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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HEARTLAND BANCSHARES, INC.
(Name of small business issuer as in its charter)
Indiana 6712 35-2017085
(State or other (Primary Standard (I.R.S.
jurisdiction of Industrial Employee
incorporation or Classification Identification
organization) Code Number) Number)
P.O. Box 469
Franklin, Indiana 46131
(317) 738-3915
(Address and telephone number of principal executive
offices and principal place of business or intended
principal place of business)
Steve Bechman, President
Heartland Bancshares, Inc.
P.O. Box 469
Franklin, Indiana 46131
(317) 738-3915
(Name, address, and telephone number of agent for service)
Copies to:
Mark B. Barnes, Esq. Timothy M. Harden, Esq.
Leagre Chandler & Millard Krieg DeVault Alexander
9100 Keystone Crossing, Suite 800 & Capehart
Indianapolis, IN 46240 2800 One Indiana Square
Telephone: (317) 843-1655 Indianapolis, IN 46204
Fax: (317) 846-7900 Telephone (317) 636-4341
Fax: (317) 636-1507
________________________________
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ____
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered(1) Per Share Price(1) Registration Fee
- ------------------- ------------- ----------------- ------------------ ----------------
Common Stock,
no par value 1,150,000 shs.$10.00 $11,500,000 $3,485
</TABLE>
(1) Includes 150,000 shares of Common Stock which may be
purchased by the Underwriter to cover over-allotments.
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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 SECTION 8(a) OF THE
SECURITIES ACT OF 1933, MAY DETERMINE.
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Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities
may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall
not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
State.
PRELIMINARY, SUBJECT TO COMPLETION, DATED JULY 28, 1997
PROSPECTUS
1,000,000 SHARES
HEARTLAND BANCSHARES, INC.
Common Stock
______________________
Heartland Bancshares, Inc., an Indiana corporation (the
"Company"), is offering for sale 1,000,000 shares of its Common
Stock (the "Common Stock"). The Company is a proposed bank holding
company organized to own all of the common stock of Heartland
Community Bank, an Indiana state chartered commercial bank (in
organization), to be headquartered in Franklin, Indiana (the
"Bank"). Neither the Company nor the Bank has ever conducted any
business operations other than matters related to their initial
organization and the raising of capital. See "Business." There has
been no public trading market for the Common Stock. Roney & Co.
L.L.C. (the "Underwriter" or "Roney & Co.") has advised the Company
that it anticipates making a market in the Common Stock following
completion of the offering, although there can be no assurance that
an active trading market will develop. See "Underwriting" for a
discussion of the factors considered in determining the initial
public offering price. The Company expects that the quotations for
the Common Stock will be reported on the NASD OTC Bulletin Board
under the symbol "______________." The directors and officers of
the Company are expected to purchase at least 72,500 of the shares
of Common Stock at the public offering price.
__________________
THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A
SIGNIFICANT AMOUNT OF RISK. SEE "RISK FACTORS" ON PAGES _______
FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE
COMPANY'S COMMON STOCK. THESE SECURITIES ARE NOT SAVINGS
ACCOUNTS OR SAVINGS DEPOSITS AND THEY ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Price to Underwriting Proceeds to
Public Discount(1)(2) Company (2)(3)
Per Share $10.00 $ $
Total(2) $10,000,000 $ $
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(1) The Company has agreed to indemnify the Underwriter against
certain liabilities including liabilities under the Securities
Act of 1933. See "Underwriting".
(2) The Company has granted the Underwriter a 30-day option to
purchase up to 150,000 additional shares of its Common Stock
solely to cover over-allotments, if any. If the Underwriter
exercises such option in full, the Price to Public,
Underwriting Discounts, and Proceeds to the Company will be
approximately $___________, $__________ and $___________,
respectively. See "Underwriting." The Underwriter has agreed
that reduced Underwriting Discounts of 4% will be incurred by
the Company for up to 200,000 shares sold by the Underwriter
to members of the Board of Directors or their immediate
families, and certain other persons. See "Underwriting." If
200,000 shares are so purchased, Underwriting Discounts will
be reduced by, and Proceeds to the Company will be increased
by, $___________.
(3) Before deducting estimated offering expenses payable by the
Company of $____________________.
_________________
The shares of Common Stock are offered by the Underwriter
subject to prior sale, when, as and if delivered to and accepted by
the Underwriter, and subject to the right of the Underwriter to
withdraw, cancel or modify such offer and to reject orders in whole
or in part. It is expected that delivery of the shares of Common
Stock will be made in Detroit, Michigan, on or about ____________,
1997.
__________________
THE DATE OF THIS PROSPECTUS IS , 1997.
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[MAP OF HEARTLAND COMMUNITY BANK SERVICE AREA]
__________________
AVAILABLE INFORMATION
The Company is not currently a reporting company pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act"), but will
be required to file reports pursuant to the Exchange Act following
the completion of the offering for at least its fiscal year ending
December 31, 1997. The Company, which will use a December 31
fiscal year, intends to furnish its shareholders with annual
reports containing audited financial statements and, for the first
three quarters of each fiscal year, quarterly reports containing
unaudited financial information.
Requests for such documents should be directed to Jeffery D.
Joyce, Chief Financial Officer of Heartland Bancshares, Inc., at
P.O. Box 469, Franklin, Indiana 46131.
__________________
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere
in this Prospectus. Unless the context clearly suggests otherwise,
references in this Prospectus to the Company include the Bank.
Except as otherwise indicated, all information in this Prospectus
assumes no exercise of the Underwriter's over-allotment option.
The Company
Heartland Bancshares, Inc. (the "Company") is an Indiana
corporation whose primary purpose will be to own and operate
Heartland Community Bank (the "Bank") as the Bank's sole
shareholder. The Bank is organizing as an Indiana state-chartered
commercial bank with depository accounts to be insured by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation (the
"FDIC"). The Bank's offices will be located in the Indiana cities
of Franklin and Greenwood in Johnson County, which is part of the
Indianapolis Standard Metropolitan Area. The Bank's retail
strategy will be to offer, primarily in Johnson County, a wide
range of basic banking products and services that will be
reasonably priced and easily understood by the customer. The
Bank's commercial strategy will center on small to medium-sized
businesses. Completion of the offering will be conditioned on,
among other things, the Company and the Bank having received all
necessary regulatory approvals and satisfying certain conditions
contained therein. Management anticipates commencing business in
the fourth quarter of 1997.
REASON FOR STARTING HEARTLAND COMMUNITY BANK
The liberalization in recent years of Indiana's branch banking
laws, together with the expansion of interstate banking, has led to
substantial consolidation of the banking industry in Indiana and
especially in the metropolitan Indianapolis area in which the Bank
will be located. In many cases, when these consolidations
occurred, local boards of directors were dissolved and local
management was relocated or, in some cases, terminated.
In the opinion of the Company's management, this situation has
created a favorable opportunity for a new commercial bank with
local management and local directors. Management believes that
such a bank can be successful in attracting small to medium-sized
businesses and individuals as customers who wish to conduct
business with a locally owned and managed institution that
demonstrates an active interest in their business and personal
financial affairs. The Bank will seek to take advantage of this
opportunity by emphasizing in its marketing plan the Bank's local
management, and their strong ties and active commitment to the
community.
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<PAGE> 6
MANAGEMENT
The Company has assembled a management team and a Board of
Directors that have strong business experience in the Bank's market
area and a shared vision and commitment to the future growth and
success of the Bank. The Bank intends to compete aggressively for
its banking business through a systematic program of direct calling
on both prospective customers and referral sources such as
attorneys, accountants and other business people, many of whom the
Bank's directors and officers have come to know during their
professional careers.
Steve Bechman, President and Chief Executive Officer of the
Company and the Bank, has over 21 years of banking experience in
the community, all with Citizens Bank of Central Indiana ("CBCI")
and its predecessors and affiliates. Prior to his resignation
earlier this year, Mr. Bechman was Regional President of CBCI,
which is a subsidiary of CNB Bancshares, Inc., of Evansville,
Indiana ("CNB"). CNB's stock is listed on the New York Stock
Exchange and at March 31, 1997, CNB had total assets of
approximately $4.2 billion. Mr. Bechman joined a predecessor of
CBCI in 1975 and he became Regional President of CBCI in 1993.
Jeffrey L. Goben, Executive Vice President and Chief Operating
Officer of the Company and the Bank, has over 24 years of banking
experience, the last 12 years being with CBCI and its predecessor.
Mr. Goben started his career in 1972 with the National Bank of
Greenwood, now a part of National City Bank. He joined a
predecessor of CBCI in July 1984 as Assistant Vice President and
Branch Manager. At various points in his career, Mr. Goben has
managed a wide variety of bank functions, including branch
administration, consumer banking, human resources, and marketing
and community development.
Keith Fox, with 14 years of banking experience in the Bank's
market area, most recently in commercial lending with CBCI, will be
the Bank's Vice President in charge of commercial lending
operations. John Morin, with 24 years of banking experience
primarily in the market area of the Bank, most recently was Vice
President in charge of consumer lending at CBCI. Mr. Morin will
head the Bank's consumer loan area. Jeffery D. Joyce, a certified
public accountant, has five years of experience with a major
regional accounting firm during which he focused primarily on
financial institutions. Mr. Joyce will be Vice President and Chief
Financial Officer of the Company and the Bank's Cashier and
Controller.
The Company has formed a Board of Directors comprised of
individuals with a broad background in business, agriculture, and
banking and a high level of community involvement. Current
directors include Gordon R. Dunn, former Chairman of the Board of
CBCI, and John Norton, previously a director of the former Franklin
Bank & Trust, Franklin, Indiana, which is now a part of KeyCorp.
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<PAGE> 7
The Company anticipates that its directors and executive
officers, alone or with their spouses, will purchase at least
72,500 shares in the offering. See "Principal Shareholders."
The management team represents a significant asset to the
Company and the Bank. These individuals have many years of personal
experience in the financial services industry, and many have worked
together successfully at CBCI. The Company believes that these
individuals and their relationships in the Bank's market area
should offer the Bank a substantial opportunity to attract new
relationships.
MARKET AREA
Johnson County was the second fastest growing county in the
State of Indiana from 1990 through 1996 based on estimates of the
Indiana Business Research Center. The Bank's main office will be
located on the main retail thoroughfare in Franklin, at 420 N.
Morton Street (U.S. Route 31), on property that has been purchased
by the Company and is being extensively renovated. Concurrently
with (or as soon as possible after) the opening of the main office
in Franklin, the Bank intends to open a branch office in leased
space in Greenwood, Indiana, 11 miles north of Franklin in Johnson
County and approximately 12 miles south of downtown Indianapolis.
The Bank's primary service area will be the northern two-thirds of
Johnson County, which includes the six Townships of Union, Needham,
Franklin, White River, Pleasant, and Clark. Management believes
this community has an expanding and diverse economic base, which
includes a wide range of small to medium-sized businesses engaged
in manufacturing, services, and retail. As of June, 1997, the
unemployment rate for Johnson County was 1.9%, compared with the
statewide average of approximately 3.1%, according to Ball State
University's Bureau of Business Research. There are approximately
3,200 businesses in Johnson County.
The Bank's main office will also serve as the Company's
corporate headquarters. The Company's address will be 420 N. Morton
Street, Franklin, Indiana 46131 once the new facility is opened;
the Company's current mailing address is P.O. Box 469, Franklin,
Indiana 46131. The Company's telephone number is 317-738-3915.
THE OFFERING
Securities offered
by the Company................. 1,000,000 shares of Common
Stock. In addition, the
Company has granted the
Underwriter an option to
purchase up to an additional
150,000 shares to cover
over-allotments. See
"Description of Capital Stock."
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<PAGE> 8
Common Stock to be outstanding
after the offering............... 1,000,000 shares (1,150,000
shares if the over-allotment
option is exercised in full).
Use of proceeds by the
Company.......................... Capitalization of the Bank and
payment of organization and
preopening expenses. See "Use
of Proceeds."
Proposed NASD Over-the-Counter
("OTC") Bulletin Board
Symbol........................... _________________________
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk
and should be considered only by persons who can afford the loss of
their investment. The following constitute some of the potential
risks of an investment in the Common Stock and should be carefully
considered by prospective investors prior to purchasing shares of
Common Stock. The order of the following is not intended to be
indicative of the relative importance of any described risk nor is
the following intended to be inclusive of all risks of investment
in the Common Stock.
LACK OF OPERATING HISTORY
Neither the Company nor the Bank has any operating history.
The business of the Company and the Bank is subject to the risks
inherent in the establishment of a new business enterprise.
Because the Company is only recently formed and the Bank and the
Company are in the process of obtaining the necessary regulatory
approvals, subject to the satisfaction of certain conditions, and
the Bank has not commenced banking operations as of the date of
this prospectus, prospective investors do not have access to all of
the information that, in assessing their proposed investment, is
available to the purchasers of securities of a financial
institution with a history of operations.
SIGNIFICANT START-UP LOSSES EXPECTED
As a result of the substantial start-up expenditures that must
be incurred by a new bank and the time it will take to develop its
deposit base and loan portfolio, it is expected that the Bank, and
thus the Company, will operate at a substantial loss during the
start-up of the Bank. Accordingly, neither the Company nor the
Bank is expected to be profitable in the first years of operation.
Cumulative losses during the first two years of operation are
expected to be at least $1,000,000, but there can be no assurance
<PAGE>
<PAGE> 9
that losses during these years will not exceed this amount. As a
result, it is anticipated that the book value of the Common Stock
will decrease accordingly. The preceding statements are forward-
looking statements that are based on assumptions rather than
historical or current facts and, therefore, are inherently
uncertain and subject to risk. There is no assurance that the Bank
will ever operate profitably. If the Company does not reach
profitability and recover its accumulated operating losses, the
non-recoverable portion of its investment in fixed assets and the
expenses and underwriting discounts incurred in connection with
this offering, investors will suffer a significant decline in the
value of their shares of Common Stock.
DELAY IN COMMENCING OPERATIONS
Although the Company and the Bank expect to receive all
regulatory approvals and commence business in their Franklin and
Greenwood facilities during the fourth quarter of 1997, there can
be no assurance as to when, if at all, these events will occur.
The Company has not yet reached agreement in principle on lease
terms with the owner of the proposed Greenwood branch site. See
"Business -- Bank Premises." Any delay in commencing operations at
either location will increase pre-opening expenses and postpone
realization by the Bank of potential revenues. Absent the receipt
of revenues and commencement of profitable operations, the
Company's accumulated deficit will continue to increase (and book
value per share decrease) as operating expenses such as salaries
and other administrative expenses continue to be incurred.
GOVERNMENT REGULATION AND MONETARY POLICY
The Bank has filed an application to organize and establish
the Bank with the Department of Financial Institutions of the State
of Indiana (the "Department"). The Bank expects that the
Department will grant approval in September, 1997, conditioned upon
the payment by the Company to the Bank of at least $9 million of
capital from the net proceeds of the offering and other standard
conditions. The Bank also expects to receive approval for the
insurance of its deposits by the FDIC in September, 1997.
The Company's application to become a bank holding company for
the Bank will be filed with a delegate of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") in late
July 1997 and the Company expects the Federal Reserve Board to
approve the Company's becoming a bank holding company for the Bank
under the Bank Holding Company Act of 1956, as amended (the "BHCA")
during September, 1997.
The Company and the Bank will be subject to extensive state
and federal government supervision, regulation and examination.
Existing state and federal banking laws will subject the Bank to
substantial limitations with respect to loans, purchase of
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<PAGE> 10
securities, payment of dividends and many other aspects of its
banking business. Recently enacted and proposed legislation may
adversely affect the banking industry or the operations of the Bank
and may result in increased competition in the financial services
industry. In June, 1997, broad financial reform legislation was
approved by the Banking Committee of the U.S. House of
Representatives. The proposed legislation includes provisions that
would permit, subject to certain restrictions, bank holding
companies to acquire manufacturing and other nonfinancial
companies, permit nonfinancial companies to acquire banks, and
require thrift institutions to convert to bank charters. The
Company cannot predict whether, or in what form, this legislation
may be enacted, and if enacted, what the effect would be on the
Company and the Bank. Federal economic and monetary policy, as
well as policy decisions of bank regulatory authorities, may affect
the Bank's ability to attract deposits, make loans and achieve
satisfactory interest spreads. See "Supervision and Regulation."
NO ASSURANCE OF DIVIDENDS
It is anticipated that no dividends will be paid on the
Company's Common Stock for the foreseeable future. The Company
will be largely dependent upon dividends paid by the Bank for funds
to pay dividends on its Common Stock, if and when such dividends
are declared. No assurance can be given that future earnings of
the Bank, and resulting dividends to the Company, will be
sufficient to permit the legal payment of dividends to Company
shareholders at any time in the future. See "Supervision and
Regulation." Even if the Company may legally declare dividends,
the amount and timing of such dividends will be at the discretion
of the Company's Board of Directors. The Board may in its sole
discretion decide not to declare dividends. These shares should
not be purchased by persons who need or desire dividend income from
this investment. For a more detailed discussion of other
limitations on the payment of cash dividends by the Company, see
"Dividend Policy."
COMPETITION
The Company and the Bank will face strong competition for
deposits, loans and other financial services from numerous Indiana
and out-of-state banks, thrifts, credit unions and other financial
institutions as well as other entities which provide financial
services, including consumer finance companies, securities
brokerage firms, mortgage brokers, equipment leasing companies,
insurance companies, mutual funds, and other lending sources and
investment alternatives. Some of the financial institutions and
financial services organizations with which the Bank will compete
are not subject to the same degree of regulation as the Bank. Many
of the financial institutions aggressively compete for business in
the Bank's proposed market areas. Many of these competitors have
been in business for many years, have established customer bases,
have substantially higher lending limits than the Bank, are larger
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and will be able to offer certain services that the Bank does not
expect to provide in the foreseeable future, including home
electronic banking services and international banking services. In
addition, most of these entities have greater capital resources
than the Bank, which, among other things, may allow them to price
their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. See
"Business -- Market Area" and "Business -- Competition."
Additionally, recently passed federal legislation regarding
interstate branching and banking and legislation affecting the cost
of deposit insurance premiums may act to increase competition in
the future from larger out-of-state banks and thrift institutions.
See "Supervision and Regulation -- Recent Regulatory Developments."
DEPENDENCE ON MANAGEMENT
The Company and the Bank are, and for the foreseeable future
will be, dependent primarily upon the services of Steve Bechman,
the President of the Company and the Bank, and Jeffrey L. Goben,
Executive Vice President of the Company and the Bank. There are no
employment agreements with either Mr. Bechman or Mr. Goben. If the
services of either of these individuals were to become unavailable
to the Company or the Bank for any reason, or if the Company or the
Bank were unable to hire highly qualified and experienced personnel
either to replace Mr. Bechman and Mr. Goben or any other proposed
employee, or to adequately staff the anticipated growth of the
Bank, the operating results of the Company and the Bank would be
adversely affected. See "Business -- Employees" and "Management."
DISCRETION IN USE OF PROCEEDS
The offering is intended to raise funds primarily to provide
for the initial capitalization of the Bank. The Bank will use the
funds to purchase real estate, improvements, equipment and other
assets for the Bank's operations, fund loans, provide working
capital for general corporate purposes and pay initial operating
expenses. While management currently has no such plans, if
opportunities arise, some of the proceeds of the offering may also
be used by the Company or the Bank to finance acquisitions of other
financial institutions, or of branches of other institutions, or to
finance expansion into other lines of business closely related to
banking. Management will retain discretion in employing the
proceeds of the offering. See "Use of Proceeds."
LENDING RISKS AND LENDING LIMITS
The risk of nonpayment of loans is inherent in commercial
banking, and such nonpayment, if it occurs, would likely have a
material adverse effect on the Company's earnings and overall
financial condition as well as the value of the Common Stock.
Because the Bank does not have an operating history, none of the
Bank's customers will have an established credit history with the
Bank. Management will attempt to minimize the Bank's credit<PAGE>
<PAGE> 12
exposure by carefully monitoring the concentration of its loans
within specific industries and through loan application and
approval procedures, but there can be no assurance that such
monitoring and procedures will reduce such lending risks. Credit
losses can cause insolvency and failure of a financial institution,
and in such event, its shareholders could lose their entire
investment.
The Bank's self-imposed lending limit initially will be
$1,000,000 per customer relationship. Accordingly, the size of the
loans which the Bank can offer to potential customers is less than
the size of loans which most of the Bank's competitors are able to
offer. This limit initially will affect the ability of the Bank to
seek relationships with the area's larger businesses. The Bank
expects to accommodate loan volumes in excess of its lending limit
through the sale of participations in such loans to other banks.
However, there can be no assurance that the Bank will be successful
in attracting or maintaining customers seeking larger loans or that
the Bank will be able to engage in participations of such loans on
terms favorable to the Bank.
IMPACT OF INTEREST RATES AND ECONOMIC CONDITIONS
The results of operations for financial institutions,
including the Bank, may be materially and adversely affected by
changes in prevailing economic conditions, including declines in
real estate market values, rapid changes in interest rates and the
monetary and fiscal policies of the federal government. See
"Supervision and Regulation -- General" and "-- Recent Regulatory
Developments." The Bank's profitability is in part a function of
the spread between the interest rates earned on investments and
loans and the interest rates paid on deposits and other
interest-bearing liabilities. In the early 1990s, many banking
organizations experienced historically high interest rate spreads.
More recently, interest rate spreads have generally narrowed due to
changing market conditions and competitive pricing pressure, and
there can be no assurance that such factors will not continue to
narrow interest rate spreads or that the higher interest rate
spreads will return. Although economic conditions in the Bank's
market area have been generally favorable, there can be no
assurance that such conditions will continue to prevail.
Substantially all the Bank's loans are expected to be to businesses
and individuals in Johnson County, Indiana and any decline in the
economy of this area could have an adverse impact on the Bank.
Like most banking institutions, the Bank's net interest spread and
margin will be affected by general economic conditions and other
factors that influence market interest rates and the Bank's ability
to respond to changes to such rates. At any given time, the Bank's
assets and liabilities will be such that they are affected
differently by a given change in interest rates, principally due to
the fact that the Bank does not plan to match the maturities of its
loans precisely with its deposits and other funding sources. As a
result, an increase or decrease in rates could have a material<PAGE>
<PAGE> 13
adverse effect on the Bank's net income, capital and liquidity.
While management intends to take measures to mitigate interest rate
risk, there can be no assurance that such measures will be
effective in minimizing the exposure to interest rate risk. See
"Supervision and Regulation."
NEED FOR TECHNOLOGICAL CHANGE
The banking industry is undergoing rapid technological changes
with frequent introductions of new technology-driven products and
services. In addition to better serving customers, the effective
use of technology increases efficiency and enables financial
institutions to reduce costs. The Company's future success will
depend in part on its ability to address the needs of its customers
by using technology to provide products and services that will
satisfy customer demands for convenience as well as to create
additional efficiencies in the Bank's operations. Many of the
Bank's competitors have substantially greater resources to invest
in technological improvements. Such technology may permit
competitors to perform certain functions at a lower cost than the
Bank. There can be no assurance that the Bank will be able to
effectively implement new technology-driven products and services
or be successful in marketing such products and services to its
customers. See "Business -- Business Strategy."
ANTI-TAKEOVER PROVISIONS
The Indiana Business Corporation Law and the Company's
Articles of Incorporation and Bylaws contain certain provisions
that may discourage, delay or prevent a change in control of the
Company. In addition, federal law requires the approval of the
Federal Reserve Board prior to acquisition of "control" of a bank
holding company. As a result, these provisions could adversely
affect the price of the Common Stock by, among other things,
preventing a shareholder of the Company's Common Stock from
realizing a premium which might be paid as a result of a change in
control of the Company. See "Description of Capital Stock -
Certain Anti-Takeover Provisions."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide for the indemnification of its
officers and directors, and thereby insulate its officers and
directors from liability for certain breaches of the duty of care.
It is possible that the indemnification obligations imposed under
these provisions could result in a charge against the Company's
earnings and thereby affect the market value of the Company's stock
and the availability of funds for payment of dividends to the
Company's shareholders. See "Description of Capital Stock --
Indemnification of Directors and Officers."
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DETERMINATION OF OFFERING PRICE; LIMITED TRADING MARKET EXPECTED
The initial public offering price of $10.00 per share was
determined by the Company in consultation with the Underwriter.
This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or
anticipated future value of the Common Stock. Prior to the
offering, there has been no public trading market for the Common
Stock. The price at which these shares are being offered to the
public may be greater than the market price for the Common Stock
following the offering. The Underwriter has advised the Company
that, upon completion of the offering, it intends to use reasonable
efforts to initiate quotations of the Common Stock on the NASD OTC
Bulletin Board and to act as a market maker in the Common Stock,
subject to applicable laws and regulatory requirements, although
the Underwriter is not obligated to do so. Making a market in
securities involves maintaining bid and ask quotations and being
able, as principal, to effect transactions in reasonable quantities
at those quoted prices, subject to various securities laws and
other regulatory requirements. The development of a public trading
market depends, however, upon the existence of willing buyers and
sellers, the presence of which is not within the control of the
Company, the Bank or any market maker. Market makers on the NASD
OTC Bulletin Board are not required to maintain a continuous
two-sided market and are required to honor firm quotations for only
a limited number of shares, and are free to withdraw firm
quotations at any time. Even with a market maker, factors such as
the limited size of the offering, the lack of earnings history of
the Company and the absence of a reasonable expectation of
dividends within the near future mean that there can be no
assurance of an active and liquid market for the Common Stock
developing in the foreseeable future. Even if a market develops,
there can be no assurance that a market will continue, or that
shareholders will be able to sell their shares at or above the
price at which these shares are being offered to the public.
Purchasers of Common Stock should carefully consider the limited
liquidity of their investment in the shares being offered hereby.
REGULATORY RISK
The banking industry is heavily regulated. Many of these
regulations are intended to protect depositors, the public, and the
deposit insurance funds administered by the FDIC, not shareholders.
Applicable laws, regulations, interpretations and enforcement
policies have been subject to significant, and sometimes
retroactively applied, changes in recent years, and may be subject
to significant future changes. There can be no assurance that such
future changes will not adversely affect the business of the
Company. In addition, the burden imposed by federal and state
regulations may place banks in general, and the Company
specifically, at a competitive disadvantage compared to less
regulated competitors. See "Supervision and Regulation."
<PAGE>
<PAGE> 15
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,000,000
shares of Common Stock offered hereby are estimated to be at least
$___________ ($___________ if the Underwriter's over-allotment
option is exercised in full), after deduction of the underwriting
discounts and commissions, but before deducting estimated offering
expenses of $__________. Under certain circumstances the
underwriting discount may be reduced by up to $_________, which
would correspondingly increase net proceeds to the Company by a
like amount. See "Underwriting."
The principal uses of the net proceeds of the offering are (a)
to capitalize the Bank with the capital required by regulators for
its opening and (b) to retire the principal and interest of
indebtedness that is owed to certain directors and executive
officers of the Company for pre-offering borrowings by the Company
(the "Borrowings"). The Borrowings (which at July 25, 1997 were in
the aggregate principal amount of $141,000) have funded the payment
of $_______ of the purchase price and other costs associated with
the acquisition and construction of improvements at the Bank's
Franklin main office site, $______ of the Bank's costs of acquiring
equipment and other fixed assets, $_________ of the Company's
professional and other fees and expenses in connection with this
offering, and $_________ of other organizational and pre-opening
expenses of the Company and the Bank, including professional and
consulting fees and expenses and salaries and benefit expense for
certain of the executive officers of the Bank (not including Mr
Bechman or Mr. Goben). The Bank will assume the portion of the
Borrowings that represents amounts spent by the Company to pay
expenses or acquire assets properly allocable to the Bank (which is
estimated to be $_______________ of principal and interest at
_____________, 1997), and will retire that portion of the Company's
indebtedness from the funds that it receives from the Company as
part of the initial capitalization. From and after the date of the
Bank's capitalization by the Company, all further expenses
associated with the organization and pre-opening activities of the
Bank, and all further payments representing the deferred or
financial purchase price of Bank assets previously acquired by the
Company on behalf of the Bank, will be paid directly by the Bank.
