded by general
principles of equity.
(c) Neither the execution, delivery and performance by Fidelity,
Fidelity Acquisition and Centennial of this Agreement, nor the consummation by
them of the transactions contemplated hereby, nor compliance by them with any of
the provisions hereof, will violate, conflict with or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien upon any of the
properties or assets of Fidelity or its Subsidiaries under the terms, conditions
or provisions of (A) their respective articles of incorporation, charter,
constitution, by-laws or code of regulations, or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Fidelity or its Subsidiaries is a party or by which they or
their respective properties or assets may be bound, or to which such parties may
be subject, or violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation
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applicable to Fidelity or its Subsidiaries or any of their respective properties
or assets, or any license or permit held by Fidelity or its Subsidiaries.
(d) Section 2.2(d) of the Disclosure Schedule details all of the
notices, consents, authorizations, approvals or exemptions required of Fidelity
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement and the consummation of Mergers and other transactions contemplated by
this Agreement, other than (i) the approval of the shareholders of Fidelity at
the Shareholders' Meeting, (ii) the actions required to be taken by any party to
this Agreement to comply with the provisions of the OGCL, Ohio laws relating to
banks and savings banks, the Securities Act, the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "EXCHANGE ACT"),
the securities or blue sky laws of the various states or filings, the Bank
Holding Company Act of 1956, as amended (the "BHCA"), the Bank Merger Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), and the
rules and regulations of the Regulatory Agencies having jurisdiction over the
parties, including without limitation the Board of Governors of the Federal
Reserve System (the "FEDERAL RESERVE BOARD"), the OTS, the Ohio Division of
Financial Institutions, and the U.S. Department of Justice (all such regulatory
actions being referred to as the "REQUIRED REGULATORY ACTIONS").
SECTION 2.3 SUBSIDIARIES. Except for Centennial, Fidelity Acquisition,
SGFSC and CSLSC, Fidelity does not have any other direct or indirect
Subsidiaries.
SECTION 2.4 NO DEFAULTS. Fidelity and its Subsidiaries are neither in
default under nor in violation of any provision of their articles of
incorporation or charter instruments, as the case may be, bylaws, regulations,
constitution, or any promissory note, indenture or any evidence of indebtedness
or security therefor, lease, contract, insurance policy, purchase or other
commitment or any other agreement or arrangement (however evidenced), whether
written or oral, and there has not occurred any event that, with the lapse of
time or giving of notice or both, would constitute such a default or violation,
which default could reasonably be expected to cause a Material Adverse Effect on
Fidelity or its Subsidiaries.
SECTION 2.5 FINANCIAL INFORMATION. The consolidated balance sheets of
Fidelity and its Subsidiaries as of December 31, 1998 and 1997, and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years then ended, together with the notes thereto, included in
Fidelity's Annual Report on Form 10-K for the year ended December 31, 1998,
together with the consolidated balance sheets of Glenway Financial Corporation
and its Subsidiaries as of June 30, 1998 and 1997, and related consolidated
statements of income, changes in shareholders' equity and cash flows for the
years then ended, together with the notes thereto, included in Glenway Financial
Corporation's Annual Report on Form 10-K for the year ended June 30, 1998, as
currently on file with the SEC, and the unaudited consolidated balance sheets of
Fidelity and its Subsidiaries as of March 31, 1999, and the related unaudited
consolidated income statements and statements of changes in shareholders' equity
and cash flows for the quarters then ended
<PAGE> 93
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included in Fidelity's Quarterly Report on Form 10-Q for such quarter, as
currently on file with the SEC, and the periodic financial reports as filed with
the applicable Regulatory Agencies (together, the "FIDELITY FINANCIAL
STATEMENTS"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein and except for any regulatory reporting differences required by the
reports of Centennial) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of Fidelity and its consolidated
Subsidiaries as of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end adjustments, none
of which shall be material). The books and records of Fidelity and its
Subsidiaries have been, and are being, maintained in accordance with generally
accepted accounting principles and any other applicable legal and accounting
requirements and reflect only actual transactions.
SECTION 2.6 ABSENCE OF CHANGES. Since March 31, 1999, there has been no
material adverse change in the financial condition, the results of operations or
the business of Fidelity nor its Subsidiaries. Since July 15, 1999, Fidelity has
not declared or paid any dividend or made any other distribution to its
shareholders, whether in cash, stock or other property.
SECTION 2.7 LITIGATION AND RELATED MATTERS. Except as set forth in
Section 2.7 of the Disclosure Schedule, there is no litigation, claim or other
proceeding pending or, to the knowledge of Fidelity or its Subsidiaries,
threatened, against Fidelity or its Subsidiaries, or of which the property of
Fidelity or its Subsidiaries is or would be subject, and there is no injunction,
order, judgment, decree or regulatory restriction imposed upon Fidelity or its
Subsidiaries or the assets of Fidelity or its Subsidiaries which would have a
Material Adverse Effect on Fidelity or its Subsidiaries. For purposes of this
Section only, the term "Material Adverse Effect" shall mean any litigation,
claim or other proceeding, pending or threatened, in which an adverse outcome
would result in a liability to Fidelity or its Subsidiaries in excess of
Twenty-Five Thousand Dollars ($25,000.00).
SECTION 2.8 REGULATORY MATTERS. Fidelity is a registered, unitary
savings and loan holding company under Section 10 of the Home Owners Loan Act,
as amended, and Centennial is an Ohio-chartered savings bank subject to
regulation, examination and supervision by the Ohio Division of Financial
Institutions and the FDIC. Centennial is a member of the Federal Home Loan Bank
System. Centennial is an insured institution (within the meaning of the Federal
Deposit Insurance Act) and the deposits of Centennial are insured by the FDIC up
to the FDIC limits. Neither Fidelity nor Centennial is subject or is party to,
or has received any notice or advice that it may become subject or party to, any
investigation with respect to, any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory enforcement action,
proceeding or order with or by, or is a party to any commitment letter or
similar undertaking to, or is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board resolutions
at the request of, any Regulatory Agency that currently restricts the
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conduct of its business or that currently affects its capital adequacy, its
credit policies, its management or its business (each, a "REGULATORY
AGREEMENT"), nor has Fidelity or its Subsidiaries been advised by any Regulatory
Agency that it is considering issuing or requesting any such Regulatory
Agreement. Except as set forth in Section 2.8 of the Disclosure Schedule, there
is no unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Fidelity or
Centennial, or any corporations or financial institutions merged with and into
Fidelity or its Subsidiaries.
SECTION 2.9 REPORTS. Fidelity and its Subsidiaries have filed all
reports and statements, together with any amendments required to be made with
respect thereto, if any, that they have been required to file with (i) the
Federal Reserve Board, (ii) the FDIC, (iii) the Ohio Division of Financial
Institutions, (iv) the SEC and any state securities authorities, (v) the OTS, or
(vi) any other Regulatory Agency with jurisdiction over Fidelity or its
Subsidiaries, and have paid all fees and assessments due and payable in
connection therewith. As of their respective dates, each of such reports and
documents, as amended, including any financial statements, exhibits and
schedules thereto, complied with the relevant statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed,
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 2.10 NON-BANKING ACTIVITIES OF FIDELITY AND SUBSIDIARIES.
Fidelity is not engaged in any activity, either directly or indirectly through
one or more of its Subsidiaries or other equity investments, which is not
permitted of a savings and loan holding company or of the subsidiary or other
enterprises through which such activity is conducted. Centennial is not engaged
in any activity, either directly or indirectly through one or more of its
Subsidiaries or other equity investments, which is not permitted of an Ohio
savings bank.
SECTION 2.11 FIDUCIARY RESPONSIBILITIES. During the applicable statute
of limitations period, (i) Fidelity and its Subsidiaries have properly
administered all accounts (if any) for which it acts as a fiduciary or agent,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law, and (ii) neither Fidelity, its
Subsidiaries, nor any director, officer or employee of Fidelity or any of its
Subsidiaries acting on behalf of Fidelity or its Subsidiaries, has committed any
breach of trust with respect to any such fiduciary or agency account, and the
accountings for each such fiduciary or agency account are true and correct and
accurately reflect the assets of such fiduciary or agency account. There is no
investigation or inquiry by any Regulatory Agency pending, or to the knowledge
of Fidelity, threatened, against or affecting Fidelity or its Subsidiaries
relating to the compliance by Fidelity or its Subsidiaries with sound fiduciary
principles and applicable regulations.
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SECTION 2.12 FAIR LENDING; COMMUNITY REINVESTMENT ACT. With the
exception of routine investigation of consumer complaints, neither Fidelity,
Centennial nor any other Subsidiary of Fidelity has been advised by any
Regulatory Agency that it is or may be in violation of the Equal Credit
Opportunity Act or the Fair Housing Act or any similar federal or state statute.
Centennial received a Community Reinvestment Act ("CRA") rating of
"satisfactory" in its most recent CRA examination.
SECTION 2.13 EMPLOYMENT AGREEMENTS. Section 2.13 of the Disclosure
Schedule lists each agreement, arrangement, commitment or contract (whether
written or oral) for the employment, retention or engagement, or with respect to
the severance, of any present or former officer, director, employee, agent,
consultant or other person or entity to which Fidelity or its Subsidiaries is a
party to or bound by and which, by its terms, is not terminable by Fidelity or
its Subsidiaries on thirty (30) days written notice or less without the payment
of any amount by reason of such termination. Copies of each written (and
summaries of each oral) agreement, arrangement, commitment or contract listed in
Section 2.13 of the Disclosure Schedule have been previously delivered to PFGI.
SECTION 2.14 EMPLOYEE MATTERS AND ERISA.
(a) Neither Fidelity nor any of its Subsidiaries has entered into any
collective bargaining agreement with any labor organization with respect to any
group of employees of Fidelity or its Subsidiaries and to the knowledge of
Fidelity there is no present effort nor existing proposal to attempt to unionize
any group of employees of Fidelity or its Subsidiaries.
(b) (i) Fidelity and its Subsidiaries are and have been in compliance
in all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and neither
Fidelity nor its Subsidiaries is engaged in any unfair labor practice, (ii)
there is no unfair labor practice complaint against Fidelity or its Subsidiaries
pending or, to the knowledge of Fidelity or its Subsidiaries, threatened before
the National Labor Relations Board, (iii) there is no labor dispute, strike,
slowdown or stoppage actually pending or, to the knowledge of Fidelity,
threatened against or directly affecting Fidelity or its Subsidiaries (iv)
neither Fidelity nor its Subsidiaries has experienced any work stoppage or other
labor difficulty during the past five (5) years, and (v) there are no EEOC or
similar agency complaints against Fidelity or its Subsidiaries pending, or to
the knowledge of Fidelity or its Subsidiaries, threatened.
(c) Section 2.14(c) of the Disclosure Schedule lists each employee
benefit plan, as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and each nonqualified employee
benefit plan, deferred compensation, bonus, stock and incentive plan, and each
other employee benefit and fringe benefit program for the benefit of former or
current officers, directors or employees of Fidelity or its Subsidiaries (the
"FIDELITY EMPLOYEE
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PLANS") which Fidelity or its Subsidiaries maintain, contribute to or
participate in or have any liability under (other than incidental employee
benefits as described by U.S. Department of Labor Regulation 2510.3-1(b) through
(k)). No present or former employee of Fidelity or its Subsidiaries has been
charged with breaching, or has breached in any material respect, a fiduciary
duty under any of the Fidelity Employee Plans. Neither Fidelity nor any of its
Subsidiaries participates in, nor has it in the past five (5) years participated
in, nor has it any present or future obligation or liability under, any
multi-employer plan (as defined at Section 3(37) of ERISA). Section 2.14(c) of
the Disclosure Schedule lists all plans that provides health, major medical,
disability or life insurance benefits to former employees of Fidelity or its
Subsidiaries that any of them maintain, contribute to, or participate in.
(d) Fidelity and its Subsidiaries do not maintain, and have not
maintained for the past five years, any Fidelity Employee Plans subject to Title
IV of ERISA or Section 412 of the Code. No claim is pending, and neither
Fidelity nor any of its Subsidiaries has received notice of any threatened or
imminent claim with respect to any Fidelity Employee Plan (other than a routine
claim for benefits for which plan administrative review procedures have not been
exhausted) for which Fidelity or its Subsidiaries would be liable after December
31, 1998, except as reflected on the Fidelity Financial Statements. All
insurance premiums have been paid in full, subject only to normal retrospective
adjustments in the ordinary course. Fidelity and its Subsidiaries do not have
any liabilities for excise taxes under Sections 4971, 4975, 4976, 4977, 4979 or
4980B of the Code or for a fine under Section 502 of ERISA with respect to any
Fidelity Employee Plan. All Fidelity Employee Plans have been operated,
administered and maintained substantially in accordance with the terms thereof
and in substantial compliance with the requirements of all applicable laws,
including, without limitation, ERISA and the Code. Any employee benefit plan (as
defined in Section 3(3) of ERISA) terminated by Fidelity or its Subsidiaries
prior to the date hereof was terminated in compliance with the requirements of
all applicable laws, including without limitation, ERISA and the Code.
(e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement (either alone or
upon the occurrence of any additional acts or events) would (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director, officer or employee
of Fidelity or its Subsidiaries from Fidelity or its Subsidiaries under any
contractual arrangement (except for the Employment Agreements with the executive
officers of Fidelity described in Section 2.13 of the Disclosure Schedule),
Fidelity Employee Plan or otherwise, (ii) increase any benefits otherwise
payable under any Fidelity Employee Plan (other than expressly by the terms of
such Plan) or (iii) result in any acceleration of the time of payment or vesting
of any such benefits (other than expressly by the terms of such agreement or
Plan), including, without limitation, the vesting of any additional Fidelity
Common Shares in any participant in any Fidelity Employee Plan.
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(f) Copies of each Fidelity Employee Plan described in Section 2.14(c)
of the Disclosure Schedule, and all amendments or supplements thereto, have been
previously delivered to PFGI by Fidelity. Section 2.14(f) of the Disclosure
Schedule lists, for each Fidelity Employee Plan, to the extent applicable, all
of the following with respect thereto: (i) summary plan descriptions, (ii) lists
of all current participants and all participants with benefit entitlements,
(iii) contracts relating to plan documents, (iv) valuations for any plan as of
the most recent date, (vi) determination letters from the IRS, (vii) the most
recent annual report filed with the IRS, and (viii) trust agreements. Copies of
each of the documents described in the preceding sentence have been previously
delivered to PFGI by Fidelity.
SECTION 2.15 TITLE TO PROPERTIES; INSURANCE. (i) Fidelity and its
Subsidiaries have good and marketable title, free and clear of all liens,
charges and encumbrances (except Taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the Fidelity Financial Statements
and easements, rights-of-way, and other restrictions and imperfections not
material in nature, and rights of redemption under applicable law) to all of
their owned real properties, a list of which is included on Schedule 2.15 of the
Disclosure Schedule, (ii) all leasehold interests for real property and personal
property used by Fidelity and its Subsidiaries in their businesses are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms, a list of which is included on Schedule 2.15 of the Disclosure
Schedule and copies of which have been delivered to PFGI, (iii) all such
properties comply with all applicable private agreements, zoning requirements
and other governmental laws and regulations relating thereto and there are no
condemnation proceedings pending or, to our knowledge, threatened with respect
to such properties, (iv) all insurable properties owned or held by Fidelity or
its Subsidiaries are adequately insured by financially sound and reputable
insurers in such amounts and against fire and other risks insured against by
extended coverage and public liability insurance, as is customary with savings
banks and savings and loan holding companies of similar size, and there are
presently no claims pending under such policies of insurance and no notices have
been given by Fidelity or its Subsidiaries under such policies, and (v) all
tangible properties used in the businesses of Fidelity or its Subsidiaries are
in good condition, reasonable wear and tear excepted, and are useable in the
ordinary course of business consistent with past practices. Section 2.15 of the
Disclosure Schedule sets forth, for each policy of insurance maintained by
Fidelity and its Subsidiaries, the amount and type of insurance, the name of the
insurer and the amount of the annual premium.
SECTION 2.16 INTELLECTUAL PROPERTY RIGHTS. Except as set forth in
Section 2.16 of the Disclosure Schedule, Fidelity and its Subsidiaries have
valid title or other ownership rights under royalty-free, perpetual and
exclusive licenses to all intangible personal or intellectual property necessary
to conduct the business and operations of Fidelity and its Subsidiaries as
presently conducted, including without limitation all franchises, trademarks,
tradenames, patents, software licenses and other rights necessary or appropriate
to conduct their respective businesses as currently conducted (none of which
shall be adversely affected by the Mergers) and free and clear of any claim,
defense or right of any other person or entity except, in the case of licenses,
for the rights of
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the licensors pursuant to applicable license agreements, which rights do not
adversely interfere with the use of such property.
SECTION 2.17 ENVIRONMENTAL MATTERS.
(a) As used herein, the term "ENVIRONMENTAL LAWS" shall mean all local,
state and federal environmental, health and safety laws and regulations and
common law standards in all jurisdictions in which Fidelity and its Subsidiaries
have done business or owned, leased or operated property, including, without
limitation, the Federal Resource Conservation and Recovery Act, the Federal
Comprehensive Environmental Response, Compensation and Liability Act, the
Federal Clean Water Act, the Federal Clean Air Act, and the Federal Occupational
Safety and Health Act.
(b) Neither the conduct nor operation of Fidelity or any of its
Subsidiaries nor any condition of any property presently or previously owned,
leased or operated by any of them violates or violated or may violate,
Environmental Laws in a manner or to any extent exposing Fidelity or its
Subsidiaries to liability or potential liability and no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, would constitute a violation of
Environmental Laws in a manner or to any extent that would obligate (or
potentially obligate) Fidelity or its Subsidiaries to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any such property.
None of Fidelity or its Subsidiaries has received any notice from any person or
entity that Fidelity or its Subsidiaries or the operation or condition of any
property ever owned, leased or operated by any of them are or were in violation
of any Environmental Laws in a manner or to any extent exposing Fidelity or its
Subsidiaries to liability or potential liability or that any of them are
responsible (or potentially responsible) for the cleanup or other remediation of
any pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on or beneath any such property and, to the knowledge of Fidelity
or its Subsidiaries and the operation and condition of any property ever owned,
leased or operated by any of them are not and were not in violation of any
Environmental Laws in a manner or to any extent exposing Fidelity or its
Subsidiaries to liability or potential liability and none of them are
responsible (or potentially responsible) for the cleanup or other remediation of
any pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on or beneath any such property. No property presently owned,
leased or operated by Fidelity or its Subsidiaries contains any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on or
beneath any such property or otherwise violates any Environmental Laws.
(c) Neither Fidelity nor any of its Subsidiaries is aware of any
material violation of any Environmental Laws by their respective customers, or
any condition affecting any real estate owned by such customers and mortgaged to
Fidelity or its Subsidiaries which, if ever owned, leased or operated by
Fidelity or its Subsidiaries, as a result of foreclosure of such mortgage or
otherwise, could give rise to a liability under any Environmental Laws or
otherwise have a Material Adverse Effect on Fidelity or its Subsidiaries.
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SECTION 2.18 YEAR 2000 COMPLIANCE.
(a) Fidelity and its Subsidiaries have taken all actions reasonably
required to verify that all date-sensitive hardware, software, processes,
procedures, interfaces and similar operating systems used with the operations of
Fidelity and its Subsidiaries are designed and will perform such that they will
not abruptly end or provide invalid or incorrect results in manipulating date
data for years after 1999 and are otherwise compliant with standards recognized
to ensure year 2000 compatibility including, but not be limited to: date data
century recognition, calculations that accommodate same century and
multi-century formulas and date values, date data interface values that reflect
the century, and which include year 2000 leap year calculations ("YEAR 2000
COMPLIANT").
(b) Fidelity and its Subsidiaries have used their best efforts to
confirm with all of their material vendors and customers that all date-sensitive
hardware, software, processes, procedures, interfaces and similar operating
systems used within their respective operations are Year 2000 Compliant.
(c) Centennial plans for being Year 2000 Compliant adhere to the terms,
deadlines, requirements, and conditions contained in the Year 2000 statements
and guidance issued by the Ohio Division of Financial Institutions and the
Federal Financial Institutions Examinations Council.
(d) Centennial has not received, and does not expect to receive, a
"Year 2000 Deficiency Notification Letter" (as such term is employed in the
Federal Reserve Board's Supervision and Regulation Letter No. SR 98-3(SUP),
dated March 4, 1998), or any similar letter from any Regulatory Agency, and does
not anticipate any deficiency in its plans, or the implementation of its plans,
for addressing the issues set forth in the statements of the OTC and the Federal
Financial Institutions Examination Council concerning Year 2000 compliance.
SECTION 2.19 CERTAIN OPERATIONAL MATTERS.
(a) Neither Fidelity nor any of its Subsidiaries is a party to any
agreement or subject to any arrangement which would prevent, limit or restrict
it from the sale, lease or other disposition of the its main offices or any
branch office.
(b) Except as set forth in Section 2.19(b) of the Disclosure Schedule,
consummation of the Mergers shall not result in the termination or cancellation
before its stated expiration of any contract to which Fidelity or its
Subsidiaries is a party or cause them to incur any financial penalty, liquidated
damages, assessment or other costs solely by reason of the Mergers.
SECTION 2.20 MATERIAL CONTRACTS AND AGREEMENTS. Section 2.20 of the
Disclosure Schedule contains a list of all contracts, agreements, indentures,
guaranties, arrangements or commitments, whether or not made in the ordinary
course of business, to which any of Fidelity or
<PAGE> 100
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its Subsidiaries is a party or by which any of them are bound and individually
involving the payment or commitment to pay of more than Fifty Thousand Dollars
($50,000.00) ("MATERIAL CONTRACTS"), other than (i) loan agreements or loan
commitments with customers made in the ordinary course of business of Centennial
in an amount less than $250,000.00 for any single family residential mortgage
loan and less than $500,000.00 for any commercial loan, and (ii) the contracts
and benefit plans listed in Sections 2.13 and 2.14 of the Disclosure Schedule.
Except as described in Section 2.20 of the Disclosure Schedule, neither Fidelity
nor its Subsidiaries is a party to, or is bound by, any other Material Contract.
Complete and accurate copies of each of the Material Contracts (other than loan
agreements and promissory notes) have been delivered to PFGI and Provident Bank.
SECTION 2.21 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Neither
Fidelity nor any of its Subsidiaries is a party to any interest rate swaps,
caps, floors, option agreements, or any other interest rate risk management
agreements whatsoever.
SECTION 2.22 STATE TAKEOVER LAWS.
(a) As a result of the required action of the Continuing Directors of
Fidelity (as defined in Fidelity's Articles of Incorporation), the provisions of
Paragraph A of Article XIV, and Paragraph A of Article XV of the Articles of
Incorporation of Fidelity shall be inapplicable to the Holding Company Merger
and the other transactions contemplated hereby.
(b) The Board of Directors of Fidelity took action prior to the date of
this Agreement to approve PFGI as an "interested shareholder" for purposes of
Chapter 1704 of the Ohio Revised Code.
(c) Provided that the representation of PFGI in Section 3.16 of this
Agreement is accurate, the transactions contemplated by this Agreement are not
subject to (or are considered exempt from) any applicable Ohio law which
purports to limit or restrict business combinations or the ability to acquire or
to vote shares. Fidelity is not aware of any further action required to be taken
by it or its Board of Directors to provide that this Agreement and the
transactions contemplated by this Agreement shall be exempt from the
requirements of any "moratorium," "control share," "fair price" or other
anti-takeover laws or regulations of any other state.
(d) Contemporaneously with the execution of this Agreement, Fidelity
has delivered to PFGI a true and correct copy of resolutions adopted and actions
taken by the Board of Directors of Fidelity prior to the execution of this
Agreement and the Stock Option Agreement, consistent with the representations
and warranties made in this Section.
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SECTION 2.23 TAX MATTERS.
(a) Except as set forth in Section 2.23 of the Disclosure Schedule,
Fidelity and its Subsidiaries have (i) duly and timely filed or will duly and
timely file (including applicable extensions granted without penalty) all Tax
Returns required to be filed at or prior to the Effective Time, and such Tax
Returns which have heretofore been filed are, and those to be hereinafter filed
will be, true, correct and complete and (ii) paid in full or, to the best
knowledge of Fidelity and its Subsidiaries, have made adequate provision for on
the financial statements of Fidelity and its Subsidiaries(in accordance with
generally accepted accounting principles) all Taxes and will pay in full or make
adequate provision for all Taxes. There are no liens for Taxes upon the assets
of either Fidelity or its Subsidiaries except for statutory liens for current
Taxes not yet due. Except as set forth in Section 2.23 of the Disclosure
Schedule, neither Fidelity nor its Subsidiaries has requested any extension of
time within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess any
Taxes are pending or outstanding. The federal and state income Tax Returns of
Fidelity and its Subsidiaries have been audited by the Internal Revenue Service
or appropriate state tax authorities with respect to those periods and
jurisdictions set forth on Section 2.23 of the Disclosure Schedule. Neither
Fidelity nor any of its Subsidiaries has any liability for Taxes for any period
prior to the Effective Time (except as set forth in Section 2.23 of the
Disclosure Schedule) or any other deficiency for any Taxes. No deficiencies for
any Taxes, assessment or governmental charge have been proposed, asserted or
assessed in writing by any governmental or taxing authority against Fidelity or
its Subsidiaries which have not been settled or would not be covered by existing
reserves. Except as set forth in Schedule 2.23, neither Fidelity nor its
Subsidiaries (i) is a party to any agreement providing for the allocation or
sharing of Taxes; or (ii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code, by reason of the voluntary change in
accounting method (nor has any taxing authority proposed in writing any such
adjustment or change of accounting method).
(b) Any amount that will become receivable (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of Fidelity or its
Subsidiaries who is a "DISQUALIFIED INDIVIDUAL" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Fidelity Employee
Plan (as defined in Section 2.14(c) hereof) currently in effect will not be
characterized as an "excess parachute payment" (as such term is defined in
Section 1.280G-1) of the Code).
SECTION 2.24 BROKERAGE. There are no existing claims or agreements for
brokerage commissions, finders' fees, or similar compensation in connection with
the transactions contemplated by this Agreement payable by Fidelity or its
Subsidiaries, other than an agreement with Sandler O'Neill & Partners, L.P., a
copy of which has been previously delivered to PFGI, providing for the payment
of fees by Fidelity.
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SECTION 2.25 COMPLIANCE WITH LAW. Fidelity and its Subsidiaries have
all licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses and are
in compliance with all applicable laws and regulations.
SECTION 2.26 NO UNDISCLOSED LIABILITIES. Fidelity and its Subsidiaries
do not have any liability, including any liability for Taxes (and there is no
past or present fact, situation, circumstance, condition or other basis for any
present or future action, suit or proceeding, hearing, charge, complaint, claim
or demand against Fidelity or its Subsidiaries giving rise to any such
liability), except (i) for liabilities set forth in the Fidelity Financial
Statements, and (ii) normal fluctuation in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
Fidelity and its Subsidiaries since the date of the most recent balance sheet
included in the Fidelity Financial Statements.
SECTION 2.27 POOLING. Neither Fidelity nor any of its Subsidiaries has
taken or agreed to take any action that would prevent the business combination
to be effected by the Mergers from being accounted for as a "pooling of
interests" and Fidelity has no reason to believe that the Mergers will not
qualify for pooling of interests accounting.
SECTION 2.28 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by Fidelity and its Subsidiaries for inclusion in
this Agreement or in any documents filed with any Regulatory Agency in
connection with the transactions contemplated by this Agreement shall, at the
respective times such documents are filed, and at the time of the Fidelity
Shareholders' Meeting contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading. All documents that Fidelity and its Subsidiaries shall be
responsible for filing with any Regulatory Agency in connection with the
transactions contemplated by this Agreement shall comply as to form in all
material respects with the provisions of applicable law and the applicable rules
and regulations thereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PFGI AND PROVIDENT BANK
PFGI and Provident Bank hereby make the following representations and
warranties:
SECTION 3.1 ORGANIZATION AND CAPITAL STOCK.
(a) PFGI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has the corporate power to own
all of its property and assets, to incur all of its liabilities and to carry on
its business as now being conducted.
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(b) As of March 31, 1999, the authorized capital stock of PFGI
consisted of (i) 110,000,000 PFGI Common Shares, of which 43,383,979 shares were
issued, 42,582,179 of which were outstanding and 801,800 were treasury stock,
and (ii) 5,000,000 shares of preferred stock, of which 70,272 Series D were
issued and outstanding. All of the issued and outstanding PFGI capital stock is
duly and validly issued and outstanding and are fully paid and non-assessable
and free of preemptive rights. PFGI also had outstanding employee stock options
pursuant to existing stock option plans described in its SEC filings.
(c) The PFGI Common Shares that are to be issued to the shareholders of
Fidelity pursuant to the Holding Company Merger shall have been duly authorized
prior to the Closing and, when so issued in accordance with the terms hereof,
shall be validly issued and outstanding, fully paid and non-assessable.
SECTION 3.2 AUTHORIZATION.
(a) The respective Boards of Directors of PFGI and Provident Bank have,
by all appropriate action, approved this Agreement and the Mergers and
authorized the due execution, delivery and performance hereof by their officers.
PFGI, in its capacity as the sole shareholder of Provident Bank, has duly
adopted and approved this Agreement and the Subsidiary Merger. No other
corporate acts or proceedings are required to be taken by PFGI or Provident Bank
to authorize the execution, delivery and performance of this Agreement and to
consummate the Mergers and the other transactions contemplated by this
Agreement.
(b) This Agreement has been duly and validly executed and delivered by
PFGI and Provident Bank and constitutes a legal, valid and binding obligation of
PFGI and Provident Bank, enforceable against them in accordance with its terms.
(c) Neither the execution, delivery and performance by PFGI or
Provident Bank of this Agreement, nor the consummation by PFGI or Provident Bank
of the transactions contemplated hereby, nor compliance by PFGI or Provident
Bank with any of the provisions hereof, will violate, conflict with or result in
a breach of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of, any lien upon
any of the properties or assets of either PFGI or Provident Bank under the
terms, conditions or provisions of (A) its articles of incorporation or code of
regulations, or (B) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which PFGI or Provident
Bank or any of the properties or assets of PFGI or Provident Bank is a party or
by which it may be bound, or to which such party may be subject, or violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to PFGI or Provident Bank or any of their respective properties or
assets, or any license or permit held by PFGI or Provident Bank.
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(d) Except for the Required Regulatory Actions, no other notice to, or
filing with, exemption or review by, or authorization, consent or approval of,
any public body or authority is necessary for the execution and delivery of this
Agreement or the consummation of the Holding Company Merger of PFGI and Fidelity
or the Subsidiary Merger of Centennial and Provident Bank.
SECTION 3.3 SUBSIDIARIES. Each of PFGI's significant Subsidiaries (as
such term is defined in Rule 1-02 of Regulation S-X promulgated by the SEC) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
respective properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted.
SECTION 3.4 NO DEFAULTS. PFGI and Provident Bank are neither in default
under nor in violation of any provision of their articles of incorporation or
regulations, or any promissory note, indenture or any evidence of indebtedness
or security therefor, lease, contract, insurance policy, purchase or other
commitment or any other agreement or arrangement (however evidenced), whether
written or oral, and there has not occurred any event that, with the lapse of
time or giving of notice or both, would constitute such a default or violation,
which default could reasonably be expected to cause a Material Adverse Effect on
PFGI or Provident Bank.
SECTION 3.5 FINANCIAL INFORMATION. The consolidated balance sheets of
PFGI and its Subsidiaries as of December 31, 1998 and 1997, and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years then ended, together with the notes thereto, included in
PFGI's Annual Report on Form 10-K for the year ended December 31, 1998, as
currently on file with the SEC, and the unaudited consolidated balance sheets of
PFGI and its Subsidiaries as of March 31, 1999, and the related unaudited
consolidated income statements and statements of changes in shareholders' equity
and cash flows for the quarter then ended included in PFGI's Quarterly Report on
Form 10-Q for such quarter, as currently on file with the SEC, and the year-end
and quarterly Reports of Condition and Reports of Income of each of the
subsidiary banks of PFGI for 1998, and March 31, 1999, respectively, as
currently on file with the applicable Regulatory Agencies (together, the "PFGI
FINANCIAL STATEMENTS"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein and except for regulatory reporting differences required by the reports
of Provident Bank) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations, changes in
shareholders' equity and cash flows of PFGI and its consolidated Subsidiaries as
of the dates and for the periods indicated (subject, in the case of interim
financial statements, to normal recurring year-end adjustments, none of which
shall be material).
SECTION 3.6 ABSENCE OF CHANGES. Since March 31, 1999, there has been no
material adverse change in the financial condition, the results of operations or
the business of PFGI and its Subsidiaries, except as disclosed by PFGI since
March 31, 1999 in its periodic reports filed with the SEC under the Exchange
Act.
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SECTION 3.7 LITIGATION AND RELATED MATTERS. There is no litigation,
claim or other proceeding pending or, to the knowledge of PFGI or Provident
Bank, threatened, against PFGI or its Subsidiaries, or of which the property of
PFGI or its Subsidiaries is or would be subject, and there is no injunction,
order, judgment, decree or regulatory restriction imposed upon PFGI or its
Subsidiaries or the assets of PFGI or its Subsidiaries which would have a
Material Adverse Effect on PFGI.
SECTION 3.8 REGULATORY MATTERS. PFGI is a bank holding company
registered with the Federal Reserve Board under the BHCA and Provident Bank is a
state-chartered bank. Neither PFGI, Provident Bank nor any of PFGI's significant
Subsidiaries is subject or is party to, or has received any notice or advice
that it may become subject or party to, any Regulatory Agreement, nor has PFGI
or any of its significant Subsidiaries been advised by any Regulatory Agency
that it is considering issuing or requesting any such Regulatory Agreement.
There is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
PFGI or Provident Bank, or any corporations or financial institutions merged
with and into PFGI or its Subsidiaries, which is expected to have a material
adverse effect on PFGI and its Subsidiaries, taken as a whole.
SECTION 3.9 REPORTS. PFGI and each of its significant Subsidiaries has
filed all material reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with the
Regulatory Agencies having jurisdiction over PFGI or any of its significant
Subsidiaries, and have paid all fees and assessments due and payable in
connection therewith. As of their respective dates, each of such reports and
documents, as amended, including any financial statements, exhibits and
schedules thereto, complied with the relevant statutes, rules and regulations
enforced or promulgated by the Regulatory Agency with which they were filed and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 3.10 TAX MATTERS. Each of PFGI and its Subsidiaries has filed
with the appropriate governmental agencies all foreign, federal, state and local
Tax Returns required to be filed by it and has timely paid any Taxes shown on
such Tax Returns.
SECTION 3.11 BROKERAGE. There are no existing claims or agreements for
brokerage commissions, finders' fees, or similar compensation in connection with
the transactions contemplated by this Agreement payable by PFGI or Provident
Bank.
SECTION 3.12 COMPLIANCE WITH LAW. PFGI and its significant Subsidiaries
have all licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
and are in compliance with all applicable laws and regulations.
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SECTION 3.13 NO UNDISCLOSED LIABILITIES. As of the date hereof, PFGI
and its Subsidiaries do not have any liability, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for Taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit or proceeding, hearing, charge, complaint, claim or demand against
PFGI or its Subsidiaries giving rise to any such liability), except (i) for
liabilities set forth in the PFGI Financial Statements, and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of PFGI and its Subsidiaries since
the date of the March 31, 1999 balance sheet included in the PFGI Financial
Statements.
SECTION 3.14 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by PFGI and Provident Bank for inclusion in this
Agreement or in any other documents filed with any Regulatory Agency in
connection with the transactions contemplated by this Agreement shall contain
any untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading. All documents that PFGI
or Provident Bank shall be responsible for filing with any Regulatory Agency in
connection with the transactions contemplated by this Agreement shall comply as
to form in all material respects with the provisions of applicable law and the
applicable rules and regulations thereunder.
SECTION 3.15 YEAR 2000 COMPLIANCE.
(a) PFGI and its Subsidiaries have taken all actions reasonably
required to verify that their systems and operations are Year 2000 Compliant.