<PAGE>
<PAGE> 16
The Company expects to apply the net proceeds of this offering
in the following approximate amounts:
Purchase of stock of Bank $9,000,000
Retirement of Borrowings allocable
to Company $________
Payment of Company organizational and
pre-opening expenses $________
Working capital $________
TOTAL $________
The Company expects that the Bank will apply the $9,000,000
proceeds of its sale of stock to the Company in the following
approximate amounts:
Retirement of Borrowings allocable to Bank $________
Payment of Bank organizational and
pre-opening expenses $________
Working capital $________
TOTAL $9,000,000
The Company and the Bank retain discretion as to the use of
working capital, although at present there are no plans to use
working capital for purposes other than general corporate purposes,
including, in the case of the Bank, the funding of the Bank's loans
and the acquisition of investment securities for the Bank's
investment portfolio. Although these funds would be available to
finance possible acquisitions of other financial institutions or
branches or expansion into other lines of business closely related
to banking, the Company has no present plans to do so. The Company
has not determined how to apply the proceeds of any sale of stock
that may be received upon any exercise of the underwriter's over-
allotment option, but presently anticipates retaining those amounts
as working capital of the Company and not contributing those
amounts to the capital of the Bank.
DIVIDEND POLICY
The Company initially expects that Company and Bank earnings,
if any, will be retained to finance the growth of the Company and
the Bank and that no cash dividends will be paid for the
foreseeable future. If the Bank achieves profitability and
recovers its operating deficit, the Company may consider payment of
<PAGE>
<PAGE> 17
dividends. However, the declaration of dividends will be at the
discretion of the Board of Directors and there is no assurance that
dividends will be declared at any time. If and when dividends are
declared, the Company will be dependent largely upon dividends paid
by the Bank for funds to pay dividends on the Common Stock. It is
also possible, however, that the Company might at some time in the
future pay dividends generated from income or investments and from
other activities of the Company.
The ability of the Company and the Bank to pay dividends is
affected by various regulatory requirements and policies, such as
the requirement to maintain adequate capital above regulatory
guidelines. See "Supervision and Regulation." Such requirements
and policies may limit the Company's ability to obtain dividends
from the Bank for its cash needs, including funds for acquisitions,
payment of dividends by the Company and the payment of operating
expenses.
CAPITALIZATION
The following table sets forth the capitalization of the
Company as it is projected to be immediately after the sale of the
1,000,000 shares of Common Stock offered hereby and the application
of the estimated net proceeds. See "Use of Proceeds."
Common Stock, no par value,
10,000,000 shares authorized;
1,000,000 shares issued and
outstanding $__________
Preferred Stock, no par value,
2,000,000 shares authorized;
no shares issued and outstanding __________
Retained earnings __________
Preopening and Organizational Expenses (1) __________
Total shareholders' equity $_________
____________________
(1) Preopening and organizational expenses will be amortized
over a 60-month period.
<PAGE>
<PAGE> 18
BUSINESS
BACKGROUND
The liberalization in recent years of Indiana's branch banking
laws, together with the expansion of interstate banking, has led to
substantial consolidation of the banking industry in Indiana and
especially the metropolitan Indianapolis area in which the Bank
will be located. In many cases, when these consolidations
occurred, local boards of directors were dissolved and local
management was relocated or, in some cases, terminated.
In the opinion of the Company's management, this situation has
created a favorable opportunity for a new bank with local
management and directors. Management of the Company believes that
such a bank can attract those customers who wish to conduct
business with a locally managed institution that demonstrates an
active interest in their business and personal financial affairs.
The Company believes that a locally managed institution will, in
many cases, be able to deliver more timely responses to customer
requests, provide customized financial products and services, and
offer the personal attention of the Bank's senior banking officers.
The Company is incorporated as an Indiana general corporation
and will hold all of the Bank's issued and outstanding stock and
will engage in the business of a bank holding company under the
federal Bank Holding Company Act of 1956, as amended ("BHCA"). The
Bank expects to receive during September, 1997, an order from the
Department preliminarily approving the application to establish the
Bank, subject to the payment by the Company to the Bank of at least
$9 million of the net proceeds of this offering and other standard
conditions. The Bank's application for FDIC deposit insurance was
filed on June 17, 1997, and the FDIC's approval, if and when it is
obtained, will be subject to certain conditions, including
conditions related to capital adequacy. The Company's application
to become a bank holding company for the Bank will be filed with a
delegate of the Federal Reserve Board in late July 1997 and the
Company expects the Federal Reserve Board to approve the Company's
becoming a bank holding company for the Bank under the BHCA during
September, 1997. The Bank expects to receive the Department and
FDIC approvals and to have all regulatory conditions to the opening
of the Bank satisfied in the fourth quarter of 1997. There can be
no assurance, however, as to the timing of such approvals or that
the Bank and the Company will obtain such approvals. The Bank
intends to commence business as soon as reasonably practicable upon
receipt of all regulatory approvals, the satisfaction of regulatory
conditions, and the completion of its Franklin facility. See "Risk
Factors -- Delay in Commencing Operations" and "Risk Factors --
Government Regulation and Monetary Policy."
<PAGE>
<PAGE> 19
Following completion of the offering and before commencement
of operations, the Bank intends to complete the furnishing of its
facilities, certain training of its staff and the purchase, lease
and installation of equipment necessary to transact a banking
business. Correspondent banking relationships and other
arrangements for services will be completed as necessary. The Bank
currently projects that the Bank will be prepared (subject to
regulatory approvals) to open at its Franklin facility as early as
November 1, 1997.
The Company will own all of the issued and outstanding stock
of the Bank. Prior to the completion of the offering, the Company
will have only one share of Common Stock outstanding with such
share being held by Steve Bechman. The Company's principal office
will be located at 420 N. Morton Street, Franklin, Indiana 46131,
and its telephone number is (317) 738-3915.
BUSINESS STRATEGY AND PLAN OF OPERATION
The Bank intends to provide a wide range of business and
consumer financial services to small to medium-sized business
customers and individuals. The foundation of this strategy will be
to emphasize local management and its commitment to the community.
Steve Bechman, President and Chief Executive Officer of the
Company, has over 21 years of banking experience in the community.
From 1993 to his resignation earlier this year, he was Regional
President for CBCI in Greenwood, Indiana. Jeffrey L. Goben,
Executive Vice President and Chief Operating Officer of the
Company, has over 24 years experience in the community. During his
career he has managed branch administration, consumer banking,
human resources, and marketing and community development functions.
Mr. Bechman and Mr. Goben have worked together for the last 13
years in the same banking organization. K. Keith Fox and John L.
Morin, Vice President -- Commercial Lending and Vice President --
Consumer Lending, respectively, also have many years of experience
in the Bank's primary market area. The Company's Vice President
and Chief Financial Officer, Jeffery D. Joyce, C.P.A., has five
years of public accounting experience primarily focused on
financial institutions with a major regional accounting firm.
Messrs. Bechman, Goben, Fox and Morin, who prior to their
resignations worked together at CBCI, are assembling a high-quality
staff of local employees. The staff will be committed to providing
outstanding customer service and banking products that are
reasonably priced and easily understood by the customer. The Bank
intends to compete aggressively for its banking business through a
systematic program of direct calling on both customers and referral
sources such as attorneys, accountants and other business people,
many of whom the management have come to know during their
professional careers.
<PAGE>
<PAGE> 20
BUSINESS FINANCIAL SERVICES. The Bank intends to offer
products and services consistent with its goal of attracting small
to medium-sized business customers as well as a variety of
individuals. Commercial loans will be offered on both a secured
and unsecured basis and will be available for working capital
purposes, the purchase of equipment and machinery, financing of
accounts receivable and inventory and for the purchase of real
estate, primarily owner occupied real estate. As part of its
banking business, the Bank may make loans to all types of borrowers
secured by first and junior mortgages on various types of real
estate, including without limitation, single-family residential,
multi-family residential, mixed use, commercial, developed, and
undeveloped. In making such loans, the Bank will be subject to
written policies, reviewed and approved at least annually by the
Bank's board of directors, pursuant to federal law and regulations.
Such policies address loan portfolio diversification and prudent
underwriting standards, loan administration procedures, and
documentation, approval and reporting requirements. In addition,
Federal regulations impose supervisory loan-to-value ratios
applicable to each type of loan secured by real estate.
The Bank will generally look to a borrower's business
operations as the principal source of repayment and will also seek,
when appropriate, security interests in the inventory, accounts
receivable or other personal property of the borrower, and personal
guaranties. Although the Bank intends to be aggressive in seeking
new loan growth, it intends to stress high quality in its loans.
To promote such standards, the Board of Directors of the Bank
intends to establish strict lending policies, including specified
lending authorities, loan review policies and lending committees.
In establishing such policies, the Board of Directors will be
required to conform to applicable bank regulatory requirements.
See "Supervision and Regulation." Mr. Bechman will be the Bank's
senior lender and Mr. Fox, most recently a commercial lending
officer of CBCI, where he was employed 8 years, will be the Bank's
Vice President of Commercial Lending.
The Bank will actively pursue business checking accounts by
offering competitive rates, computerized banking, and other
convenient services to many of its business customers. In some
cases the Bank will require its business borrowers to maintain
minimum balances. Management of the Bank also intends to establish
relationship with one or more correspondent banks and other
independent financial institutions to provide other services
required by its customers, including loan participations where the
requested loan amount exceeds the Bank's legal lending limit.
CONSUMER FINANCIAL SERVICES. The Bank's retail banking
strategy will initially focus on providing basic banking products
that are reasonably priced and easily understood by the customer.
The Bank will be capable of offering sophisticated electronic
banking services in the future, if there is sufficient customer<PAGE>
<PAGE> 21
demand, through third-party service providers, which will allow the
Bank to be at the forefront of technology while minimizing the
costs of delivery.
The Bank will offer a full range of short to intermediate term
personal loans to individuals for various purposes, including
purchases of automobiles, mobile homes, boats and other
recreational vehicles, home improvements, education and personal
investments. The Bank anticipates that it will retain
substantially all of such loans. The Bank intends initially to
offer only adjustable rate mortgages. It does not anticipate
offering long-term fixed rate mortgage products, except through an
arrangement with outside providers. The Bank expects that any
fixed rate residential mortgage loans it generates will be sold to
third party investors, though with respect to some of such loans,
the Bank may continue to service the loans for a fee.
The Bank intends to offer other consumer lending services,
including credit cards and other personal loan products on both a
secured and unsecured basis. Mr. Morin, formerly Vice President of
Retail Banking at CBCI, has more than 24 years of banking
experience and will be the Bank's Vice President of Consumer
Lending.
DEPOSITS AND RETAIL BANKING. The Bank plans to offer its
retail customers a variety of deposit accounts. The Bank plans on
taking advantage of increasing population and rising income levels
in the growing areas of its primary market areas, including
Franklin, Needham, Clark, Pleasant, White River, and Union
Townships. Bank personnel will be trained to offer a variety of
deposit options. These options are expected to include demand
deposit accounts, regular savings accounts, NOW accounts, money
market demand accounts and certificates of deposit. The Bank's
deposit funding strategy will be to seek deposits aggressively
through competitive pricing.
MARKET RESPONSIVENESS. The management team will monitor the
performance of each part of the Bank's business strategy. The
strategy may change based on market conditions and acceptance of
the strategy and as the executive officers evaluate new
opportunities. The Bank expects to respond to changes in the
marketplace by focusing attention and resources on those areas that
show the greatest potential for growth. While the Bank expects to
concentrate on the business strategy as described above, market
forces may dictate alterations that cannot be predicted at this
time.
<PAGE>
<PAGE> 22
INVESTMENTS
The principal investment of the Company is expected to be its
purchase of all of the common stock of the Bank. See "Use of
Proceeds". Funds retained by the Company (including the net
proceeds obtained by the Company upon any exercise by the
Underwriter of its over - allotment option) may be invested at the
discretion of the Company in any lawful investment. Current laws
and regulations that limit the types of investments by bank holding
companies (see "Supervision and Regulation -- The Company --
Investments and Activities") are proposed to be made much less
restrictive by broad financial reform legislation approved by the
Banking Committee of the House of Representatives in June 1997 (see
"Supervision and Regulation -- Regulatory Developments").
The Bank may invest in a wide variety of securities and may
participate in the federal funds market with other depository
institutions. Subject to certain exceptions, the Bank is
prohibited by law from investing in equity securities. The Bank
has established an investment policy, under which the President of
the Bank (or, in the President's absence, the Bank's Controller)
will have daily authority to make trades in accordance with the
policy. The investment policy will be reviewed by the Bank's Board
of Directors annually.
MARKET AREA
Johnson County was the second fastest growing county in the
State of Indiana from 1990 through 1996 based on estimates of the
Indiana Business Research Center. The Bank's main office will be
located on the main retail thoroughfare in Franklin, at 420 N.
Morton Street (U.S. Route 31), on property that has been purchased
by the Company and is being extensively renovated. Concurrently
with (or as soon as possible after) the opening of the main office
in Franklin, the Bank intends to open a branch office in leased
space in Greenwood, Indiana, 11 miles north of Franklin in Johnson
County and approximately 12 miles south of downtown Indianapolis.
The Bank's primary service area will be the northern two-thirds of
Johnson County, which includes the six Townships of Union, Needham,
Franklin, White River, Pleasant, and Clark. Management believes
this community has an expanding and diverse economic base, which
includes a wide range of small to medium-sized businesses engaged
in manufacturing, services, and retail. As of June, 1997, the
unemployment rate for Johnson County was 1.9%, compared with the
statewide average of approximately 3.1%, according to Ball State
University's Bureau of Business Research. There are approximately
3,200 businesses in Johnson County.
<PAGE>
<PAGE> 23
COMPETITION
There are many thrifts, credit unions and bank offices located
within the Bank's primary and secondary market areas. Most are
branches of larger financial institutions which, in management's
view, are managed with a philosophy of strong centralization. The
Bank will face competition from the thrifts, credit unions and
other banks as well as finance companies, insurance companies,
mortgage companies, securities brokerage firms, equipment leasing
companies, mutual funds, money market funds and other providers of
financial services. Most of the Bank's competitors have been in
business a number of years, have established customer bases, are
larger and have higher lending limits than the Bank. The Bank will
compete for loans principally through its ability to communicate
effectively with its customers and to understand and meet their
needs. Management believes that its personal service philosophy
will enhance its ability to compete favorably in attracting
individuals and small businesses. The Bank will actively solicit
retail customers and will compete for deposits by offering
customers personal attention, professional service, computerized
banking and competitive interest rates.
BANK PREMISES
The Company has agreed to purchase a 5,700 square foot
building at 420 N. Morton Street (U.S. Route 31), which is on the
main retail thoroughfare in Franklin, Indiana. The building on the
site, which will be used as the Bank's main office and the
Company's headquarters, is being extensively renovated. Total cost
of land, building, improvements and renovations are estimated to be
approximately $1,075,000.
The Company is negotiating a lease for a branch facility to be
constructed in Greenwood, Indiana, on State Road 135, one-half mile
north of Smith Valley Road. The Company, however, has not yet
reached agreement in principle on the lease terms. This proposed
branch would include approximately 4,800 square feet of space, and
would require construction of approximately $150,000 of leasehold
improvements. The site would have access to both State Road 135
and Smith Valley Road, which are principal thoroughfares in
Greenwood. If the Company cannot obtain acceptable terms for this
lease, the Company intends to seek another site in the Greenwood
area for lease of a comparable facility as soon as practicable.
There is no assurance, however, that lease negotiations and
necessary construction or remodeling can be completed in time to
open the Greenwood branch at the same time as the Franklin office.
<PAGE>
<PAGE> 24
DATA PROCESSING
The Bank has not yet selected a data processing service
contractor and is negotiating with four vendors. Management
believes that data processing will be a vital part of the success
of the Bank. Management anticipates that the original term of the
contract will not exceed five years.
EMPLOYEES
Upon commencement of operations, the Bank expects to employ
approximately 18 full-time employees, including its executive
officers, teller staff and other support positions. Management
will encourage all employees to share management's goal of
high-quality customer service.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company as of the date
hereof, and the contemplated directors and officers of the Bank
upon completion of its organization, are as follows:
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR TERM POSITION(S)
NAME AND AGE THE COMPANY EXPIRES WITH THE BANK
<S> <C> <C> <C>
Steve Bechman, 45 President, Chief 1999 President, Chief
Executive Officer, Executive Officer,
and Director and Director
Jeffrey L. Goben, 45 Executive Vice 2000 Executive Vice
President, Chief President, Chief
Operating Officer, Operating Officer,
and Director and Director
K. Keith Fox, 37 Vice President -- Vice President,
Commercial Lending
John Morin, 47 Vice President -- Vice President,
Consumer Lending
Sharon Acton, 50 Director 2000 Director
Gordon R. Dunn, 76 Director 1999 Director
Jeffery D. Joyce, 27 Vice President -- Cashier and
and Chief Controller
Financial Officer
<PAGE>
<PAGE> 25
John Norton, 49 Director 2000 Director
Robert Richardson, 36 Director 1998 Director
Patrick A. Sherman, 49 Director 1998 Director
James C. Stewart, 46 Director 1999 Director
</TABLE>
Under Federal law and regulations and subject to certain
exceptions, the addition or replacement of any director, or the
employment, dismissal or reassignment of a senior executive
officer, of the Bank occurring within two years of the chartering
of the Bank, its acquisition by the Company, or any change in
control of the Bank or the Company (or at any time that the Bank is
not in compliance with applicable minimum capital requirements or
is otherwise in a troubled condition) is subject to prior notice to
and disapproval by the FDIC.
<PAGE>
<PAGE> 26
The Company's Bylaws provide that the number of directors, as
determined from time to time by the Board of Directors, shall be no
fewer than six and no more than fifteen. The Board of Directors
has presently fixed the number of directors at eight. The Articles
of Incorporation further provide that the directors shall be
divided into three classes, with each class serving a staggered 3-
year term and with the number of directors in each class being as
nearly equal as possible. The initial terms of the three classes
of directors have been established at one year, two years and three
years, respectively. The subsequent terms of each class of director
will be for three years.
It is anticipated that the entire Board of Directors of the
Bank will be elected annually by its shareholder, the Company.
Officers of the Company and the Bank will be appointed annually by
their respective Boards of Directors and perform such duties as are
prescribed in the Bylaws or by the Board of Directors.
None of the executive officers or staff is subject to any
agreements with former employers that restrict their right to fully
perform their duties with the Company or the Bank.
There are no family relationships among any of the Company's
directors, officers, or key personnel.
EXPERIENCE OF DIRECTORS AND OFFICERS
The experience and backgrounds of the directors and officers,
and their proposed positions with the Company, are summarized
below.
Steve Bechman (President, Chief Executive Officer, Director) has
been in banking in the community for over 21 years, all with
Citizens Bank of Central Indiana and its predecessors and
affiliates. He began his career at Bargersville State Bank,
Greenwood, Indiana ("BSB") and worked his way through the branch
system, commercial lending and several management positions. For
a two year period starting around July 1988 he was President of
BSB's affiliate, Bloomington Bank & Trust, Bloomington, Indiana
("BB&T"). In May 1992 BSB and BB&T were acquired by CNB
Bancshares, Inc., which merged BSB and BB&T to form Citizens Bank
of Central Indiana ("CBCI"). Mr. Bechman from 1993 until his
resignation in 1997 was CBCI's Regional President in charge of 13
locations in the Johnson County area. Mr. Bechman is a member of
the Board of Directors of the Indiana Bankers Association. Mr.
Bechman serves on numerous boards of community organizations, and
is past president of the United Way of Johnson County, President of
the Johnson County Health Foundation, and incoming President of the
Franklin Chamber of Commerce.
<PAGE>
<PAGE> 27
Jeffrey L. Goben (Executive Vice President, Chief Operating
Officer, Director) has been in banking in Johnson County for the
past 25 years. Mr. Goben started his career in 1972 with National
Bank of Greenwood, Greenwood, Indiana (now part of National City
Bank), and joined CBCI's predecessor Bargersville State Bank in
July 1984 as Assistant Vice President and branch manager. When he
left CBCI in May 1997, Mr. Goben was a Senior Vice President in
charge of marketing and community development. Mr. Goben is also
experienced in branch administration, human resources and consumer
lending. Mr. Goben is active in the community, serving as Vice
President and President-elect of the Greenwood Chamber of Commerce,
President of the Greenwood Senior Citizens Center Board, and Past
President of the Greenwood Sertoma Club.
K. Keith Fox (Vice President of Commercial Lending) has been in
banking in the Johnson County community since May 1982. For most
of the last 9 years he was employed by CBCI. His bank experience
includes branch operations and commercial lending. Mr. Fox is an
active member of the Johnson County Builders Association and in
August 1997 will complete his degree at the Graduate School of
Banking in Madison, Wisconsin.
John Morin (Vice President of Consumer Lending) began his banking
career at the National Bank of Greenwood, Johnson County, and has
24 years of banking experience, with 12 years at CBCI and 12 years
at the National Bank of Greenwood (now part of National City Bank).
During his career he has been a branch manager, commercial loan
officer and most recently Vice President in charge of retail
lending.
Jeffery D. Joyce (Vice President and Chief Financial Officer) is a
Certified Public Accountant who was employed with the Indianapolis
office of the public accounting firm of Crowe, Chizek and Company
LLP from September 1992 to May 1997. Most of his experience with
the firm was in the area of financial institution auditing and
consulting. Mr. Joyce is a Deacon of the Calvary Baptist Church in
Greenwood, Indiana, as well as Vice Chairman of the financial
committee. He is also active in United Way of Central Indiana and
Big Brothers of Johnson County.
Sharon Acton (Director) is employed by Cinergy/PSI, an electric
utility, as manager of the Franklin/Greenwood District providing
customer services to over 25,000 customers in the district. She is
active in numerous community organizations including the Franklin
Rotary and the Johnson County Historical Society. She also holds
office and serves on the Boards of Directors of the Franklin
Chamber of Commerce, United Way of Johnson County, Leadership
Johnson County and Johnson County Health Foundation. She is a life
time resident of Johnson County.
<PAGE>
<PAGE> 28
Gordon Dunn (Director) is a retired purchasing agent for the L.S.
Ayres department stores. He was employed there for 43 years. Mr.
Dunn also formerly served as Chairman of the Board of CBCI, and
served as a Director of CBCI and its predecessors for 22 years. He
presently serves on the Boards of the Franklin United Methodist
Retirement Community and the Grace United Methodist Church. He has
also been active in the annual campaign for the United Way of
Johnson County.
John Norton (Director) is owner and president of Norton Farms,
Inc., a grain farming operation located in Franklin, Indiana. He
is a lifelong resident of the Franklin area. Mr. Norton formerly
served as a Director on the Board of Ameritrust Indiana Corporation
(formerly Franklin Bank & Trust) for nine years. He is on the
Board of the Johnson County Historical Society, past director of
Leadership Johnson County and a member of the Board of Zoning
Appeals for Johnson County.
Robert Richardson (Director) since 1990 has been the majority owner
and president of MegaSys, Inc., a third party logistics company
located in Greenwood, Indiana. He serves on the Board of Directors
for Reach for Youth social services agency. Mr. Richardson is also
a member of American Society for Transportation and the Greenwood
Sertoma Club.
Patrick A. Sherman (Director) is President and part owner of
Sherman & Armbruster P.C., a public accounting firm located in
Greenwood, Indiana. Mr. Sherman has been a Certified Public
Accountant with this firm for 22 years. He is past president of
the Board of Aviation Commission for the City of Greenwood and
Board of Trustees of Valle Vista Hospital. He has also been the
Chairman of the finance committee for Our Lady of Greenwood
Catholic Church and past board member of the Greenwood Chamber of
Commerce.
James C. Stewart (Director) is currently under contract as a
consultant to Bauer Built Corp. to manage Jim Stewart Truck Tire
Company, a firm he owned for 24 years until October 1996. Mr.
Stewart's community involvement includes service as past director
of the Indianapolis Business Boosters organization, member of the
Indianapolis Athletic Club and Knights of Columbus. He is also a
member of the Indiana Motor Truck Association.
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
In the first year of operation, a cash retainer of $300 per
month is expected to be paid to non-employee directors of the
Company for their services, regardless of attendance at meetings.
In addition, non-employee directors will receive awards under the
1997 Stock Option Plan for Nonemployee Directors. See "1997 Stock
Option Plan for Nonemployee Directors."
<PAGE>
<PAGE> 29
The Company will commence paying salaries to Mr. Bechman
(initial rate of $115,000 per year) and to all five of its
executive officers as a group (aggregate initial rates of
approximately $400,000) upon completion of this offering. In
addition, the Company has paid aggregate salary to three of its
five executive officers (not including Mr. Bechman or Mr. Goben,
who have served without salary) for their services during the
organizational period through the date of this Prospectus in the
aggregate estimated amount of $5,750. The Bank's initial salary
levels for its executive officers are based on individual years of
experience and the compensation of officers in comparable positions
at competitive financial institutions. Executive officers'
compensation in subsequent years will be determined by the
Compensation Committee, a committee of the Bank's Board of
Directors comprised of a majority of outside (non-employee)
directors. Officers of the Bank may also participate in any
benefit plan adopted for broad participation by Bank employees,
such as a planned 401(k) plan. Neither the Company nor the Bank
has an employment agreement with any officer.
1997 STOCK OPTION PLAN
The Board of Directors has adopted, and the sole shareholder
of the Company has approved, the 1997 Stock Option Plan (the
"Plan)". The Plan's adoption is intended to enable the key
employees of the Company or any subsidiary (and non-employee
consultants) to participate in any growth and profitability of the
Company and encourage their continuation of service to the Company
or a subsidiary to the benefit of the Company and its shareholders.
Pursuant to the Plan, stock options may be granted which qualify
under the Internal Revenue Code as incentive stock options or as
stock options that do not qualify as incentive stock options. The
Board is of the judgment that the interests of the Company and its
shareholders will be advanced by implementation of this Plan. The
option price will not be less than fair market value of the shares
of shares of Common Stock at the time the option is granted, but in
any event not less than $10 per share during the ______ months
following the date of this Prospectus. The maximum number of
shares of Common Stock which may be issued under Plan during its
ten-year term will not exceed 75,000 shares (subject to anti-
dilution adjustments). The shares will be authorized but unissued
shares (including shares reacquired by the Company). In the event
of a change in control (as defined in the Plan), each option then
outstanding will become exercisable in full immediately prior to
such change in control.
The Stock Option Committee of the Board of Directors of the
Company has granted options under the Plan to the following
officers:
<PAGE>
<PAGE> 30
Number of Shares
Name of Officer Covered by Options
Steve Bechman 20,000
Jeffrey L. Goben 15,000
Keith Fox 5,000
John Morin 5,000
Jeffery D. Joyce 5,000
The options, which are intended to be incentive options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, were granted as of the date immediately preceding the date
of this Prospectus. The exercise price for each option is $10 per
share. Each option is immediately exercisable with respect to 20
percent of the shares covered by the option and will vest with
respect to an additional 20 percent of the shares on each of the
following four anniversaries of the date of this Prospectus,
assuming continued employment of the optionee. The options will
expire on July 24, 2007.
1997 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
In order to increase the proprietary interest of nonemployee
directors of the Company and to enhance the Company's ability to
retain and attract experienced and knowledgeable directors, the
Board of Directors has adopted and the sole shareholder of the
Company has approved the 1997 Stock Option Plan for Nonemployee
Directors (the "Nonemployee Director Plan"). Pursuant to the
Nonemployee Director Plan, as of the close of business on the date
preceding the date of this Prospectus, the Company has granted to
each director of the Company who is not an employee of the Company
or any affiliate ("Nonemployee Director") an option to purchase
4,000 shares of Common Stock of the Company at the public offering
price of $10 per share. Nonemployee Directors who are first
appointed or elected after the date of this Prospectus, will
receive an option for a lesser number of shares, the number of
which will depend on which annual meeting is the first annual
meeting occurring concurrently with, or after he or she becomes a
Nonemployee Director. The total number of shares of the Company's
Common Stock which may be issued under the Nonemployee Director
Plan will not exceed 40,000 shares (subject to anti-dilution
adjustments). The shares will be authorized but unissued shares
(including shares reacquired by the Company). Options granted
under the Nonemployee Director Plan are immediately exercisable for
1,000 shares of Common Stock. On the date of each successive
annual meeting of the Company, each option will become exercisable
(assuming continued service on the Board of Directors) for an
additional 1,000 shares of Common Stock, until it is exercisable in
full. In the event of a "change in control" of the Company, as
defined in the Nonemployee Director Plan, each option then
outstanding shall become immediately exercisable in full,
immediately prior to such change in control. The option exercise
<PAGE>
<PAGE> 31
price for future options granted under the Nonemployee Director
Plan will be the fair market value per share on the date the option
is granted to the Nonemployee Director. The unexercised portion of
each option automatically expires, and is no longer exercisable, on
the earliest to occur of the following: (i) ten years after the
option is granted, (ii) three months after the person who was
granted the option ceases to be a Nonemployee Director, other than
due to permanent disability, death, or for cause, (iii) one year
following the death or permanent disability of the Nonemployee
Director, and (iv) termination of the Nonemployee Director's
service as such, for cause.
RELATED PARTY TRANSACTIONS
LOANS FROM ORGANIZERS AND REDEMPTION OF ORGANIZATIONAL STOCK
Over the past several months, the organizers of the Bank have
loaned an aggregate amount of approximately $141,000 to the Company
to cover organizational expenses of the Company and the Bank and
other costs. Interest is payable on the loans at the national
prime rate. All of these loans will be repaid by the Company and
the Bank (with interest) from the net proceeds of the offering.
See "Use of Proceeds." The organizers include the members of the
Board of Directors and executive officers. In addition, the
Company will redeem the single share of Common Stock issued to Mr.
Bechman upon its organization for Mr. Bechman's $10 cost upon
closing of this offering.
BANKING TRANSACTIONS
It is anticipated that the directors and officers of the
Company and the Bank and the companies with which they are
associated will have banking and other transactions with the
Company and the Bank in the ordinary course of business. It is the
Bank's policy that any loans and commitments to lend to such
affiliated persons or entities included in such transactions will
be made in accordance with all applicable laws and regulations and
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with unaffiliated parties of similar creditworthiness,
and will not involve more than normal risk or present other
unfavorable features to the Company and the Bank. Applicable law
and Bank policy generally require that transactions between the
Company or the Bank, and any officer, director, principal
shareholder, or other affiliate of the Company or the Bank will be
on terms no less favorable to the Company or the Bank than could be
obtained on an arm's-length basis from unaffiliated independent
third parties.
<PAGE>
<PAGE> 32
INDEMNIFICATION
The Bylaws of the Company provide for the indemnification of
directors and officers of the Company, including reasonable legal
fees, incurred by such directors and officers while acting for or
on behalf of the Company or the Bank as a director or officer,
subject to certain limitations. See "Description of Capital Stock
- -- Indemnification of Directors and Officers." The scope of such
indemnification otherwise permitted by Indiana law may be limited
in certain circumstances by Federal law and regulations. See
"Supervision and Regulation -- Recent Regulatory Developments."
The Company may purchase directors' and officers' liability
insurance for directors and officers of the Company and the Bank.
PRINCIPAL SHAREHOLDERS
The Company has only one share of Common Stock outstanding
with such share being held by Steve Bechman; that share will be
redeemed by the Company at its cost upon closing of this offering.
The following table sets forth certain information with respect to
the anticipated beneficial ownership of the Company's Common Stock
after the sale of shares offered hereby, by each of the current
directors and executive officers of the Company and by all such
directors and executive officers of the Company as a group. No
person is expected to beneficially own more than five percent of
the outstanding Common Stock following the offering. Pursuant to
the Underwriting Agreement, the Company will direct the underwriter
to offer to sell the number of shares listed below. All share
numbers are provided based upon such directions from the Company
and non-binding expressions of interest supplied by the persons
listed below. Depending upon their individual circumstances at the
time, each of such persons may purchase a greater or fewer number
of shares than indicated in the following table and in fact may
purchase no shares.
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
Number of shares Percentage of
beneficially owned outstanding shares
Name and Address after offering(1) after offering(4)
<S> <C> <C>
Sharon K. Acton 500(3) 0.05%
Steve Bechman 25,000(2) 2.50%
Gordon R. Dunn 6,000(3) 0.60%
K. Keith Fox 2,500(2) 0.25%
Jeffrey L. Goben 20,000(2) 2.00%
Jeffery D. Joyce 1,000(2) 0.10%
John Morin 2,500(2) 0.25%
John Norton 4,000(3) 0.40%
Robert L. Richardson 4,000(3) 0.40%
Patrick A. Sherman 2,000(3) 0.20%
James C. Stewart 5,000(3) 0.50%
Directors and executive 72,500(2)(3) 7.25%
officers as a group
(11 persons)
______________________
</TABLE>
(1) Some or all of the Common Stock listed may be held jointly
with, or for the benefit of, spouses and children of, or
various trusts established by, the person indicated.
(2) Does not include an additional 10,000 shares that such persons
have the right to acquire, in the aggregate, within 60 days of
the date of this Prospectus pursuant to the Company's 1997
Employee Stock Option Plan (Mr. Bechman: 4,000 shares; Mr.
Goben: 3,000 shares; Mr. Fox: 1,000 shares; Mr. Morin: 1,000
shares; and Mr. Joyce: 1,000 shares). Such persons also hold
options under such plan to purchase an additional 40,000
shares (which will first become exercisable subject to
continued service in future years) as follows:
<PAGE>
<PAGE> 34
Mr. Bechman 16,000
Mr. Goben 12,000
Mr. Fox 4,000
Mr. Morin 4,000
Mr. Joyce 4,000
(3) Does not include 1,000 shares that such person has the right
to acquire within 60 days after the date of the Prospectus
pursuant to the Company's 1997 Stock Option Plan for
Nonemployee Directors. Such person also holds options under
such plan to purchase an additional 3,000 shares, which
options will first become exercisable (subject to continued
service) in future years.
(4) The percentages shown are based on the 1,000,000 shares
offered hereby plus the number of shares that the named person
or group has the right to acquire within 60 days of the date
of this Prospectus, and assumes no exercise of the
Underwriter's over-allotment option.
SUPERVISION AND REGULATION
GENERAL
Financial institutions and their holding companies are
extensively regulated under federal and state law. Consequently,
the growth and earnings performance of the Company and the Bank can
be affected not only by management decisions and general economic
conditions, but also by the statutes administered by, and the
regulations and policies of, various governmental regulatory
authorities. Those authorities include, but are not limited to,
the Federal Reserve Board, the FDIC, the Department, the Securities
and Exchange Commission (the "SEC"), the Internal Revenue Service
and state taxing authorities. The effect of such statutes,
regulations and policies can be significant, and cannot be
predicted with a high degree of certainty.
Federal and state laws and regulations generally applicable to
financial institutions and their holding companies regulate, among
other things, the scope of business, investments, reserves against
deposits, capital levels relative to operations, lending activities
and practices, the nature and amount of collateral for loans, the
establishment of branches, mergers, consolidations and dividends.
The system of supervision and regulation applicable to the Company
and the Bank establishes a comprehensive framework for their
respective operations and is intended primarily for the protection
of the FDIC's deposit insurance funds, the depositors of the Bank
and the public, rather than shareholders of the Bank or the
Company.
<PAGE>
<PAGE> 35
Federal law and regulations, including provisions added by the
Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") and regulations promulgated thereunder, establish
supervisory standards applicable to the operation, management and
lending activities of the Bank, including internal controls, loan
documentation, credit underwriting, interest rate exposure, asset
growth, compensation and loan-to-value ratios for loans secured by
real property. The Bank intends to comply with these requirements,
and in some cases may apply more restrictive standards.
The following references to statutes and regulations are
intended to summarize material effects of certain government
regulation on the business of the Company and the Bank. Any change
in government regulation may have a material adverse effect on the
Company, the Bank and their operations.
THE COMPANY
GENERAL. The Company will file in late July 1997 an
application to serve as the holding company for the Bank with the
Federal Reserve Bank of Chicago pursuant to regulations promulgated
under the Bank Holding Company Act of 1956, as amended ("BHCA").
When the Company becomes the sole shareholder of the Bank, the
Company will be a bank holding company and, as such, will be
subject to the supervision of and regulation by, the Federal
Reserve Board under the BHCA. Under the BHCA, the Company will be
subject to periodic examination by the Federal Reserve Board and
will be required to file periodic reports of its operations and
such additional information as the Federal Reserve Board may
require. The Company also will be required to file periodic
reports with, and otherwise comply with the rules and regulations
of, the SEC under the federal securities laws.
In accordance with Federal Reserve Board policy, the Company
will be expected to act as a source of financial strength to the
Bank and to commit resources to support the Bank in circumstances
where the Company might not do so absent such policy. In addition,
in certain circumstances an Indiana state bank having impaired
capital may be required by the Department of Financial Institutions
either to restore the bank's capital by a special assessment upon
its shareholders or to initiate the liquidation of the bank.
INVESTMENTS AND ACTIVITIES. Under the BHCA, bank holding
companies are prohibited, with certain limited exceptions, from
engaging in, or acquiring, directly or indirectly, control of
voting securities or assets of a company engaged in, any activity
other than banking or managing or controlling banks or an activity
that the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper
incident thereto. Under current Federal Reserve Board regulations,<PAGE>
<PAGE> 36
such permissible non-bank activities include such things as
mortgage banking, equipment leasing, securities brokerage and
consumer and commercial finance company operations. Any such
acquisition will require, except in certain cases, prior written
notice to the Federal Reserve Board.
In evaluating a written notice of such an acquisition, the
Federal Reserve Board will consider various factors, including
among others the financial and managerial resources of the
notifying bank holding company and its subsidiaries, and the
relative public benefits and adverse effects which may be expected
to result from the performance of the activity by an affiliate of
such company. The Federal Reserve Board may apply different
standards to activities proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a
going concern. The required notice period may be extended by the
Federal Reserve Board under certain circumstances, including a
notice for acquisition of a company engaged in activities not
previously approved by regulation of the Federal Reserve Board. If
such a proposed acquisition is not disapproved or subjected to
conditions by the Federal Reserve Board within the applicable
notice period, it is deemed approved by the Federal Reserve Board.
In general, any direct or indirect acquisition by the Company
of any voting shares of any bank which would result in the
Company's direct or indirect ownership or control of more than 5%
of any class of voting shares of such bank, and any merger or
consolidation of the Company with another bank holding company,
will require the prior written approval of the Federal Reserve
Board under the BHCA. In acting on such applications, the Federal
Reserve Board must consider various statutory factors, including
among others, the effect of the proposed transaction on competition
in the relevant geographic and product markets, each party's
financial condition and managerial resources and record of
performance under the Community Reinvestment Act. Since September
29, 1995, the BHCA has permitted the Federal Reserve Board under
specified circumstances to approve the acquisition, by a bank
holding company located in one state, of a bank or bank holding
company located in another state, without regard to any prohibition
contained in state law. See "Recent Regulatory Developments."
The merger or consolidation of an existing bank subsidiary of
the Company with another bank, or the acquisition by such a
subsidiary of assets of another bank, or the assumption of
liability by such a subsidiary to pay any deposits in another bank,
will require the prior written approval of the responsible Federal
depository institution regulatory agency under the Bank Merger Act,
based upon a consideration of statutory factors similar to those
outlined above with respect to the BHCA. In addition, in certain
such cases an application to, and the prior approval of, the
Federal Reserve Board under the BHCA and/or the Department of
Financial Institutions of the State of Indiana, may be required.
<PAGE>
<PAGE> 37
CAPITAL REQUIREMENTS. The Federal Reserve Board uses capital
adequacy guidelines in its examination and regulation of bank
holding companies. If capital falls below minimum guidelines, a
bank holding company may, among other things, be denied approval to
acquire or establish additional banks or non-bank businesses.
The Federal Reserve Board's capital guidelines establish the
following minimum regulatory capital requirements for bank holding
companies: (i) a leverage capital requirement expressed as a
percentage of total assets, (ii) a risk-based requirement expressed
as a percentage of total risk-weighted assets, and (iii) a Tier 1
leverage requirement expressed as a percentage of total assets.
The leverage capital requirement consists of a minimum ratio of
total capital to total assets of 6%, with an expressed expectation
that banking organizations generally should operate above such
minimum level. The risk-based requirement consists of a minimum
ratio of total capital to total risk-weighted assets of 8%, of
which at least one-half must be Tier 1 capital (which consists
principally of shareholders' equity). The Tier 1 leverage
requirement consists of a minimum ratio of Tier 1 capital to total
assets of 3% for the most highly rated companies, with minimum
requirements of 4% to 5% for all others.
The risk-based and leverage standards presently used by the
Federal Reserve Board are minimum requirements, and higher capital
levels will be required if warranted by the particular
circumstances or risk profiles of individual banking organizations.
Further, any banking organization experiencing or anticipating
significant growth would be expected to maintain capital ratios,
including tangible capital positions (i.e., Tier 1 capital less all
intangible assets), well above the minimum levels.
The Federal Reserve Board's regulations provide that the
foregoing capital requirements will generally be applied on a
bank-only (rather than a consolidated) basis in the case of a bank
holding company with less than $150 million in total consolidated
assets unless: (i) the bank holding company is engaged directly or
indirectly in any nonbank activity involving significant leverage
or (ii) the holding company has outstanding significant debt held
by the general public. Nonetheless, on a pro forma basis, assuming
the issuance and sale by the Company of the 1,000,000 shares of
Common Stock offered hereby at $10.00 per share, the Company's
leverage capital ratio, risk-based capital ratio and Tier 1
leverage ratio, in each case as calculated on a consolidated basis
under the Federal Reserve Board's capital guidelines, would exceed
the minimum requirements.
DIVIDENDS. The Company is a corporation separate and distinct
from the Bank. Most of the Company's revenues will be received by
it in the form of dividends or interest paid by the Bank. The Bank
is subject to statutory restrictions on its ability to pay<PAGE>
<PAGE> 38
dividends. See "The Bank -- Dividends." The Federal Reserve Board
has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the Federal
Reserve Board expressed its view that a bank holding company
experiencing earnings weaknesses should not pay cash dividends
exceeding its net income or which could only be funded in ways that
weakened the bank holding company's financial health, such as by
borrowing. Additionally, the Federal Reserve Board possesses
enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or
unsound practices or violations of applicable statutes and
regulations. Among these powers is the ability to proscribe the
payment of dividends by banks and bank holding companies. Similar
enforcement powers over the Bank are possessed by the FDIC. The
"prompt corrective action" provisions of FDICIA impose further
restrictions on the payment of dividends by insured banks which
fail to meet specified capital levels and, in some cases, their
parent bank holding companies.
In addition to the restrictions on dividends imposed by the
Federal Reserve Board, the laws of the State of Indiana impose
certain restrictions on the declaration and payment of dividends by
Indiana corporations such as the Company. See "Description of
Capital Stock -- Common Stock -- Dividend Rights."
THE BANK
GENERAL. Upon completion of its organization, the Bank will
be an Indiana state-charted commercial bank, and its deposit
accounts will be insured up to applicable limits by the FDIC under
the Bank Insurance Fund (the "BIF"). As an FDIC-insured,
Indiana-chartered bank, the Bank will be subject to the
examination, supervision, reporting and enforcement requirements of
the Department of Financial Institutions, as the chartering
authority for Indiana banks, and the FDIC, as administrator of the
BIF. These agencies and federal and state law extensively regulate
various aspects of the banking business including, among other
things, permissible types and amounts of loans, investments and
other activities, capital adequacy, branching, interest rates on
loans and on deposits, the maintenance of non-interest bearing
reserves on deposit accounts and the safety and soundness of
banking practices.
DEPOSIT INSURANCE. As an FDIC-insured institution, the Bank
will be required to pay deposit insurance premium assessments to
the FDIC. Pursuant to FDICIA, the FDIC adopted a risk-based
assessment system under which all insured depository institutions
are assigned one of nine categories (consisting of one of three
capital subcategories and one of three supervisory subcategories)
and assessed insurance premiums based upon their level of capital
and supervisory evaluation. Institutions classified as
well-capitalized (as defined by the FDIC) and considered healthy<PAGE>
<PAGE> 39
pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of
substantial supervisory concern pay the highest premium. Risk
classification of all insured institutions is made by the FDIC for
each semi-annual assessment period.
FDICIA required the FDIC to establish assessment rates at
levels which would restore the BIF to a mandated reserve ratio of
1.25% of insured deposits over a period not to exceed 15 years. In
November 1995, the FDIC determined that the BIF had reached the
required ratio. Accordingly, the FDIC has established the schedule
of BIF insurance assessments for the first semi-annual assessment
period of 1997, ranging from 0% of deposits for institutions in the
highest category to .27% of deposits for institutions in the lowest
category.
The FDIC may terminate the deposit insurance of any insured
depository institution if the FDIC determines, after a hearing,
that the institution or its directors have engaged or are engaging
in unsafe or unsound practices, or have violated any applicable
law, regulation, rule, order or any condition imposed in writing
by, or written agreement with, the FDIC, or if the institution is
in an unsafe or unsound condition to continue operations. The FDIC
may also suspend deposit insurance temporarily during the hearing
process for a permanent termination of insurance if the institution
has no tangible capital.
CAPITAL REQUIREMENTS. The FDIC has established the following
minimum capital standards for state-chartered, FDIC-insured
non-member banks, such as the Bank: (i) a leverage requirement
consisting of a minimum ratio of Tier 1 capital to total assets of
3% for the most highly-rated banks and a minimum ratio of Tier I
capital to total assets of 4% to 5% for all others, and (ii) a
risk-based capital requirement consisting of a minimum ratio of
total capital to total risk-weighted assets of 8%, of which at
least one-half of that total capital amount must consist of Tier 1
capital. Tier 1 capital consists principally of shareholders'
equity.
The capital requirements described above are minimum
requirements. Higher capital levels will be required if warranted
by the particular circumstances or risk profiles of individual
institutions. As a condition to the regulatory approvals of the
Bank's formation, the Bank will be required to have an initial
capitalization sufficient to provide a ratio of Tier 1 capital to
total estimated assets of at least 8% at the end of the third year
of operation.
PROMPT CORRECTIVE ACTION. FDICIA establishes a system of
prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, federal<PAGE>
<PAGE> 40
depository institution regulators are required to take certain
mandatory supervisory actions, and may take certain discretionary
supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of
capitalization. In addition, subject to a narrow exception, FDICIA
generally requires the federal depository institution regulators to
appoint a receiver or conservator for an institution that is
critically undercapitalized.
As mandated by FDICIA, the federal banking regulators have
specified by regulation the relevant capital measures at which an
insured depository institution is deem well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized. Pursuant to the FDIC's regulations
implementing the prompt corrective action provisions of FDICIA, a
bank will be deemed to be: (i) well capitalized if the bank has a
total risk-based capital ratio of 10% or greater, Tier 1 risk-based
capital ratio of 6% or greater and leverage ratio of 5% or greater;
(ii) adequately capitalized if the bank has a total risk-based
capital ratio of 8% or greater, Tier 1 risk-based capital ratio of
4% or greater and leverage ratio of 4% or greater (3% for the most
highly rated banks); (iii) undercapitalized if the bank has a total
risk-based capital ratio of less than 8%, Tier 1 risk-based capital
ratio of less than 4% or leverage ratio of less than 4% (less than
3% for the most highly rated banks); (iv) significantly
undercapitalized if the bank has a total risk-based capital ratio
of less than 6%, Tier 1 risk-based capital ratio of less than 3% or
leverage ratio of less than 3%; and (v) critically undercapitalized
if the bank has a ratio of tangible equity to total assets of 2% or
less.
Subject to certain exceptions, these capital ratios are
generally determined on the basis of Call Reports submitted by each
depository institution and the reports of examination by each
institution's appropriate federal depository institution regulatory
agency.
Depending upon the capital category to which an institution is
assigned, the regulators' corrective powers include: requiring the
submission of a capital restoration plan (which must include a
holding company guarantee of performance); placing limits on asset
growth and restrictions on activities; requiring the institution to
issue additional capital stock (including additional voting stock)
or to be acquired; restricting transactions with affiliates;
restricting the interest rate the institution may pay on deposits;
ordering a new election of directors of the institution; requiring
that senior executive officers or directors be dismissed;
prohibiting the institution from accepting deposits from
correspondent banks requiring the holding company to divest certain
subsidiaries including the institution; requiring the institution
to divest certain subsidiaries; prohibiting the payment of
principal or interest on subordinated debt; and ultimately,
appointing a receiver or conservator for the institution.<PAGE>
<PAGE> 41
In general, a depository institution may be reclassified to a
lower category than is indicated by its capital position if the
appropriate federal depository institution regulatory agency
determines the institution to be otherwise in an unsafe or unsound
condition or to be engaged in an unsafe or unsound practice. This
could include a failure by the institution, following receipt of a
less-than-satisfactory rating on its most recent examination
report, to correct the deficiency.
DIVIDENDS. As a state-chartered commercial bank organized
under Indiana law, the Bank may declare and pay dividends to the
proposed sole shareholder (the Company) of so much undivided
profits as its Board of Directors deems expedient, subject to prior
approval of the Department if the proposed dividend (when added to
all prior dividends declared during the current calendar year)
would exceed current year "net profits" and retained "net profits"
for the previous two calendar years.
FDICIA generally prohibits a depository institution from
making any capital distribution (including payment of a dividend)
or paying any management fee to its holding company if the
depository institution would thereafter be undercapitalized. The
FDIC may prevent an insured bank from paying dividends if the bank
is in default of payment of any assessment due to the FDIC. In
addition, payment of dividends by a bank may be prevented by the
applicable federal regulatory authority if such payment is
determined, by reason of the financial condition of such bank, to
be an unsafe and unsound banking practice.
INSIDER TRANSACTIONS. The Bank is subject to certain
restrictions imposed by the Federal Reserve Act ("FRA") on any
extensions of credit to the Company or its subsidiaries, on
investments in the stock or other securities of the Company or its
subsidiaries, and the acceptance of the stock or other securities
of the Company or its subsidiaries as collateral for loans. These
restrictions limit the aggregate amount of transactions with any
individual affiliate to 10% of the Bank's capital and surplus,
limit the aggregate amount of transactions with all affiliates to
20% of the Bank's capital and surplus, require that loans and
certain other extensions of credit be secured by collateral in
certain specified amounts and types, generally prohibit the
purchase of low quality assets from affiliates and generally
require that certain transactions with affiliates, including loans
and asset purchases, be on terms and under circumstances, including
credit standards, that are substantially the same or at least as
favorable to the Bank as those prevailing at the time for
comparable transactions with nonaffiliated individuals or entities.
<PAGE>
<PAGE> 42
Also, the FRA prescribes certain limitations and reporting
requirements on extensions of credit by the Bank to its directors
and executive officers, to directors and executive officers of the
Company and its subsidiaries, to principal shareholders of the
Company and its subsidiaries, to principal shareholders of the
Company and to "related interests" of such directors, officers and
principal shareholders. Among other things, the FRA, and the
regulations thereunder, require such loans to be made on
substantially the same terms as those offered to unaffiliated
individuals, place limits on the amount of loans the Bank may
extend to such individuals and require certain approval procedures
to be followed. In addition, such legislation and regulations may
affect the terms upon which any person becoming a director or
officer of the Company or one of its subsidiaries or a principal
shareholder of the Company may obtain credit from banks with which
the Bank maintains a correspondent relationship.
SAFETY AND SOUNDNESS STANDARDS. On July 10, 1995, the FDIC,
the Office of Thrift Supervision, the Federal Reserve Board and the
Office of the Comptroller of the Currency published final
guidelines implementing the FDICIA requirement that the federal
banking agencies establish operational and managerial standards to
promote the safety and soundness of federally insured depository
institutions. The guidelines, which took effect on August 9, 1995,
establish standards for internal controls, information systems,
internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation, fees and
benefits, and specifically prohibit, as an unsafe and unsound
practice, excessive compensation that could lead to a material loss
to an institution. The federal banking agencies also adopted asset
quality and earnings standards that were added to the safety and
soundness guidelines effective October 1, 1996. If an institution
fails to comply with any of the standards set forth in the
guidelines, the institution's primary federal regulator may require
the institution to submit a plan for achieving and maintaining
compliance. Failure to submit an acceptable compliance plan, or
failure to adhere to a compliance plan that has been accepted by
the appropriate regulator, would constitute grounds for further
enforcement action.
STATE BANK ACTIVITIES. Under FDICIA, as implemented by final
regulations adopted by the FDIC, FDIC-insured state banks are
prohibited, subject to certain exceptions, from directly or
indirectly acquiring or retaining any equity investments of a type,
or in an amount, that are not permissible for a national bank.
FDICIA, as implemented by FDIC regulations, also prohibits
FDIC-insured state banks and their subsidiaries, subject to certain
exceptions, from engaging as principal in any activity that is not
permitted for a national bank or its subsidiary, respectively,
unless the bank meets, and continues to meet, its minimum
regulatory capital requirements and the FDIC determines the
activity would not pose a significant risk to the deposit insurance
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<PAGE> 43
fund of which the bank is a member. Impermissible investments and
activities must be divested or discontinued within certain time
frames set by the FDIC in accordance with FDICIA. These
restrictions are not currently expected to have a material impact
on the operations of the Bank.
CONSUMER BANKING. The Bank's business will include making a
variety of types of loans to individuals. In making these loans,
the Bank will be subject to state usury and regulatory laws and to
various federal statutes, such as the Equal Credit Opportunity Act,
Fair Credit Reporting Act, Truth in Lending Act, Real Estate
Settlement Procedures Act and Home Mortgage Disclosure Act, and the
regulations promulgated thereunder, which prohibit discrimination,
specify disclosures to be made to borrowers regarding credit and
settlement costs and regulate the mortgage loan servicing
activities of the Bank, including the maintenance and operation of
escrow accounts and the transfer of mortgage loan servicing. The
Riegle Act imposed new escrow requirements on depository and
non-depository mortgage lenders and servicers under the National
Flood Insurance Program. See "Recent Regulatory Developments." In
receiving deposits, the Bank will be subject to extensive
regulation under state and federal law and regulations, including
the Truth in Savings Act, the Expedited Funds Availability Act, the
Bank Secrecy Act, the Electronic Funds Transfer Act and the Federal
Deposit Insurance Act. Violation of these laws could result in the
imposition of significant damages and fines upon the Bank, its
directors and officers.
REGULATORY DEVELOPMENTS
The Deposit Insurance Funds Act of 1996 (the "DIFA"), which
was part of the omnibus appropriations bill for fiscal year 1997,
addresses the problem of the undercapitalized Savings Association
Insurance Fund (the "SAIF"). As required under the DIFA, the FDIC
imposed a one-time special assessment on savings associations to
bring the SAIF up to a mandated reserve ratio of 1.25% of insured
deposits.
In addition, beginning on January 1, 1997, banks and thrifts
are required to share in the payment of the Financing Corporation
(the "FICO") bonds. The FICO bonds were issued pursuant to the
Competitive Equality Banking Act of 1987 to recapitalize the
Federal Savings and Loan Insurance Corporation. Prior to the
enactment of the DIFA, savings associations alone paid assessments
on the FICO bonds.
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<PAGE> 44
In 1994, the Congress enacted two major pieces of banking
legislation, the Riegle Community Direction Act (the "Riegle Act")
and the Riegle-Neal Interstate Banking and Branching Efficiency Act
(the "Riegle-Neal Act"). The Riegle Act addressed such varied
issues as the promotion of economic revitalization of defined urban
and rural "qualified distressed communities" through special
purpose "Community Development Financial Institutions," the
expansion of consumer protection with respect to certain loans
secured by a consumer's home and reverse mortgages and reductions
in compliance burdens regarding Currency Transaction Reports, in
addition to reform of the National Flood Insurance Program, the
promotion of a secondary market for small business loans and leases
and mandating specific changes to reduce regulatory impositions on
depository institutions and holding companies.
The Riegle-Neal Act substantially changed the geographic
constraints applicable to the banking industry. Effective
September 29, 1995, the Riegle-Neal Act allows bank holding
companies to acquire banks located in any state in the United
States without regard to geographic restrictions or reciprocity
requirements imposed by state law, but subject to certain
conditions, including limitations on the aggregate amount of
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<PAGE> 45
deposits that may be held by the acquiring holding company and all
of its insured depository institution affiliates. Effective June
1, 1997 (or earlier if expressly authorized by applicable state
law), the Riegle-Neal Act allows banks to establish interstate
branch networks through acquisitions of other banks, subject to
certain conditions, including certain limitations on the aggregate
amount of deposits that may be held by the surviving bank and all
of its insured depository institution affiliates. The
establishment of de novo interstate branches or the acquisition of
individual branches of a bank in another state (rather than the
acquisition of an out-of-state bank in its entirety) is allowed by
the Riegle-Neal Act only if specifically authorized by state law.
The legislation allowed individual states to "opt-out" of certain
provisions of the Riegle-Neal Act by enacting appropriate
legislation prior to June 1, 1997.
Effective March 14, 1996, Indiana "opted in" to the interstate
branching provisions of the Riegle-Neal Act. The Indiana
legislation authorizes, subject to certain approval and other
requirements, Indiana-chartered banks to establish branches in
states other than Indiana and out-of-state banks to establish
branches in Indiana. Indiana and out-of-state banks are authorized
to establish branches either by acquisition or de novo.