(b) PFGI and its Subsidiaries have used their best efforts to confirm
with all of their material vendors and customers that all date-sensitive
hardware, software, processes, procedures, interfaces and similar operating
systems used within their respective operations are Year 2000 Compliant.
(c) Provident Bank plans for being Year 2000 Compliant adhere to the
terms, deadlines, requirements, and conditions contained in the Year 2000
statements and guidance issued by the Ohio Division of Financial Institutions
and the Federal Financial Institutions Examinations Council.
(d) Provident Bank has not received, and does not expect to receive, a
"Year 2000 Deficiency Notification Letter" (as such term is employed in the
Federal Reserve Board's Supervision and Regulation Letter No. SR 98-3(SUP),
dated March 4, 1998), or any similar letter from any Regulatory Agency, and does
not anticipate any deficiency in its plans, or the implementation of its plans,
for addressing the issues set forth in the statements of the OTC and the Federal
Financial Institutions Examination Council concerning Year 2000 compliance.
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SECTION 3.16 INTERESTED SHAREHOLDER PROVISION. PFGI is not, and has not
been during the three (3) years prior to the date of this Agreement, an
"interested shareholder" of Fidelity within the meaning of Ohio Revised Code
Section 1704.01(C)(8).
SECTION 3.17 ACCOUNTING CHANGES. PFGI does not have a present intention
of making any material accounting changes, or changes in the presentation of the
PFGI Financial Statements, which if not disclosed, would render misleading the
representations and warranties of PFGI set forth in Section 3.5 concerning the
PFGI Financial Statements.
ARTICLE 4
AGREEMENTS OF FIDELITY AND ITS SUBSIDIARIES
SECTION 4.1 BUSINESS IN ORDINARY COURSE.
(a) Fidelity shall not declare or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other property, after
the date hereof, except for quarterly dividends in the same amounts as the most
recent quarterly dividend, declared and paid in a manner consistent with past
practices; provided, however, that the declaration of the last quarterly
dividend by Fidelity prior to the Effective Time and the payment thereof shall
be coordinated with, and subject to the approval of, PFGI so as to preclude any
duplication of dividend benefit, it being the intention of the parties that the
shareholders of Fidelity receive dividends for any particular quarter on either
the Fidelity Common Shares or the PFGI Common Shares, but not both.
(b) Fidelity and its Subsidiaries shall (1) continue to carry on after
the date hereof its respective business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted and (2) use reasonable best efforts to
maintain and preserve intact its respective business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees. Fidelity and its Subsidiaries shall not, without the prior
written consent of PFGI:
(i) issue any Fidelity Common Shares or other capital stock or
any options, warrants, or other rights to subscribe for or purchase
Fidelity Common Shares or any other capital stock or any securities
convertible into or exchangeable for any capital stock of Fidelity or
its Subsidiaries (except pursuant to options previously granted and
with respect to the options to be granted to PFGI pursuant to this
Agreement); or
(ii) directly or indirectly redeem, purchase or otherwise
acquire any Fidelity Common Shares or any other capital stock of
Fidelity or its Subsidiaries or effect a reclassification,
recapitalization, splitup, exchange of shares, readjustment or other
similar
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change in or to any capital stock or otherwise reorganize or
recapitalize Fidelity or its Subsidiaries; or
(iii) change the Articles of Incorporation, Code of
Regulations, Bylaws, constitution or other charter or governing
documents of Fidelity or its Subsidiaries; or
(iv) grant any increase, other than ordinary and normal
increases consistent with past practices, in the compensation payable
or to become payable to officers or salaried employees or, except as
required by law or as required by existing contractual obligations
which shall have been described in Sections 2.14(c) or 2.20 of the
Disclosure Schedule, adopt or make any material change in any bonus
(permitting the continued accrual of management bonuses at current
rates and payment of such bonuses in accordance with past practices,
the Board being permitted to consider the impact of the transactions
contemplated by this Agreement on the possible adverse performance of
Fidelity and its Subsidiaries), insurance, pension, or other Fidelity
Employee Plan (except as otherwise permitted by this Agreement),
agreement, payment or arrangement made to, for or with any of such
officers or employees; or
(v) borrow or agree to borrow any material amount of funds
except in the ordinary course of business, or directly or indirectly
guarantee or agree to guarantee any material obligations of others,
except in the ordinary course of business; or
(vi) make or commit to make any new loan or letter of credit
or any new or additional discretionary advance under any existing line
of credit, except in the ordinary course of business; or
(vii) purchase or otherwise acquire any investment security
for its own account, except in a manner and pursuant to policies
consistent with past practice; or
(viii) materially increase or decrease the rate of interest
paid on time deposits, or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices; or
(ix) enter into any agreement, contract or commitment of a
material nature out of the ordinary course of business; or
(x) except in the ordinary course of business, place on any of
its material assets or properties any mortgage, pledge, lien, charge,
or other encumbrance of a material nature; or
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(xi) except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to Fidelity or its
Subsidiaries or any claims which Fidelity or its Subsidiaries may
possess or waive any material rights with respect thereto; or
(xii) sell, assign, transfer, convey, license, subcontract,
cancel, amend or alter in any other material respect any loan servicing
rights of Fidelity or its Subsidiaries, except for sales on the
secondary market in the ordinary course of business and in accordance
with past practices; or
(xiii) except as set forth in Section 4.1(b)(xiii) of the
Disclosure Schedule, sell or otherwise dispose of any material real
property or any material amount of any tangible or intangible personal
property other than in the ordinary course of business and other than
properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness to Fidelity or its Subsidiaries; or
(xiv) with respect to the branch operations of Centennial,
take any action to close any existing branch, open new branches,
acquire by purchase, merger or otherwise additional branches, or
otherwise affect the number, location, and nature of the branch
operations, or to make any public announcement regarding the
continuation or discontinuation of any branch operations; or
(xv) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a Phase I
environmental report thereon which indicates that the property is free
of pollutants, contaminants or hazardous or toxic waste materials;
provided, however, that no report shall be required with respect to
single family, non-agricultural residential property of one acre or
less to be foreclosed upon unless there is reason to believe that such
property might contain any such waste materials or otherwise might be
contaminated; or
(xvi) commit any act or fail to do any act which would cause a
breach of any agreement, contract or commitment and which would have a
Material Adverse Effect on Fidelity or any of its Subsidiaries; or
(xvii) purchase any real or personal property or make any
other capital expenditure in excess of $50,000.00; or
(xviii) take, or cause to be taken, any action, whether before
or after the Effective Time, which would disqualify the Mergers as a
"reorganization" within the meaning of Section 368(a) of the Code or
preclude pooling of interests accounting treatment for the transaction;
or
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(xix) take any action which would materially and adversely
affect or delay the ability of any party hereto to obtain any necessary
approvals of any Regulatory Agency or other governmental authority
required for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement or the
Fidelity Option Agreement.
(c) Fidelity and its Subsidiaries shall not, without the prior written
consent of PFGI, engage in any transaction or take any action that would render
untrue any of the representations and warranties of Fidelity and its
Subsidiaries contained in Article 2 hereof (except for any such representations
and warranties made only as of a specified date), if such representations and
warranties were given as of the date of such transaction or action.
(d) Fidelity shall promptly notify PFGI in writing of the occurrence of
any matter or event known to and directly involving Fidelity or its
Subsidiaries, which would not include any changes in conditions that affect the
banking industry generally, that would have, either individually or in the
aggregate, a Material Adverse Effect on Fidelity or any of its Subsidiaries.
(e) Fidelity and its Subsidiaries shall not, and shall not authorize or
knowingly permit any of their respective affiliates, officers, directors,
employees or agents to, on or before the earlier of the Closing Date or the date
of termination of this Agreement, directly or indirectly solicit, initiate or
encourage or hold discussions or negotiations with or provide any information to
any person in connection with any proposal from any person for the acquisition
of all or any substantial portion of the business, assets, Fidelity Common
Shares or other securities of Fidelity or its Subsidiaries. Fidelity shall
within twenty-four (24) hours advise PFGI of its receipt of any such proposal or
inquiry concerning any possible such proposal, the substance of such proposal or
inquiry, and the identity of the party making the proposal. Nothing contained
herein shall prohibit the Board of Directors of Fidelity from furnishing
information to or entering into discussions or negotiations with, any person or
entity, if, and only to the extent that (A) the Board of Directors of Fidelity,
based upon the advice of outside counsel, determines in good faith that such
action is required by the Board of Directors to comply with its fiduciary duties
to shareholders imposed by law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or entity relating
to a Competing Transaction, Fidelity provides written notice to PFGI to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity relating to a Competing Transaction,
and (C) Fidelity keeps PFGI reasonably informed as to the status and all
material information with respect to any such discussions or negotiations.
SECTION 4.2 BREACHES. Fidelity and its Subsidiaries shall, in the event
either has knowledge of the occurrence, or impending or threatened occurrence,
of any event or condition which would cause or constitute a breach (or would
have caused or constituted a breach had such event occurred or been known prior
to the date hereof) of any of its representations or agreements
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contained or referred to herein, give prompt written notice thereof to PFGI and
use its best efforts to prevent or promptly remedy the same.
SECTION 4.3 SUBMISSION TO MANAGEMENT AND SHAREHOLDERS. Fidelity, acting
through its Board of Directors, shall, in accordance with the OGCL and its
Articles of Incorporation and Code of Regulations, promptly and duly call, give
notice of, convene and hold a special shareholders' meeting (the "SHAREHOLDERS'
MEETING") as soon as practicable following the date upon which the Registration
Statement has been declared effective by the SEC and under all applicable state
securities laws, for the purpose of approving this Agreement and the
transactions contemplated hereby. Subject only to the provisions of Section 7.8,
at the Shareholders' Meeting and in any proxy materials used in connection with
the meeting:
(a) the Board of Directors of Fidelity shall recommend that its
shareholders vote for approval of this Agreement, subject only to the fiduciary
obligations of the Board of Directors, the receipt of a fairness opinion from
its financial advisor, Sandler O'Neill & Partners, L.P., received immediately
prior to the effectiveness of the Registration Statement and review of the
Registration Statement;
(b) Fidelity shall use its best efforts to solicit from its
shareholders proxies to vote on the proposal to approve this Agreement and the
Mergers and to secure a quorum at the Shareholders' Meeting;
(c) Fidelity shall use its best efforts to secure the vote of
shareholders required by Fidelity's Articles of Incorporation and Code of
Regulations to approve this Agreement and the Mergers.
In addition, within fifteen (15) days of the execution of this
Agreement, Fidelity shall use its best efforts to obtain from all of the
Fidelity directors and executive officers holding Fidelity Common Shares written
undertakings in form and substance satisfactory to PFGI and Provident Bank that
each officer and director shall agree to cast his or her shares in favor of
approving this Agreement and the Mergers.
SECTION 4.4 CONSENTS TO CONTRACTS AND LEASES. Fidelity, Fidelity
Acquisition and Centennial shall use their respective best efforts to obtain all
necessary consents with respect to all interests of Fidelity and its
Subsidiaries in any material leases, licenses, contracts, instruments and rights
which require the consent of another person for their transfer or assumption
pursuant to the Mergers, including, but not limited to any landlord approvals
required in Section 6.1(l).
SECTION 4.5 CONSUMMATION OF AGREEMENT. Fidelity, Fidelity Acquisition
and Centennial shall use their best efforts to perform and fulfill all
conditions and obligations on their part to be performed or fulfilled under this
Agreement as promptly as possible and to effect the Mergers and
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the other transactions contemplated hereby expeditiously in accordance with the
terms and provisions hereof and to effect the transition and integration of the
business and operations of Fidelity and its Subsidiaries with the business and
operations of PFGI and its Subsidiaries. Fidelity, Fidelity Acquisition and
Centennial shall furnish to PFGI and Provident Bank in a timely manner, all
information, data and documents in the possession of Fidelity and its
Subsidiaries requested by PFGI as may be required to obtain any necessary
regulatory or other approvals of the Mergers and to file the Registration
Statement with the SEC relating to the PFGI Common Shares to be issued to the
shareholders of Fidelity pursuant to this Agreement and shall otherwise
cooperate fully with PFGI and Provident Bank to carry out the purpose and intent
of this Agreement. Fidelity shall diligently review its activities and
operations to ascertain and report to PFGI within twenty (20) days after
execution of this Agreement whether Fidelity or any of its Subsidiaries is
engaged in any activity or has any equity investment that is prohibited by the
Federal Reserve Board or the BHCA or which is not listed at 12 C.F.R. 225.25, or
that would be impermissible for PFGI or Provident Bank by the BHCA or by rule or
regulation of a Regulatory Agency upon consummation of the Mergers.
SECTION 4.6 EMPLOYEE BENEFIT PLANS.
(a) CENTENNIAL ESOP. (i) Fidelity is authorized to take all steps
appropriate to terminate the Centennial Bank Employee Stock Ownership Plan
("CENTENNIAL ESOP") effective as of the Effective Time and to request that the
IRS issue a determination letter to the effect that termination of the
Centennial ESOP, the allocation and disposition of its assets as described in
Section 4.6(a)(ii) and the distribution of participants' account balances will
not affect the Centennial ESOP's status as a tax-qualified retirement plan. This
determination letter request will be filed with the IRS not later than six weeks
after the date action is taken to terminate the Centennial ESOP (or as soon a
possible after the action is taken). Fidelity will make no additional
contributions to the Centennial ESOP after the date of this Agreement, except
for contributions that are consistent with prior levels and rates of
contributions.
(ii) All Fidelity Common Shares held by the Centennial ESOP
Trustee at the Effective Time, including those allocated to Centennial
ESOP participants' accounts ("ALLOCATED SHARES"), any forfeited shares
then pending reallocation to participants' accounts ("FORFEITED
SHARES") and those subject to a security interest granted in connection
with any outstanding loan ("PLEDGED SHARES") will be exchanged by the
Centennial ESOP Trustee for PFGI Common Shares at the Per Share
Consideration in accordance with this Agreement. The PFGI Common Shares
received by the Centennial ESOP will be credited to Centennial ESOP
participants' accounts as provided by the Centennial ESOP's terms, to
the extent that they represent shares received in exchange for
Allocated or Forfeited Shares or will be substituted for the Pledged
Shares, to the extent that they represent shares received in exchange
for Pledged Shares ("PLEDGED PFGI SHARES"). To the extent that cash
held in the Centennial ESOP Trust is insufficient to retire the loan,
the Centennial ESOP Trustee
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will (A) sell Pledged PFGI Shares to the extent needed to retire the
loan and (B) repay the loan. Any Pledged PFGI Shares remaining in the
Centennial ESOP trust after the loan is repaid will be allocated to
participants' accounts as provided by the Centennial ESOP. The
allocation procedure will be fully described in the determination
letter request referred to above in Section 4.6(a)(i). If the IRS
issues a determination letter with respect to that application, the
allocation will be made as described in the application. If the IRS
refuses to issue a determination letter with respect to that
application, the allocation will be made on another basis on which the
IRS approves and issues a determination letter. Notwithstanding any
other provision in this Agreement to the contrary, the Centennial ESOP
participants shall not be eligible to receive an allocation of benefits
under the employee stock ownership contribution portion of The
Provident Financial Group, Inc. Retirement Plan until January 1, 2001.
(b) OTHER FIDELITY EMPLOYEE PLANS. (i) Except as provided in Section
4.6(a), through the Effective Time, Fidelity will continue to administer the
Fidelity Employee Plans consistent with their terms and the requirements imposed
by the Code and ERISA, including admitting new employees as they becomes
eligible, accepting and depositing all employee contributions and deferrals,
calculating and remitting all Fidelity contributions, reviewing claims for
benefits and distributing plan benefits. However, without the prior written
consent of PFGI, which shall not be unreasonably withheld or delayed, Fidelity
will not (A) amend the Fidelity Code ss.401(k) Plan in any respect, other than
amendments that may be required to ensure that the plan continues to meet
applicable legal standards or (B) make any benefit payments, other than payments
arising in the normal administration of the plans or (C) except as set forth in
Section 4.6(a)(ii), make any contributions to the Fidelity Employee Plans after
the date of this Agreement except for contributions that are consistent with
prior levels and rates of contribution. Also, and except as provided in Section
4.6(a) or as a consequence of the action taken under Section 4.6(b)(ii),
Fidelity will take no action that will accelerate any participant's vesting in
benefits earned under any Fidelity Employee Plan.
(ii) If PFGI so requests (and except as otherwise provided in
any other section of this Agreement), Fidelity and its Subsidiaries
will amend any Fidelity Employee Plan to (A) cease further benefit
accruals and (B) to limit participation to the Fidelity employees then
participating in the Fidelity Employee Plan. The effective date of this
action will be as of the Effective Time. However, Fidelity's obligation
under this subsection will arise only if (C) PFGI's request is given in
writing, specifying the plan to be amended and the effective date of
this action and (D) that action can be taken without affecting any
benefits accrued by participants to the effective date the plan is to
be amended.
(iii) After the Effective Time, PFGI will assume
responsibility for maintenance and administration of the Fidelity
Employee Plans that (A) have not been terminated before the Effective
Time or (B) have been terminated before the Effective Time but their
assets not
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distributed before the Effective Time. Also, PFGI will be responsible
for all residual acts (such as filing annual reports) associated with
Fidelity Employee Plans that were terminated before the Effective Time,
whether or not their assets were distributed before the Effective Time,
and for completing the disposition of the Centennial ESOP as described
in Section 4.6(a).
(c) DISCRETIONARY ACTS. With respect to any Fidelity Employee Plans
that provide for the allocation or vesting of benefits, there shall be no
discretionary acceleration of any such allocation or vesting without PFGI's
consent whether or not such discretionary acceleration of such allocation or
vesting is permitted under the terms of the Fidelity Plan; provided that a
Fidelity Employee Plan which pursuant to its terms provides for an acceleration
of any allocation or vesting upon a change of control of Fidelity shall not be
deemed to involve a discretionary acceleration and such allocation or vesting
thereunder, as the case may be, shall accelerate as of the Effective Time.
(d) DETERMINATION LETTERS. Within six weeks of the date of the
Agreement (or as soon as possible after that date), Fidelity and its
Subsidiaries will file an application with the IRS to the effect that the
Fidelity ss.401(k) Plan complies with all applicable requirements imposed by
Code ss.401(a). Within the period described in Section 4.6(a) a similar
application will be made with respect to the termination of the Centennial ESOP.