FDIC regulations, which became effective April 1, 1996, impose
certain limitations (and in certain cases, prohibitions) on (i)
"golden parachute" severance payments by troubled depository
institutions, their subsidiaries and affiliated holding companies
to institution-affiliated parties (primarily directors, officers,
employees or principal shareholders of the institution), and (ii)
indemnification payments by a depository institution, their
subsidiaries and affiliated holding companies, regardless of
financial condition, to institution-affiliated parties. The FDIC
regulations impose limitations on indemnification payments which
could restrict, in certain circumstances, payments by the Company
or the Bank to their respective directors or officers otherwise
permitted under Indiana state law. See "Description of Capital
Stock -- Indemnification of Directors and Officers."
In June, 1997, broad financial reform legislation was approved
by the Banking Committee of the U.S. House of Representatives. The
proposed legislation includes provisions that would permit, subject
to certain restrictions, bank holding companies to acquire
manufacturing and other nonfinancial companies, permit nonfinancial
companies to acquire banks, and require thrift institutions to
convert to bank charters. The Company cannot predict whether, or
in what form, this legislation may be enacted, and if enacted, what
the effect would be on the Company and the Bank.
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<PAGE> 46
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 10,000,000
shares of Common Stock, no par value, of which only one share was
issued and outstanding as of the date of this Prospectus and
2,000,000 shares of Preferred Stock, no par value, of which no
shares are issued and outstanding. At the conclusion of the
offering, 1,000,000 shares of Common Stock will be issued and
outstanding, assuming no exercise by the Underwriter of its over-
allotment option. The Board of Directors has the power to
determine the relative rights of and restrictions on any series of
Preferred Stock that it may authorize in the future and may provide
terms upon which preferred stock may be converted into shares of
any other class of stock, and may issue and sell such Preferred
Stock without prior shareholder approval. The Company has reserved
115,000 shares of Common Stock that may be issued under the
Company's stock option plans. The remaining authorized but
unissued shares of Common Stock may be issued upon authorization by
the Board of Directors without prior shareholder approval.
COMMON STOCK
VOTING RIGHTS. Each share of the Company's Common Stock
entitles the holder thereof to one vote on all matters on which the
holders of shares of the Company's Common Stock are entitled to
vote. Except for (a) supermajority votes required to approve
certain business combinations and certain other matters (see
"Description of Capital Stock -- Certain Provisions of Indiana Law
and the Company's Articles of Incorporation and Bylaws"), and (b)
certain corporate actions that must be approved by a majority of
the outstanding votes of the relevant voting group under the
Indiana Business Corporation Law (the "IBCL"), the affirmative vote
of the holders of the majority of the votes cast at a meeting at
which a quorum is present is sufficient to approve matters
submitted for shareholder approval, except that directors are
elected by a plurality of the votes cast. Shareholders do not have
cumulative voting rights for the election of directors. Directors
may be removed, with or without cause, only by the vote of 80% of
the shares entitled to vote at an election of directors.
DIVIDEND RIGHTS. Subject to any preferential dividend rights
of a series of shares of preferred stock, the holders of Common
Stock are entitled to receive dividends as and when declared by the
Board of Directors from funds legally available for their payment.
Although the Company does not currently anticipate paying dividends
in the foreseeable future, holders of shares of Common Stock would
be entitled to share ratably in dividends, if any, that may be
declared on the Common Stock by the Board of Directors.
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<PAGE> 47
LIQUIDATION RIGHTS. Upon any liquidation, dissolution, or
winding up of the affairs of the Company, the holders of Common
Stock are entitled to share ratably in the assets legally available
for distribution to the holders of Common Stock after satisfaction
in full of any liquidation preference to which holders of Preferred
Stock, if any, may then be entitled.
OTHER MATTERS. The holders of shares of the Common Stock have
no preemptive or redemption rights or any preferred right to
purchase or subscribe for any authorized but unissued capital stock
or any securities of the Company convertible into Common Stock.
The outstanding shares are, and the shares offered hereby will be
when issued, fully paid and nonassessable. The shares of Common
Stock are not redeemable at the option of the Company or holders
thereof.
_________________ serves as the registrar and transfer agent
for the Common Stock.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the Board of
Directors, without further shareholder approval, to establish the
relative rights, designations, preferences, and limitations or
restrictions on the shares of Preferred Stock prior to the issuance
thereof, including, without limitation, dividend rights, conversion
rights, voting rights, liquidation preferences, redemption rights,
division into series, sinking fund provisions, and similar matters.
Thus, the Board of Directors may authorize and issue a series of
Preferred Stock with rights and preferences that are superior to
those of the Common Stock, the issuance of which could adversely
affect the voting power of the holders of Common Stock.
The availability of Preferred Stock with unspecified voting
rights and possibly other rights, such as a required approval of
mergers or other extraordinary corporate transactions, could be
used by management to create voting impediments or to deter persons
seeking to effect a merger or otherwise to gain control of the
Company. Preferred Stock may also be issued at sometime in the
future in connection with acquisitions by the Company of additional
companies or businesses. The Company has no present plans to issue
any series of Preferred Stock.
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<PAGE> 48
INDIANA LAW
Under the IBCL, several provisions could affect the
acquisition of the shares of or control over the Company. The IBCL
contains a Control Share Acquisition Chapter that may have the
effect of discouraging or making more difficult a hostile takeover
of an Indiana corporation. This provision also may have the effect
of discouraging premium bids for outstanding shares. The Control
Share Acquisition Chapter provides that, unless otherwise provided
in a corporation's articles of incorporation or by-laws, shares
acquired in certain acquisitions of the corporation's stock (which
take the acquiror over the successive thresholds of 20%, 33% and
50% of the corporation's stock) will be accorded voting rights only
if a majority of the disinterested shareholders approves a
resolution granting the potential acquiror the ability to vote such
shares. An Indiana corporation is subject to the Control Share
Acquisition Chapter if it has 100 or more shareholders and its
principal place of business is in Indiana. An Indiana corporation
otherwise subject to the Control Share Acquisition Chapter may
elect not to be governed by the statute by so providing in its
articles of incorporation or by-laws. The Company has not made
such an election and, therefore, the Company will be subject to the
statute when and if it has 100 or more shareholders.
In addition to the Control Share Acquisition Chapter, the IBCL
contains a Business Combination Chapter. The Business Combinations
Chapter provides that, unless a company elects not to be governed
by that chapter, certain Indiana corporations and a 10% or greater
shareholder may not engage in certain business combinations,
including mergers, sales of assets, recapitalizations, and reverse
stock splits for five years following the date on which the
shareholder obtained a 10% or greater ownership interest, unless
the acquisition has been approved in advance of that date by the
Board of Directors. In addition, if prior approval is not
obtained, the Company and such shareholder may not consummate a
business combination unless a majority of disinterested
shareholders approve the transaction or all shareholders receive a
price per share determined in accordance with the Business
Combinations Chapter. The Articles of Incorporation of the Company
provide that the Business Combinations Chapter shall not apply to
the Company. The Company could subsequently elect to be covered by
the Business Combination Chapter, however, but such an election
would remain ineffective for 18 months and would not apply to a
combination with a shareholder who acquired a 10% or greater
ownership position prior to the effective date of the election.
The Company's Restated Articles of Incorporation contain provisions
governing approval of certain business combinations. See
"Description of Capital Stock -- Articles of Incorporation and
Bylaws."
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<PAGE> 49
The IBCL specifically authorizes directors, in considering the
best interests of a corporation, to consider the effects of any
action on shareholders, employees, suppliers, and customers of the
corporation, the communities in which offices or other facilities
of the corporation are located, and any other factors the directors
consider pertinent. Under the IBCL, directors are not required to
approve a proposed business combination or other corporation action
if the directors determine in good faith, after considering and
weighing as they deem appropriate the effects of such action on the
corporation's constituents, that such approval is not in the best
interest of the corporation. The IBCL specifies that, in making
these determinations, directors are not required to consider the
effects of a proposed corporate action on any particular corporate
constituent group or interest (including the amounts that might be
paid to shareholders) as a dominant or controlling factor. The
IBCL explicitly provides that the different or higher degree of
scrutiny imposed in Delaware and certain other jurisdictions upon
director actions taken in response to potential changes in control
are inconsistent with the proper application of the applicable
provisions of the IBCL.
In taking or declining to take any action or in making any
recommendation to a corporation's shareholders with respect to any
matter, directors are authorized under the IBCL to consider both
the short-term and long-term interests of the corporation as well
as interests of other constituencies and other relevant factors.
Any determination made with respect to the foregoing by a majority
of disinterested directors shall conclusively be presumed to be
valid unless it can be demonstrated that such determination was not
made in good faith.
Because of the foregoing provisions of the IBCL, the Board
will have flexibility in responding to unsolicited proposals to
acquire the Company, and, accordingly, it may be more difficult for
an acquiror to gain control of the Company in a transaction not
approved by the Board.
The IBCL also imposes restrictions in connection with
shareholder derivative proceedings. The IBCL provides that if a
shareholder of the corporation files a derivative complaint, the
corporation's board of directors may establish a committee of
disinterested directors or other disinterested persons to
investigate the complaint. The IBCL authorizes a stay of any court
proceedings on the complaint until the investigation of such
committee is completed. If the committee determines that pursuit
of the claim through the derivative proceeding would not be in the
best interests of the corporation, then the committee can terminate
the derivative proceeding. The conclusion of the committee is
determinative unless the shareholder who filed the complaint can
demonstrate that the committee was not disinterested or did not act
in good faith.
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<PAGE> 50
ARTICLES OF INCORPORATION AND BYLAWS
REMOVAL OF DIRECTORS. The Articles of Incorporation provide
that a director may be removed from office with or without cause
prior to the expiration of his or her term only upon the
affirmative vote of the holders of at least 80% of the outstanding
shares of stock of the Company entitled to vote for the election of
directors at any meeting called for that purpose. The Articles do
not provide for the removal of a director by the remaining
directors.
CERTAIN BUSINESS COMBINATIONS. The Articles of Incorporation
of the Company include a provision imposing certain supermajority
vote and minimum price requirements on any "Business Combination"
with a "Related Person" unless the combination has been approved by
the vote of two-thirds of certain members of the Board of Directors
of the Company who are not associated with the Related Person.
This provision defines "Business Combination" very broadly to
include, subject to certain conditions, (i) any merger or
consolidation of the Company or any of its subsidiaries into or
with a Related Person, its affiliates or associates; (ii) any sale,
exchange, lease, transfer or other disposition by the Company or
any of its subsidiaries of all or any substantial part of its or
their assets or businesses to or with a Related Person, its
affiliates or associates; (iii) the purchase, exchange, lease or
acquisition by the Company or any of its subsidiaries of all or any
substantial part of the assets or business of a Related Person, its
affiliates or associates; (iv) any reclassification of securities,
recapitalization or other transaction that has the effect of
increasing the proportionate amount of the Company's Common Stock
(or other voting capital security) beneficially owned by a Related
Person; (v) any partial or complete liquidation, spinoff or splitup
of the Company or any of its subsidiaries; and (vi) the acquisition
by a Related Person of beneficial ownership upon issuance of Common
Stock (or other voting capital shares) of the Company or any of its
subsidiaries or any securities convertible into, or any rights,
warrants or options to acquire, any such shares.
"Related Person" also is defined broadly to mean (i) any
person (which includes any individual, corporation or entity other
than the Company or its subsidiaries) who beneficially owns ten
percent or more of the Company Common Stock (or other voting
capital security) (a "Ten Percent Shareholder"); (ii) any person
who within the preceding two-year period has been a Ten Percent
Shareholder and who directly or indirectly controls, is controlled
by, or is under common control with the Company; or (iii) any
person who has received, other than pursuant to or in a series of
transactions involving a public offering within the meaning of the
1933 Act, the Company Common Stock (or other voting capital
security) that has been owned by a Related Person within the
preceding two-year period.
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<PAGE> 51
In the absence of approval by the Company Directors who are
not associated with the Related Person or, in the alternative, the
agreement by the Related Person to pay all other shareholders a
certain minimum price for their shares, a Business Combination with
a Related Person would require the approval of 80% of the
outstanding voting stock plus the approval of a majority of the
outstanding shares that are not controlled by the Related Person.
In general terms, the restrictions apply to mergers or
consolidations of the Company of any subsidiary with any Related
Person, transfers or encumbrances of all or substantially all of
the assets of the Company to a Related Person, the adoption of any
plan of liquidation proposed by a Related Person or any transaction
which would have the effect, directly or indirectly, of increasing
the proportionate share of any class of equity securities of the
Company of any shareholder (including affiliates and associates)
who is the beneficial owner of more than 10% of the voting power of
the then outstanding shares entitled to vote generally in the
election of Directors of the Company. Absent the provision
regulating Business Combinations, mergers, consolidations, and
sales of all or substantially all assets would require only the
approval of a majority of the Board of Directors and (subject to
the rights of any Preferred Stock issued in the future) the
affirmative vote of a majority of the total number of outstanding
shares of the Company entitled to vote on the matter.
The percentage of the shares required to approve a Business
Combination by a Related Person may be reduced from 80% to two-
thirds if certain price and other requirements are met. The
shareholder voting requirements do not apply, however, if the
directors of the Company other than directors who are Related
Persons or Affiliates of Related Persons vote by a two-thirds vote
to approve the Business Combination.
This provision may tend to discourage or render it more
difficult for a person to acquire control of the Company, even if
such a transaction might generally be favorable to the interests of
shareholders. This provision may also tend to perpetuate present
management in that if a certain number of Directors do not approve
a proposed Business Combination it may be more difficult to obtain
the 80% shareholder approval requirement. In addition, this
provision may give Directors and minority shareholders veto power
over a Business Combination which a majority of the shareholders
may believe is desirable.
AMENDMENT, CHANGE, OR REPEAL OF CERTAIN ARTICLES. The
Articles provide that any amendment, change, or repeal of the
provisions of the Articles of Incorporation relating to Business
Combinations, the removal of Directors, or amendment of the
Articles must receive the approval of (a) at least 80% of the
outstanding voting power, and (b) in the case of an amendment,
change, or repeal of any of the above-stated provisions proposed by
or on behalf of a Related Person, the approval by a majority of the
shares not controlled by the Related Person. However, in the event
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<PAGE> 52
that an amendment, change, or repeal of those provisions is
approved by two-thirds of the Board of Directors, and, if the
amendment is proposed by or on behalf of a Related Person, by the
favorable vote of two-thirds of certain Directors who are not
associated with the Related Person, the affirmative vote of a
majority of the outstanding voting power would be sufficient to
approve any such amendment, change, or repeal.
CLASSIFIED BOARD. The Articles of Incorporation permit the
Bylaws to provide for the staggering of the terms of the members of
the Board of Directors to the full extent permitted by the IBCL.
The Bylaws provide for the Board of Directors to be divided into
three equal (or as nearly equal as possible) classes with only one
class of Directors being elected at any annual meeting. As a
result, approximately one-third of the Board of Directors is
elected each year. In addition, the Bylaws provide that any
vacancy shall be filled by a majority vote of the remaining
Directors. Any Director elected to fill such vacancy shall hold
office for the expired term of the class of which he is a member.
These provisions effectively prevent the shareholders of the
Company from changing a majority of the Directors at any single
election of Directors.
REDEMPTION OF SHARES ACQUIRED IN CONTROL SHARE ACQUISITIONS.
The Bylaws of the Company empower the Company to redeem shares that
are acquired in excess of the percentage-of-ownership thresholds
specified by the Control Share Acquisition Chapter of the IBCL in
the event that the disclosure statement required by the Control
Share Acquisition Chapter is not delivered or the acquired shares
are not accorded full voting rights by the shareholders. For
information concerning the Control Share Acquisition Chapter, see
"Description of Capital Stock - Indiana Law." The redemption price
is specified to be the fair market value per share of the shares to
be redeemed immediately prior to the first public announcement of
the intent or plan of the acquiring person to make a control share
acquisition.
DISCLOSURE PROCEDURE. The Bylaws provide, in accordance with
the IBCL, that the President may, in his or her discretion from
time to time, require a record shareholder to disclose to the
Company whether or not such shareholder holds shares of record for
the account of another person or persons who is or are the
beneficial owner(s) of such shares and, if so, the name(s) of such
beneficial owner(s). This disclosure procedure provides that if
the shareholder shall, without legal justification, fail to
disclose the information requested within ten (10) days of being
requested to do so, then the Company may, in the discretion of its
President, (a) prohibit the voting of any or all shares held by
such record shareholder at the next meeting of the shareholders;
(b) for so long as the failure to disclose continues, withhold
dividends with respect to such record shareholder's shares; (c)
acquire any or all of the shareholder's shares at a price
determined by market prices or market quotations of the shares (or
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<PAGE> 53
at a price determined by the Board of Directors in good faith to
represent the fair market value of such shares in the event that
there is no market for the shares) by mailing to such shareholder
a notice of acquisition; or (d) deny voting rights, withhold
dividends, and acquire shares, or exercise such rights in any
combination.
NOMINATION PROCEDURE. The Bylaws of the Company limit
eligibility for election to the Board of Directors at any meeting
of shareholders at which one or more Directors are to be elected to
(a) those persons named in (or replacements thereof named in
accordance with) the proxy or information statement prepared on
behalf of the Board of Directors of the Company and distributed to
shareholders in accordance with the proxy rules of the Securities
and Exchange Commission (the "SEC Proxy Rules") and (b) other
persons nominated from the floor of such shareholders meeting by a
shareholder, but only if (i) the names of the particular person or
persons who are proposed to be nominated are disclosed to the
Secretary of the Company by the nominating shareholder not later
than ten (10) business days prior to the shareholder meeting at
which such nomination is to be made and (ii) any "solicitation" of
"proxies" by such shareholder (or other persons) on behalf of such
other nominee(s) has been conducted in accordance with the SEC
Proxy Rules, if applicable.
SHARES ELIGIBLE FOR FUTURE SALE
The Company presently has one share of Common Stock
outstanding. That share is held by a member of the Board of
Directors and it will be redeemed at its original cost after
completion of the offering. Upon completion of the offering, the
Company expects to have 1,000,000 shares of its Common Stock
outstanding (plus any shares issued and sold upon exercise by the
Underwriter of the over-allotment option). The 1,000,000 shares of
the Company's Common Stock sold in the offering (plus any
additional shares sold upon the Underwriter's exercise of its
over-allotment option) have been registered with the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933 (the
"Securities Act") and may generally be resold without registration
under the Securities Act unless they were acquired by directors,
executive officers or other affiliates of the Company
(collectively, "Affiliates"). Affiliates of the Company may
generally only sell shares of the Common Stock pursuant to Rule 144
under the Securities Act without registration.
In general, under Rule 144 as currently in effect, an
affiliate (as defined in Rule 144) of the Company may sell shares
of Common Stock within any three-month period in an amount limited
to the greater of 1% of the outstanding shares of the Company's
Common Stock or the average weekly trading volume in the Company's
<PAGE>
<PAGE> 54
Common Stock during the four calendar weeks preceding such sale.
Sales under Rule 144 are also subject to certain manner-of-sale
provisions, holding periods for restricted shares, notice
requirements and the availability of current public information
about the Company.
The Company and the directors and officers of the Company and
the Bank (who are expected to hold an aggregate of approximately
72,500 shares after the offering), have agreed, or will agree, that
(i) they will not issue, offer for sale, sell, transfer, grant
options to purchase or otherwise dispose of any shares of Common
Stock without the prior written consent of the Underwriter for a
period of 150 days from the date of this Prospectus, except that
(a) they may sell shares to the Company in payment of part or all
of the purchase price of shares purchased under the Stock Option
Plan, and (b) the directors and officers may give Common Stock
owned by them to others who have agreed in writing to be bound by
the same agreement, and (ii) they will not sell, transfer, assign,
pledge or hypothecate any shares of Common Stock for a period of
____________ months from the date of the Prospectus acquired in
connection with directions from the Company for issuer directed
securities.
Prior to the offering, there has been no public trading market
for the Common Stock, and no predictions can be made as to the
effect, if any, that sales of shares or the availability of shares
for sale will have on the prevailing market price of the Common
Stock after completion of the offering. Nevertheless, sales of
substantial amounts of Common Stock in the public market could have
an adverse effect on prevailing market prices.
UNDERWRITING
The Underwriter has agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the
Company 1,000,000 shares of the Company's Common Stock. The
Underwriting Agreement provides that the obligations of the
Underwriter thereunder are subject to certain conditions and
provides for the Company's payment of certain expenses incurred in
connection with the review of the underwriting arrangements for the
offering by the National Association of Securities Dealers, Inc.
(the "NASD"). The Underwriter is obligated to purchase all
1,000,000 of the shares of Common Stock offered hereby, excluding
shares covered by the over-allotment option granted to the
Underwriter, if any are purchased.
If the Underwriting Agreement is terminated, except in certain
limited cases, the Underwriting Agreement provides that the Company
will reimburse the Underwriter for all accountable out-of-pocket
expenses, including Underwriter's counsel's fees and any Blue Sky<PAGE>
<PAGE> 55
costs, incurred by it in connection with the proposed purchase and
sale of the Common Stock, up to $30,000 (in addition to $10,000
already advanced by the Company to cover expenses). Such expenses
and advances will be credited by the Underwriter against the
underwriting discount otherwise payable to the Underwriter upon any
purchase by it of Common Shares.
<PAGE>
<PAGE> 56
The Company and the Underwriter have agreed that the
Underwriter will purchase the 1,000,000 shares of Common Stock
offered hereunder at a price to the public of $10.00 per share less
underwriting discounts and commissions of $____ per share.
However, underwriting discounts or commissions will be incurred by
the Company in the amount of $_______ per share with respect to the
first 200,000 shares sold to members of the Board of Directors of
the Company, their immediate families or certain other designated
individuals. The Underwriter proposes to offer the Common Stock to
selected dealers who are members of the NASD, at a price of $10 per
share less a concession not in excess of $_______ per share. The
Underwriter may allow, and such dealers may re-allow, concessions
not in excess of $______ per share to certain other brokers and
dealers.
The Underwriter has informed the Company that the Underwriter
does not intend to make sales to any accounts over which it
exercises discretionary authority.
The Company has granted the Underwriter an option, exercisable
within 30 days after the date of this offering, to purchase up to
an additional 150,000 shares of Common Stock from the Company to
cover over-allotments, if any, at the same price per share as is to
be paid by the Underwriter for the other shares offered hereby;
except that, if the over-allotment option is exercised in full, the
underwriting discount or commission with respect to each of the
option shares will be reduced to $______ per share. The
Underwriter may purchase such shares only to cover over-allotments,
if any, in connection with the offering.
The Underwriting Agreement contains indemnity provisions
between the Underwriter and the Company and the controlling persons
thereof against certain liabilities, including liabilities arising
under the Securities Act. The Company is generally obligated to
indemnify the Underwriter and its controlling persons in connection
with losses or claims arising out of any untrue statement of a
material fact contained in this Prospectus or in related documents
filed with the Commission or with any state securities
administrator, or any omission of certain material facts from such
documents.
There has been no public trading market for the Common Stock.
The price at which the shares are being offered to the public was
determined by negotiations between the Company and the Underwriter.
This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or
anticipated future value of the Common Stock. Several factors were
considered in determining the initial offering price of the Common
Stock, among them the size of the offering, the desire that the
security being offered be attractive to individuals and the
Underwriter's experience in dealing with initial public offerings
for financial institutions.
<PAGE>
<PAGE> 57
LEGAL PROCEEDINGS
Neither the Bank nor the Company is a party to any pending
legal proceedings or aware of any threatened legal proceedings
where the Company or the Bank may be exposed to any material loss.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed
upon for the Company by Leagre Chandler & Millard, Indianapolis,
Indiana. Krieg DeVault Alexander & Capehart, Indianapolis,
Indiana, is acting as counsel for the Underwriter in connection
with certain legal matters relating to the shares of Common Stock
offered hereby.
EXPERTS
The financial statements of the Company included in this
Prospectus have been audited by Crowe, Chizek and Company, LLP,
independent public accountants, as indicated in their report with
respect thereto. Such financial statements and their report have
been included herein in reliance upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange
Commission ("SEC") a Form SB-2 Registration Statement under the
Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth
in the Registration Statement, certain portions of which have been
omitted as permitted by the Rules and Regulations of the SEC. For
further information pertaining to the shares of Common Stock
offered hereby and to the Company, reference is made to the
Registration Statement, including the Exhibits filed as a part
thereof, copies of which can be inspected at and copied at the
Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Room 1400, 75 Park Place, New York New
York 10007. Copies of such materials can also be obtained at
prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The
information is also available on the World Wide Web site maintained
by the SEC. The address of the site is http://www.sec.gov.
<PAGE>
F-1
HEARTLAND BANCSHARES, INC.
FINANCIAL STATEMENTS
(A COMPANY IN THE DEVELOPMENT STAGE)
INDEX
PAGE NO.
INDEPENDENT AUDITORS' REPORT................... F-2
FINANCIAL STATEMENTS
Balance Sheet............................... F-3
Statement of Shareholder's Equity........... F-4
Statement of Income......................... F-5
Statement of Cash Flows..................... F-6
Notes to Financial Statements............... F-7
<PAGE>
F-2
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Heartland Bancshares, Inc.
Franklin, Indiana
We have audited the accompanying balance sheet of Heartland
Bancshares, Inc. (a company in the development stage) as of
June 30, 1997 and the related statements of operations, changes
in shareholder's deficit and cash flows for the period from
May 27, 1997 (date of inception) to June 30, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform our audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Heartland Bancshares, Inc. (a company in the development
stage) as of June 30, 1997, and the results of its operations and
its cash flows for the period from May 27, 1997 (date of
inception) to June 30, 1997 in conformity with generally accepted
accounting principles.
Crowe, Chizek and Company LLP
Indianapolis, Indiana
July 25, 1997
<PAGE>
F-3
HEARTLAND BANCSHARES, INC.
(A Company in the Development Stage)
BALANCE SHEET
June 30, 1997
_________________________________________________________________
ASSETS
Cash $ 10,214
Premises and equipment 13,210
Organization costs 46,171
Deferred offering costs 29,500
_________
$ 99,095
=========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Liabilities
Accounts payable $ 81,684
Related party notes payable (Note 2) 25,490
________
Total liabilities 107,174
Shareholder's deficit
Common stock - no par value; 10,000 shares
authorized; one share issued and outstanding 10
Deficit accumulated during the development stage (8,089)
_________
Total shareholder's deficit (8,079)
________
$ 99,095
=========
<PAGE>
F-4
HEARTLAND BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
For the period from May 27, 1997 (date of inception)
to June 30, 1997
_________________________________________________________________
OPERATING EXPENSES
Interest expense $ 385
Salaries and employee benefits 6,391
Other 1,313
________
Total operating expenses 8,089
Loss before income taxes (8,089)
Provision for income taxes (Note 3) -
________
Net loss $ (8,089)
========
<PAGE>
F-5
HEARTLAND BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIT
For the period from May 27, 1997 (date of inception)
to June 30, 1997
_________________________________________________________________
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Common Development
Stock Stage Total
______ __________ ________
<S> <C> <C> <C>
Balance at inception (May 27, 1997) $ - $ - $ -
Issuance of common stock 10 - 10
Net loss - (8,089) (8,089)
________ ________ ________
Balance at June 30, 1997 $ 10 $ (8,089) $ (8,079)
======== ========= =========
</TABLE>
<PAGE>
F-6
HEARTLAND BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
For the period from May 27, 1997 (date of inception)
to June 30, 1997
______________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,089)
Adjustments to reconcile net loss to
net cash from operating activities
Increase in accounts payable 81,684
________
Net cash from operating activities 73,595
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (13,210)
Organizational costs (46,171)
________
Net cash from investing activities (59,381)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party notes payable 25,490
Deferred offering costs (29,500)
Sale of common stock 10
________
Net cash from financing activities (4,000)
________
Net increase in cash 10,214
Cash at beginning of period -
________
CASH AT END OF PERIOD $ 10,214
========
<PAGE>
F-7
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: Heartland Bancshares, Inc. (the "Company") was
incorporated on May 27, 1997 to form a new bank, Heartland
Community Bank (the "Bank") to be located in Franklin, Indiana.
The Company intends to raise a minimum of $9,000,000 in equity
capital through the sale of 1,000,000 shares of the Company's
common stock at $10 per share, net of underwriting discounts and
offering costs. Proceeds from the offering will be used to
capitalize the Bank and provide working capital.
NATURE OF BUSINESS: The Bank intends to generate commercial,
mortgage and installment loans and receive deposits from customers
located in Johnson and contiguous counties in Indiana.
USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statement disclosures provided.
These estimates and assumptions may change in the future and future
results could differ.
ORGANIZATION COSTS: Organization costs represent incorporation and
legal costs and other costs relating to the establishment of the
Company. These costs will be amortized over a 60-month period
after the commencement of operations.
DEFERRED OFFERING COSTS: Deferred offering costs include legal,
consulting and accounting costs incurred in connection with the
registration of the Company's common stock. Those costs will be
charged against the stock proceeds or, if the offering is not
successful, charged to expense at that time.
OFFICE EQUIPMENT: Office equipment is stated at cost less
accumulated depreciation. Depreciation is computed using the
straight line method based on the estimated useful lives of the
assets. Maintenance and repairs are expensed and major
improvements are capitalized.
NOTE 2 - NOTES PAYABLE TO RELATED PARTIES
Demand notes payable in the amount of $25,490 are outstanding to
certain directors and officers of the Company and bear interest at
prime rate variable (which was 8.5% at June 30, 1997). The Company
intends to repay the loans from the proceeds of the common stock
offering. The notes are due no later than December 31, 1997.
<PAGE>
F-8
NOTE 3 - INCOME TAXES
At June 30, 1997, the Company had a loss of $8,089. At the
conclusion of its tax year, the Company may have an operating loss
carryforward which could be utilized over a 15 year period. No
deferred tax asset is recorded, as a valuation allowance reduces
the gross deferred tax asset of $2,750 to zero.
NOTE 4 - STOCK OPTIONS AND AUTHORIZED SHARES
On July 25, 1997, the Company's Board of Directors adopted two
stock option plans: an employee plan and a non-employee director
plan. Under the terms of the plans, options for up to 115,000
shares of the Company's common stock may be granted to key
management employees and directors of the Company and its
subsidiaries. The exercise price of the options will be determined
at the time of grant by an administrative committee to be appointed
by the Board of Directors. Also on July 25, 1997, the Board of
Directors amended the articles of incorporation to increase
authorized shares of common stock to 10,000,000 and to authorize
2,000,000 shares of no par preferred stock.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PAGE
----
Available Information.................. 4
Prospectus Summary..................... 5
Risk Factors........................... 8
Use of Proceeds........................ 15
Dividend Policy........................ 16
Capitalization......................... 17
Business............................... 18
Management............................. 24
Related Party Transactions............. 30
Principal Shareholders................. 31
Supervision and Regulation............. 33
Description of Capital Stock........... 44
Shares Eligible for Future Sale........ 51
Underwriting........................... 52
Legal Proceedings...................... 54
Legal Matters.......................... 54
Experts................................ 54
Additional Information................. 54
Index to Financial Statements.......... F-1
------------------------
UNTIL , 1997 (60 DAYS AFTER THE EFFECTIVE DATE OF
THE OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
<PAGE>
1,000,000 SHARES
[HEARTLAND BANCSHARES, INC. LOGO]
COMMON STOCK
--------------------------
PROSPECTUS
--------------------------
(LOGO)
, 1997
- - -------------------------------------------------------
- - -------------------------------------------------------<PAGE>
<PAGE> II-1
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Indiana Business Corporation Law and Article IV of
the Company's Restated Bylaws, the Company's officers and directors
are entitled to indemnification against all liability and expense
with respect to any civil or criminal claim, action, suit or
proceeding in which they are wholly successful. If they are not
wholly successful and even if they are adjudged liable or guilty,
they are entitled to indemnification if it is determined, with
respect to a civil action, by disinterested directors, a special
legal counsel, or a majority vote of the shares of the Company's
voting stock held by disinterested shareholders, that they acted in
good faith in what they reasonably believed to be the best
interests of the Company. With respect to any criminal action, it
must also be determined that they had no reasonable cause to
believe their conduct unlawful.
Under the Indiana Business Corporation Law, a director of the
Company cannot be held liable for actions that do not constitute
wilful misconduct or recklessness. In addition, the Articles of
Incorporation of the Company provide that directors of the Company
shall be immune from personal liability for any action taken as a
director, or any failure to take any action, to the fullest extent
permitted by the applicable provisions of the Indiana Business
Corporation Law from time to time in effect and by general
principles of corporate law. In addition, a director of the
Company against whom a shareholders' derivative suit has been filed
cannot be held liable if a committee of disinterested directors of
the Company, after a good faith investigation, determines either
that the shareholder has no right or remedy or that pursuit of that
right or remedy will not serve the best interests of the Company.
At present, there are no claims, actions, suits or proceedings
pending where indemnification would be required under the above,
and the Company does not know of any threatened claims, actions,
suits or proceedings which may result in a request for such
indemnification.
<PAGE>
<PAGE> II-2
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in
connection with the sale and distribution of the Common Stock being
registered, other than underwriting discounts and commissions. All
amounts shown are estimates, except the SEC registration fee and
the NASD filing fee, and assume sale of 1,000,000 shares in the
offering.
SEC registration fee . . . . . . . . . . . . . . . .
NASD filing fee. . . . . . . . . . . . . . . . . . .
Printing and mailing expenses. . . . . . . . . . . .
Fees and expenses of counsel . . . . . . . . . . . .
Accounting and related expenses. . . . . . . . . . .
Blue Sky fees and expenses (including
counsel fees). . . . . . . . . . . . . . . . . . . .
Registrar and Transfer Agent fees. . . . . . . . . .
Underwriter's Expenses . . . . . . . . . . . . . . .
Miscellaneous. . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The registrant has borrowed approximately $141,000 from its
organizers through July 25, 1997, to pay organizational and related
expenses. To the extent that such transactions would be deemed to
involve the offer or sale of a security, the registrant would claim
exemption including, without limitation, the exemption provided by
Section 4(2) of the Securities Act of 1933, for such transactions.
In addition, the registrant, sold one share of its Common Stock to
Steve Bechman, its Chairman and Chief Executive Officer, for $10.
The registrant also claims an exemption for such sale pursuant to
Section 4(2).
<PAGE>
<PAGE> II-3
ITEM 27.EXHIBITS.
Exhibit No. Description
1 *Form of Underwriting Agreement
3.1 *Amended and Restated Articles of Incorporation of
Heartland Bancshares, Inc.
3.2 *Amended and Restated Bylaws of Heartland Bancshares, Inc.
5 *Opinion of Leagre Chandler & Millard
10.1 *1997 Stock Option Plan
10.2 *1997 Stock Option Plan for Nonemployee Directors
23.1 *Consent of Leagre Chandler & Millard (included in opinion
filed as Exhibit 5)
23.2 **Consent of Krieg DeVault Alexander & Capehart
23.3 *Consent of Crowe, Chizek and Company, LLP
24 *Power of Attorney (included on page II-4)
27 *Financial Data Schedule (EDGAR filing only)
__________________
* Filed herewith.
**To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
(1) The registrant will provide to the underwriter at the
closing specified in the underwriting agreement certificates in
such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities 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 is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
<PAGE> II-4
(3) The registrant will:
(i) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant under
Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part
of this registration statement as of the time the SEC declared it
effective; and
(ii) For determining any liability under the Securities
Act, treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of the
securities at that time as the initial bona fide offering of those
securities.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form
SB-2 and authorized this registration statement to be signed on its
behalf by the undersigned, in the City of Franklin, State of
Indiana, on July 25, 1997.
HEARTLAND BANCSHARES, INC.
By /s/ Steve Bechman
Steve Bechman, President
POWER OF ATTORNEY
Each of the undersigned whose signature appears below hereby
constitutes and appoints Steve Bechman and Jeffrey L. Goben, and
each of them acting alone, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, under the Securities Act of 1933.
In accordance with the requirements of the Securities Act of
1933, this Registration Statement was signed by the following
persons in the capacities indicated on July 25, 1997.
Signatures Title
/s/ Steve Bechman President (chief executive officer)
Steve Bechman and Director
/s/ Jeffrey L. Goben Director
Jeffrey L. Goben
Chief Financial Officer
/s/ Jeffery D. Joyce (principal financial and accounting
Jeffery D. Joyce officer)
<PAGE>
____________________________ Director
Sharon K. Acton
/s/ Gordon R. Dunn Director
Gordon R. Dunn
/s/ John Norton Director
John Norton
____________________________ Director
Robert L. Richardson
____________________________ Director
Patrick A. Sherman
/s/ James C. Stewart Director
James C. Stewart
EXHIBIT 1
UNDERWRITER'S PROPOSED FORM OF UNDERWRITING AGREEMENT
1,000,000 SHARES
HEARTLAND BANCSHARES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____________________, 1997
Roney & Co., L.L.C.
One Griswold
Detroit, Michigan 48226
Dear Sirs:
Heartland Bancshares, Inc., an Indiana corporation
(the"COMPANY"), proposes to issue and sell 1,000,000 shares (the
"FIRM SHARES") of its authorized but unissued Common Stock (the
"COMMON STOCK") to Roney & Co., L.L.C., a Delaware limited
liability company ("RONEY & CO." or "UNDERWRITER"). In addition,
the Company proposes to grant to the Underwriter an option to
purchase up to an additional 150,000 shares (the "OPTIONAL SHARES")
to cover over-allotments. The Firm Shares and the Optional Shares
are called, collectively, the "SHARES."
1. SALE AND PURCHASE OF THE SHARES.
(a) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to
the terms and conditions of, this Agreement, the Company
agrees to issue and sell to the Underwriter, and the
Underwriter agrees to purchase the Firm Shares at a
purchase price of $9.30 per Share, except as set forth in
Section 1(b) below.
(b) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to
the terms and conditions of, this Agreement, and pursuant
to directions from the Company, the Underwriter will
offer to sell to each of the persons named in a list
provided by the Company to the Underwriter (who may
purchase alone or with family members to the extent
permitted by the Free-Riding and Withholding
Interpretation (the "INTERPRETATION") under the Rules of
Fair Practice of the National Association of Securities
Dealers, Inc. (the "NASD")) the number of Shares set
<PAGE>
forth opposite their respective names on the list. To
the extent such persons (alone or with such members) buy
such Shares, the Underwriter agrees to purchase up to
200,000 of the Shares at a purchase price of $9.60 per
Share. The parties agree that the securities purchased
and sold under this subparagraph to the Company's
employees and directors shall constitute "issuer directed
securities" under the Interpretation. The provisions of
this Section 1(b) shall not affect the Underwriter's
right, with respect to persons who are not employees or
directors of the Company, to withdraw, cancel or modify
orders or to reject orders in whole or in part.
(c) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to
the terms and conditions of, this Agreement, the Company
grants to the Underwriter an option to purchase all or
any part of the Optional Shares at a price per Share of
$9.30. The over-allotment option may be exercised only
to cover over-allotments in the sale of the Firm Shares
by the Underwriter and may be exercised in whole or in
part at any time or times on or before 12:00 noon,
Detroit time, on the day before the Firm Shares Closing
Date (as defined in Section 2 below), and only once at
any time after that date and within 30 days after the
Effective Date (as defined in Section 4 below), in each
case upon written or transmitted facsimile notice, or
verbal notice confirmed by transmitted facsimile, written
or telegraphic notice, by Roney & Co. to the Company no
later than 12:00 noon, Detroit time, on the day before
the Firm Shares Closing Date or at least three but not
more than five full business days before the Optional
Shares Closing Date (as defined in Section 2 below), as
the case may be, setting forth the number of Optional
Shares to be purchased and the time and date (if other
than the Firm Shares Closing Date) of such purchase.
<PAGE>
2. DELIVERY AND PAYMENT. Delivery by the Company of the
Firm Shares to Roney & Co. and payment of the purchase price by
certified or official bank check payable in Detroit Clearing House
(next day) funds to the Company, shall take place at the offices of
Roney & Co., One Griswold, Detroit, Michigan 48226, at 10:00 a.m.,
Detroit time, at such time and date, not later than the third (or,
if the Firm Shares are priced, as contemplated by Rule
15c6-1(c)under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), after 4:30 p.m., Washington, D.C. time, the
fourth) full business day following the first date that any of the
Shares are released by the Underwriter for sale to the public, as
Roney & Co. shall designate by at least 48 hours prior notice to
the Company (the "FIRM SHARES CLOSING DATE"); provided, however,
that if the Prospectus (as defined in Section 4 below) is at any
time prior to the Firm Shares Closing Date recirculated to the
public, the Firm Shares Closing Date shall occur upon the later of
the third or fourth, as the case the may be, full business day
following the first date that any of the Shares are released by the
Underwriter for sale to the public or the date that is 48 hours
after the date that the Prospectus has been so recirculated. To
the extent the option with respect to the Optional Shares is
exercised, delivery by the Company of the Optional Shares, and
payment of the purchase price by certified or official bank check
payable in Detroit Clearing House (next day) funds to the Company,
shall take place at the offices of Roney& Co. specified above at
the time and on the date (which may be the Firm Shares Closing
Date) specified in the notice referred to in Section l(c) (such
time and date of delivery and payment are called the "OPTIONAL
SHARES CLOSING DATE"). The Firm Shares Closing Date and the
Optional Shares Closing Date are called, individually, a "CLOSING
DATE" and, collectively, the "CLOSING DATES." Certificates
representing the Firm Shares shall be registered in such names and
shall be in such denominations as Roney & Co. shall request at
least two full business days before the Firm Shares Closing Date
or, in the case of the Optional Shares, on the day of notice of
exercise of the option as described in Section l(c), and shall be
made available to Roney & Co. for checking and packaging, at such
place as is designated by Roney & Co., at least one full business
day before the Closing Date.
3. PUBLIC OFFERING. The Company understands that the
Underwriter proposes to make a public offering of the Shares, as
set forth in and pursuant to the Prospectus, as soon after the
Effective Date as Roney & Co. deems advisable. The Company hereby
confirms that the Underwriter and dealers have been authorized to
distribute each preliminary prospectus and are authorized to
distribute the Prospectus (as from time to time amended or
supplemented).
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Underwriter and agree with
the Underwriter as follows:
(a) The Company has carefully prepared in conformity with the
requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT") and the rules and regulations
adopted by the Securities and Exchange Commission (the
"COMMISSION") thereunder (the "RULES"), a registration
statement on Form SB-2 (No. 333 - __________), including
a preliminary prospectus, and has filed with the
Commission the registration statement and such amendments
thereof as may have been required to the date of this
Agreement. Copies of such registration statement
(including all amendments thereof) and of the related
preliminary prospectus have heretofore been delivered by
the Company to you. The term "PRELIMINARY PROSPECTUS"
means any preliminary prospectus (as defined in Rule 430
of the Rules) included at any time as a part of the
registration statement. The registration statement as
amended (including any supplemental registration
statement under Rule 462(b) or any amendment under Rule
462(c) of the Rules) at the time and on the date it
becomes effective (the "EFFECTIVE DATE"), including the
prospectus, financial statements, schedules, exhibits,
and all other documents incorporated by reference
therein or filed as a part thereof, is called the
"REGISTRATION STATEMENT;" provided, however, that
"REGISTRATION STATEMENT" shall also include all Rule 430A
Information (as defined below) deemed to be included in
such Registration Statement at the time such Registration
Statement becomes effective as provided by Rule 430A of
the Rules. The term "PROSPECTUS" means the Prospectus as
filed with the Commission pursuant to Rule 424(b) of the
Rules or, if no filing pursuant to Rule 424(b) of the
Rules is required, means the form of final prospectus
included in the Registration Statement at the time such
Registration Statement becomes effective. The term "RULE
430A INFORMATION" means information with respect to the
Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective
pursuant to Rule 430A of the Rules. Reference made
herein to any preliminary prospectus or to the Prospectus
shall be deemed to refer to and include any document
attached as an exhibit thereto or incorporated by
reference therein, as of the date of such preliminary
<PAGE>
prospectus or the Prospectus, as the case may be. The
Company will not file any amendment of the Registration
Statement or supplement to the Prospectus to which Roney
& Co. shall reasonably object in writing after being
furnished with a copy thereof.
(b) Each preliminary prospectus, at the time of filing
thereof, contained all material statements which were
required to be stated therein in accordance with the
Securities Act and the Rules, and conformed in all
material respects with the requirements of the Securities
Act and the Rules, and did not include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Commission has not issued any order suspending or
preventing the use of any preliminary prospectus. When
the Registration Statement shall become effective, when
the Prospectus is first filed pursuant to Rule 424(b) of
the Rules, when any post-effective amendment of the
Registration Statement shall become effective, when any
supplement to or pre-effective amendment of the
Prospectus is filed with the Commission and at each
Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement
thereto) will comply with the applicable provisions of
the Securities Act and the Exchange Act and the
respective rules and regulations of the Commission
thereunder, and neither the Registration Statement nor
the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material
fact or will omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading; provided, however,
that the Company makes no representation or warranty as
to the information contained in the Registration
Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity
with information furnished in writing to the Company by
the Underwriter, specifically for use in connection with
the preparation thereof.
(c) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed
with the Commission as exhibits to the Registration
Statement.
<PAGE>
(d) Crowe Chizek & Co., whose report is filed with the
Commission as part of the Registration Statement, are,
and during the periods covered by their report were,
independent public accountants as required by the
Securities Act and the Rules.
(e) The Company and its subsidiary, Heartland Community Bank,
an Indiana chartered commercial bank (the "BANK"), have
been duly organized and are validly existing as a
corporation or banking corporation, as applicable, in
good standing under the laws of the State of Indiana.
Neither the Company nor the Bank have any properties or
conduct any business outside of the State of Indiana
which would require either of them to be qualified as a
foreign corporation or bank, as the case may be, in any
jurisdiction outside of Indiana. Neither the Company nor
the Bank has any directly or indirectly held subsidiary
other than the Bank. The Company has all power,
authority, authorizations, approvals, consents, orders,
licenses, certificates and permits needed to enter into,
deliver and perform this Agreement and to issue and sell
the Shares.
(f) The application for permission to organize the Bank (the
"DFI APPLICATION") was approved by the Indiana Department
of Financial Institutions (the "DFI") on
________________________, 1997, pursuant to Order No.
______________________________, subject to certain
conditions specified in the Order and supplemental
correspondence from the DFI dated the same date. The
Order and supplemental correspondence from the DFI are
collectively referred to in this Agreement as the "DFI
ORDER." All conditions contained in the DFI Order
required to be satisfied before the date of this
Agreement have been satisfied. The application to the
Federal Deposit Insurance Corporation (the "FDIC") to
become an insured depository institution under the
provisions of the Federal Deposit Insurance Act (the
"FDIC APPLICATION") was approved by order of the FDIC
dated ____________________, 1997 (the "FDIC ORDER"),
subject to certain conditions specified in the Order.
All conditions contained in the FDIC Order required to be
satisfied before the date of this Agreement have been
satisfied. The Company's application to become a bank
holding company and acquire all issued capital stock of
the Bank and the Bank's application to become a member of
the Federal Reserve System (collectively, the "BANK
HOLDING COMPANY APPLICATION") under the Bank Holding
<PAGE>
Company Act of 1956, as amended, was approved on
_______________________, 1997 (collectively, the "FEDERAL
RESERVE BOARD APPROVAL"), subject to certain conditions
specified in the Federal Reserve Board Approval. All
conditions in the Federal Reserve Board Approval required
to be satisfied before the date of this Agreement have
been satisfied. Each of the DFI Application, FDIC
Application, and Bank Holding Company Application, at the
time of their respective filings, contained all required
information and such information was complete and
accurate in all material respects. Other than the
remaining conditions to be fulfilled under the DFI Order,
FDIC Order and the Federal Reserve Board Approval
specified above, no authorization, approval, consent,
order, license, certificate or permit of and from any
federal, state, or local governmental or regulatory
official, body, or tribunal, is required for the Company
or the Bank to commence and conduct their respective
businesses and own their respective properties as
described in the Prospectus, except such authorizations,
approvals, consents, orders, licenses, certificates, or
permits as are not material to the commencement or
conduct of their respective businesses or to the
ownership of their respective properties.
(g) The financial statements of the Company and any related
notes thereto, included in the Registration Statement and
the Prospectus, present fairly the financial position of
the Company as of the date of such financial statements
and for the period covered thereby. Such statements and
any related notes have been prepared in accordance with
generally accepted accounting principals applied on a
consistent basis and certified by the independent
accountants named in subsection 4(d) above. No other
financial statements are required to be included in the
Prospectus or the Registration Statement.
(h) The Company owns adequate and enforceable rights to use
any patents, patent applications, trademarks, trademark
applications, service marks, copyrights, copyright
applications and other similar rights (collectively,
"INTANGIBLES") necessary for the conduct of the material
aspects of its business as described in the Prospectus
and the Company has not infringed, is infringing, or has
received any notice of infringement of, any Intangible of
any other person.
<PAGE>
(i) The Company owns its main office located at 420 N. Morton
Street, Franklin, Indiana, and has a valid and
enforceable leasehold interest in the real property in
which its branch facility is located at
________________________________, Greenwood, Indiana,
both of which are as described in the Prospectus and are,
except as otherwise described in the Prospectus, free and
clear of all liens, encumbrances, claims, security
interests and defects.
(j) There are no litigation or governmental or other
proceedings or investigations pending before any court or
before or by any public body or board or threatened
against the Company or the Bank and to the best of the
Company's knowledge, there is no reasonable basis for any
such litigation, proceedings or investigations, which
would have a material adverse effect on commencement or
conduct of the respective businesses of the Company or
the Bank or the ownership of their respective properties.
(k) The Company and Bank have filed all federal, state, and
local tax returns required to be filed by them and paid
all taxes shown due on such returns as well as all other
material taxes, assessments and governmental charges
which have become due; no material deficiency with
respect to any such return has been assessed or proposed.
(l) Subsequent to the respective dates as of which
information is given in the Registration Statement and
the Prospectus, there has not been any material adverse
change in the condition (financial or other), business,
properties or prospects of the Company.
(m) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a
default, in the due performance and observance of any
material term, covenant or condition, by the Company, the
Bank or, to the best of the Company's knowledge, any
other party, of any lease, indenture, mortgage, note or
any other agreement or instrument to which the Company or
the Bank is a party or by which either of them or either
of their businesses may be bound or affected, except such
defaults or events as are not material to the
commencement or conduct of their respective businesses or
ownership of their respective properties.
<PAGE>
(n) Neither the Company nor the Bank is in violation of any
term or provision of the articles of incorporation or
bylaws of the Company or the Bank. Neither the Company
nor the Bank is in violation of, nor is either of them
required to take any action to avoid any material
violation of, any franchise, license, permit, judgment,
decree, order, statute, rule or regulation.
(o) Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation of the
transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute
a default) under, or require any consent under, or result
in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company
or the Bank pursuant to the terms of, any lease,
indenture, mortgage, note or other agreement or
instrument to which the Company or the Bank is a party or
by which either of them or either of their businesses may
be bound or affected, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation or
violate any provision of the articles of incorporation or
bylaws of the Company or the Bank, except those which are
immaterial in amount or effect.
(p) The Company has authorized capital stock as set forth in
the Prospectus. One share of Common Stock of the Company
is issued and outstanding, which will be redeemed at or
promptly following the Closing if permitted by applicable
law. No shares of preferred stock are issued and
outstanding. The issuance, sale and delivery of the
Shares have been duly authorized by all necessary
corporate action by the Company and, when issued, sold
and delivered against payment therefor pursuant to this
Agreement, will be duly and validly issued, fully paid
and nonassessable and none of them will have been issued
in violation of any preemptive or other right. Upon
issuance, sale, and delivery thereof against payment
therefor pursuant to the subscription agreement, all of
the capital stock of the Bank will be duly authorized and
validly issued, fully paid and nonassessable and will be
owned by the Company, free and clear of all liens,
<PAGE>
provisions of the Indiana Financial Institutions Act, as
amended (the "BANKING CODE")). There is no outstanding
option, warrant or other right calling for the issuance
of, and no commitment, plan or arrangement to issue, any
share of stock of the Company or the Bank or any security
convertible into or exchangeable for stock of the Company
or the Bank, except for stock options described in the
Registration Statement (the "STOCK OPTIONS") under the
1997 Employee Stock Option Plan and the 1997 Stock Option
Plan For Nonemployee Directors (collectively, the "STOCK
OPTION PLANS"). The Common Stock, the Shares and the
Stock Options conform to all statements in relation
thereto contained in the Registration Statement and the
Prospectus.
(q) Subsequent to the respective dates as of which
information is given in the Registration Statement and
the Prospectus, neither the Company nor the Bank has (1)
issued any securities or incurred any material liability
or obligation, direct or contingent, (2) entered into any
material transaction, or (3) declared or paid any
dividend or made any distribution on any of their stock,
except liabilities, obligations, and transactions
reasonably expected based on the disclosures in the
Prospectus, and redemption of one share of Common Stock
for $10 at or promptly following the Closing if permitted
by applicable law.
(r) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal,
valid and binding agreement and obligation of the
Company.
(s) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus.
(t) Neither the Company, nor the Bank, nor, to the Company's
knowledge any director, officer, agent, employee or other
person associated with the Company or the Bank, acting on
behalf of the Company or the Bank, has used any corporate
funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity;
made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from
corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
<PAGE>
(u) Neither the Company nor the Bank nor any affiliate of
either of them has taken, and they will not take,
directly or indirectly, any action designed to cause or
result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization
or manipulation of the price of the shares of the Common
Stock in order to facilitate the sale or resale of any of
the Shares.
(v) No transaction has occurred between or among the Company
or the Bank and any of their officers, directors,
organizers or the Company's shareholder or any affiliate
or affiliates of any such officer, director, organizer,
or shareholder, that is required to be described in and
is not described in the Prospectus.
(w) The Company is not and will not after the offering be an
"investment company", or a company "controlled" by an
"investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(x) The Company has obtained from all of its executive
officers and directors their written agreement that (i)
for a period of 180 days from the date of the Effective
Date, they will not offer to sell, sell, transfer,
contract to sell, or grant any option for the sale of or
otherwise dispose of, directly or indirectly, any shares
of Common Stock of the Company (or any securities
convertible into or exercisable for such shares of Common
Stock), except for (1) the exercise of Stock Options
under the Stock Option Plans or (2) gifts of Common Stock
(or other securities) to a donee or donees who agree in
writing to be bound by this clause, and (ii) for a period
of three months from the date of the Effective Date, they
will not sell, transfer, assign, pledge, or hypothecate
any shares of Common Stock acquired under Section 1(b),
above, except with respect to Steve Bechman who may
resell one share of Common Stock to the Company.
5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The
obligation of the Underwriter to purchase the Shares shall be
subject to the accuracy of there presentations and warranties of
the Company in this Agreement as of the date of this Agreement and
as of the Firm Shares Closing Date or Optional Shares Closing Date,
as the case may be, to the accuracy of the statements of Company
officers made pursuant to the provisions of this Agreement, to the
performance by the Company of its obligations under this Agreement,
and to the following additional terms and conditions:
<PAGE>
(a) The Registration Statement shall have become effective
not later than 5:00 P.M., Detroit time, on the date of
this Agreement or on such later date and time as shall be
consented to in writing by Roney & Co.; if the filing of
the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules, the Prospectus
shall have been filed in the manner and within the time
period required by Rule 424(b) of the Rules; at each
Closing Date, if any, no stop order shall have been
issued or proceedings therefor initiated or threatened by
the Commission; and any request of the Commission for
inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to
the reasonable satisfaction of Roney & Co.
(b) At each Closing Date, Roney & Co. shall have received the
opinion of Leagre Chandler & Millard, counsel for the
Company, dated the Firm Shares Closing Date or the
Optional Shares Closing Date, as the case may be,
addressed to the Underwriter and in form and scope
reasonably satisfactory to counsel for Roney & Co. to the
effect that:
(i) Each of the Company and the Bank (A) is a
corporation or banking corporation, as applicable,
existing and in good standing under the laws of the
State of Indiana and (B) is not required to be
qualified to do business in any jurisdiction
outside Indiana, except where the failure to so
qualify would not have a material adverse effect on
the Company or the Bank.