SECTION 4.7 ACCESS TO INFORMATION. Fidelity and its Subsidiaries shall
permit PFGI and Provident Bank reasonable access in a manner which shall avoid
undue disruption or interference with Fidelity's and its Subsidiaries' normal
operations to their operations and premises and shall disclose and make
available to PFGI and Provident Bank all books, documents, papers, records and
computer systems documentation and files relating to its assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and shareholders' meetings, organizational
documents, contracts and agreements, loan files, filings with any regulatory
authority, accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files (except for matters covered
by the attorney-client privilege), Fidelity Employee Plans, and any other
business activities or prospects. Fidelity and its Subsidiaries shall provide
notice of and permit a representative of PFGI and/or Provident Bank to attend
all meetings of the Board of Directors and committees thereof; provided,
however, that the Boards of Directors may exclude such representative from
attending any deliberations during which the Boards may discuss a Competing
Transaction. PFGI shall hold any such information which is nonpublic in
confidence in accordance with the confidentiality provisions hereof.
SECTION 4.8 PLAN OF MERGER. Upon request, Fidelity and its Subsidiaries
shall enter into a separate plans of merger or articles of merger or
certificates of merger reflecting the terms hereof for purposes of any filing
requirement of the OGCL or any other federal or state law.
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SECTION 4.9 COOPERATION. PFGI will prepare and cause to be filed at its
expense such applications and other documents with the Board of Governors of the
Federal Reserve System, the FDIC, the OTS, the Ohio Division of Financial
Institutions, and any other governmental agencies as are required to secure the
requisite approval of such agencies to the consummation of the transactions
provided for in this Agreement, and the parties shall cooperate in the
preparation of an appropriate registration statement, including the prospectus,
proxy statement, and such other documents necessary to comply with all federal
and state securities laws related to the registration and issuance of the shares
of PFGI to be issued to the shareholders of Fidelity in this transaction (the
expenses thereof, other than accounting, legal, investment banking, financial
consulting and associated expenses of Fidelity and its Subsidiaries, to be paid
by PFGI and the fee for any filing under the HSR Act shall be divided equally
between Fidelity and PFGI), and any other laws applicable to the transactions
provided for in this Agreement. PFGI shall use all reasonable efforts to file
all such applications within ninety (90) days of the date of this Agreement and
to secure all such approvals. Fidelity and its Subsidiaries agree that they
will, as promptly as practicable after request and at their own expense, provide
PFGI with all information and documents concerning Fidelity and its Subsidiaries
as shall be required in connection with preparing any applications, registration
statements and other documents which are to be prepared and filed by PFGI and in
connection with regulatory approvals required to be obtained by PFGI hereunder.
PFGI agrees that it will, as promptly as practicable after request and at its
own expense, provide Fidelity and its Subsidiaries with all information and
documents concerning PFGI and its Subsidiaries as shall be required in
connection with preparing such applications, registration statements and other
documents which are to be prepared and filed by Fidelity or its Subsidiaries in
connection with approvals required to be obtained by Fidelity or its
Subsidiaries hereunder. Prior to filing such applications, statements, or other
documents with the applicable governmental agency, Fidelity and its Subsidiaries
shall provide at least five (5) days prior to the filing date, copies thereof to
PFGI. Fidelity and its Subsidiaries shall cooperate with PFGI and Provident Bank
in the preparation and filing of applications for the closure of certain branch
operations of Fidelity, so that any branch closures contemplated by PFGI can be
promptly approved by the applicable Regulatory Agencies and permitted to occur
immediately after the Effective Time.
ARTICLE 5
AGREEMENTS OF PFGI AND PROVIDENT BANK
SECTION 5.1 REGULATORY APPROVALS; OTHER AGREEMENTS.
(a) PFGI and Provident Bank shall file all regulatory applications
required in order to consummate the Mergers, including but not limited to the
necessary applications for the prior approval of the Federal Reserve Board and
the Ohio Division of Financial Institutions and any premerger notification to
the U.S. Department of Justice required under the HSR Act. PFGI shall
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keep Fidelity reasonably informed as to the status of such applications and/or
waiting periods and make available to Fidelity for review prior to filing with
the applicable Regulatory Agencies from time to time copies of such applications
and any supplementally filed materials.
(b) Neither PFGI nor Provident Bank shall, between the date hereof and
the Effective Time, commit any act or fail to do any act which would cause a
breach of any agreement, contract or commitment and which would have a material
adverse effect on PFGI and its Subsidiaries, taken as whole.
(c) Neither PFGI nor Provident Bank shall, between the date hereof and
the Effective Time, affirmatively take, or cause to be taken, any action,
whether before or after the Effective Time, which would disqualify the Mergers
as a "reorganization" within the meaning of Section 368(a) of the Code.
(d) Neither PFGI nor Provident Bank shall, without the prior written
consent of Fidelity, engage in any transaction or take any action that would
render untrue any of the representations and warranties of PFGI and Provident
Bank contained in Article 3 hereof (except for any such representations and
warranties made only as of a specified date), if such representations and
warranties were given as of the date of such transaction or action.
(e) PFGI shall promptly notify Fidelity in writing of the occurrence of
any matter or event known to and directly involving PFGI or Provident Bank,
which would not include any changes in conditions that affect the banking
industry generally, that would have a material adverse effect on PFGI or any of
its Subsidiaries, taken as whole.
SECTION 5.2 BREACHES. PFGI and Provident Bank shall, in the event
either has knowledge of the occurrence, or impending or threatened occurrence,
of any event or condition which would cause or constitute a breach (or would
have caused or constituted a breach had such event occurred or been known prior
to the date hereof) of any of its representations or agreements contained or
referred to herein, give prompt written notice thereof to Fidelity and use its
best efforts to prevent or promptly remedy the same.
SECTION 5.3 CONSUMMATION OF AGREEMENT. PFGI and Provident Bank shall
use their best efforts to perform and fulfill all conditions and obligations on
their part to be performed or fulfilled under this Agreement and to effect the
Mergers in accordance with the terms and conditions of this Agreement. PFGI
acknowledges that it is not required to submit this Agreement to a vote of its
shareholders and, while it may be permitted to do so, that it will not submit
this Agreement to its shareholders for approval.
SECTION 5.4 EMPLOYEE BENEFITS. PFGI and/or Provident Bank shall, with
respect to each employee of Fidelity and its Subsidiaries at the Effective Time
who shall continue in employment
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with PFGI or Provident Bank or their respective Subsidiaries (each a "CONTINUED
EMPLOYEE"), provide the benefits described in this Section 5.4. Subject to the
right of subsequent amendment, modification or termination in PFGI's sole
discretion, each Continued Employee shall be entitled, as a new employee of a
subsidiary of PFGI, to participate in such employee benefit plans, as defined in
Section 3(3) of ERISA, or any non-qualified employee benefit plans or deferred
compensation, stock option, bonus or incentive plans, severance plans (provided,
however, that (i) any employee of Fidelity and its Subsidiaries who is a party
to a written employment or severance agreement providing for separate severance
benefits shall be entitled only to the benefits provided for in such agreement
and (ii) an employee shall be deemed "severed" if he or she voluntarily
terminates his or her employment as a result of either being required to
relocate more than 15 miles (for non-exempt employees) or 30 miles (for exempt
employees) from the current location of his or her employment or as a result of
receiving a reduction in the level of his or her salary or hourly rate of
compensation) or other employee benefit or fringe benefit programs that may be
in effect generally for employees of PFGI's Subsidiaries (the "PFGI EMPLOYEE
PLANS"), to the extent (if any) that a Continued Employee otherwise may satisfy
the eligibility requirements and, if required, selected for participation
therein under the terms thereof. PFGI shall cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under any Fidelity Employee Plan) and eligibility waiting
periods under group health plans to be waived with respect to such participants
and their eligible dependents. All such participation shall be subject to such
terms of such PFGI Employee Plans as may be in effect from time to time and this
Section 5.4 is not intended to give Continued Employees any rights or privileges
superior to those of other employees of PFGI's Subsidiaries (except as provided
in the following sentence with respect to credit for past service). PFGI and/or
Provident Bank may terminate or modify all Fidelity Employee Plans except
insofar as benefits thereunder shall have vested at the Effective Time and
cannot be modified and PFGI's obligation under this Section 5.4 shall not be
deemed or construed so as to provide duplication of similar benefits but,
subject to that qualification, PFGI shall, for purposes of vesting and any age
or period of service requirements for commencement of participation with respect
to any PFGI Employee Plans in which Continued Employees may participate (but not
for benefit accruals under any defined benefit plan), credit each Continued
Employee with his or her term of service with Fidelity and its Subsidiaries and
their predecessors. PFGI shall be entitled to provide benefits to the Continued
Employees under the terms of existing Fidelity Employee Plans (instead of PFGI
Employee Plans) for a period of time after the Effective Time which PFGI, in its
discretion, determines appropriate to the termination of the Fidelity Employee
Plans or the integration of the Fidelity Employee Plans into the PFGI Employee
Plans.
SECTION 5.5 ADVISORY BOARD. PFGI shall take such corporate action as is
necessary to establish an Advisory Board comprised of the nine (9) non-employee
members of the Centennial Board of Directors. The Advisory Board shall serve in
an adjunct capacity to the Board of Directors of PFGI to advise PFGI on issues
which may arise concerning the business of Centennial and the transition of the
Centennial organization and business to Provident Bank. Those individuals who
agree to serve as members of the Advisory Board shall serve in such capacity for
a period of two (2)
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years following the Closing Date and each shall be compensated on a monthly
basis at the rate of Nine Hundred Dollars ($900.00) per month. Each member of
the Advisory Board shall agree to enter into a written agreement providing in
substance that, during his or her tenure as a member of the Advisory Board, such
individual shall not solicit the services of any of the employees and shall not,
for the sale of any products or services, solicit any customers of Fidelity,
either directly or indirectly, as an officer, director, employee or more than
Five Percent (5%) shareholder in the banking, investment or financial products
business.
SECTION 5.6 DIRECTOR AND OFFICER MATTERS. Effective as of the Effective
Time, PFGI shall cause to be issued one or more policies of insurance, or
provide for coverage under the existing policies of one or more of the parties
to this Agreement, for all of the current directors and officers of Fidelity and
its Subsidiaries, for the acts and omissions of such directors and officers
occurring in their respective capacities as such prior to the Effective Time,
and for a period of three (3) years from the Effective Time, providing liability
insurance coverage on substantially the same terms and conditions as presently
provided for the benefit of the directors and officers of Fidelity and its
Subsidiaries under their respective existing directors' and officers' liability
insurance policies, but only to the extent that such insurance may be purchased
or kept in force on commercially reasonable terms taking into account the cost
thereof and the benefits provided thereby. The cost of such insurance shall be
considered commercially reasonable so long as it does not exceed 200% of the
costs currently paid for such coverage by Fidelity. Proof of such insurance
shall be furnished to any of the former directors and officers of Fidelity and
its Subsidiaries upon request. PFGI and Provident Bank agree that all rights to
indemnification that the directors and officers of Fidelity and its Subsidiaries
and PFGI have pursuant to the Articles of Incorporation, Code of Regulations or
similar charter documents of Fidelity and its Subsidiaries and PFGI, or under
applicable law, shall survive the Mergers and shall continue in full force and
effect. In the case of any former officer or director of Fidelity or any of its
Subsidiaries or any of their constituent predecessor corporations who is not an
officer or director as of the date hereof, and who is entitled to and is
currently receiving the benefits of any existing contractual arrangement with
Fidelity or any of its Subsidiaries providing benefits similar to those set
forth in this Section, PFGI shall be obligated to honor the terms and conditions
of any such prior contractual arrangement.
SECTION 5.7 ACCESS TO INFORMATION. PFGI shall permit Fidelity
reasonable access in a manner which shall avoid undue disruption or interference
with PFGI' s normal operations to its properties and shall disclose and make
available to Fidelity all books, documents, papers and records relating to its
assets, stock ownership, properties, operations, obligations and liabilities,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of directors' and shareholders' meetings,
organizational documents, material contracts and agreements, loan files, filings
with any regulatory authority, accountants' workpapers (if available and subject
to the respective independent accountants' consent), litigation files, plans
affecting employees, and any other business activities or prospects in
furtherance of the transactions contemplated by this
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Agreement. Fidelity shall hold any such information which is nonpublic in
confidence in accordance with the confidentiality provisions hereof.
SECTION 5.8 EMPLOYMENT AGREEMENTS. The executive officers of Fidelity
and Centennial and certain other employees are parties to employment or
severance agreements, all of which are listed in Section 2.13 of the Disclosure
Schedule, pursuant to which each of them shall be entitled, under certain
circumstances, to payments in connection with a termination of employment
resulting from a "change in control" transaction. PFGI and Provident Bank
expressly acknowledge the validity and enforceability of these employment
agreements and agree to honor the terms thereof following the Effective Time.
PFGI expressly agrees to honor the terms of the Glenway Loan and Deposit Bank
Incentive Plan in which Robert Sudbrook is the sole participant (with the
references to Fidelity and to options in Fidelity Common Shares being
appropriately changed to PFGI and PFGI Common Shares in the manner described in
Section 1.6 hereof). PFGI also agrees to enter into a new consulting agreement
with Robert Sudbrook, on mutually acceptable terms, including the continuation
of his same level of salary for a period of eighteen (18) months. As a part of
such consulting agreement, PFGI also agrees to grant Robert Sudbrook options to
acquire 10,000 PFGI Common Shares at an exercise price equal to the closing
price of PFGI Common Shares on the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO MERGER
SECTION 6.1 CONDITIONS TO OBLIGATIONS OF PFGI AND PROVIDENT BANK. The
obligations of PFGI and Provident Bank to effect the Mergers shall be subject to
the satisfaction (or waiver by PFGI and Provident Bank) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by Fidelity and its
Subsidiaries in this Agreement shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date (except for any such
representations and warranties made only as of a specified date which shall be
true and correct as of such date);
(b) Fidelity and its Subsidiaries shall have performed and complied in
all material respects with all of its obligations and agreements required to be
performed on or prior to the Closing Date under this Agreement, including, but
not limited to, obtaining the approvals of Fidelity's officers and directors as
provided in Section 4.3 hereof;
(c) No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition (an "INJUNCTION")
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preventing the consummation of the Mergers shall be in effect, nor shall any
proceeding by any Regulatory Agency or other person seeking any of the foregoing
be pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Mergers which makes the consummation of the Mergers illegal;
(d) All necessary regulatory approvals, consents, authorizations and
other approvals, including the requisite approval of this Agreement and the
Mergers by the shareholders of each party hereto, required by law or any
Regulatory Agency for consummation of the Mergers shall have been obtained and
all waiting periods required by law shall have expired, and no regulatory
approval shall have imposed any condition, requirement or restriction which the
Board of Directors of PFGI reasonably determines in good faith would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement to PFGI and its shareholders as to
render inadvisable the consummation of the Mergers (any such condition,
requirement or restriction, a "BURDENSOME CONDITION");
(e) PFGI and Provident Bank shall have received all documents required
by this Agreement to be received, on or prior to the Closing Date, all in form
and substance reasonably satisfactory to PFGI;
(f) The Mergers shall qualify as a "pooling of interests" for
accounting purposes if closed and consummated in accordance with this Agreement
and PFGI and Provident Bank shall have received an opinion letter, dated as of
the Closing Date, from Ernst & Young, LLP, its independent public accountants,
to such effect;
(g) As soon as practicable after the execution of this Agreement, PFGI
and Provident Bank shall have received an executed Pooling Affiliate Letter in
the form of Exhibit 6.1(g) from Fidelity's executive officers and directors (or
so many of them as PFGI may require to ensure that the Mergers shall qualify as
a "pooling of interests" for accounting purposes);
(h) PFGI and Provident Bank shall have received an opinion of its
counsel, Keating, Muething & Klekamp, P.L.L., to the effect that if the Mergers
are consummated in accordance with the terms set forth in this Agreement (i) the
Mergers shall constitute a reorganization within the meaning of Section 368(a)
of the Code, (ii) no gain or loss shall be recognized by the holders of
Outstanding Fidelity Shares upon receipt of PFGI Common Shares as a part of the
Merger Consideration, (iii) the basis of PFGI Common Shares received by the
shareholders of Fidelity shall be the same as the basis of Fidelity Common
Shares exchanged therefor, and (iv) the holding period of the PFGI Common Shares
received by such shareholders shall include the holding period of the Fidelity
Common Shares exchanged therefor, provided such shares were held as capital
assets as of the Effective Time;
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(i) PFGI shall have received the unaudited consolidated balance sheets
of Fidelity and Subsidiaries as of September 30, 1999, and related consolidated
income, changes in stockholders' equity and cash flows for the quarter ended
September 30, 1999, together with the consolidating statements and notes
thereto, and the unaudited consolidated balance sheets of Fidelity and
Subsidiaries and the related unaudited consolidated income statements and
statements of changes in shareholders' equity and cash flows for each month
prior to the Effective Time, and, to the extent that the Closing occurs after
the completion of Fidelity's financial statements for the year ended December
31, 1999, either (i) the audited (if available or practicable to complete) or
(ii) the unaudited consolidated balance sheets of Fidelity and its Subsidiaries
as of December 31, 1999, and related consolidated income, changes in
stockholders' equity and cash flows for the year ended December 31, 1999,
together with the consolidating statements and notes thereto (all such financial
statements being collectively referred to as the "PRE-CLOSING FINANCIAL
STATEMENTS"), in each instance prepared on a basis consistent with prior periods
and in accordance with generally accepted accounting principles;
(j) The Pre-Closing Financial Statements as at the end of the month
prior to the Closing Date shall reflect stockholders' equity, as of the Closing
Date, of not less than Ninety-Seven Million Six Hundred Five Thousand Dollars
($97,605,000) (disregarding, however, fees and expenses of legal counsel to
Fidelity and its Subsidiaries related to the Mergers, investment banking fees
paid to Sandler O'Neill & Partners, L.P., proxy preparation and printing
expenses, change in control payments to executive officers, expenses incurred in
fulfilling Fidelity's obligations under Section 8.19 hereof, and other expenses
incurred in connection with the transactions contemplated by this Agreement or
similar impact to equity as a result of the application of FASB 115);
(k) The Pre-Closing Financial Statements as at the end of the month
prior to the Closing Date shall reflect sufficient total capital of Centennial
in order to continue to meet the regulatory standards and requirements
established by the Ohio Division of Financial Institutions for minimum reserve
and net worth;
(l) PFGI shall have entered into and received originally-executed
agreements, in form and substance satisfactory to PFGI, with John R. Reusing,
Robert R. Sudbrook and Joseph D. Hughes, providing in substance that each such
individual shall not, either directly or indirectly, in any capacity, including
but not limited to, as an officer, director, employee, or more than Five Percent
(5%) shareholder of any business that provides banking, investment or financial
services:
(i) for a period of two (2) years from the later of (A) the
Closing Date or (B) if such individual becomes employed by
PFGI or Provident Bank following the Mergers, the date of
termination of such individual's employment, solicit any
customers of Fidelity or Centennial for the purpose of selling
any banking, investment or financial services or products; and
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(ii) for a period of six (6) months from the later of (A) the
Closing Date or (B) if such individual becomes employed by
PFGI or Provident Bank following the Mergers, the date of
termination of such individual's employment, hire or attempt
to hire any of the employees of Fidelity or Centennial.