(ii) Each of the Company and the Bank has full corporate
power and authority and all material
authorizations, approvals, orders, licenses,
certificates and permits of and from all
governmental regulatory officials and bodies
necessary to own or lease their respective
properties and conduct their respective businesses
as described in the Registration Statement and
Prospectus;
<PAGE>
(iii) The Company has authorized capital stock as
set forth in the Prospectus and, prior to the
Closing, had one share of Common Stock issued
and outstanding; the Shares have been duly
authorized and validly issued and upon receipt
by the Company of payment therefor in
accordance with the terms of this Agreement
will be fully paid and nonassessable and are
not subject to preemptive rights; the Shares
and the other capital stock and Stock Options
of the Company conform in all material
respects to the descriptions thereof contained
in the Registration Statement and the
Prospectus;
(iv) To such counsel's knowledge, after due inquiry, the
Company has no directly or indirectly held
subsidiary other than the Bank;
(v) When issued, sold, and delivered against payment
therefor in accordance with the terms of the
subscription agreement, the Company will be the
registered holder of all of the outstanding capital
stock of the Bank, and all such shares of stock so
held will be duly authorized and validly issued,
fully paid and nonassessable and will be owned free
and clear of any liens, encumbrances or other
claims or restrictions whatsoever, subject to the
provisions of the Banking Code;
(vi) The certificates evidencing the Shares are in the
form approved by the Board of Directors of the
Company, comply with the bylaws and the articles of
incorporation of the Company, and comply as to form
and in all other material respects with applicable
legal requirements;
(vii) This Agreement has been duly and validly
authorized, executed and delivered by the
Company, and is the legal, valid and binding
agreement and obligation of the Company
enforceable in accordance with its terms,
except (a) as enforcement thereof may be
limited by bankruptcy, insolvency,
reorganization, moratorium or other laws
relating to or affecting enforcement of
<PAGE>
creditors' rights or by general equity
principles, whether applied in an action at
law or in equity, or by the discretionary
nature of specific performance, injuncture
relief, and other equitable remedies,
including the appointment of a receiver, and
(b), with respect to provisions relating to
indemnification and contribution, to the
extent they are held by a court of competent
jurisdiction to be void or unenforceable as
against public policy;
(viii) The Company is conveying to the Underwriter
good and valid title to the Shares, free and
clear of any liens, encumbrances, security
interests, restrictions, and adverse claims;
(ix) To the best of such counsel's knowledge, after
due inquiry, there are (A) no contracts or
other documents which are required to be filed
as exhibits to the Registration Statement
other than those filed as exhibits thereto,
(B) no legal or governmental proceedings
pending or threatened against the Company or
the Bank, and (C) no statutes or regulations
applicable to the Company or the Bank, or
certificates, permits, grants or other
consents, approvals, orders, licenses or
authorizations from regulatory officials or
bodies, which are required to be obtained or
maintained by the Company or the Bank and
which are of a character required to be
disclosed in the Registration Statement and
Prospectus which have not been so disclosed
and properly described therein;
(x) The statements in the Registration Statement and
the Prospectus, insofar as they are descriptions of
corporate documents, stock option plans, contracts,
agreements or other documents specifically
identified in the Registration Statement or
descriptions of laws, regulations, or regulatory
requirements, or refer to compliance with law or to
statements of law or legal conclusions, are correct
in all material respects;
<PAGE>
(xi) To the best of such counsel's knowledge, after due
inquiry, the execution, delivery and performance of
this Agreement, the consummation of the
transactions herein contemplated and the compliance
with the terms and provisions hereof by the Company
will not give rise to a right to terminate or
accelerate the due date of any payment due under,
or conflict with or result in a breach of any of
the terms or provisions of, or constitute a default
(or an event which, with notice or lapse of time,
or both, would constitute a default) under, or
require any consent under, or result in the
execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the
Company or the Bank pursuant to the terms of, any
lease, indenture, mortgage, note or other agreement
or instrument to which the Company or the Bank is a
party or by which either of them or either of their
properties or businesses is or may be bound or
affected, nor will such action result in any
violation of the provisions of the articles of
incorporation or bylaws of the Company or the Bank
or any statute or any order, rule, or regulation
applicable to the Company or the Bank of any court
or any federal, state, local or other regulatory
authority or other governmental body, the effect of
which, in any such case, would be expected to have
a material adverse effect to the Company or the
Bank;
(xii) To the best of such counsel's knowledge, after
due inquiry, no consent, approval,
authorization or order of any court or
governmental agency or body, domestic or
foreign, is required to be obtained by the
Company in connection with the execution and
delivery of this Agreement or the sale of the
Shares to the Underwriter as contemplated by
this Agreement, except such as have been
obtained;
<PAGE>
(xiii) To the best of such counsel's knowledge, after
due inquiry, (A) neither the Company nor the
Bank is in breach of, or in default (and no
event has occurred which, with notice or lapse
of time, or both, would constitute a default)
under, any lease, indenture, mortgage, note,
or other agreement or instrument to which the
Company or the Bank is a party; or (B) neither
the Company nor the Bank is in violation of
any term or provision of either of their
articles of incorporation or bylaws, or of any
franchise, license, grant, permit, judgment,
decree, order, statute, rule or regulation;
and (C) neither the Company nor the Bank has
received any notice of conflict with the
asserted rights of others in respect of
Intangibles necessary for the commencement or
conduct of its business, the effect of which,
in any such case, would be expected to have a
material adverse effect on the Company or the
Bank;
(xiv) The Registration Statement and the Prospectus
and any amendments or supplements thereto
(other than the financial statements as to
which no opinion need be rendered) comply as
to form in all material respects with the
requirements of the Securities Act and the
Rules; and
(xv) The Registration Statement is effective under the
Securities Act, and any required filing of the
Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by
Rule 424(b) and, to the best of such counsel's
knowledge, after due inquiry, no stop order
suspending the effectiveness of the Registration
Statement or any post-effective amendment to the
Registration Statement and no order directed at any
document incorporated by reference in the
Registration Statement or the Prospectus or any
amendment or supplement thereto has been issued,
and no proceedings for that purpose have been
instituted or threatened or are contemplated by the
Commission.
<PAGE>
In rendering the foregoing opinion, such counsel may rely
upon certificates of public officials (as to matters of fact
and law) and officers of the Company (as to matters of fact),
and include customary qualifications in its opinion as are
acceptable to Roney & Co. Copies of all such certificates
shall be furnished to counsel to Roney & Co. on the Closing
Date. In addition, such counsel shall state that they have
participated in conferences with officials of the Company and
its independent auditors, and representatives of the
Underwriter and its counsel at which the content of the
Registration Statement and Prospectus and related matters were
discussed, and also had discussions with such officials of the
Company with a view toward a clear understanding on their part
of the requirements of the Act with reference to the
preparation of registration statements and prospectuses. Such
counsel did not independently verify the accuracy or
completeness of the statements made in the Registration
Statement and Prospectus; however, based on such counsel's
examination of the Registration Statement and the Prospectus
and on its participation in the above-mentioned conferences,
nothing has come to the attention of such counsel that gives
them reason to believe that the Registration Statement or
Prospectus (other than financial statements and notes, any
related schedules or other financial information contained in
such Registration Statement or Prospectus as to which such
counsel need express no opinion or belief), at the time the
Registration Statement became effective, contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus
(other than financial statement and notes, any related
schedules or other financial information contained in such
Prospectus or amendment or supplement thereto, as to which
such counsel need express no opinion or belief), as of the
date of the opinion, contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) On or prior to each Closing Date, Roney & Co. shall have
been furnished such documents, certificates and opinions
as they may reasonably require for the purpose of
enabling them to review the matters referred to in
subsection (b) of this Section 5, and in order to
evidence the accuracy, completeness or satisfaction of
the representations, warranties or conditions herein
contained.
<PAGE>
(d) Prior to each Closing Date, (i) there shall have been no
material adverse change in the condition or prospects,
financial or otherwise, of the Company or the Bank; (ii)
there shall have been no material transaction, not in the
ordinary course of business, entered into by the Company
or the Bank except as set forth in the Registration
Statement and Prospectus, other than transactions
referred to or contemplated therein or to which Roney &
Co. has given its written consent; (iii) neither the
Company nor the Bank shall be in default (nor shall an
event have occurred which, with notice or lapse of time,
or both, would constitute a default) under any provision
of any material agreement, understanding or instrument
relating to any outstanding indebtedness that is
material in amount; (iv) no action, suit or proceeding,
at law or in equity, shall be pending or threatened
against the Company or the Bank before or by any court or
Federal, state or other commission, board or other
administrative agency having jurisdiction over the
Company or the Bank, as the case may be, which is
expected to have a material adverse effect on the Company
or the Bank; and (v) no stop order shall have been issued
under the Securities Act and no proceedings therefor
shall have been initiated or be threatened by the
Commission.
(e) At each Closing Date, Roney & Co. shall have received a
certificate signed by the Chairman of the Board, the
President, and the Treasurer of the Company dated the
Firm Shares Closing Date or Optional Shares Closing Date,
as the case may be, to the effect that the conditions set
forth in subsection (d) above have been satisfied and as
to the accuracy, as of the Firm Shares Closing Date or
the Optional Shares Closing Date, as the case may be, of
the representations and warranties of the Company set
forth in Section 4 hereof.
(f) At or prior to each Closing Date, Roney & Co. shall have
received a "blue sky" memorandum (upon which Roney & Co.
may rely) of Kreig DeVault Alexander & Capehart, counsel
for Roney & Co., addressed to Roney & Co. and in form and
scope reasonably satisfactory to Roney & Co. concerning
compliance with the blue sky or securities laws of the
states listed in Exhibit A attached to this Agreement.
<PAGE>
(g) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably
satisfactory in form and substance to Roney & Co. and to
counsel for Roney & Co., and Roney & Co. shall have
received from counsel for Roney & Co. a favorable
opinion, dated as of each Closing Date, with respect to
such of the matters set forth under Subsections (b) (i),
(iii), (vi), (vii), and (xv) of this Section 5, and with
respect to such other related matters as Roney & Co. may
require, if the failure to receive a favorable opinion
with respect to such other related matters would cause
Roney & Co. to deem it inadvisable to proceed with the
sale of the Shares.
(h) There shall have been duly tendered to Roney & Co.
certificates representing all the Shares agreed to be
sold by the Company on the Firm Shares Closing Date or
the Optional Shares Closing Date, as the case may be.
(i) No order suspending the sale of the Shares prior to each
Closing Date, in any jurisdiction listed in Exhibit A,
shall have been issued on the Firm Shares Closing Date or
the Optional Shares Closing Date, as the case may be, and
no proceedings for that purpose shall have been
instituted or, to Roney & Co.'s knowledge or that of the
Company, shall be contemplated.
(j) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to the
Underwriter's participation in the same. If any
condition to the Underwriter's obligations hereunder to
be fulfilled prior to or at the Firm Shares Closing Date
or the Optional Shares Closing Date, as the case may be,
is not so fulfilled, Roney & Co. may terminate this
Agreement pursuant to Section 9(c) hereof or, if Roney &
Co. so elects, waive any such conditions which have not
been fulfilled or extend the time of their fulfillment.
<PAGE>
6. COVENANTS. The Company covenants and agrees that it
will:
(a) Use its best efforts to cause the Registration Statement
to become effective and will notify Roney & Co.
immediately, and confirm the notice in writing, (i) when
the Registration Statement and any post-effective
amendment thereto becomes effective, (ii) of the issuance
by the Commission of any stop order or of the initiation,
or the threatening, of any proceedings for that purpose
and (iii) of the receipt of any comments from the
Commission. The Company will make every reasonable
effort to prevent the issuance of a stop order, and, if
the Commission shall enter a stop order at any time, the
Company will make every reasonable effort to obtain the
lifting of such order at the earliest possible moment.
(b) During the time when a prospectus is required to be
delivered under the Securities Act, comply so far as it
is able with all requirements imposed upon it by the
Securities Act, as now and hereafter amended, and by the
Rules, as from time to time in force, so far as necessary
to permit the continuance of sales of or dealings in the
Shares. If at any time when a prospectus relating to the
Shares is required to be delivered under the Securities
Act any event shall have occurred as a result of which,
in the reasonable opinion of counsel for the Company or
counsel for Roney & Co., the Registration Statement or
Prospectus as then amended or supplemented includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
or if it is necessary at any time to amend or supplement
the Registration Statement or Prospectus to comply with
the Securities Act, the Company will notify Roney & Co.
promptly and prepare and file with the Commission an
appropriate amendment or supplement in form satisfactory
to Roney & Co. The cost of preparing, filing and
delivering copies of such amendment or supplement shall
be paid by the Company.
(c) Deliver to the Underwriter such number of copies of each
preliminary prospectus as may reasonably be requested by
Roney & Co. and, as soon as the Registration Statement,
or any amendment or supplement thereto, becomes
effective, deliver to the Underwriter three signed copies
of the Registration Statement, including exhibits, and
all post-effective amendments thereto and deliver to the<PAGE>
Underwriter such number of copies of the Prospectus, the
Registration Statement and supplements and amendments
thereto, if any, without exhibits, as Roney & Co. may
reasonably request.
(d) Endeavor in good faith, in cooperation with Roney & Co.
and its counsel, at or prior to the time the Registration
Statement becomes effective, to qualify the Shares for
offering and sale under the securities laws relating to
the offering or sale of the Shares of the states listed
in Exhibit A. In each jurisdiction where such
qualification shall be effected, the Company will, unless
Roney & Co. agrees that such action is not at the time
necessary or advisable, file and make such statements or
reports at such times as are or may reasonably be
required by the laws of such jurisdiction. The Company
will advise Roney & Co. promptly of the suspension of the
qualification of the Shares for offering, sale or trading
in any jurisdiction, or any initiation or threat of any
proceeding for such purpose, and in the event of the
issuance of any order suspending such qualification, the
Company, with the cooperation of Roney & Co., will use
all reasonable efforts to obtain the withdrawal thereof.
(e) Furnish its security holders as soon as practicable an
earnings statement (which need not be certified by
independent certified public accountants unless required
by the Securities Act or the Rules) covering a period of
at least twelve months beginning after the effective date
of the Registration Statement, which shall satisfy the
provisions of Section 11(a) of the Securities Act and the
Rules thereunder.
(f) For a period of five years from the Effective Date,
furnish to its shareholders annual audited and quarterly
unaudited consolidated financial statements with respect
to the Company including balance sheets and income
statements.
(g) For a period of five years from the Effective Date,
furnish to Roney & Co. the following:
(i) at the time they have been sent to shareholders of
the Company or filed with the Commission one copy
of each annual, quarterly, interim, or current
financial and other report or communication sent by
the Company to its shareholders or filed with the
Commission;
<PAGE>
(ii) as soon as practicable, one copy of every press
release and every material news item and article in
respect of the Company or the affairs of the
Company which was released by the Company;
(iii) all other information reasonably requested by
Roney & Co. with respect to the Company to
comply with Rule 15c2-11 of the Rules and
Section 4 of Schedule H of the NASD By-Laws;
and
(iv) such additional documents and information with
respect to the Company and its affairs as Roney &
Co. may from time to time reasonably request.
(h) Acquire all of the Bank's outstanding capital stock, free
and clear of all liens, encumbrances, or other claims or
restrictions whatsoever, for not less than $____________
from the proceeds of the offering and, in all other
material respects, apply the net proceeds from the
offering in the manner set forth under "Use of Proceeds"
in the Prospectus.
(i) Not file any amendment or supplement to the Registration
Statement or Prospectus after the effective date of the
Registration Statement to which Roney & Co. shall
reasonably object in writing after being furnished a copy
thereof.
(j) Timely file with the Commission reports on Form SR (if
applicable) containing the information required by that
Form in accordance with the provisions of Rule 463 of the
Regulation under the Act.
(k) Comply with all registration, filing and reporting
requirements of the Securities Act or the Exchange Act,
which may from time to time be applicable to the Company.
(l) Cause the proper submission of the Certificate of Paid In
Capital and Surplus, give advance written notice to the
DFI of the Bank's projected opening date, and in all
other respects use reasonable efforts to comply with the
requirements of, and satisfy the conditions of, the DFI
Order, the FDIC Order and the Federal Reserve Board
Approval; provided, however, that it shall not be a
breach of this Section 6(l) for the Company or the Bank
to fail to maintain any specified level of capital,
surplus, capital ratio, valuation reserve or financial or
<PAGE>
operating performance after the Bank has commenced the
business of banking if such failure is waived or
performance of such requirement or condition is accepted
as sufficient by the DFI, the FDIC, and/or the Federal
Reserve Board, as applicable.
(m) Pay, or reimburse if paid by the Underwriter, whether or
not the transactions contemplated hereby are consummated
or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the
Company under this Agreement, including those relating to
(1) the preparation, printing, filing and delivery of the
Registration Statement, including all exhibits thereto,
each preliminary prospectus, the Prospectus, all
amendments of and supplements to the Registration
Statement and the Prospectus, and the printing of the
Underwriting Agreement and related agreements including,
without limitation, the Dealer Agreement; (2) the
issuance of the Shares and the preparation and delivery
of certificates for the Shares to the Underwriter; (3)
the registration or qualification of the Shares for offer
and sale under the securities or "blue sky" laws of the
various jurisdictions referred to in Exhibit A, including
the fees and disbursements of counsel in connection with
such registration and qualification and the preparation
and printing of preliminary, supplemental, and final blue
sky memoranda; (4) the furnishing (including costs of
shipping and mailing) to the Underwriter of copies of
each preliminary prospectus, the Prospectus and all
amendments of or supplements to the Prospectus, and of
the several documents required by this Section to be so
furnished; (5) the filing requirements and fees of the
NASD in connection with its review of the terms of the
public offering and the underwriting; (6) the furnishing
(including costs of shipping and mailing) of copies of
all reports and information required by Section 6(g); (7)
all transfer taxes, if any, with respect to the sale and
delivery of the Shares by the Company to the Underwriter,
(8) the inclusion of the Shares on the OTC Bulletin
Board; (9) an Underwriter's Fee of $50,000; and (10) the
Underwriter's out-of-pocket expenses, including without
limitation, road show expenses and legal fees of counsel
to Roney & Co. (such out-of- pocket expenses and legal
fees payable by the Company shall not exceed $30,000).
Upon a successful completion of the offering, if the
Underwriter purchases all the Firm Shares, but less than
all of the Optional Shares, the Underwriter will credit
<PAGE>
$25,000 against the Underwriter's Fee described in
Section 6(m)(9) hereof. Upon a successful completion of
the offering, if the Underwriter purchases all the
Optional Shares, the Underwriter will credit an
additional $25,000 against the Underwriter's Fee
described in Section 6(m)(9) hereof.
(n) Not, without the prior written consent of Roney & Co.,
sell, contract to sell or grant any option for the sale
of or otherwise dispose of, directly or indirectly, or
register with the Commission, any shares of Common Stock
of the Company (or any securities convertible into or
exercisable for such shares of Common Stock) within 150
days after the date of the Prospectus, except as provided
in this Agreement and except for grants and exercises of
Stock Options under the Stock Option Plans as described
in the Prospectus.
(o) For not less than 3 fiscal years after the Effective
Date, maintain the Exchange Act registration of the
Common Stock, unless the Company's shareholders direct
the Company to reregister the Common Stock.
(p) Use its best efforts to cause itself and the Bank to
commence their businesses as described in the Prospectus
not later than __________________________, 1997.
(q) Not, for one year after the Effective Date, issue any
stock options to purchase Common Stock under either of
the Stock Option Plans, or any other stock option plan of
the Company, that have an exercise price of less than $10
per share.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and
any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they may
become subject under the Securities Act, the Exchange Act
or other Federal or state statutory law or regulation, at
<PAGE>
common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus,
the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall
not inure to the benefit of the Underwriter (or any
person controlling the Underwriter) on account of any
losses, claims, damages or liabilities arising from the
sale of the Shares in the public offering to any person
by the Underwriter if such untrue statement or omission
or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement, in reliance
upon and in conformity with information furnished in
writing to the Company by or on behalf of the Underwriter
specifically for use therein. The Company shall not be
liable hereunder to the Underwriter (or any controlling
person thereof) to the extent that any loss, claim,
damage or other liability incurred by the Underwriter
arises from the Underwriter's fraudulent act or omission.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the
Registration Statement, to the same extent as the
foregoing indemnity from the Company to the Underwriter,
but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus,
the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, in reliance upon
and in conformity with information furnished in writing
to the Company by the Underwriter specifically for use
therein; provided, however, that the obligation of the
Underwriter to indemnify the Company (including any
controlling person, director or officer thereof)
hereunder shall be limited to the total price at which
the Shares purchased by the Underwriter hereunder were
offered to the public. The Underwriter shall not be
<PAGE>
liable hereunder to the Company (including any
controlling person, director or officer thereof) to the
extent that any loss, claim, damage or other liability
incurred by the Company arises from a fraudulent act or
omission by the Company.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after
receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim
is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party
of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served, but the omission
so to notify such indemnifying party of any such action,
suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party
otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the
defense thereof and the approval by the indemnified party
of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other
expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred
by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to
employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (1) the employment of counsel by
such indemnified party has been authorized in writing by
the indemnifying parties, (2) the indemnified party shall
have reasonably concluded that, because of the existence
of different or additional defenses available to the
indemnified party or of other reasons, there may be a
conflict of interest between the indemnifying parties and
the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall
not have the right to direct the defense of such action
on behalf of the indemnified party) or that, under the
circumstances, it is otherwise appropriate, or (3) the
<PAGE>
indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of
which cases the fees and expenses of counsel shall be at
the expense of the indemnifying parties. An indemnifying
party shall not be liable for any settlement of any
action, suit, proceeding or claims effected without its
written consent.
8. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances in which the
indemnification provided for in Section 7(a) or 7(b) is due in
accordance with its terms but for any reason is held to be
unavailable, the Company and the Underwriter shall contribute to
the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting any
contribution received from other persons), to which the Company and
the Underwriter may be subject, in such proportion so that the
Underwriter is responsible for that portion represented by the
percentage that the underwriting discount appearing on the front
cover page of the Prospectus bears to the public offering price
appearing thereon and the Company irresponsible for the balance;
provided, however, that (a) in no case shall the Underwriter be
responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by the Underwriter hereunder and
(b) no person found guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was guilty of such
fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Underwriter within the meaning of
the Securities Act or the Exchange Act shall have the same rights
to contribution as the Underwriter, and each person, if any, who
controls the Company within the meaning of the Securities Act or
the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in
each case to clauses (a) and (b) of this Section. Any party
entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against
another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission so
to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may
have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent.
<PAGE>
In any proceeding relating to the Registration Statement, any
preliminary prospectus, the Prospectus or any supplement thereto or
amendment thereof, each party against whom contribution may be
sought under this Section 8 hereby consents to the jurisdiction of
any court in Michigan, agrees that process issuing from such court
may be served upon him or it by any other contributing party and
consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in
any such proceeding in which such other contributing party is a
party.
9. TERMINATION. This Agreement may be terminated by Roney
& Co. by notifying the Company at any time:
(a) before the earlier of (1) 11:00 a.m., Detroit time, on
the business day following the Effective Date, or (2) the
time when the Shares are first generally offered by the
Underwriter to dealers by letter or telegram;
(b) at or before any Closing Date if, in the judgment of
Roney & Co., payment for and delivery of the Shares is
rendered impracticable or inadvisable because (1)
additional material governmental restrictions, not known
to be in force and effect when this Agreement is signed,
shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been
generally established on the New York Stock Exchange, on
the American Stock Exchange or on the over-the-counter
market, or trading in securities generally shall have
been suspended on either such Exchange or on the
over-the-counter market or a general banking moratorium
shall have been established by federal, New York or
Indiana authorities, (2) a war or other calamity shall
have occurred or shall have accelerated to such an extent
as to affect adversely the marketability of the Shares,
(3) the Company or the Bank shall have sustained a
material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or
malicious act, which, whether or not said loss shall have
been insured, will in Roney & Co.'s opinion, make it
inadvisable to proceed with the offering of the Shares,
(4) the DFI Order, the FDIC Order, or the Federal Reserve
Board Approval shall have been withdrawn or materially
altered, or notice shall have been received to the effect
that any of such approvals will not be received, or, if
received, will be subject to conditions that the Company
would not be able to fulfill in a reasonable time in
<PAGE>
Roney & Co.'s reasonable opinion, (5) in Roney & Co.'s
reasonable opinion it is not probable that the Company
and Bank will be able to commence business before
___________________________, 1997, for any reason, or (6)
there shall have been such material change in the
condition, business operations or prospects of the
Company or the market for the Shares or similar
securities as in Roney & Co.'s judgment would make it
inadvisable to proceed with the offering of the Shares;
or
(c) at or before any Closing Date, if any of the conditions
specified in Section 5 or any other agreements,
representations or warranties of the Company in this
Agreement shall not have been fulfilled when and as
required by this Agreement. If this Agreement is
terminated pursuant to any of its provisions, except as
otherwise provided in this Agreement, the Company shall
not be under any liability to the Underwriter (other than
for obligations assumed in Section 6 hereof), and the
Underwriter shall not be under any liability to the
Company; provided, however, that if this Agreement is
terminated by Roney & Co. because of any failure, refusal
or inability on the part of the Company to comply with
the terms or to fulfill any of the conditions of this
Agreement, or for any reasons provided in subparagraphs
(b) and (c) above, the Company will reimburse the
Underwriter for all accountable out-of-pocket expenses
(including, without limitation, road show expenses and
fees and disbursements of counsel to Roney &Co.) up to a
maximum of $30,000 (excluding the $10,000 advance
described below) incurred by it in connection with the
proposed purchase and sale of the Shares or in
contemplation of performing its obligations hereunder.
The Underwriter acknowledges receipt of a $10,000 non-
refundable advance from the Company. If this Agreement
is terminated for any reason, the Underwriter shall be
entitled to retain the $10,000 advance. If this
Agreement is not terminated, the $10,000, and any portion
of the $30,000 expense allowance previously paid or
accrued, shall be credited at closing against the
underwriting discount.
<PAGE>
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement shall be deemed to be representations, warranties and
agreements at the Closing Dates, and such representations,
warranties and agreements of the Company, including, without
limitation, the payment and reimbursement agreements contained in
Section 6 hereof and the indemnity and contribution agreements
contained in Sections 7 and 8 hereof, shall remain operative and in
full force and effect regardless of any investigation made by or on
behalf of the Underwriter or any controlling person and shall
survive termination of this Agreement and/or delivery of the Shares
to and payment for the Shares by the Underwriter pursuant to this
Agreement. In addition, the covenants contained in Section 6
hereof, the agreements contained in this Section 10 and in Sections
7, 8 and 9 shall survive termination of this Agreement and/or
delivery of the Shares to and payment for the Shares by the
Underwriter pursuant to this Agreement.
11. MISCELLANEOUS. This Agreement has been and is made
for the benefit of the Underwriter, the Company and their
respective successors and assigns, and, to the extent expressed
herein, for the benefit of persons controlling the underwriter or
the Company, and directors and certain officers of the Company and
their respective successors and assigns, and no other person,
partnership, association or corporation shall acquire or have any
right under or by virtue of this Agreement. The term "SUCCESSORS
AND ASSIGNS" shall not include any purchaser of Shares from the
Underwriter merely because of such purchase.
If any action or proceeding shall be brought by the
Underwriter or the Company in order to enforce any right or remedy
under this Agreement, the underwriter and the Company hereby
consent to, and agree that they will submit to, the jurisdiction of
the courts of the State of Michigan and of any Federal court
sitting in the State of Michigan.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph, if
subsequently confirmed in writing, to Roney & Co., at One Griswold,
Detroit, Michigan 48226 (facsimile No. (313) 963-2303) (with a copy
to Timothy M. Harden, Kreig DeVault Alexander & Capehart, Suite
2800, One Indiana Square, Indianapolis, Indiana, 46204 (facsimile
No. (317) 636-1507)); and to the Company at P.O. Box 469, Franklin,
Indiana, 46131, Attention: Steve Bechman, President (facsimile No.
(317) 738-3915) (with a copy to Mark B. Barnes, Leagre Chandler &
Millard, 9100 Keystone Crossing, Suite 800, Indianapolis, Indiana
(facsimile No. (317) 846-7900).
<PAGE>
This Agreement shall be construed in accordance with the laws
of the state of Michigan, without giving effect to principles of
conflicts of laws. Please confirm that the foregoing correctly
sets forth the agreement between us.
Very truly yours,
HEARTLAND BANCSHARES, INC.
By:______________________________
Steve Bechman, President and
Director
And by:____________________________
Jeffrey L. Goben,
Executive Vice President
and Director
Confirmed by Roney & Co.
RONEY & CO., L.L.C.
By:________________________________
John C. Donnelly Director,
Corporate Finance
SS-126686-3
<PAGE>
EXHIBIT A
BLUE SKY STATES
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HEARTLAND BANCSHARES, INC.
Heartland Bancshares, Inc. (the "Corporation"), a corporation
duly organized and existing pursuant to the provisions of the
Indiana Business Corporation Law (the "Corporation Law"), hereby
amends and restates its Articles of Incorporation as follows.
ARTICLE I
Name
The name of the Corporation is Heartland Bancshares, Inc.
ARTICLE II
Registered Office and Agent
The street address of the Corporation's registered office is
1681 N. 125 W., Franklin, Indiana 46131, and the name of its
registered agent at such office is Steven L. Bechman.
ARTICLE III
Number and Classification
of Authorized Shares
The total number of shares that the Corporation has authority
to issue shall be 12,000,000 shares consisting of 10,000,000 common
shares (the "Common Shares") and 2,000,000 preferred shares (the
"Preferred Shares").
The Corporation's Common Shares and Preferred Shares shall
have no par value, except that, solely for the purpose of any
statute or regulation imposing any tax or fee based upon the
capitalization of the Corporation, all of the Corporation's Common
Shares and Preferred Shares shall be deemed to have a par value of
$0.01 per share.
ARTICLE IV
Terms of Shares
SECTION 1. GENERAL TERMS OF ALL SHARES. The Corporation
shall have the power to acquire (by purchase, redemption, or
otherwise), hold, own, pledge, sell, transfer, assign, reissue,
cancel, or otherwise dispose of the shares of the Corporation in
the manner and to the extent now or hereafter permitted by the laws
of the State of Indiana. The power to purchase, redeem, or
otherwise acquire the Corporation's own shares, directly or
indirectly, may be exercised without pro rata treatment of the
owners or holders of any class or series of shares. The
Corporation may not purchase, redeem or otherwise acquire the
Corporation's own shares if, after giving effect thereto, the
Corporation would not be able to pay its debts as they become due
in the usual course of business or the Corporation's total assets
<PAGE>
would be less than its total liabilities (without regard to any
amounts that would be needed, if the Corporation were to be
dissolved at the time of the purchase, redemption, or other
acquisition, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those of the
holders of the shares of the Corporation being purchased, redeemed,
or otherwise acquired, unless otherwise expressly provided with
respect to a series of Preferred Shares in the provisions of these
Amended and Restated Articles of Incorporation adopted by the Board
of Directors pursuant to Section 3(a) of this Article IV describing
the terms of such series). Shares of the Corporation purchased,
redeemed, or otherwise acquired by it shall constitute authorized
but unissued shares, unless the Board of Directors shall at any
time adopt a resolution providing that such shares constitute
authorized and issued but not outstanding shares.
The Board of Directors of the Corporation may dispose of,
issue, and sell shares in accordance with, and in such amounts as
may be permitted by, the laws of the State of Indiana and the
provisions of these Amended and Restated Articles of Incorporation
and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the
privilege of selectively repurchasing the same) as the Board of
Directors of the Corporation shall determine, without the
authorization or approval by any shareholders of the Corporation.
Shares may be disposed of, issued, and sold to such persons, firms,
or corporations as the Board of Directors may determine, without
any preemptive or other right on the part of the owners or holders
of other shares of the Corporation of any class or kind to acquire
such shares by reason of their ownership of such other shares.
The Corporation shall have the power to declare and pay
dividends or other distributions upon the issued and outstanding
shares of the Corporation, subject to the limitation that a
dividend or other distribution may not be made if, after giving it
effect, the Corporation would not be able to pay its debts as they
become due in the usual course of business or the Corporation's
total assets would be less than its total liabilities (without
regard to any amounts that would be needed, if the Corporation were
to be dissolved at the time of the dividend or other distribution,
to satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those of the holders of
shares receiving the dividend or other distribution, unless
otherwise expressly provided with respect to a series of Preferred
Shares in the provisions of these Amended and Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section
3(a) of this Article IV describing the terms of such series). The
Corporation shall have the power to issue shares of one class or
series as a share dividend or other distribution in respect of that
class or series or one or more other classes or series, except as
may be otherwise provided with respect to a series of Preferred
Shares in the provisions of these Amended and Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section
3(a) of this Article IV describing the terms of such series.<PAGE>
SECTION 2. TERMS OF COMMON SHARES. The Common Shares shall
be equal in every respect insofar as their relationship to the
Corporation is concerned, but such equality of rights shall not
imply equality of treatment as to redemption or other acquisition
of shares by the Corporation. Subject to the rights of the holders
of any issued and outstanding Preferred Shares under this Article
IV, the holders of Common Shares shall be entitled to share ratably
in such dividends or other distributions (other than purchases,
redemptions, or other acquisitions of Common Shares of the
Corporation), if any, as are declared and paid from time to time on
the Common Shares at the discretion of the Board of Directors. In
the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, after payment shall
have been made to the holders of the Preferred Shares of the full
amount to which they shall be entitled under this Article IV, the
holders of Common Shares shall be entitled, to the exclusion of the
holders of the Preferred Shares of any and all series, to share,
ratably according to the number of Common Shares held by them, in
all remaining assets of the Corporation available for distribution
to its shareholders.
SECTION 3. TERMS OF PREFERRED SHARES.
(a) Preferred Shares may be issued from time to time in
one or more series, each such series to have such distinctive
designation and such preferences, limitations, and relative voting
and other rights as shall be set forth in these Amended and
Restated Articles of Incorporation. Subject to the requirements of
the Corporation Law and subject to all other provisions of these
Amended and Restated Articles of Incorporation, the Board of
Directors of the Corporation may create one or more series of
Preferred Shares and may determine the preferences, limitations,
and relative voting and other rights of one or more series of
Preferred Shares before the issuance of any shares of that series
by the adoption of an amendment to these Amended and Restated
Articles of Incorporation that specifies the terms of that series
of Preferred Shares. All shares of a series of Preferred Shares
must have preferences, limitations, and relative voting and other
rights identical to those of other shares of the same series. No
series of Preferred Shares need have preferences, limitations, or
relative voting or other rights identical with those of any other
series of Preferred Shares. Before issuing any shares of a series
of Preferred Shares, the Board of Directors shall adopt an
amendment to these Amended and Restated Articles of Incorporation,
which shall be effective without any shareholder approval or other
action, that fixes and sets forth the distinctive designation of
such series; the number of shares that shall constitute such
series, which number may be increased or decreased (but not below
the number of shares thereof then outstanding) from time to time by
action of the Board of Directors; and the preferences, limitations,
and relative voting and other rights of the series. Authority is
<PAGE>
hereby expressly vested in the Board of Directors, by such
amendment, to fix all of the preferences or rights, and any
qualifications, limitations, or restrictions of such preferences or
rights, of such series to the full extent permitted by the
Corporation Law; provided, however, that no such preferences,
rights, qualifications, limitations, or restrictions shall be in
conflict with these Amended and Restated Articles of Incorporation
or any amendment hereof.
(b) Preferred Shares of any series that have been redeemed
(whether through the operation of a sinking fund or otherwise) or
purchased by the Corporation, or that, if convertible, have been
converted into shares of the Corporation of any other class or
series, may be reissued as a part of such series or of any other
series of Preferred Shares, subject to such limitations (if any) as
may be fixed by the Board of Directors with respect to such series
of Preferred Shares in accordance with Section 3(a) of this Article
IV.
ARTICLE V
Voting Rights
SECTION 1. COMMON SHARES. Except as otherwise provided by
the Corporation Law or by the provisions of these Amended and
Restated Articles of Incorporation adopted by the Board of
Directors pursuant to Section 3(a) of Article IV hereof describing
the Preferred Shares or a series thereof, and subject to such
shareholder disclosure and recognition procedures (which may
include sanctions for noncompliance therewith to the fullest extent
permitted by the Corporation Law) as the Corporation may by action
of the Board of Directors establish, the Common Shares shall have
unlimited voting rights. At every meeting of the shareholders of
the Corporation every holder of Common Shares shall be entitled to
one vote in person or by proxy for each Common Share standing in
such holder's name on the share transfer records of the
Corporation.
SECTION 2. PREFERRED SHARES. Except as required by the
Corporation Law or by the provisions of these Amended and Restated
Articles of Incorporation adopted by the Board of Directors
pursuant to Section 3(a) of Article IV hereof describing the terms
of Preferred Shares or a series thereof, the holders of Preferred
Shares shall have no voting rights or powers. Preferred Shares
shall, when validly issued by the Corporation, entitle the record
holder thereof to vote on such matters, but only on such matters,
as the holders thereof are entitled to vote under the Corporation
Law or under an amendment to these Amended and Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section
3(a) of Article IV hereof describing the terms of Preferred Shares
or a series thereof (which provisions may provide for special,
conditional, limited, or unlimited voting rights, including
<PAGE>
multiple or fractional votes per share, or for no right to vote,
except to the extent required by the Corporation Law) and subject
to such shareholder disclosure and recognition procedures (which
may include sanctions for noncompliance therewith to the fullest
extent permitted by the Corporation Law) as the Corporation may by
action of the Board of Directors establish.
ARTICLE VI
Directors
SECTION 1. NUMBER. The number of Directors shall be fixed
by, or fixed in accordance with, the Bylaws. The Bylaws may also
provide for staggering the terms of the members of the Board of
Directors to the fullest extent permitted by the Corporation Law.
SECTION 2. ELECTION OF DIRECTORS BY HOLDERS OF PREFERRED
SHARES. The holders of one or more series of Preferred Shares may
be entitled to elect all or a specified number of Directors, but
only to the extent and subject to limitations as may be set forth
in the provisions of these Amended and Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section
3(a) of Article IV hereof describing the terms of the series of
Preferred Shares.
SECTION 3. VACANCIES. Vacancies occurring in the Board of
Directors shall be filled in the manner provided in the Bylaws or,
if the Bylaws do not provide for the filling of vacancies, in the
manner provided by the Corporation Law.
SECTION 4. LIMITED LIABILITY OF DIRECTORS. Directors shall
be immune from personal liability for any action taken as a
Director, or any failure to take any action, to the fullest extent
permitted by the Corporation Law and by general principles of
corporate law.
SECTION 5. REMOVAL OF DIRECTORS. Any or all of the
members of the Board of Directors may be removed, with or without
cause, at a meeting of the shareholders called expressly for that
purpose, by the affirmative vote of the holders of at least 80
percent of the outstanding shares then entitled to vote at an
election of Directors. However, a Director elected by the holders
of a series of Preferred Shares as authorized by Section 2 of this
Article VI may be removed only by the affirmative vote of the
holders of a majority of the outstanding shares of that series then
entitled to vote at an election of Directors. Directors may not be
removed by the Board of Directors.
<PAGE>
ARTICLE VII
Approval of Business Combinations
SECTION 1. SUPERMAJORITY VOTE. Except as provided in
Sections 2 and 3 of this Article VII, neither the Corporation nor
any of its Subsidiaries shall become party to any Business
Combination with a Related Person without the prior affirmative
vote at a meeting of the Corporation's shareholders:
(a) By the holders of not less than 80 percent of the
outstanding shares of all classes of Voting Shares of the
Corporation considered for purposes of this Article VII as a single
class, and
(b) By an Independent Majority of Shareholders.
Such favorable votes shall be in addition to any shareholder vote
that would be required without reference to this Section 1 and
shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified by law or
in other Articles of these Amended and Restated Articles of
Incorporation or the Bylaws of the Corporation or otherwise.
SECTION 2. REDUCED SUPERMAJORITY VOTE FOR FAIR PRICING. The
percentage vote required by Section 1(a) of this Article VII shall
be reduced from not less than 80 percent to not less than two-
thirds, if all of the conditions set forth in subsection (a)
through (d) of this Section 2 are satisfied.
(a) The fair market value of the property, securities, or
other consideration to be received per share by holders of each
class or series of capital shares of the Corporation in the
Business Combination is not less, as of the date of the
consummation of the Business Combination (the "Consummation Date"),
than the higher of the following: (i) the highest per share price
(with appropriate adjustments for recapitalization and for share
splits, share dividends, and like distributions) including
brokerage commissions and solicitation fees paid by the Related
Person in acquiring any of its holdings of such class or series of
capital shares within the two-year period immediately prior to the
first public announcement of the proposed Business Combination
("Announcement Date") or in the transaction in which it became a
Related Person, whichever is higher, plus interest accrued daily
but compounded annually, from the later of the date that the
Related Person became a Related Person (the "Determination Date"),
or the date two years before the Consummation Date through the
Consummation Date, at the national "prime rate" or "base rate" (as
approximated by the report published in The Wall Street Journal or
other recognized business publication) from time to time in effect,
less the aggregate amount of any cash dividends paid and the fair
market value of any dividends paid in other than cash on each share
from the date from which interest accrues under the preceding
clause through the Consummation Date up to but not exceeding the
amount of interest so payable per share; OR (ii) if such class or
<PAGE>
series is then traded on an exchange (or other recognized market
that reports the price of actual transactions) or is the subject of
regularly published quotations from two or more broker/dealers who
make a market in such class or series for their own accounts, the
fair market value per share of such class or series on the
Announcement Date, as determined by the highest closing sales price
on such exchange or other market or the highest closing bid
quotation with respect to such shares during the 30-day period
immediately preceding the Announcement Date, or, if such class or
series is not then traded on any such exchange or other market and
no such quotations are available, the fair market value per share
of such class or series on the Announcement Date, as determined by
the Board of Directors in good faith by such other reasonable
method as the Board of Directors of the Corporation shall, in its
discretion, select and apply. In the event of a Business
Combination upon consummation of which the Corporation would be the
surviving corporation or company or would continue to exist (unless
it is provided, contemplated, or intended that as part of such
Business Combination or within one year after consummation thereof
a plan of liquidation or dissolution of the Corporation will be
effected), the term "other consideration to be received" shall
include (without limitation) Common Shares and/or the shares of any
other class retained by shareholders of the Corporation other than
Related Persons who are parties to such Business Combination;
(b) The consideration to be received in such Business
Combination by holders of each class or series of capital shares
other than the Related Person involved shall, except to the extent
that a shareholder agrees otherwise as to all or part of the shares
which he or she owns, be in the same form and of the same kind as
the consideration paid by the Related Person in acquiring the
majority of the capital shares of such class or series already
Beneficially Owned by it within the two-year period ending on the
Determination Date;
(c) After such Related Person became a Related Person and
prior to the consummation of such Business Combination: (i) the
Board of Directors of the Corporation shall have included at all
times representation by Continuing Directors at least proportionate
to the ratio that the number of Voting Shares of the Corporation
from time to time not Beneficially Owned by the Related Person
bears to all Voting Shares of the Corporation outstanding at the
time in question (with a Continuing Director to occupy any
resulting fractional position among the Directors); (ii) such
Related Person shall not have acquired from the Corporation,
directly or indirectly, any shares of the Corporation (except upon
conversion of convertible securities acquired by it prior to
becoming a Related Person or as a result of a pro rata share
dividend, share split, or division of shares or in a transaction
that satisfied all applicable requirements of this Article VII);
(iii) such Related Person shall not have acquired any additional
Voting Shares of the Corporation or securities convertible into or<PAGE>
exchangeable for Voting Shares except as a part of the transaction
which resulted in such Related Person's becoming a Related Person;
and (iv) such Related Person shall not have received the benefit,
directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges, or other financial
assistance or tax credits provided by the Corporation or any
Subsidiary, and (v) such Related Person shall not have made any
change in the Corporation's business or equity capital structure or
entered into any contract, arrangement, or understanding with the
Corporation except any such change, contract, arrangement, or
understanding as may have been approved by the favorable vote of
not less than a majority of the Continuing Directors of the
Corporation; and
(d) A proxy statement complying with the requirements of
the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission thereunder, as then in
force for corporations subject to the requirements of Section 14 of
such Act (even if the Corporation is not otherwise subject to
Section 14 of such Act), shall have been mailed to all holders of
Voting Shares for the purpose of soliciting shareholder approval of
such Business Combination. Such proxy statement shall contain on
the face page thereof, in a prominent place, any recommendations as
to the advisability (or inadvisability) of the Business Combination
which the Continuing Directors, or any of them, may have furnished
in writing and, if deemed advisable by a majority of the Continuing
Directors, a fair summary of an opinion of a reputable investment
banking firm addressed to the Corporation as to the fairness (or
lack of fairness) of the terms of such Business Combination from
the point of view of the holders of Voting Shares other than any
Related Person (such investment banking firm to be selected by a
majority of the Continuing Directors, to be furnished with all
information it reasonably requests, and to be paid a reasonable fee
for its services upon receipt by the Corporation of such opinion).
SECTION 3. DIRECTOR APPROVAL EXCEPTION. The provisions of
Sections 1 and 2 of this Article VII shall not apply if:
(a) The Continuing Directors of the Corporation by a two-
thirds vote (i) have expressly approved a memorandum of
understanding with the Related Person with respect to the Business
Combination prior to the time the Related Person became a Related
Person and the Business Combination is effected on substantially
the same terms and conditions as are provided by the memorandum of
understanding, or (ii) have otherwise approved the Business
Combination (this provision is incapable of satisfaction unless
there is at least one Continuing Director); or
(b) The Business Combination is solely between the
Corporation and another corporation, one hundred percent of the
Voting Shares of which are owned directly or indirectly by the
Corporation.
<PAGE>
SECTION 4. DEFINITIONS. For purpose of this Article:
(a) A "Business Combination" means:
(i) The sale, exchange, lease, transfer, or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any of
its Subsidiaries (in a single transaction or a Series of
Related Transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses
(including, without limitation, any securities issued by a
Subsidiary);
(ii) The purchase, exchange, lease, or other
acquisition by the Corporation or any of its Subsidiaries (in
a single transaction or a Series of Related Transactions) of
all or substantially all, or any Substantial Part, of the
assets or business of a Related Person or any Affiliate or
Associate of such Related Person;
(iii) Any merger or consolidation of the Corporation
or any of its Subsidiaries into or with a Related Person or
any Affiliate or Associate of such Related Person or into or
with another Person which, after such merger or consolidation,
would be an Affiliate or an Associate of a Related Person, in
each case irrespective of which Person is the surviving entity
in such merger or consolidation;
(iv) Any reclassification of securities,
recapitalization or other transaction (other than a redemption
in accordance with the terms of the security redeemed) which
has the effect, directly or indirectly, of increasing the
proportionate amount of Voting Shares of the Corporation or
any Subsidiary thereof which are Beneficially Owned by a
Related Person, or any partial or complete liquidation,
spinoff, splitoff, or splitup of the Corporation or any
Subsidiary thereof; provided, however, that this Section
4(a)(iv) shall not include any such transaction that has been
approved by a majority of the Continuing Directors; or
(v) The acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of Voting Shares or
securities convertible into Voting Shares or any voting
securities or securities convertible into voting securities of
any Subsidiary of the Corporation, or the acquisition upon the
issuance thereof of Beneficial Ownership by a Related Person
of any rights, warrants, or options to acquire any of the
foregoing or any combination of the foregoing Voting Shares or
voting securities of the Subsidiary.
<PAGE>
(b) A "Series of Related Transactions" shall be deemed to
include (i) a series of transactions with the same Related Person
and (ii) a series of separate transactions with a Related Person or
any Affiliate or Associate of such Related Person.
(c) A "Person" shall mean any individual, any firm,
corporation, or other entity and any partnership, syndicate, or
other group.
(d) "Related Person" shall mean any Person (other than the
Corporation and any of the Corporation's Subsidiaries) who or that:
(i) is the Beneficial Owner, directly or indirectly,
of more than 10 percent of the voting power of the outstanding
Voting Shares;
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date
in question was the Beneficial Owner, directly or indirectly,
of 10 percent or more of the voting power of the then
outstanding Voting Shares; or
(iii) is an assignee of or has otherwise succeeded to
any Voting Shares which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any Related Person, if such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
A Related Person shall be deemed to have acquired a share of the
Corporation at the time when such Related Person became the
Beneficial Owner thereof. For the purposes of determining whether
a Person is the Beneficial Owner of 10 percent or more of the
voting power of the then outstanding Voting Shares, the outstanding
Voting Shares shall be deemed to include any Voting Shares that may
be issuable to such Person pursuant to Section 4(e)(ii)(a) of this
Article. A Person who is a Related Person at (i) the time any
definitive agreement relating to a Business Combination is entered
into, (ii) the record date for the determination of shareholders
entitled to notice of and to vote on a Business Combination, or
(iii) the time immediately prior to the consummation of a Business
Combination, shall be deemed a Related Person.
(e) A Person shall be a "Beneficial Owner" of any Voting
Shares:
(i) which such Person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
<PAGE>
(ii) which such Person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement, or understanding or
upon the exercise of conversion rights, exchange rights,
warrants, or options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement, or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of its Affiliates or Associates has any agreement,
arrangement, or understanding for the purpose of acquiring,
holding, voting, or disposing of any Voting Shares.
(f) An "Affiliate" of, or a person Affiliated with, a
specific Person means a Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with, the Person specified.
(g) The term "Associate" used to indicate a relationship
with any Person means (i) any corporation or organization (other
than this Corporation or a majority-owned Subsidiary of this
Corporation) of which such Person is an officer or partner or is,
directly or indirectly, the Beneficial Owner of 5 percent or more
of any class of equity securities, (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary
capacity, (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person, or
(iv) any investment company registered under the Investment Company
Act of 1940, for which such Person or any Affiliate of such Person
serves as investment advisor.
(h) "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or indirectly,
by the Corporation; provided, however, that for the purposes of the
definition of Related Person set forth in paragraph (d) of this
Section 4, the term "Subsidiary" shall mean only a corporation of
which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
(i) "Continuing Director" means any member of the Board of
Directors of the Corporation (the "Board"), other than the Related
Person who proposes the Business Combination in question and such
Related Person's Affiliates and Associates, who was a member of the
Board prior to the time that the Related Person who proposes the
Business Combination in question became a Related Person or who is
a successor of a Continuing Director who was recommended to succeed
that Continuing Director by a majority of Continuing Directors then
on the Board.
<PAGE>
(j) "Independent Majority of Shareholders" shall mean the
holders of a majority of the outstanding Voting Shares that are not
Beneficially Owned or controlled, directly or indirectly, by the
Related Person who proposes the Business Combination in question.
(k) "Voting Shares" shall mean all outstanding capital
shares of the Corporation or another corporation entitled to vote
generally in the election of Directors, and each reference to a
proportion of Voting Shares shall refer to such proportion of the
votes entitled to be cast by such shares.
(l) "Substantial Part" means properties and assets
involved in any single transaction or a Series of Related
Transactions having an aggregate fair market value of more than 10
percent of the total consolidated assets of the Person in question
as determined immediately prior to such transaction or Series of
Related Transactions.
SECTION 5. DIRECTOR DETERMINATIONS. A majority of the
Continuing Directors shall have the power to determine for the
purposes of this Article VII, on the basis of information known to
them: (i) the number of Voting Shares of which any Person is the
Beneficial Owner, (ii) whether a Person is an Affiliate or
Associate of another, (iii) whether a Person has an agreement,
arrangement, or understanding with another as to the matters
referred to in the definition of "Beneficial Owner, " (iv) whether
the assets subject to any Business Combination constitute a
Substantial Part, (v) whether two or more transactions constitute
a Series of Related Transactions, and (vi) such other matters with
respect to which a determination is required under this Article
VII.
In connection with the exercise of its judgment in determining
what is in the best interests of the Corporation and its
shareholders when evaluating a Business Combination or a proposal
by another Person or Persons to make a Business Combination or a
tender or exchange offer, the Board of Directors of the Corporation
may, in addition to considering the adequacy of the consideration
to be paid in connection with any such transaction, consider all of
the following factors and any other factors that it deems relevant:
(i) the social and economic effects of the transaction on the
Corporation and its Subsidiaries, employees, customers, creditors,
and other elements of the communities in which the Corporation and
its Subsidiaries operate or are located; (ii) the business and
financial condition and earnings prospects of the acquiring Person
or Persons, including, but not limited to, debt service and other
existing or likely financial obligations of the acquiring Person or
Persons and its or their Affiliates and Associates, and the
possible effect of such conditions upon the Corporation and its
Subsidiaries and the other elements of the communities in which the
Corporation and its Subsidiaries operate or are located; and (iii)
the competence, experience, and integrity of the acquiring Person
or Persons and its or their management and Affiliates and
Associates.<PAGE>
SECTION 6. FIDUCIARY DUTIES UNAFFECTED. Nothing in this
Article shall be construed to relieve any Related Person from any
fiduciary duty imposed by law.
ARTICLE VIII
Miscellaneous
SECTION 1. BYLAWS. The Board of Directors shall have the
exclusive power to make, alter, amend, or repeal, or to waive
provisions of, the Bylaws of the Corporation by the affirmative
vote of a majority of the number of Directors then in office,
except as otherwise provided by the Corporation Law.
SECTION 2. AMENDMENT OR REPEAL.
(a) Any amendment, change or repeal of Section 5 of Article
VI, Article VII, or this Section 2 of Article VIII of these Amended
and Restated Articles of Incorporation, or any other amendment of
these Amended and Restated Articles of Incorporation which would
have the effect of modifying or permitting circumvention of those
provisions, shall require the affirmative vote, at a meeting of
shareholders of the Corporation, by the holders of at least 80
percent of the outstanding shares of all classes of Voting Shares
of the Corporation (considered for purposes of this Section 2(a) as
a single class and as defined in Article VII) and, if the
amendment, change, or repeal shall be proposed by or on behalf of
a Related Person, by an Independent Majority of Shareholders (as
those terms are defined in Article VII); provided, however, that
this Section 2(a) shall not apply to, and such vote shall not be
required for, any such amendment, change, or repeal recommended to
shareholders by the favorable vote of not less than two-thirds of
the Board of Directors and, if the amendment, change, or repeal
shall be proposed by or on behalf of a Related Person, by the
favorable vote of not less than two-thirds of the Continuing
Directors (as defined in Article VII and computed with reference to
the Related Person who shall propose such amendment, change, or
repeal), and any such amendment, change, or repeal so recommended
shall require only the shareholder vote required under the
applicable provisions of the Corporation Law.
(b) The Corporation shall be deemed, for all purposes, to
have reserved the right to amend, alter, change, or repeal any
provision contained in these Amended and Restated Articles of
Incorporation to the extent and in the manner now or hereafter
permitted or prescribed by these Amended and Restated Articles of
Incorporation and by statute, and all rights herein conferred upon
shareholders are granted subject to such reservation.
<PAGE>
SECTION 3. CORPORATION LAW. All references in these Amended
and Restated Articles of Incorporation to the Corporation Law shall
mean the Indiana Business Corporation Law as it may from time to
time be amended and any statute which may in the future supersede
or replace, in whole or in part, the Indiana Business Corporation
Law, as amended.
SECTION 4. BUSINESS COMBINATION CHAPTER INAPPLICABLE. The
provisions of I.C. 23-1-43 of the Corporation Law are not
applicable to the Corporation.
EXHBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
HEARTLAND BANCSHARES, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1. ANNUAL MEETINGS. Annual meetings of the
shareholders of Heartland Bancshares, Inc. (the "Corporation"),
shall be held at such date, time and place, within or without the
State of Indiana, as shall be designated by the Board of Directors.
SECTION 1.2. SPECIAL MEETINGS. Special meetings of the
shareholders of the Corporation may be called at any time by the
Board of Directors or the President and shall be called by the
Board of Directors if the Secretary receives written, dated, and
signed demands for a special meeting, describing in reasonable
detail the purpose or purposes for which it is to be held, from the
holders of shares representing at least eighty percent of all votes
entitled to be cast on any issue proposed to be considered at the
proposed special meeting. If the Secretary receives one or more
proper written demands for a special meeting of shareholders, the
Board of Directors may set a record date for determining
shareholders entitled to make such demand. The Board of Directors
or the President, as the case may be, calling a special meeting of
shareholders shall set the date, time, and place of such meeting,
which may be held within or without the State of Indiana.
SECTION 1.3. NOTICES. A written notice, stating the date,
time, and place of any meeting of the shareholders, and in the case
of a special meeting the purpose or purposes for which such meeting
is called, shall be delivered or mailed by the Secretary of the
Corporation, to each shareholder of record of the Corporation
entitled to notice of or to vote at such meeting no fewer than ten
nor more than sixty days before the date of the meeting, or as
otherwise provided by the Corporation Law. In the event of a
special meeting of shareholders required to be called as the result
of a demand therefor made by shareholders, such notice shall be
given no later than the sixtieth day after the Corporation's
receipt of the demand requiring the meeting to be called. Notice
of shareholders' meetings, if mailed, shall be mailed, postage
prepaid, to each shareholder at his address shown in the
Corporation's current record of shareholders.