(m) PFGI shall have received written confirmation in form and substance
satisfactory to it from all of the landlords of Fidelity and its Subsidiaries
that, after the Closing and the consummation of the Mergers, the terms of the
agreements between Fidelity and its Subsidiaries and their landlords, will
permit continuation of activities on such leased premises as presently conducted
and the operation of branches and ATMs of Provident Bank on all leased premises
at which a Centennial branch is currently operated, except where (A) the failure
to obtain such confirmation is not reasonably expected to have a material
adverse effect and (B) an opinion of counsel or other reasonable assurance is
furnished to PFGI to the effect that the activities on such leased premises may
continue after the Effective Time without PFGI or its Subsidiaries being in
breach of the subject lease; and
(n) PFGI shall have had an opportunity to have experts designated by
PFGI review the computer systems, software and other operations of Fidelity and
its Subsidiaries, and PFGI shall have received confirmation from such experts,
not later than October 1, 1999 and reasonably satisfactory to PFGI, that all of
the hardware, software and other systems owned or used by Fidelity and its
Subsidiaries and material to their business are Year 2000 Compliant.
(o) The Pre-Closing Financial Statements as at the end of the month
prior to the Closing Date shall report that the deposit accounts of Centennial
(which for purposes of this Section are adjusted to exclude non-retail deposits,
that is, brokered deposits, commercial accounts, custodial accounts, public
funds and internal operating accounts) as of such date are at least the lesser
of: (1) Ninety-Five Percent (95%) of the amount of such deposit accounts, as so
adjusted, on August 31, 1999, or (2) if the deposit accounts at Provident Bank
as of the end of the month prior to the Closing Date and computed in the same
manner as stated above are less than such deposit accounts at Provident Bank, as
so adjusted, on August 31, 1999, the percentage reduction of such deposit
accounts at Centennial does not exceed the percentage reduction of such deposit
accounts at Provident Bank; provided, however, that Centennial shall pay rates
on deposit accounts comparable to rates for similar types, amounts and
maturities of deposit accounts paid by its competitors in Centennial's deposit
market as reported in the Ratewatch Premium Report for the Cincinnati Region or
other similar publication.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF FIDELITY AND ITS SUBSIDIARIES.
The obligations of Fidelity and its Subsidiaries to effect the Mergers shall be
subject to the satisfaction (or waiver by Fidelity and its Subsidiaries) prior
to or on the Closing Date of the following conditions:
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(a) The representations and warranties made by PFGI and Provident Bank
in this Agreement shall be true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been made or
given on and as of the Closing Date (except for any such representations and
warranties made only as of a specified date which shall be true and correct as
of such date);
(b) PFGI and Provident Bank shall have performed and complied in all
material respects with all of its obligations and agreements hereunder required
to be performed on or prior to the Closing Date under this Agreement;
(c) No Injunction preventing the consummation of the Mergers shall be
in effect, nor shall any proceeding by any Regulatory Agency or any other person
seeking any of the foregoing be pending. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Mergers which makes the consummation of the Mergers illegal;
(d) All necessary regulatory approvals, consents, authorizations and
other approvals, including the requisite approval of this Agreement and the
Mergers by the shareholders of the parties hereto, required by law or any
Regulatory Agency for consummation of the Mergers shall have been obtained and
all waiting periods required by law shall have expired;
(e) PFGI shall have registered its shares of Common Stock to be issued
to the Fidelity shareholders with the SEC pursuant to the Securities Act and
with all applicable state securities authorities; the Registration Statement
shall have been declared effective by the SEC and all applicable state
securities authorities and no stop order shall have been issued; and the
Provident Common Shares shall have been authorized for trading on the National
Market System of NASDAQ upon official notice of issuance;
(f) Fidelity and its Subsidiaries shall have received all documents
required to be received from PFGI or Provident Bank on or prior to the Closing
Date, all in form and substance reasonably satisfactory to Fidelity and its
Subsidiaries;
(g) Since the date of this Agreement, there shall not have been any
change in the financial condition, results of operations or business of PFGI,
Provident Bank and their Subsidiaries that would have a material adverse effect
on PFGI, Provident Bank or their Subsidiaries, taken as a whole;
(h) Fidelity shall have received the opinion of PFGI's counsel,
addressed to Fidelity, contemplated by Section 6.1(h) hereof; and
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(i) Fidelity shall have received an opinion of Sandler O'Neill &
Partners, L.P. to the effect that the consideration receivable upon consummation
of the Mergers is fair from a financial point of view to the holders of Fidelity
Common Shares, which opinion is expected by Fidelity to be received reasonably
contemporaneously with the mailing of the proxy statement to the Fidelity
shareholders.
ARTICLE 7
TERMINATION OR ABANDONMENT
SECTION 7.1 MUTUAL AGREEMENT. This Agreement may be terminated by the
mutual written agreement of PFGI and Fidelity at any time prior to the Closing
Date, regardless of whether approval of this Agreement and the Holding Company
Merger by the shareholders of Fidelity and PFGI shall have been previously
obtained.
SECTION 7.2 BREACH OF AGREEMENTS. In the event that there is any breach
in any of the representations and warranties or a breach of any of the
agreements of any party hereto, which breach is not cured within thirty (30)
days after written notice to cure such breach is given to the breaching party by
the non-breaching party, then the non-breaching party, regardless of whether
shareholder approval of this Agreement and the Holding Company Merger shall have
been previously obtained, may terminate and cancel this Agreement by providing
written notice of such action to the other party hereto.
SECTION 7.3 FAILURE OF CONDITIONS. In the event any of the conditions
to the obligations of either party are not satisfied or waived on or prior to
the Closing Date, and if any applicable cure period provided in Section 7.2
hereof has lapsed, then such party may, regardless of whether approval of this
Agreement and the Holding Company Merger by the shareholders of Fidelity has
been previously obtained, terminate and cancel this Agreement by delivery of
written notice of such action to the other party on such date.
SECTION 7.4 REGULATORY APPROVAL DENIAL; BURDENSOME CONDITION. If any
regulatory application filed pursuant to Section 5.1(a) hereof should be finally
denied or disapproved by the respective Regulatory Agency, then this Agreement
thereupon shall be deemed terminated and canceled; provided, however, that a
request for additional information or undertaking by PFGI, as a condition for
approval, shall not be deemed to be a denial or disapproval so long as PFGI
diligently provides the requested information or undertaking. In the event an
application is denied pending an appeal, petition for review, or similar such
act on the part of PFGI (hereinafter referred to as the "appeal") then the
application shall be deemed denied unless PFGI prepares and timely files such
appeal and continues the appellate process for purposes of obtaining the
necessary approval. PFGI may terminate this Agreement if its Board of Directors
shall have reasonably determined in good
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faith that any of the requisite regulatory approvals imposes a Burdensome
Condition, and PFGI shall deliver written notice of such determination to
Fidelity not later than thirty (30) days after receipt by PFGI of notice of the
imposition of such Burdensome Condition from the applicable Regulatory Agency
(unless an appeal of such determination is being pursued by PFGI, in which event
the foregoing notice shall be given within thirty (30) days of the termination
of any such appeal by PFGI or the denial of such appeal by the appropriate
Regulatory Agency).
SECTION 7.5 SHAREHOLDER APPROVAL DENIAL; WITHDRAWAL/MODIFICATION OF
BOARD RECOMMENDATION. If this Agreement and the relevant transactions
contemplated by this Agreement, including the Holding Company Merger, are not
approved by the requisite vote of the shareholders of Fidelity at the
Shareholders Meeting, then either party may terminate this Agreement. PFGI may
terminate this Agreement (without prejudice to any recourse it may have against
Fidelity) if Fidelity's Board of Directors shall have withdrawn or modified in
any manner adverse to PFGI its approval or recommendation of this Agreement or
the Holding Company Merger, or shall have resolved or publicly announced an
intention to do either of the foregoing.
SECTION 7.6 REGULATORY ENFORCEMENT MATTERS. If, prior to the Effective
Time, Fidelity or any of its Subsidiaries becomes a party or subject to any new
or amended written agreement, memorandum of understanding, cease and desist
order, imposition of civil money penalties or other regulatory enforcement
action or proceeding with a Regulatory Agency, which might have a Material
Adverse Effect on Fidelity, then PFGI may terminate this Agreement. If, prior to
the Effective Time, PFGI or any of its Subsidiaries becomes a party or subject
to any new or amended written agreement, memorandum of understanding, cease and
desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with a Regulatory Agency, which would have a
Material Adverse Effect on PFGI, then Fidelity may terminate this Agreement.
SECTION 7.7 OUTSIDE CLOSING DATE. If the Closing Date does not occur on
or prior to June 30, 2000, then this Agreement may be terminated by either party
by giving written notice thereof to the other, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth in this Agreement.
SECTION 7.8 TERMINATION FOR MATERIALLY IMPROVED OFFER. Fidelity may
terminate this Agreement by written notice to PFGI and Provident Bank in
accordance with this Section if the following conditions are satisfied:
(a) An unsolicited offer to consummate a Competing Transaction is
received by the Board of Directors of Fidelity at a price per share (or
equivalent) higher than $21.00;
(b) the Board of Directors of Fidelity determines in good faith, after
taking into all other factors relevant to the Fidelity shareholders and based
upon the written advice of its legal counsel
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and financial advisors that (i) the Competing Offer is materially better for the
Fidelity shareholders than the benefits accorded the Fidelity shareholders under
this Agreement, (ii) the failure to withdraw, modify or change its
recommendation to approve this Agreement and the Mergers would cause the Board
of Directors of Fidelity to breach its fiduciary duties to Fidelity's
shareholders under applicable law, and (iii) the Board of Directors should
accept and recommend the Competing Transaction to the shareholders of Fidelity;
(c) Fidelity proceeds to close the Competing Transaction on the terms
of the unsolicited offer; and
(d) contemporaneously with the closing of the Competing Transaction,
Fidelity tenders with its written notice of termination to PFGI payment in full,
in immediately available funds, of the cash-out option as provided for in the
Stock Option Agreement between PFGI and Fidelity referred to in Section 8.20
hereof.
SECTION 7.9 UPSET PROVISION. Within three (3) business days after the
Common Exchange Value is determined, Fidelity shall have the right, upon
delivery of written notice to PFGI, to terminate this Agreement effective on the
thirtieth (30th) day following such notice (the "EFFECTIVE TERMINATION DATE") if
the Final PFGI Value is less than Eighty-Five Percent (85%) of the Initial
Exchange Value, unless the ratio of the Final PFGI Value to the Initial Exchange
Value (the "PFGI RATIO") is greater than or equal to the number obtained by
subtracting 0.15 from the ratio of the Final Index Price to the Initial Index
Price (the "INDEX RATIO"), subject, however, to the following provisions.
If Fidelity elects to exercise its termination right pursuant to this
Section, it shall give prompt written notice thereof to PFGI; provided, that
such notice of election to terminate may be withdrawn at any time prior to the
Effective Termination Date. During the five (5) day period commencing with its
receipt of such notice, PFGI shall have the option to increase the consideration
to be received by the holders of Fidelity Common Shares hereunder by adjusting
the Per Share Consideration to the lesser of (i) a number which is equal to the
Per Share Consideration times a fraction, the numerator of which is Eighty-Five
Percent (85%) times the Initial PFGI Value and the denominator of which is the
Final PFGI Value, and (ii) a number which is equal to the Per Share
Consideration times a fraction, the numerator of which is the Index Ratio minus
0.15 and the denominator of which is the PFGI Ratio (the intent of which is to
permit PFGI to increase the Per Share Consideration to such amount as would be
sufficient to prevent Fidelity from becoming entitled to exercise its rights
under the first sentence of this Section to terminate this Agreement). If PFGI
so elects, it shall give, within such five (5) day period, written notice to
Fidelity of such election and the revised Per Share Consideration, whereupon no
termination shall be deemed to have occurred pursuant to this Section 7.9 and
this Agreement shall remain in full force and effect in accordance with its
terms (except as the Per Share Consideration shall have been so modified).
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If the number of shares of common stock of any Index Company is
materially changed as a result of a recapitalization, reclassification,
subdivision, spinoff, splitup, exchange of shares or readjustment, or stock
dividend taking effect after the Initial Index Price is determined and prior to
the last trading day during which the Final Index Price is determined, then the
closing prices for such common stock for purposes of determining the Initial
Index Price and the Final Index Price shall be equitably adjusted (in the same
manner as would apply to a Share Adjustment) so as to be comparable as of the
dates on which such Initial Index Price and Final Index Price are determined.
SECTION 7.10 EFFECT OF TERMINATION. A termination of this Agreement
effected by written notice shall be without prejudice to the terminating party's
rights to damages or to seek other recourse against one or more of the other
parties hereto for any breach of this Agreement. If, however, this Agreement is
terminated mutually by the parties, or if the transactions are not approved by
all of the requisite Regulatory Agencies, or if a party is unable to satisfy a
condition precedent to the consummation of the transactions through no fault of
any party hereto, or if this Agreement is terminated as result of the
application of Sections 7.7, 7.8 or 7.9, then this Agreement shall be of no
further force or effect and the parties shall have no further obligations to
each other except for such executory obligations (such as the return of
information) as expressly survive the termination of this Agreement by the terms
hereof. The agreements set forth in Section 8.2, 8.3, 8.4, 8.6 and 8.17 hereof
shall survive the earlier termination of this Agreement.
ARTICLE 8
GENERAL
SECTION 8.1 DISCLOSURE SCHEDULE.
(a) Fidelity and its Subsidiaries have delivered to PFGI and Provident
Bank a disclosure schedule (the "DISCLOSURE SCHEDULE"), certified by Fidelity
and its Subsidiaries and delivered prior to the execution of this Agreement,
setting forth, among other things, items the disclosure of which shall be
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Article 2 hereof.
(b) Fidelity and its Subsidiaries shall update and supplement the
Disclosure Schedule so as to disclose exceptions to one or more representations
or warranties contained in Article 2 hereof which shall have arisen between the
date hereof and the Closing Date, but any exceptions or other information
subsequently disclosed shall not be taken into consideration in determining, for
purposes of this Agreement, whether the condition set forth in Section 6.1(a)
hereof shall have been satisfied.
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SECTION 8.2 CONFIDENTIAL INFORMATION. The parties acknowledge the
general confidential and proprietary nature of the information which has
heretofore been exchanged and which shall be received from each other hereunder
and agree to hold and keep the same confidential. Confidential information does
not include, however, information which is or becomes generally available to the
public other than as a result of a disclosure by a party or its representatives
in violation of this Agreement. The parties agree that the information shall be
used solely for the purposes contemplated by this Agreement and that such
information shall not be disclosed to any person other than employees and agents
of a party who are directly involved in evaluating the transaction. The
information shall not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the other party's business or any
business or enterprise in which such party may have an interest, now or in the
future, and whether or not now in competition with such other party.
SECTION 8.3 PUBLICITY. PFGI and Fidelity shall cooperate with each
other in the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Mergers and shall not issue any
news release or make any other public disclosure prior to the Effective Time
without the prior consent of the other party, unless it reasonably believes such
is required by law upon the advice of counsel or is in response to published
newspaper or other mass media reports regarding the transactions contemplated by
this Agreement, in which such latter event the parties shall give reasonable
notice, and to the extent practicable, consult with each other regarding such
responsive public disclosure. Subsequent to the Effective Time, PFGI shall have
the exclusive right to issue news releases and other public disclosures
concerning this Agreement and the Mergers.
SECTION 8.4 RETURN OF DOCUMENTS. Upon termination of this Agreement
without the Mergers becoming effective, each party shall deliver to the other
originals and all copies of all Information made available to such party and
shall not retain any copies, extracts or other reproductions in whole or in part
of such Information.
SECTION 8.5 NOTICES. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to PFGI:
Provident Financial Group, Inc.
One East Fourth St.
Cincinnati, Ohio 45202
Attention: Mark E. Magee, Vice President, General Counsel
Facsimile: (513) 763-8069
<PAGE> 129
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with a copy to:
Keating, Muething & Klekamp, P.L.L.
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Timothy B. Matthews, Esq.
Facsimile: (513) 579-6457
and
(b) if to Fidelity:
Fidelity Financial of Ohio, Inc.
5535 Glenway Avenue
Cincinnati, Ohio 45238
Attention: Robert R. Sudbrook, President and Chief Executive
Officer
Facsimile: (513) 922-3024
with a copy to:
Vorys, Sater, Seymour and Pease LLP
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45202
Attention: Terri R. Abare or Kate M. Molinsky
Facsimile: 513-723-4056
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 8.6 LIABILITIES AND EXPENSES.
(a) If this Agreement is terminated pursuant to the provisions of
Article 7 hereof (except by reason of a breach of this Agreement as permitted by
Section 7.2 or the failure of one party to satisfy a condition to Closing as a
result of such party's actions or failure to act, as permitted by Section 7.3),
no party hereto shall have any liability to any other party for costs, expenses,
damages or otherwise. If, however, this Agreement is terminated by a party
pursuant to Section 7.2 by reason of a breach in any of the representations,
warranties or covenants contained in this Agreement or pursuant to Section 7.3
by reason of the other party's failure to satisfy a condition to closing as a
result of such party's actions or failure to act, then the non-breaching party
shall be entitled to recover damages from the breaching party, including,
without limitation, reimbursement to the non-
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breaching party of its costs, fees and expenses (including attorneys',
accountants' and advisors' fees and expenses) incident to the negotiation,
preparation, execution and performance of this Agreement and related
documentation.
(b) In the event that the Board of Directors of Fidelity fails to
recommend to the shareholders of Fidelity approval of this Agreement and this
Agreement is rejected by the shareholders of Fidelity at the Shareholders'
Meeting, or in the event that no meeting of the shareholders of Fidelity is held
on or before March 31, 2000, other than for reasons beyond the control of
Fidelity, then, in either of such events, Fidelity shall pay to PFGI Five
Million Dollars ($5,000,000) in immediately available federal funds (i) in the
case of the disapproval by the shareholders of Fidelity of this Agreement where
the Board of Directors of Fidelity has failed to recommend approval, such
payment to be made within five days after the date of the Shareholders' Meeting,
and (ii) if no Shareholders' Meeting is held by March 31, 2000, other than for
reasons beyond the control of Fidelity, such payment to be made within five days
after March 31, 2000.
(c) In the event of any breach of this Agreement by Fidelity, Fidelity
Acquisition or Centennial which (i) has given rise to a right of termination by
PFGI pursuant to Section 7.2 of this Agreement, after the expiration of the
applicable cure period provided in such Section, (ii) is volitional in nature
(and thus within the control of Fidelity, Fidelity Acquisition or Centennial)
and (iii) is materially adverse to the ability of the parties to consummate the
transactions contemplated by this Agreement or has a Material Adverse Effect on
any of the parties hereto, Fidelity shall pay to PFGI Five Million Dollars
($5,000,000) in immediately available federal funds, such payment to be made
within five days after the date of written demand by PFGI.
SECTION 8.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein shall expire at the Effective
Time, provided, however, that no such representation or warranty shall be deemed
to be terminated or extinguished so as to deprive PFGI or Fidelity (or any
director, officer or controlling person thereof) of any defense in law or equity
which otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either PFGI or
Fidelity, the aforesaid representations and warranties being material
inducements to the consummation by PFGI and Fidelity of the transactions
contemplated herein.
SECTION 8.8 ENTIRE AGREEMENT. This Agreement constitute the entire
agreement between the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings, agreements in principle or other
agreements between the parties relating to the subject matter hereof.
SECTION 8.9 HEADINGS AND CAPTIONS. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
<PAGE> 131
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SECTION 8.10 WAIVER, AMENDMENT OR MODIFICATION. The conditions of this
Agreement which may be waived may only be waived by written notice to the other
party waiving such condition. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may be amended or modified
by the parties hereto, at any time before or after shareholder approval of the
Agreement; provided, however, that after any such approval no such amendment or
modification shall alter the amount or change the form of the Merger
Consideration contemplated by this Agreement to be received by shareholders of
Fidelity and, provided, further, that after shareholder approval of this
Agreement, if any such amendment or modification does not alter the amount or
change the form of the Merger Consideration, no further action or approval by
the shareholders of Fidelity shall be required. This Agreement may not be
amended or modified except by a written document duly executed by the parties
hereto.
SECTION 8.11 RULES OF CONSTRUCTION. Unless the context otherwise
requires: (i) a term has the meaning assigned to it, (ii) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles, (iii) "or" is not exclusive, (iv) words in the
singular may include the plural and in the plural include the singular, and (v)
"knowledge" of a party means the actual or constructive knowledge of any
director or executive officer of such party or any of its Subsidiaries.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument. For purposes of executing this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, any facsimile or telecopy document shall be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier or the fact that
any signature was transmitted through the use of a facsimile or telecopier
machine as a defense to the enforcement of this Agreement or any amendment or
other document executed in compliance with this Section 8.12.
SECTION 8.13 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No person or entity not a party to this Agreement (other
than the shareholders of Fidelity, to the extent they are entitled to payment of
the Merger Consideration) shall be deemed to be a third party beneficiary of
this Agreement.
SECTION 8.14 SEVERABILITY. In the event that any provisions of this
Agreement or any portion thereof shall be finally determined to be unlawful or
unenforceable, such provision or portion thereof shall be deemed to be severed
from this Agreement, and every other provision, and any
<PAGE> 132
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portion of a provision, that is not invalidated by such determination, shall
remain in full force and effect. To the extent that a provision is deemed
unenforceable by virtue of its scope but may be made enforceable by limitation
thereof, such provision shall be enforceable to the fullest extent permitted
under the laws and public policies of the State whose laws are deemed to govern
enforceability. It is declared to be the intention of the parties that they
would have executed the remaining provisions without including any that may be
declared unenforceable.
SECTION 8.15 GOVERNING LAW; ASSIGNMENT. This Agreement shall be
governed by the laws of the State of Ohio and applicable federal laws and
regulations. This Agreement may not be assigned by either of the parties hereto;
provided, however, that the merger or consolidation of PFGI shall not be deemed
an assignment hereunder if PFGI is the surviving corporation in such merger or
consolidation and the PFGI Common Shares shall thereafter continue to be
publicly traded and issuable to the Fidelity shareholders pursuant to the terms
of this Agreement.
SECTION 8.16 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, an aggrieved party to this Agreement shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction and such right shall be in
addition to any other remedy to which they shall be entitled at law or in
equity.
SECTION 8.17 OBJECTIONS UNDER ANTITRUST LAWS. Each of the parties
hereto shall use its diligent efforts to resolve any objections to the Mergers
which may be asserted by the Department of Justice or any private party or other
governmental entity under any antitrust laws or regulations.
SECTION 8.18 CURRENT INFORMATION. During the period from the date of
this Agreement to the Effective Time, each of the parties will promptly notify
the other of (i) any material change in the normal course of its business, (ii)
any governmental complaints, investigations or hearings (or communications that
the foregoing may be contemplated), (iii) the institution or the threat of
material litigation involving such party, and each agrees to keep the other
promptly informed of the status of such events.
SECTION 8.19 INTEGRATION OF OPERATIONS. Subject to applicable laws,
regulations and the requirements of Regulatory Agencies, during the period from
the date of this Agreement to the Effective Time, the parties will consult and
cooperate fully with each other to do all things advisable to prepare for and
facilitate the integration of Fidelity and its Subsidiaries and their operations
into and with PFGI's Subsidiaries and operations as rapidly and effectively as
possible as of the Effective Time, including, without limitation, preparation
for the integration of branch operations, management information systems,
financial and accounting operations, employee compensation and benefit matters,
employee training and similar matters. Nothing in this Section shall be
construed,
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however, to obligate the Board of Directors of Fidelity to take any action which
would constitute a breach of its fiduciary duties to its shareholders.
SECTION 8.20 OPTION AGREEMENT. Within one (1) day of the execution of
this Agreement, Fidelity and PFGI shall enter into a Stock Option Agreement in
the form attached as Exhibit 8.20 providing for the grant of an option to PFGI
to acquire 1,815,955 Fidelity Common Shares (which Fidelity represents shall
constitute approximately 19.9% of the number of Outstanding Fidelity Shares), at
a price equal to Fifteen and 75/100 Dollars ($15.75) per share.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ Robert R. Sudbrook
-------------------------------------------
Robert R. Sudbrook
President and Chief Executive Officer
FIDELITY ACQUISITION CORPORATION
By: /s/ Robert R. Sudbrook
-------------------------------------------
Robert R. Sudbrook
CENTENNIAL BANK
By: /s/ Robert R. Sudbrook
-------------------------------------------
Robert R. Sudbrook
President and Chief Executive Officer
<PAGE> 134
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PROVIDENT FINANCIAL GROUP, INC.
By: /s/ Robert L. Hoverson
---------------------------------------------
Robert L. Hoverson
President and Chief Executive Officer
THE PROVIDENT BANK
By: /s/ Robert L. Hoverson
---------------------------------------------
Robert L. Hoverson
President and Chief Executive Officer
<PAGE> 135
ANNEX B
SECTION 1701.84. DISSENTS IN CASE OF A MERGER, CONSOLIDATION,
COMBINATION, OR MAJORITY SHARE ACQUISITION.
The following are entitled to relief as dissenting shareholders under
section 1701.85 of the Revised Code:
(A) Shareholders of a domestic corporation that is being merged or
consolidated into a surviving or new entity, domestic or foreign, pursuant to
section 1701.78, 1701.781, 1701.79, 1701.791, or 1701.801 of the Revised Code;
(B) In the case of a merger into a domestic corporation, shareholders
of the surviving corporation who under section 1701.78 or 1701.781 of the
Revised Code are entitled to vote on the adoption of an agreement of merger, but
only as to the shares so entitling them to vote;
(C) Shareholders, other than the parent corporation, of a domestic
subsidiary corporation that is being merged into the domestic or foreign parent
corporation pursuant to section 1701.80 of the Revised Code.
(D) In the case of a combination or a majority share acquisition,
shareholders of the acquiring corporation who under section 1701.83 of the
Revised Code are entitled to vote on such transaction, but only as to the shares
so entitling them vote;
(E) Shareholders of a domestic subsidiary corporation into which one or
more domestic or foreign corporations are being merged pursuant to section
1701.801 of the Revised Code.
SECTION 1701.85. PROCEDURE IN CASE OF DISSENTS.
(A)(1) A shareholder of a domestic corporation is entitled to relief as
a dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
<PAGE> 136
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(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a record holder
of the shares of the corporation as to which he seeks relief as of the date on
which the agreement of merger was adopted by the directors of that corporation.
Within twenty days after he has been sent the notice provided in section 1701.80
or 1701.801 of the Revised Code, the dissenting shareholder shall deliver to the
corporation a written demand for payment with the same information as that
provided for in division (A)(2) of this section.
(4) In the case of a merger of consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court for good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such shares. Upon
receiving a demand for payment from a dissenting shareholder who is the record
holder of uncertificated securities, the corporation shall make an appropriate
notation of the demand for payment in its shareholder records. If uncertificated
shares for which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required for
certificated securities as provided in this paragraph. A transferee of the
shares so endorsed, or of uncertificated securities where such notation has been
made, acquires only such rights in the corporation as the original dissenting
holder of such shares had immediately after the service of a demand for payment
of the fair cash value of the shares. A request under this paragraph by the
corporation is not an admission by the corporation that the shareholder is
entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to
an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted
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to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of facts, including the vote and the facts entitling the dissenting shareholder
to the relief demanded. No answer to such a complaint is required. Upon the
filing of such a complaint, the court, on motion of the petitioner, shall enter
an order fixing a date for a hearing on the complaint and requiring that a copy
of the complaint and a notice of the filing and of the date for hearing be given
to the respondent or defendant in the manner in which is required to be served
or substituted service is required to be made in other cases. On the day fixed
for hearing on the complaint or any adjournment of it, the court shall determine
from the complaint and from such evidence as is submitted by either party
whether the dissenting shareholder is entitled to be paid the fair cash value of
any shares and, if so, the number and class of such shares. If the court finds
that the dissenting shareholder is so entitled, the court may appoint one or
persons as appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value. The appraisers have such power and authority as
is specified in the order of their appointment. The court thereupon shall make a
finding as to the fair cash value of a share and shall render judgment against
the corporation for the payment of it, with interest at such rate and from such
date as the court considers equitable. The costs of the proceeding, including
reasonable compensation to the appraisers to be fixed by the court, shall be
assessed or apportioned as the court considers equitable. The proceeding is a
special proceeding and final orders in it may be vacated, modified, or reversed
on appeal pursuant to the Rules of Appellate Procedure and, to the extent not in
conflict with those rules, Chapter 2505. of the Revised Code. If, during the
pendency of any proceeding instituted under this section, a suit or proceeding
is or has been instituted to enjoin or otherwise to prevent the carrying out of
the action as to which the shareholder has dissented, the proceeding instituted
under this section shall be stayed until the final determination of the other
suit or proceeding. Unless any provision in division (D) of this section is
applicable, the fair cash value of the shares that is agreed upon by the parties
or as fixed under this section shall be paid within thirty days after the date
of final determination of such value under this division, the effective date of
the amendment to the articles, or the consummation of the other action involved,
whichever occurs last. Upon the occurrence of the last such event, payment shall
be made immediately to a holder of uncertificated securities entitled to such
payment. In the case of holders of shares represented by certificates, payment
shall be made only upon and simultaneously with the surrender to the corporation
of the certificates representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of
the corporation, fair cash value as to those shareholders shall be determined as
of the day prior to the day on which the vote by the shareholders was taken,
and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing buyer who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the
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particular shareholder. In computing such fair cash value, any appreciation or
depreciation in market value resulting from the proposal submitted to the
directors or to the shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this
section unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind
their adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the
consent of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not
come to an agreement as to the fair cash value per share, and neither
the shareholder nor the corporation has filed or joined in a complaint
under division (B) of this section within the period provided in that
division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
<PAGE> 139
ANNEX C
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT (the "STOCK OPTION AGREEMENT") dated as of
August 17, 1999, is made between PROVIDENT FINANCIAL GROUP, INC., an Ohio
corporation ("PFGI"), and FIDELITY FINANCIAL OF OHIO, INC., an Ohio corporation
("FIDELITY").
R E C I T A L S:
----------------
PFGI, The Provident Bank, an Ohio banking corporation ("PROVIDENT") and
wholly-owned subsidiary of PFGI, are entering into an Agreement and Plan of
Merger (the "MERGER AGREEMENT") with Fidelity, Fidelity Acquisition Corporation
("FIDELITY ACQUISITION") and Centennial Bank, an Ohio savings bank
("CENTENNIAL"), providing for the merger of Fidelity with and into PFGI and the
merger of Centennial with and into Provident.
NOW, THEREFORE, to induce PFGI to enter into the Merger Agreement, and
in consideration of the representations, warranties, covenants and agreements
set forth in the Merger Agreement, PFGI and Fidelity, intending to be legally
bound, do hereby agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Fidelity hereby grants to PFGI the irrevocable, continuing option (the
"OPTION") to purchase a maximum of up to One Million Eight Hundred Fifteen
Thousand Nine Hundred Fifty Five (1,815,955) shares (the "OPTIONED SHARES") of
Fidelity common stock, $.10 par value per share ("FIDELITY COMMON SHARES")
(subject to adjustment as provided in Section 10 hereof and as provided in the
last sentence of this Section). Fidelity represents and warrants to PFGI that
the aforementioned number of Optioned Shares is equal to approximately Nineteen
and Nine-Tenths Percent (19.9%) of the number of issued and outstanding Fidelity
Shares on a fully-diluted basis without giving effect to the exercise of the
Option. The Optioned Shares may be purchased in the manner set forth below at a
price per Fidelity Common Share, payable in cash in accordance with Section 4 of
this Agreement, of Fifteen and 75/00 Dollars ($15.75) (subject to adjustment as
provided in Section 10 hereof) (the "EXERCISE PRICE"). The number of Fidelity
Shares for which this Option is exercisable shall at all times equal 19.9% of
the number of issued and outstanding Fidelity Shares at the time of exercise
without giving effect to any Fidelity Shares subject to or issued pursuant to
the Option, and shall automatically be adjusted upwards or downwards without any
action required on the part of PFGI or Fidelity.
<PAGE> 140
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2. EXERCISE OF OPTION.
(a) The Option may be exercised by PFGI, in whole or in part,
at any time after the occurrence of a Competing Transaction (as defined in the
Merger Agreement) and shall cease to be exercisable eighteen (18) months
thereafter.
(b) (i) Fidelity shall notify PFGI promptly in writing of the
termination of the Merger Agreement, it being understood that the giving of such
notice by Fidelity shall not be a condition to the right of PFGI to exercise the
Option and that Fidelity's failure to give such notice shall have no effect on
PFGI's rights hereunder.
(ii) As, if and when PFGI desires to exercise the Option,
PFGI shall deliver to Fidelity written notice thereof, which notice shall
specify the number of Fidelity Common Shares to be acquired in connection with
that Option exercise (the "EXERCISE NOTICE").
(iii) Upon the giving by PFGI to Fidelity of an Exercise
Notice and the tender of the Exercise Price for Fidelity Common Shares to be
acquired, PFGI, provided that the conditions to Fidelity's obligation to issue
Fidelity Common Shares to PFGI hereunder set forth in Section 3 have been
satisfied or waived, shall be deemed (subject to the receipt of any applicable
regulatory approvals) to be the holder of record of Fidelity Common Shares
issuable upon such exercise, notwithstanding that the stock transfer books of
Fidelity shall then be closed or that certificates representing Fidelity Common
Shares shall not then have been actually delivered to PFGI.
(iv) The closing of the purchase of Fidelity Common
Shares (the "CLOSING") shall occur at a place, on a date, and at a time
designated by PFGI in the Exercise Notice delivered at least two (2) business
days prior to the date of the Closing.
(c) This Option shall terminate upon the termination of the
Merger Agreement pursuant to its terms, except a termination by reason of a
Competing Transaction pursuant to Section 7.8.
(d) Fidelity agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Fidelity Common Shares so that the Option may be exercised without
additional authorization of Fidelity Common Shares after giving effect to all
other options, warrants, convertible securities and other rights to purchase
Fidelity Common Shares; (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Fidelity; (iii) promptly to take all action as may from time to
time be required (including (x) complying with all premerger notification,
reporting and waiting period
<PAGE> 141
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requirements specified in the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and regulations promulgated thereunder (the "HSR ACT") and (y)
any federal or state banking law, prior approval of or notice to the Federal
Reserve Board, Office of Thrift Supervision, or to any state regulatory
authority is necessary before the Option may be exercised, cooperating fully
with PFGI in preparing such applications or notices and providing such
information to the federal or such state regulatory authority as they may
require) in order to permit PFGI to exercise the Option and Fidelity duly and
effectively to issue shares of Fidelity Common Shares pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of PFGI
against dilution.
(e) Notwithstanding any other provision of this Stock Option
Agreement to the contrary, in no event shall PFGI purchase under the terms of
this Agreement that number of Optioned Shares which have a "SPREAD VALUE" in
excess of the Spread Cap. The term "SPREAD CAP" shall mean Fifteen Million and
00/100 Dollars ($15,000,000.00). The term "Spread Value" shall mean the
difference between (i) the product of (1) the sum of the total number of
Optioned Shares PFGI (x) intends to purchase at the Closing pursuant to the
exercise of the Option and (y) previously purchased pursuant to the prior
exercise of the Option, and (2) the closing price of Fidelity Common Shares as
quoted on the Nasdaq National Market on the last trading day immediately
preceding the Closing, and (ii) the product of (1) the total number of Optioned
Shares PFGI (x) intends to purchase at the Closing pursuant to the exercise of
the Option and (y) previously purchased pursuant to the prior exercise of the
Option and (2) the applicable Exercise Price of such Optioned Shares. In the
event the Spread Value exceeds the Spread Cap, the number of Option Shares which
PFGI is entitled to purchase at the Closing shall be reduced to that number of
shares necessary such that the Spread Value equals the Spread Cap.
3. CONDITIONS TO CLOSING. The obligation of Fidelity to issue Fidelity
Common Shares to PFGI hereunder is subject to the conditions that:
(a) the waiting periods, if any, applicable to the issuance of
Fidelity Common Shares under the HSR Act shall have expired or been terminated
and all other required consents relating to this Stock Option Agreement and
required to be obtained prior to issuance of Fidelity Common Shares shall have
been obtained, except where the failure to obtain such other required consents
would not have a material adverse effect on Fidelity or PFGI, as the case may
be; and
(b) no preliminary or permanent injunction or other order by
any court, governmental entity or regulatory agency of competent jurisdiction
prohibiting or preventing such issuance shall have been issued and remain in
effect.
<PAGE> 142
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4. CLOSING. At the Closing,
(a) Fidelity shall deliver to PFGI a single certificate in
definitive form representing Fidelity Common Shares to be acquired, such
certificate to be registered in the name of PFGI and to bear the legend set
forth in Section 12 and, if the Option should be exercised in part only, a new
Option evidencing the rights of PFGI to purchase the balance of the Optioned
Shares, and PFGI shall deliver to Fidelity a copy of this Agreement and a letter
agreeing that PFGI will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement;
(b) PFGI shall deliver to Fidelity the aggregate Exercise
Price for Fidelity Common Shares to be acquired by wire transfer of immediately
available funds to an account to be designated in writing by Fidelity; and
(c) Fidelity shall pay all expenses that may be payable in
respect of the preparation, issuance and delivery of stock certificates under
this Section 4.
5. REPRESENTATIONS AND WARRANTIES OF FIDELITY. Fidelity represents and
warrants to PFGI that:
(a) Fidelity has taken all necessary corporate action to
authorize and reserve for issuance and (subject to the satisfaction of the
conditions set forth in Section 3) to permit it to issue, upon exercise of the
Option, and, at all times from the date hereof through the expiration of the
Option will have reserved, authorized and unissued shares of Fidelity common
stock sufficient for the exercise of the Option and Fidelity Common Shares, upon
issuance pursuant hereto, will be duly and validly issued, fully paid and
nonassessable; and
(b) upon delivery of Fidelity Common Shares to PFGI upon the
exercise of the Option, PFGI will acquire Fidelity Common Shares free and clear
of all claims, liens, charges, encumbrances and security interests of any nature
whatsoever.
6. REPRESENTATIONS AND WARRANTIES OF PFGI. PFGI represents and warrants
to Fidelity that:
(a) any Fidelity Common Shares acquired by PFGI upon exercise
of the Option will be acquired for PFGI's own account, for investment purposes
only and will not be, and the Option is not being, acquired by PFGI with a view
to the public distribution of Fidelity Common Shares, in violation of any
applicable provision of the Securities Act of 1933 ("SECURITIES ACT"); and
<PAGE> 143
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(b) any Fidelity Common Shares acquired by PFGI upon exercise
of the Option will not be transferred or otherwise disposed of except in a
transaction registered, or exempt from registration, under the Securities Act
and otherwise in accordance with this Stock Option Agreement.
7. CERTAIN REPURCHASES.
(a) If PFGI so elects, then, at the request of PFGI by written
notice (the "CASH-OUT NOTICE") given to Fidelity at any time during which the
Option is exercisable pursuant to Section 2, Fidelity (or any successor entity
thereto) shall, to the extent permitted by applicable law and subject to the
receipt by it of any consent or waiver required by it under the terms of any
law, regulation, indenture, loan document or other contract, either (i) pay to
PFGI, in consideration of the redelivery and cancellation without exercise of
the Option (in whole and not in part), an amount in cash (the "CASH-OUT AMOUNT")
equal to the difference between the "MARKET/OFFER PRICE" (as defined below) for
shares of Fidelity Common Shares as of the date PFGI delivers the Cash-Out
Notice and the Exercise Price, multiplied by the total number of Fidelity Common
Shares, or (ii) pay to PFGI, in consideration of Fidelity's repurchase of the
Optioned Shares obtained by PFGI as a result of the exercise of the Option, an
amount in cash (the "REDEMPTION AMOUNT") equal to the Market/Offer Price. For
purposes of this Section 7, the "MARKET/OFFER PRICE" shall mean, as of any date,
the higher of: (x) Fair Market Value (as defined below) per share as of such
date, (y) Twenty One and 00/100 Dollars ($21.00) per share (or such higher price
per share, if applicable, offered by PFGI with respect to Fidelity and not
terminated or withdrawn as of such date ); or (z) the highest price per share
offered by any third party as of such date pursuant to any tender or exchange
offer or other public offer for Fidelity Common Shares and not terminated or
withdrawn as of such date (the "OFFER PRICE"). As used herein, "FAIR MARKET
VALUE" shall be the average of the daily closing sales price for a share of
Fidelity Common Shares on the Nasdaq National Market during the ten (10) trading
days prior to the fifth (5th) trading day immediately preceding the date such
Fair Market Value is to be determined. If any consideration offered by PFGI or a
third party includes any consideration other than cash, such consideration shall
be valued as follows for purposes of calculating the Offer Price or Market/Offer
Price: (i) any securities that are either listed on a national securities
exchange (as defined under the Securities Act) or on any designated offshore
securities market (as defined in Regulation S under the Securities Act) or
included in a national securities quotation system (as defined in the Securities
Act) (collectively, "LISTED SECURITIES") shall be valued based on the average of
the daily closing sale price of such Listed Securities for the ten (10) trading
days on such national securities exchange, designated offshore securities market
or national securities quotation system prior to the fifth (5th) trading day
immediately preceding the date of delivery of the Cash-Out Notice; and (ii) any
consideration other than cash or Listed Securities shall be valued based on the
written opinion of an investment banking firm of nationally recognized
reputation selected by PFGI, which firm is reasonably acceptable to Fidelity.
The costs and fees of such investment banking firm in connection with such
valuation shall be borne equally by PFGI and Fidelity.
<PAGE> 144
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(b) If PFGI exercises its right under this Section 7, Fidelity
shall, within ten (10) business days thereafter, pay the required amount (the
Cash-Out Amount or the Redemption Amount) to PFGI in immediately available funds
and PFGI shall surrender to Fidelity the Option or the Optioned Shares, as the
case may be. If, pursuant to the Merger Agreement, Fidelity shall tender payment
of the Cash-Out Amount to PFGI contemporaneously with the termination of the
Merger Agreement, PFGI shall not be obligated to exercise its cash-out or
redemption options pursuant to Section 7(a) above, PFGI shall be obligated
either to accept and retain the Cash-Out Amount within ten (10) days after
receipt of such tender and promptly surrender to Fidelity the Option, or return
the amount tendered to Fidelity, without prejudice to PFGI's right to exercise
the Option, the cash-out option or the redemption option at a later date to the
extent otherwise permissible under this Agreement.
(c) Notwithstanding any other provision of this Section 7 to
the contrary, in no event shall the Cash-Out Amount exceed the Spread Cap or the
Redemption Amount exceed the Spread Cap plus the aggregate Exercise Price
actually paid by PFGI to acquire Optioned Shares.
8. RESTRICTIONS ON TRANSFER.
(a) Fidelity Common Shares shall not be directly or
indirectly, by operation of law or otherwise, sold, assigned, pledged, or
otherwise disposed of or transferred, other than in accordance with Section 8(b)
or Section 9.
(b) PFGI shall be permitted to sell, assign, transfer or
dispose of any Fidelity Common Shares beneficially owned by it if such sale is
made: (i) pursuant to a transaction that has been approved or recommended, or
otherwise determined to be fair to and in the best interests of the shareholders
of Fidelity, by a majority of the members of the Board of Directors of Fidelity,
which majority shall include a majority of directors who were directors prior to
the announcement of such transaction; or (ii) to any purchaser or transferee who
would not, to PFGI's knowledge after reasonable inquiry, immediately following
such sale, assignment, transfer or disposal beneficially own more than five
percent (5%) of Fidelity Common Shares on a fully diluted basis.
9. REGISTRATION RIGHTS.
(a) On or prior to the second anniversary of the exercise of
the Option, PFGI may by written notice (the "REGISTRATION NOTICE") to Fidelity
request Fidelity to register under the Securities Act all or any part of
Fidelity Common Shares beneficially owned by PFGI (the ("REGISTRABLE
SECURITIES") pursuant to a bona fide firm commitment underwritten public
offering, in which PFGI and the underwriters shall effect as wide a distribution
of such Registrable Securities as is reasonably practicable and shall use their
best efforts to prevent any person (including any group (as used in Rule 13d-5
under the Securities Exchange Act of 1934 (the "EXCHANGE ACT")) and its
affiliates from purchasing through such offering Fidelity Common Shares
representing more than
<PAGE> 145
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five percent (5%) of the outstanding shares of Fidelity common stock on a fully
diluted basis (excluding any Fidelity Common Shares held by a subsidiary of
Fidelity) (a "PERMITTED OFFERING").
(b) The Registration Notice shall include a certificate
executed by PFGI and its proposed managing underwriter, which underwriter shall
be an investment banking firm of nationally recognized standing (the "MANAGER"),
stating that
(i) they have a good faith intention promptly to
commence a Permitted Offering, and
(ii) the Manager in good faith believes that, based
on the then-prevailing market conditions, it will be able to sell the
Registrable Securities at a per share price equal to at least eighty percent
(80%) of the then Fair Market Value of such shares.
(c) Fidelity (and/or any person designated by Fidelity) shall
thereupon have the option exercisable by written notice delivered to the PFGI
within ten (10) business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the Registrable Securities
proposed to be so sold for cash at a price (the "OPTION PRICE") equal to the
product of: (i) the number of Registrable Securities to be so purchased by
Fidelity; and (ii) the then Fair Market Value of such shares.
(d) Any purchase of Registrable Securities by Fidelity (or its
designee) under Section 9(c) shall take place at a closing to be held at the
principal executive offices of Fidelity or at the offices of its counsel at any
reasonable date and time designated by Fidelity and/or such designee in such
notice within twenty (20) business days after delivery of such notice, and any
payment for the shares to be so purchased shall be made by delivery at the time
of such closing in immediately available funds.
(e) If Fidelity does not elect to exercise its option pursuant
to this Section 9 with respect to all Registrable Securities, it shall use its
reasonable efforts to effect, as promptly as reasonably practicable, the
registration under the Securities Act of the unpurchased Registrable Securities
proposed to be so sold; provided, however, that
(i) PFGI shall not be entitled to more than an
aggregate of two (2) effective registration statements hereunder, and
(ii) Fidelity will not be required to file any such
registration statement during any period of time (not to exceed one hundred
eighty (180) days after such request) when:
(A) Fidelity is in possession of material
non-public information which it reasonably believes would be detrimental to be
disclosed at such time and, in the opinion
<PAGE> 146
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of counsel to Fidelity, such information would have to be disclosed if a
registration statement were filed at that time;
(B) Fidelity is required under the
Securities Act to include audited financial statements for any period in such
registration statement and such financial statements are not yet available for
inclusion in such registration statement; or
(C) Fidelity determines, in its reasonable
judgment, that such registration would interfere with any financing, acquisition
or other material transaction involving Fidelity or any of its affiliates.
(f) Fidelity shall use its reasonable best efforts to cause
any Registrable Securities registered pursuant to this Section 9 to be qualified
for sale under the securities or Blue Sky laws of such jurisdictions as PFGI may
reasonably request and shall continue such registration or qualification in
effect in such jurisdiction; PROVIDED, however, that Fidelity shall not be
required to qualify to do business in, or consent to general service of process
in, any jurisdiction by reason of this provision.
(g) The registration rights set forth in this Section 9 are
subject to the condition that PFGI shall provide Fidelity with such information
with respect to its Registrable Securities, the plans for the distribution
thereof, and such other information with respect to such holder as, in the
reasonable judgment of counsel for Fidelity, is necessary to enable Fidelity to
include in such registration statement all material facts required to be
disclosed with respect to a registration thereunder.
(h) A registration effected under this Section 9 shall be
effected at Fidelity's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to PFGI, and Fidelity shall
provide to the underwriters such documentation (including certificates, opinions
of counsel and "comfort" letters from auditors) as is customary in connection
with underwritten public offerings as such underwriters may reasonably require.
(i) In connection with any registration effected under this
Section 9, the parties agree
(i) to indemnify each other and the underwriters in
the customary manner,
(ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the Manager and the
other underwriters participating in such offering, and
<PAGE> 147
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(iii) to take further reasonable actions which are
necessary to effect such registration and sale.
(j) Fidelity shall be entitled to include (at its expense)
additional shares of Fidelity common stock in a registration effected pursuant
to this Section 9 only if and to the extent the Manager determines that such
inclusion will not adversely affect the prospects for success of such offering.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without limitation to
any restriction on Fidelity contained in this Stock Option Agreement or in the
Merger Agreement, in the event of any change in Fidelity common stock by reason
of stock dividends, splitups, mergers (other than the mergers contemplated by
the Merger Agreement), recapitalizations, combinations, exchange of shares or
the like, the type and number of shares or securities subject to the Option and
the Exercise Price shall be adjusted appropriately and proper provision will be
made in the agreements governing such transaction, so that PFGI will receive
upon exercise of the Option the number and class of shares or other securities
or property that PFGI would have received in respect of Fidelity Common Shares
if the Option had been exercised immediately prior to such event or the record
date therefor, as applicable.
11. RESTRICTIVE LEGENDS. Each certificate representing Fidelity Common
Shares issued to the PFGI hereunder shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR
IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE STOCK OPTION AGREEMENT, DATED AS OF AUGUST 17, 1999, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that:
(i) the reference to the resale restrictions of the
Securities Act and state securities or Blue Sky laws in the above legend shall
be removed by delivery of substitute certificate(s) without such reference, if
Fidelity shall have delivered to PFGI a copy of a letter from the staff of the
Commission, or an opinion of counsel, in form and substance satisfactory to
PFGI, to the effect that such legend is not required for purposes of the
Securities Act or such laws;
(ii) the reference to the provisions to this Stock
Option Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the
<PAGE> 148
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shares have been sold or transferred in compliance with the provisions of this
Stock Option Agreement and under circumstances that do not require the retention
of such reference; and
(iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied.
In addition, such certificates shall bear any other legend as
may be required by law. Certificates representing shares sold in a registered
public offering pursuant to Section 10 shall not be required to bear the legend
set forth in this Section 11.
12. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Stock Option Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns.
(b) Nothing contained in this Stock Option Agreement, express
or implied, is intended to confer upon any person other than the parties hereto
and their respective assigns any rights or remedies hereunder.
(c) Any Fidelity Common Shares sold by PFGI in compliance with
the provisions of Section 10 shall, upon consummation of such sale, be free of
the restrictions imposed with respect to such shares by this Stock Option
Agreement.
13. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
harm would occur if any of the provisions of this Stock Option Agreement were
not performed in accordance with their specified terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Stock Option Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
14. VALIDITY.
(a) The invalidity or unenforceability of any provision of
this Stock Option Agreement shall not affect the validity or enforceability of
the other provisions of this Stock Option Agreement, which shall remain in full
force and effect.
(b) If any court or other competent authority holds any
provision of this Stock Option Agreement to be null, void or unenforceable, the
parties hereto shall negotiate in good faith the execution and delivery of an
amendment to this Stock Option Agreement in order, as nearly as
<PAGE> 149
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possible, to effectuate, to the extent permitted by law, the intent of the
parties hereto with respect to such provision and the economic effects thereof.
(c) The validity of this Stock Option Agreement shall not be
affected by the invalidity of the Merger Agreement, or any provision thereof,
nor shall the invalidity of this Stock Option Agreement, or any provision
hereof, affect the validity of the Merger Agreement. Nothing contained in this
Stock Option Agreement shall be deemed to authorize either Fidelity or PFGI to
breach any provision of the Merger Agreement.
15. NOTICES. Any notice or other communication shall be in writing and
shall be deemed to have been given or made on the date of delivery, in the case
of hand delivery, or three (3) business days after deposit in the United States
Registered Mail, postage prepaid, or upon receipt if transmitted by facsimile
telecopy or any other means, addressed (in any case) as follows:
(i) if to PFGI:
Provident Financial Group, Inc.
One East Fourth St.
Cincinnati, Ohio 45202
Attention: Mark E. Magee, Senior Vice President, General
Counsel
Facsimile: (513) 763-8069
with a copy to:
Keating, Muething & Klekamp, P.L.L.
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Timothy B. Matthews, Esq.
Facsimile: (513) 579-6457
and
(b) if to Fidelity:
Fidelity Financial of Ohio, Inc.
5535 Glenway Avenue
Cincinnati, Ohio 45238
Attention: Robert S. Sudbrook, President and CEO
Facsimile: (513) 922-3024
<PAGE> 150
- 12 -
with a copy to:
Vorys, Sater, Seymour and Pease LLP
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45202
Attention: Roger A. Yurchuck, Esq.
Facsimile: 513-723-4056
or to such other address as any party may from time to time designate by notice
to the others.
16. GOVERNING LAW. This Stock Option Agreement shall be governed in all
respects, including validity, interpretation and effect by and construed in
accordance with the laws of the State of Ohio without giving effect to the
provisions thereof relating to conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby. Each
party hereby irrevocably consents to the jurisdiction of the federal district
court for the Southern District of Ohio over any suit, action or other
proceeding initiated to enforce or to interpret this Stock Option Agreement.
Neither party shall object to the venue of any such suit, action or other
proceeding in such court on forum non conveniens or any other ground.
17. INTERPRETATION.
(a) When reference is made in this Stock Option Agreement to
Articles, Sections, Schedules or Exhibits, such reference shall be to an
Article, Section, Schedule or Exhibit of this Stock Option Agreement, as the
case may be, unless otherwise indicated.
(b) The headings contained in this Stock Option Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of the Stock Option Agreement.
(c) Whenever the words "include," "includes," or "including"
are used in this Stock Option Agreement and are not followed by the words
"without limitation," they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Stock Option Agreement shall refer to this Stock Option
Agreement as a whole and not to any particular provision of this Stock Option
Agreement.
18. COUNTERPARTS; EFFECT. This Stock Option Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement and each of which
shall only become effective when one or more counterparts have been signed by
each party and delivered to the other party.
<PAGE> 151
- 13 -
19. AMENDMENTS; WAIVER. This Stock Option Agreement may be amended by
the parties hereto and the terms and conditions hereof may be waived but, in the
case of an amendment, only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an instrument signed on
behalf of the party waiving compliance.
20. LOSS OR MUTILATION. Upon receipt by Fidelity of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Stock
Option Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this Stock
Option Agreement, if mutilated, Fidelity will execute and deliver a new Stock
Option Agreement of like tenor and date.
[Remainder of page intentionally left blank. Signature page to follow.]
<PAGE> 152
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Option
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ Robert R. Sudbrook
--------------------------------------
Robert R. Sudbrook
President and Chief Executive Officer
PROVIDENT FINANCIAL GROUP, INC.
By: /s/ Robert L. Hoverson
--------------------------------------
Robert L. Hoverson
President and Chief Executive Officer
<PAGE> 153
ANNEX D
- -----------------------------------------------------------------
SANDLER O'NEILL & PARTNERS, L.P. Telephone: 212-466-7700
INVESTMENT BANKING GROUP 800-635-6855
Two World Trade Center, 104th Floor Facsimile: 212-466-7711
New York, New York 10049
SANDLER O'NEILL LOGO
August 16, 1999
Board of Directors
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, OH 45212
Ladies and Gentlemen:
Fidelity Financial of Ohio, Inc. ("FFOH") and Provident Financial Group,
Inc. ("Provident") and certain of their respective subsidiaries have entered
into an Agreement and Plan of Merger, dated as of August 16, 1999 (the
"Agreement"), pursuant to which FFOH will be merged with and into Provident (the
"Merger"). Upon consummation of the Merger, each share of FFOH common stock, par
value $.10 per share, issued and outstanding immediately prior to the Merger
(the "FFOH Shares"), other than certain shares specified in the Agreement, will
be converted into the right to receive a number of shares of Provident common
stock, no par value, determined by dividing $21.00 by the average of the closing
sale prices of Provident common stock for the ten trading days ending on the
date on which the last regulatory approval required to consummate the Merger is
obtained (the "Exchange Ratio); provided, however, that the Exchange Ratio shall
not be less than 0.4719 nor more than 0.5250, subject to increase under certain
circumstances as set forth in the Agreement. The terms and conditions of the
Merger are more fully set forth in the Agreement. You have requested our opinion
as to the fairness, from a financial point of view, of the Exchange Ratio to the
holders of FFOH Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated August 16, 1999, by and between FFOH and Provident; (iii) certain publicly
available financial statements of FFOH and other historical financial
information provided by FFOH that we deemed relevant; (iv) certain publicly
available financial statements of Provident and other historical financial
information provided by Provident that we deemed relevant; (v) certain internal
financial analyses and forecasts of FFOH prepared by and reviewed with
management of FFOH and the views of senior management of FFOH, based on certain
limited discussions with certain members of senior management regarding FFOH's
past and current business, financial condition, results of operations and future
prospects; (vi) certain internal financial analyses and forecasts of Provident
prepared by and reviewed with management of Provident and the views of senior
management of Provident, based on certain limited discussions with certain
members of senior management, regarding
SANDLER O'NEIL & PARTNERS, L.P., IS A LIMITED PARTNERSHIP, THE SOLE GENERAL
PARTNER OF WHICH IS SANDLER O'NEILL & PARTNERS CORP., A NEW YORK CORPORATION
<PAGE> 154
Board of Directors
Fidelity Financial of Ohio, Inc.
August 16, 1999
Page 2 SANDLER O'NEILL
Provident's past and current business, financial condition, results of
operations and future prospects; (vii) the pro forma impact of the Merger;
(viii) the publicly reported historical price and trading activity for FFOH's
and Provident's common stock, including a comparison of certain financial and
stock market information for FFOH and Provident with similar publicly available
information for certain other companies the securities of which are publicly
traded; (ix) the financial terms of recent business combinations in the savings
institution industry, to the extent publicly available; (x) the current market
environment generally and the banking environment in particular; and (xi) such
other information, financial studies, analyses and investigations and financial,
economic and market criteria as we considered relevant. In connection with our
engagement, we were not asked to, and did not, solicit indications of interest
in a potential transaction from other third parties other than one third party
specifically identified to us by FFOH's Board of Directors.
In performing our review, we have assumed and relied upon the accuracy
and completeness of all the financial information, analyses and other
information that was publicly available or otherwise furnished to, reviewed by
or discussed with us, and we do not assume any responsibility or liability for
independently verifying the accuracy or completeness thereof. We did not make
an independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities (contingent of otherwise) of FFOH or
Provident or any of their subsidiaries, or the collectibility of any such
assets, nor have we been furnished with any such evaluations or appraisals. We
did not make an independent evaluation of the adequacy of the allowance for loan
losses of FFOH or Provident nor have we reviewed any individual credit files
relating to FFOH or Provident and, with your permission, we have assumed that
the respective allowances for loan losses for both FFOH and Provident are
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity. With respect to the financial projections reviewed with
management, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performance of FFOH
and Provident and that such performances will be achieved, and we express no
opinion as to such financial projections or the assumptions on which they are
based. We have also assumed that there has been no material change in FFOH's
or Provident's assets, financial condition, results of operations, business or
prospects since the date of the most recent financial statements made available
to us. We have assumed in all respects material to our analysis that FFOH and
Provident will remain as going concerns for all periods relevant to our
analyses, that all of the representations and warranties contained in the
Agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements, that the conditions precedent in the Agreement
are not waived and that the Merger will be accounted for as a pooling of
interests and will qualify as a tax-free reorganization for federal income tax
purposes.
Our opinion is necessarily based on financial, economic, market and
other conditions as in
<PAGE> 155
Board of Directors
Fidelity Financial of Ohio, Inc.
August 16, 1999
Page 3
SANDLER O'NEILL LOGO
effect on, and the information made available to us as of, the date hereof.
Events occuring after the date hereof could materially affect this opinion. We
have not undertaken to update, revise or reaffirm this opinion or otherwise
comment upon events occurring after the date hereof. We are expressing no
opinion herein as to what the value of Provident common stock will be when
issued to FFOH's shareholders pursuant to the Agreement or the prices at which
FFOH's or Provident's common stock will trade at any time.
We have acted as FFOH's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. In the past, we have also provided
certain other investment banking services for FFOH and have received
compensation for such services.
In the ordinary course of our business as a broker-dealer, we may purchase
securities from and sell securities to FFOH and Provident. We may also actively
trade the debt and equity securities of FFOH and Provident for our own account
and for the accounts of our customers and, accordingly, may at any time hold a
long or short position in such securities.
Our opinion is directed to the Board of Directors of FFOH in connection
with its consideration of the Merger and does not constitute a recommendation
to any shareholder of FFOH as to how such shareholder should vote at any
meeting of shareholders called to consider and vote upon the Merger. Our
opinion is not to be quoted or referred to, in whole or in part, in a
registration statement, prospectus, proxy statement or in any other document,
nor shall this opinion be used for any other purposes, without Sandler
O'Neill's prior written consent.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to the
holders of FFOH Shares.
Very tuly yours,
/s/ Sandler O'Neill & Partners, L.P.
<PAGE> 156
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Registrant to any person made or threatened to be made a party to any
proceedings, other than a proceeding by or in the right of the Registrant, by
reason of the fact that he is or was a director, officer, employee or agent of
the Registrant, against expenses, including judgment and fines, if he acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant and, with respect to criminal actions, in which
he had no reasonable cause to believe that his conduct was unlawful. Similar
provisions apply to actions brought by or in the right of the Registrant, except
that no indemnification shall be made in such cases when the person shall have
been adjudged to be liable for negligence or misconduct to the Registrant unless
deemed otherwise by the court. Indemnification may be authorized by a majority
vote of a quorum of disinterested directors or upon the written opinion of
independent counsel or by the shareholders or by court order. The Registrant's
Code of Regulations extends such indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit Number Description of Document
-------------- -----------------------
2 Agreement and Plan of Merger among Provident Financial Group,
Inc., The Provident Bank, Fidelity Financial of Ohio, Inc.,
Fidelity Acquisition Corporation and Centennial Bank
(incorporated by reference to Annex A to the accompanying
proxy statement/prospectus)
5 Opinion of Keating, Muething & Klekamp, P.L.L.
8 Opinion of Keating, Muething & Klekamp, P.L.L. regarding tax
matters
10 Stock Option Agreement (incorporated by reference to Annex C
to the accompanying proxy statement/prospectus)
23.1 Consent of Grant Thornton LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Keating, Muething & Klekamp, P.L.L. (Contained in
Exhibit 5)
24 Powers of Attorney (contained on the signature page)
99.1 Form of Proxy
99.2 Opinion of Financial Advisor (incorporated by reference to
Annex D to the accompanying proxy statement/prospectus)
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act,
II-1
<PAGE> 157
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement for the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" taking the effective registration statement.
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold in the termination of the
offering.
4. To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
5. To supply by means of a post-effective amendment all information
concerning a transaction, and the Company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
6. That for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
7. Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
8. That every prospectus (i) that is filed pursuant to paragraph 7
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such
II-2
<PAGE> 158
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
9. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 20
above, or otherwise (other than insurance), the Registrant has been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the Securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it, other than indemnification pursuant to court order and
not including any coverage under, or agreement to pay premiums for, any policy
of insurance, is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cincinnati,
State of Ohio, on October 8, 1999.
PROVIDENT FINANCIAL GROUP, INC.
By: /s/ Robert L. Hoverson
---------------------------------
Robert L. Hoverson, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. The persons whose names appear with an
asterisk (*) below hereby designate Mark E. Magee or Christopher J. Carey, or
either of them, as attorney-in-fact to sign all amendments including any
post-effective amendments to this Registration Statement as well as any related
registration statement (or amendment thereto) filed pursuant to Rule 462(b)
promulgated under the Securities Act of 1933.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert L. Hoverson President and Director (Principal Executive October 8, 1999
- -------------------------- Officer)
*Robert L. Hoverson
Director
- --------------------------
*Jack M. Cook
/s/ Thomas D. Grote, Jr. Director October 8, 1999
- --------------------------
*Thomas D. Grote, Jr.
/s/ Philip R. Myers Director October 8, 1999
- --------------------------
*Philip R. Myers
/s/ Joseph A. Pedoto Director October 8, 1999
- --------------------------
*Joseph A. Pedoto
/s/ Sidney A. Peerless Director October 8, 1999
- --------------------------
*Sidney A. Peerless
/s/ Joseph A. Steger Director October 8, 1999
- --------------------------
*Joseph A. Steger
/s/ Christopher J. Carey Executive Vice President and Chief Financial October 8, 1999
- -------------------------- Officer (Principal Financial Officer and
*Christopher J. Carey Principal Accounting Officer)
</TABLE>
II-4
<PAGE> 1
[Keating, Muething & Klekamp, P.L.L. Letterhead]
MARK A. WEISS
DIRECT DIAL: (513) 579-6599
FACSIMILE: (513) 579-6956
E-MAIL: [email protected]
EXHIBIT 5
October 8, 1999
Provident Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Gentlemen:
We are familiar with your Articles of Incorporation, Code of
Regulations and corporate proceedings. On this basis, we have made an
examination as to:
1. The organization of Provident Financial Group, Inc.;
2. The legal sufficiency of all corporate proceedings of Provident
Financial in connection with the authorization and issuance of all presently
outstanding and issued Common Stock of Provident Financial; and
3. The legal sufficiency of all corporate proceedings taken in
connection with the authorization of the issuance of shares of Common Stock
pursuant to an Agreement and Plan of Merger dated as of August 16, 1999 among
Provident Financial, the Provident Bank, Fidelity Financial of Ohio, Inc.,
Fidelity Acquisition Corporation and Centennial Bank (the AMerger Agreement@)
and included in a Registration Statement on Form S-4 filed with the Securities
and Exchange Commission in connection with that Agreement.
Based upon such examination, we are of the opinion that:
1. Provident Financial is a duly organized and validly existing
corporation under the laws of the State of Ohio;
2. Provident Financial has taken all necessary and required corporate
actions in connection with the issuance of Common Stock pursuant to the Merger
Agreement, and when issued, those shares of Common Stock will be validly
authorized, legally issued, fully paid and
<PAGE> 2
nonassessable shares of Common Stock of Provident Financial free of any
preemptive rights.
We hereby consent to the reference to our firm in the Registration
Statement and the Prospectus part thereof as the attorneys who will pass upon
legal matters in connection with the issuance of such shares of Common Stock and
to the filing of this opinion as an exhibit to the Registration Statement. In
providing this consent, we do not admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
KEATING, MUETHING & KLEKAMP, P.L.L.
By: /s/ Mark A. Weiss
-----------------------------------
Mark A. Weiss
<PAGE> 1
[Keating, Muething & Klekamp, P.L.L. Letterhead]
TIMOTHY B. MATTHEWS
DIRECT DIAL: (513) 579-6595
FACSIMILE: (513) 579-6457
E-MAIL: [email protected]
EXHIBIT 8
October 8, 1999
Board of Directors
Provident Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Board of Directors
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Gentlemen:
You have requested our opinion regarding the discussion of the material
U.S. federal income tax consequences under the caption "Federal Income Tax
Consequences" in the Proxy Statement/ Prospectus filed in the Registration
Statement on Form S-4 by Provident Financial Group, Inc. on the date hereof with
the Securities and Exchange Commission under the Securities Act of 1993. The
Proxy Statement/Prospectus relates to the proposed merger of Fidelity Financial
of Ohio, Inc. with and into Provident Financial Group, Inc. and the proposed
merger of Centennial Bank with and into The Provident Bank. This opinion is
delivered in accordance with Item 601(b)(8) of Regulation S-K under the
Securities Act.
We have reviewed the Proxy Statement/Prospectus and such other
materials as we have deemed necessary or appropriate as a basis for our opinion
described therein, and have considered the applicable provisions of the Internal
Revenue Code of 1986, as amended, Treasury regulations, pertinent judicial
authorities, rulings of the Internal Revenue Service, and such other authorities
as we have considered relevant to such opinion.
Based on the foregoing, it is our opinion that the statements made
under the caption "Federal Income Tax Consequences" in the Proxy
Statement/Prospectus, to the extent that they constitute matters of law or legal
conclusions, are correct in all material respects.
<PAGE> 2
Board of Directors
October 8, 1999
Page 2
We hereby consent to the use of our name under the caption "Legal
Matters" in the Proxy Statement/Prospectus and to the filing of this opinion as
an Exhibit to the Registration Statement.
Very truly yours,
KEATING, MUETHING & KLEKAMP, P.L.L.
By: /s/ Timothy B. Matthews
---------------------------------
Timothy B. Matthews
<PAGE> 1
Exhibit 23.1
ACCOUNTANTS' CONSENT
We have issued our report dated February 10, 1999, accompanying the
consolidated financial statements of Fidelity Financial of Ohio, Inc. for the
year ended December 31, 1998 which are incorporated by reference in the
Corporation's Form S-4 to be filed with the Securities and Exchange Commission
on or about October 8, 1999. We hereby consent to the incorporation by reference
of said report in the Proxy/Prospectus.
/s/ Grant Thornton LLP
Cincinnati, Ohio
October 8, 1999
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the Proxy
Supplement of Provident Financial Group, Inc. that is made a part of the
Registration Statement (Form S-4) and Prospectus of Provident Financial Group,
Inc. for the registration of its common stock and to the incorporation by
reference therein of our report dated January 19, 1999, with respect to the
consolidated financial statements of Provident Financial Group, Inc. included in
its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Cincinnati, Ohio
October 8, 1999
<PAGE> 1
EXHIBIT 99.1
FIDELITY FINANCIAL OF OHIO, INC.
5535 GLENWAY AVENUE
CINCINNATI, OHIO 45238
(513) 922-5959
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS
---------------
The undersigned hereby appoints_________________ and________________, or each of
them, with full power of substitution, the true and lawful attorneys in fact,
agents and proxies of the undersigned to vote at the Special Meeting of
Stockholders of Fidelity Financial of Ohio, Inc. ("Fidelity Financial"), to be
held on_____________, commencing at 2:00 p.m. local time,
at_________________________________________, and at any and all adjournments and
postponements thereof, according to the number of votes which the undersigned
would possess if personally present, for the purpose of considering and taking
action upon the following, as more fully set forth in the Proxy
Statement/Prospectus of Fidelity Financial dated______________.
1. Approval and adoption of the Agreement and Plan of Merger dated
August 16, 1999, by and among Fidelity Financial, Fidelity Acquisition
Corporation, Centennial Bank, Provident Financial Group, Inc. and The Provident
Bank (the "Merger Agreement") and the transactions contemplated thereby.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion with respect to such other business as properly
may come before the meeting (including, without limitation, adjournment or
postponement of such meeting in order to allow for additional solicitation of
stockholder votes in order to obtain a quorum or in order to obtain more votes
in favor of the Merger Agreement) or any adjournments or postponements thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 2
- 2 -
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" EACH OF THE ABOVE PROPOSALS.
Dated: ,
-------------------------- ---------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
Please sign exactly as name(s) appear on
this proxy card. When shares are held by
joint tenants, both should sign. When
signing as attorney-in-fact, executor,
administrator, personal representative,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
THIS PROXY CARD USING THE ENCLOSED ENVELOPE