<PAGE>
A shareholder or such shareholder's proxy may at any time
waive notice of a meeting if the waiver is in writing and is
delivered to the Corporation for inclusion in the minutes or filing
with the Corporation's records. A shareholder's attendance at a
meeting, whether in person or by proxy, (a) waives objection to
lack of notice or defective notice of the meeting, unless the
shareholder or such shareholder's proxy at the beginning of the
meeting objects to holding the meeting or transacting business at
the meeting, and (b) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder or
such shareholder's proxy objects to considering the matter when it
is presented. Each shareholder who has in the manner described
above waived notice or objection to notice of the shareholders'
meeting shall be conclusively presumed to have been given due
notice of such meeting (including the purpose or purposes thereof
if such shareholder in the manner described above waived objection
to the consideration of a particular matter).
If an annual or special shareholders' meeting is adjourned to
a different date, time, or place, notice need not be given of the
new date, time, or place if the new date, time, or place is
announced at the meeting before adjournment, unless a new record
date is or must be established for the adjourned meeting.
SECTION 1.4. VOTING. Except as otherwise provided by the
Corporation Law or the Corporation's Articles of Incorporation,
each capital share of any class of the Corporation that is
outstanding at the record date and represented in person or by
proxy at the annual or special meeting shall entitle the record
holder thereof, or such holder's proxy, to one vote on each matter
voted on at the meeting.
SECTION 1.5. QUORUM. Unless the Corporation's Articles of
Incorporation or the Corporation Law provide otherwise, at all
meetings of shareholders a majority of the votes entitled to be
cast on a matter, represented in person or by proxy, constitutes a
quorum for action on the matter. Action may be taken at a
shareholders' meeting only on matters with respect to which a
quorum exists; provided, however, that any meeting of shareholders,
including annual and special meetings and any adjournments thereof,
may be adjourned to a later date although less than a quorum is
present. Once a share is represented for any purpose at a meeting,
it is deemed present for quorum purposes for the remainder of the
meeting and for any meeting held pursuant to an adjournment of that
meeting unless a new record date is or must be set for that
adjourned meeting.
<PAGE>
SECTION 1.6. VOTE REQUIRED TO TAKE ACTION. If a quorum
exists as to a matter to be considered at a meeting of
shareholders, action on such matter (other than the election of
Directors) is approved if the votes properly cast favoring the
action exceed the votes properly cast opposing the action, unless
the Corporation's Articles of Incorporation or the Corporation Law
require a greater number of affirmative votes. Directors shall be
elected by a plurality of the votes properly cast.
SECTION 1.7. RECORD DATE. Only such persons shall be
entitled to notice of or to vote, in person or by proxy, at any
shareholders' meeting as shall appear as shareholders upon the
books of the Corporation as of such record date as the Board of
Directors shall determine, which date may not be earlier than the
date seventy days immediately preceding the meeting unless
otherwise permitted by the Corporation Law. In the absence of such
determination, the record date shall be the fiftieth day
immediately preceding the date of such meeting. Unless otherwise
provided by the Board of Directors, shareholders shall be
determined as of the close of business on the record date.
SECTION 1.8. PROXIES. A shareholder may vote his shares
either in person or by proxy. A shareholder may appoint a proxy to
vote or otherwise act for the shareholder (including authorizing
the proxy to receive, or to waive, notice of any shareholders'
meetings within the effective period of such proxy) by signing an
appointment form, either personally or by the shareholder's
attorney-in-fact. An appointment of a proxy is effective when
received by the Secretary or other officer or agent authorized to
tabulate votes and is effective for eleven months unless a
different period is expressly provided in the appointment form.
The proxy's authority may be limited to a particular meeting or may
be general and authorize the proxy to represent the shareholder at
any meeting of shareholders held within the time provided in the
appointment form. Subject to the Corporation Law and to any
express limitation on the proxy's authority appearing on the face
of the appointment form, the Corporation is entitled to accept the
proxy's vote or other action as that of the shareholder making the
appointment.
SECTION 1.9. DISCLOSURE PROCEDURE. The President may, in the
discretion of the President and from time to time, require such of
the record holders of the Corporation's shares as the President
shall determine, to disclose to the Corporation whether or not such
record holder holds such shares for the account of another person
or persons who is or are the beneficial owner(s) of such shares
and, if so, the name(s) of such beneficial owner(s). If any such
record holder shall, without legal justification, fail to disclose
the information required by the preceding sentence to the
Corporation (by depositing in United States mail, postage prepaid,
<PAGE>
a letter properly addressed to the Corporation at the designated
address or otherwise) within 10 days of the date of mailing by the
Corporation of the disclosure request (postage prepaid and properly
addressed to the record holder at the address appearing in the
Corporation's stock records) then, in the discretion of the
President, the Corporation may (in addition to any other remedies
that may then be available to it at law or in equity) (a) prohibit
the voting of any or all shares held by such record shareholder at
the next meeting of the shareholders; (b) for so long as the
failure to disclose continues, withhold dividends with respect to
such record shareholder's shares; (c) reacquire any or all shares
registered in the name of such record shareholder (for the account
of the Corporation or its assignee) at a price per share equal to
the closing price of the shares on the trading day next preceding
the date of the notice of reacquisition as reported by the
principal national market on which the shares are then traded or
quoted, or, if there are no sales reported on the trading day next
preceding the date of the notice of reacquisition, at a price per
share equal to the median price between the highest closing bid
quotation and the lowest closing asked quotation with respect to
such shares on the trading day next preceding the date of the
notice of reacquisition as reported by such principal market, or,
if no such quotations are available, at a price per share equal to
the fair market value of such shares immediately prior to the date
of the notice of reacquisition as determined by the Board of
Directors in good faith by such other reasonable method as the
Board of Directors shall, in its discretion, select and apply, by
depositing in the United States mail (postage prepaid and properly
addressed to such record holder at its address appearing in the
Corporation's stock records) a notice of reacquisition, specifying
(i) the number of shares to be so reacquired, (ii) the price at
which such shares are to be reacquired as determined by this clause
(c), (iii) the closing date of the reacquisition, which shall not
be later than the fifth trading day following the date of the
notice of reacquisition, and (iv) the procedures by which the
record holder may surrender the certificates for the shares
reacquired on or after the closing date in exchange for the
reacquisition price; in which event the shares specified by the
notice of reacquisition shall be deemed reacquired by the
Corporation effective date of the notice of reacquisition for all
purposes and the record holder's rights with respect to such shares
on and after such date shall be limited to the right to receive on
or after the specified closing date (upon surrender of the
certificate(s) for the reacquired shares, accompanied by such
instruments of transfer and other assurances as the corporation may
reasonably request) the reacquisition price, without interest; or
(d) deny voting rights, withhold dividends, and reacquire shares,
or any combination thereof, as provided in clauses (a), (b), and
(c). The Corporation may, but is not required to, accept a
delinquent disclosure of the matters referred to in this procedure
<PAGE>
in satisfaction of an insufficient disclosure or a failure to
timely disclose, or may proceed with its remedies (including its
reacquisition of shares held by such record shareholder)
notwithstanding any attempt to cure a prior insufficient disclosure
or failure to disclose. If the Corporation (or any person acting
on its behalf) shall employ counsel in connection with any legal
proceeding to enforce or defend any action taken pursuant to this
procedure, the Corporation (or other person) shall be entitled to
recover from the record shareholder its reasonable attorneys' fees
and expenses and other costs incurred in the enforcement or defense
of such action, to the extent successful, in addition to all other
appropriate relief.
SECTION 1.10. SHAREHOLDER NOMINEES. The only persons who
shall be eligible for election to the Board of Directors at any
meeting of shareholders at which one or more directors are to be
elected are (a) those persons named in (or replacements thereof
named in accordance with) proxy or information statement prepared
on behalf of the Board of Directors of the Corporation and
distributed to shareholders in connection with such meeting in
accordance with the proxy rules of the Securities and Exchange
commission (the "SEC Proxy Rules"), and (b) other persons nominated
from the floor of such shareholders meeting by a shareholder but
only if (i) the shareholder who submits such nomination notifies
the Secretary of the Corporation not later than 10 business days
prior to the shareholder meeting at which such nomination is to be
considered of such shareholder's intent to nominate that particular
person(s) and (ii) any "solicitation" of "proxies" by such
shareholder or other persons on behalf of such other nominee(s) has
been conducted in accordance with the SEC Proxy Rules, if
applicable.
ARTICLE II
DIRECTORS
SECTION 2.1. NUMBER AND TERM; AUTHORITY. The business of the
Corporation shall be managed by a Board of Directors consisting of
at least six Directors and no more than fifteen Directors. The
exact number of Directors of the Corporation shall be fixed by the
Board of Directors within the range established by the preceding
sentence, and may be changed within that range from time to time by
the Board of Directors. The Directors shall be divided into three
equal (or nearly equal as possible) classes with only one class of
Directors being elected at any annual meeting. The terms of the
Directors in the first class shall expire at the first annual
meeting of the shareholders after their election, the terms of the
Directors in the second class shall expire at the second annual
meeting of shareholders after their election, and the terms of the
directors in the third class shall expire at the third annual
meeting of the shareholders after their election. At each annual
<PAGE>
meeting of the shareholders held thereafter, Directors shall be
elected for a term of three years to succeed those Directors whose
terms expire. Each Director shall continue to serve until such
Director's successor is elected and qualified, or until the earlier
of such Director's death, resignation, disqualification, or removal
by shareholders, or until there is a decrease in the number of
Directors; provided, however, that a Director cannot be removed by
such decrease unless in connection with an election of Directors by
shareholders.
The Directors and each of them shall have no authority to bind
the Corporation except when acting as a Board or a Committee
established by the Board and granted authority to bind the
Corporation.
SECTION 2.2. QUORUM AND VOTE REQUIRED TO TAKE ACTION. A
majority of the whole Board of Directors (the size of which shall
be determined in accordance with the latest action of the Board of
Directors fixing the number of Directors) shall be necessary to
constitute a quorum for the transaction of any business, except the
filling of vacancies. If a quorum is present when a vote is taken,
the affirmative vote of a majority of the Directors present shall
be the act of the Board of Directors, unless the act of a greater
number is required by the Corporation Law, the Corporation's
Articles of Incorporation, or these Amended and Restated Bylaws.
SECTION 2.3. ANNUAL AND REGULAR MEETINGS. The Board of
Directors shall meet annually, without notice, on the same day as
the annual meeting of the shareholders, for the purpose of
transacting such business as properly may come before the meeting.
Other regular meetings of the Board of Directors, in addition to
said annual meeting, shall be held on such dates, at such times,
and at such places as shall be fixed by resolution adopted by the
Board of Directors or otherwise communicated to the Directors. The
Board of Directors may at any time alter the date for the next
annual meeting of the Board of Directors. Notice of the time,
place or purpose of a regular meeting shall not be required, unless
and to the extent that a regular meeting is rescheduled or
relocated in which event notice of the date, time and place of the
rescheduled or relocated meeting shall be given as in the case of
a special meeting of the Board of Directors.
SECTION 2.4. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by the President or any member of the
Board of Directors upon not less than 24 hours' notice given to
each Director of the date, time, and place of the meeting, which
notice need not specify the purpose or purposes of the special
meeting. Such notice may be communicated in person (either in
writing or orally), by telephone, telegraph, teletype or other form
of wire or wireless communication or by mail, and shall be
<PAGE>
effective at the earlier of the time of its receipt or, if mailed,
five days after its mailing. Notice of any meeting of the Board
may be waived in writing at any time if the waiver is signed by the
Director entitled to the notice and is filed with the minutes or
corporate records. A Director's attendance at or participation in
a meeting waives any required notice to the Director of the
meeting, unless the Director at the beginning of the meeting (or
promptly upon the Director's arrival) objects to holding the
meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
SECTION 2.5. WRITTEN CONSENTS. Any action required or
permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting if the action is taken by all members of
the Board. The action must be evidenced by one or more written
consents describing the action taken, signed by each Director, and
included in the minutes or filed with the corporate records
reflecting the action taken. Action taken under this Section 2.5
is effective when the last Director signs the consent, unless the
consent specifies a different prior or subsequent effective date,
in which case the action is effective on or as of the specified
date. A consent signed under this Section 2.5 has the effect of a
meeting vote and may be described as such in any document.
SECTION 2.6. PARTICIPATION BY CONFERENCE TELEPHONE. The
Board of Directors may permit any or all Directors to participate
in a regular or special meeting by, or through the use of, any
means of communication, such as conference telephone, by which all
Directors participating may simultaneously hear each other during
the meeting. A Director participating in a meeting by such means
shall be deemed to be present in person at the meeting.
SECTION 2.7. COMMITTEES.
(a) The Board of Directors may create one or more
committees and appoint members of the Board of Directors to
serve on them, by resolution of the Board of Directors adopted
by a majority of all the Directors in office when the
resolution is adopted. Each committee may have one or more
members, and all the members of a committee shall serve at the
pleasure of the Board of Directors.
(b) To the extent specified by the Board of Directors in
the resolutions creating a committee (and all resolutions
subsequently adopted modifying, amending or terminating such
committee's authority), and except to the extent specifically
precluded by the Corporation Law, each committee may exercise
all of the authority of the Board of Directors.
<PAGE>
(c) Except to the extent inconsistent with the
resolutions creating a committee, Sections 2.1 through 2.6 of
these Amended and Restated Bylaws, which govern meetings,
actions without meetings, notices and waivers of notice,
quorum and voting requirements, and telephone participation in
meetings of the Board of Directors, shall apply to the
committee and its members.
ARTICLE III
OFFICERS
SECTION 3.1. DESIGNATION, SELECTION, AND TERMS. The officers
of the Corporation shall consist of the President, Vice President,
Secretary and Treasurer. The officers of the Corporation shall be
elected by the Board of Directors. The Board of Directors may also
elect Assistant Treasurers, Assistant Secretaries, and such other
officers or assistant officers as it may from time to time
determine by resolution creating the office and defining the duties
thereof. In defining the duties of officers, the Board of
Directors may designate a chief executive officer, a chief
operating officer, a chief administrative officer, a chief
financial officer, a chief accounting officer, or similar
functional titles. Officers need not be selected from among the
members of the Board of Directors. Any two or more offices may be
held by the same person. The election or appointment of an officer
does not itself create contract rights.
SECTION 3.2. REMOVAL. The Board of Directors may remove any
officer at any time with or without cause. Vacancies in such
offices, however occurring, may be filled by the Board of Directors
at any meeting of the Board of Directors.
SECTION 3.3. PRESIDENT. The President shall have and may
exercise all of the powers and duties as are incident to his office
or may from time to time be delegated to him by the Board of
Directors.
SECTION 3.4. VICE-PRESIDENT. The Vice-President, or Vice
Presidents if more than one (in the order designated by the
President or the Board), shall exercise and perform all powers of,
and perform duties incumbent upon, the President during his absence
or disability and shall exercise and perform such other powers and
duties as these Amended and Restated Bylaws, the Board or the
President may prescribe.
SECTION 3.5. TREASURER. The Treasurer shall have and may
exercise all of the powers and duties as are usual in the office of
the Treasurer of a corporation including but not limited to
maintaining the accounting records required by the Corporation Law.
<PAGE>
SECTION 3.6. SECRETARY. The Secretary shall be the custodian
of the books, papers, and records of the Corporation and of its
corporate seal, if any, and shall be responsible for seeing that
the Corporation maintains the records required by the Corporation
Law (other than accounting records) and that the Corporation files
with the Indiana Secretary of State the biannual report required by
the Corporation Law. The Secretary shall be responsible for
preparing minutes of the meetings of the shareholders and of the
Board of Directors and for authenticating records of the
Corporation, and he shall perform all of the other duties customary
to the office of the Secretary of a corporation.
ARTICLE IV
INDEMNIFICATION OF OFFICERS,
DIRECTORS AND OTHER ELIGIBLE PERSONS
SECTION 4.1. GENERAL. To the extent not inconsistent with
applicable law, every Eligible Person shall be indemnified by the
Corporation against all Liability and reasonable Expense that may
be incurred by him in connection with or resulting from any Claim:
(a) if such Eligible Person is Wholly Successful with
respect to the Claim, or
(b) if not Wholly Successful, then if such Eligible
Person is determined, as provided in either Section 4.3(a) or
4.3(b) of this Article IV, to have:
(i) conducted himself in good faith; and
(ii) reasonably believed:
(A) in the case of conduct in his official
capacity with the Corporation, that his
conduct was in its best interest; and
(B) in all other cases, that his conduct was
at least not opposed to the best interest
of the Corporation; and
(iii) in the case of any criminal proceeding,
either:
(A) had reasonable cause to believe his
conduct was lawful; or
(B) had no reasonable cause to believe his
conduct was unlawful.
<PAGE>
The termination of any Claim, by judgment, order, settlement
(whether with or without court approval), or conviction or upon a
plea of guilty or of nolo contendere, or its equivalent, shall not
create a presumption that an Eligible Person did not meet the
standards of conduct set forth in clause (b) of this Section 4.1.
The actions of an Eligible Person with respect to an employee
benefit plan subject to the Employee Retirement Income Security Act
of 1974 shall be deemed to have been taken in what the Eligible
Person reasonably believed to be the best interest of the
Corporation or at least not opposed to its best interest if the
Eligible Person reasonably believed he was acting in conformity
with the requirements of such Act or he reasonably believed his
actions to be in the interest of the participants in or
beneficiaries of the plan.
SECTION 4.2. DEFINITIONS.
(a) The term "Claim" as used in this Article IV shall
include every pending, threatened, or completed claim, action,
suit, or proceeding and all appeals thereof (whether brought
by or in the right of this Corporation or any other
corporation or otherwise), whether civil, criminal,
administrative, or investigative, formal or informal, in which
an Eligible Person may become involved, as a party or
otherwise: (i) by reason of his being or having been an
Eligible Person, or (ii) by reason of any action taken or not
taken by him in his capacity as an Eligible Person, whether or
not he continued in such capacity at the time a Liability or
Expense shall have been incurred in connection with a Claim.
(b) The term "Eligible Person" as used in this Article
IV shall mean every person (and the estate, heirs, and
personal representatives of such person) who is or was a
Director or officer of the Corporation, including any Director
or officer who is or was serving at the request of the
Corporation as a Director, officer, employee, agent, or
fiduciary of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or
other organization or entity, whether for profit or not. An
Eligible Person shall be considered to have been serving an
employee benefit plan at the request of the Corporation if his
duties to the Corporation also imposed duties on, or otherwise
involved services by, him to the plan or to participants in or
beneficiaries of the plan.
(c) The terms "Liability" and "Expense" as used in this
Article IV shall include, but shall not be limited to, counsel
fees and disbursements and amounts of judgments, fines, or
penalties against (including excise taxes assessed with
respect to an employee benefit plan), and amounts paid in
settlement by or on behalf of, an Eligible Person.
<PAGE>
(d) The term "Wholly Successful" as used in this Article
IV shall mean (i) termination of any Claim against the
Eligible Person in question without any finding of liability
or guilt against him, (ii) approval by a court, with knowledge
of the indemnity herein provided, of a settlement of any
Claim, or (iii) the expiration of a reasonable period of time
after making or threatened making of any Claim without the
institution of the same, without any payment or promise made
to induce a settlement.
SECTION 4.3. PROCEDURE.
(a) Every Eligible Person claiming indemnification
hereunder (other than one who has been Wholly Successful with
respect to any Claim) shall be entitled to indemnification if
it is determined, as provided in this Section 4.3(a), that
such Eligible Person has met the standards of conduct set
forth in clause (b) of Section 4.1. The determination whether
an Eligible Person has met the required standards of conduct
shall be made (i) by the Board of Directors by majority vote
of a quorum consisting of Directors not at the time parties to
the Claim, and if such a quorum cannot be obtained, then (ii)
by majority vote of a committee duly designated by the Board
of Directors (in which designation, Directors who are parties
to the Claim may participate) consisting solely of two (2) or
more Directors not at the time parties to the Claim, and if
such a committee cannot be constituted, then (iii) by the
shareholders (but shares owned by or voted under the control
of a Director who is at the time a party to the Claim may not
be voted on the determination), and if there are no
shareholders who are entitled to vote pursuant to the
requirements of paragraph (iii), then (iv) by special legal
counsel selected by a majority vote of the full Board of
Directors (in which selection, a Director who is a party to
the Claim may participate). If an Eligible Person is found to
be entitled to indemnification pursuant to the preceding
sentence, the reasonableness of the Eligible Person's Expenses
shall be determined by the procedure set forth in the
preceding sentence, except that if such determination is by
special legal counsel, the reasonableness of Expenses shall be
determined by a majority vote of the full Board of Directors
(in which determination, a Director who is a party to the
Claim may participate).
<PAGE>
(b) If an Eligible Person claiming indemnification
pursuant to Section 4.3(a) of this Article IV is found not to
be entitled thereto, the Eligible Person may apply for
indemnification with respect to a Claim to a court of
competent jurisdiction, including a court in which the Claim
is pending against the Eligible Person. On receipt of an
application, the court, after giving notice to the Corporation
and giving the Corporation ample opportunity to present to the
court any information or evidence relating to the claim for
indemnification that the Corporation deems appropriate, may
order indemnification if it determines that the Eligible
Person is entitled to indemnification with respect to the
Claim because such Eligible Person met the standards of
conduct set forth in clause (b) of Section 4.1 of this Article
IV. If the court determines that the Eligible Person is
entitled to indemnification, the court shall also determine
the reasonableness of the Eligible Person's Expenses.
SECTION 4.4. NONEXCLUSIVE RIGHTS. The right of
indemnification provided in this Article IV shall be in addition to
any rights to which any Eligible Person may otherwise be entitled.
Irrespective of the provisions of this Article IV, the Board of
Directors may, at any time and from time to time, (a) approve
indemnification of any Eligible Person to the full extent permitted
by the provisions of applicable law at the time in effect, whether
on account of past or future transactions, and (b) authorize the
Corporation to purchase and maintain insurance on behalf of any
Eligible Person against any Liability asserted against him and
incurred by him in any such capacity, or arising out of his status
as such, whether or not the Corporation would have the power to
indemnify him against such Liability.
SECTION 4.5. EXPENSES. Expenses incurred by an Eligible
Person with respect to any Claim shall be advanced by the
Corporation (by action of the Board of Directors, whether or not a
disinterested quorum exists) prior to the final disposition thereof
if:
(a) the Eligible Person furnishes the Corporation a
written affirmation of his good faith belief that he has met
the standards of conduct specified in Section 4.1(b);
(b) the Eligible Person furnishes the Corporation a
written undertaking, executed personally or on the Eligible
Person's behalf, to repay the advance if it is ultimately
determined that the Eligible Person did not meet the standards
of conduct specified in Section 4.1(b); and
(c) the Board of Directors makes a determination that
the facts then known would not preclude indemnification of the
Eligible Person.
<PAGE>
SECTION 4.6. CONTRACT. The provisions of this Article IV
shall be deemed to be a contract between the Corporation and each
Eligible Person, and an Eligible Person's rights hereunder with
respect to a Claim shall not be diminished or otherwise adversely
affected by any repeal, amendment, or modification of this Article
IV that occurs subsequent to the date of any action taken or not
taken by reason of which such Eligible Person becomes involved in
a Claim.
SECTION 4.7. EFFECTIVE DATE. The provisions of this Article
IV shall be applicable to Claims made or commenced after the
adoption hereof, whether arising from acts or omissions to act
occurring before or after the adoption hereof.
ARTICLE V
CHECKS
All checks, drafts, or other orders for payment of money shall
be signed in the name of the Corporation by such officers or
persons as shall be designated from time to time by resolution
adopted by the Board of Directors and included in the minute book
of the Corporation.
ARTICLE VI
LOANS
Such of the officers of the Corporation as shall be designated
from time to time by any resolution adopted by the Board of
Directors and included in the minute book of the Corporation shall
have the power, with such limitations thereon as may be fixed by
the Board of Directors, to borrow money in the Corporation's
behalf, to establish credit, to discount bills and papers, to
pledge collateral, and to execute such notices, bonds, debentures,
or other evidences of indebtedness, and such mortgages, trust
indentures, and other instruments in connection therewith, as may
be authorized from time to time by such Board of Directors.
ARTICLE VII
EXECUTION OF DOCUMENTS
The President or any officer designated by the President may,
in the Corporation's name, sign all deeds, leases, contracts, or
similar documents that may be authorized by the Board of Directors
unless execution is otherwise provided for, required, or directed
by the Board of Directors, the Corporation's Articles of
Incorporation, the Corporation Law, or other law.
<PAGE>
ARTICLE VIII
SHARES
SECTION 8.1. EXECUTION. Certificates for capital shares of
the Corporation shall be signed (either manually or in facsimile)
by the President and the Secretary or two officers designated from
time to time by the Board of Directors and the seal of the
Corporation (or a facsimile thereof), if any, may be thereto
affixed. Where any such certificate is also signed by a transfer
agent or a registrar, or both, the signatures of the officers of
the Corporation may be facsimiles. The Corporation may issue and
deliver any such certificate notwithstanding that any such officer
who shall have signed, or whose facsimile signature shall have been
imprinted on, such certificate shall have ceased to be such
officer.
SECTION 8.2. CONTENTS. Each certificate shall state on its
face the name of the Corporation and that it is organized under the
laws of the State of Indiana, the name of the person to whom it is
issued, and the number and class and the designation of the series,
if any, of shares the certificate represents, and, whenever the
Corporation is authorized to issue more than one class of shares or
different series within a class, each certificate issued after the
effectiveness of such authorization shall further state
conspicuously on its front or back that the Corporation will
furnish the shareholder, upon his written request and without
charge, a summary of the designations, relative rights,
preferences, and limitations applicable to each class and series
and the authority of the Board of Directors to determine variations
in rights, preferences and limitations for future series.
SECTION 8.3. TRANSFERS. Except as otherwise provided by law
or by resolution of the Board of Directors, transfers of shares of
the Corporation shall be made only on the books of the Corporation
by the holder thereof in person or by duly authorized attorney, on
payment of all taxes thereon and surrender for cancellation of the
certificate or certificates for such shares (except as hereinafter
provided in the case of loss, destruction, or mutilation of
certificates) properly endorsed by the holder thereof or
accompanied by the proper evidence of succession, assignment, or
authority to transfer and delivered to the Secretary or an
Assistant Secretary.
SECTION 8.4. SHARE TRANSFER RECORDS. There shall be entered
upon the share records of the Corporation the number of each
certificate issued; the name and address of the registered holder
of such certificate; the number, kind, and class or series of
shares represented by such certificate; the date of issue; whether
the shares are originally issued or transferred; the registered
holder from whom transferred; and such other information as is
commonly required to be shown by such records. The share records
<PAGE>
of the Corporation shall be kept at its principal office, unless
the Corporation appoints a transfer agent or registrar, in which
case the Corporation shall keep at its principal office a complete
and accurate shareholders' list giving the name and addresses of
all shareholders and the number and class of shares held by each.
If a transfer agent is appointed by the Corporation, shareholders
shall give written notice of any changes in their addresses from
time to time to the transfer agent.
SECTION 8.5. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors may appoint one or more transfer agents and one or more
registrars and may require each share certificate to bear the
signature of either or both.
SECTION 8.6. LOSS, DESTRUCTION, OR MUTILATION OF
CERTIFICATES. The holder of any of the shares of the Corporation
shall immediately notify the Corporation of any loss, destruction,
or mutilation of the certificate therefor, and the Board of
Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of shares upon the surrender of the
mutilated certificate, or, in the case of loss or destruction, upon
satisfactory proof of such loss or destruction. The Board of
Directors may, in its discretion, require the holder of the lost or
destroyed certificate or his legal representative to give the
Corporation a bond in such sum and in such form, and with such
surety or sureties as it may direct, to indemnify the Corporation,
its transfer agents and its registrars, if any, against any claim
that may be made against them or any of them with respect to the
shares represented by the certificate or certificates alleged to
have been lost or destroyed, but the Board of Directors may, in its
discretion, refuse to issue a new certificate or certificates, save
upon the order of a court having jurisdiction in such matters.
SECTION 8.7. FORM OF CERTIFICATES. The form of the
certificates for shares of the Corporation shall conform to the
requirements of Section 8.2 of these Amended and Restated Bylaws
and be in such printed form as shall from time to time be approved
by resolution of the Board of Directors.
ARTICLE IX
SEAL
The corporate seal of the Corporation shall, if the
Corporation elects to have one, be in the form of a disc, with the
name of the Corporation on the periphery thereof and the word
"SEAL" in the center.
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1. CORPORATION LAW. The provisions of the
Corporation Law, as it may from time to time be amended, applicable
to all matters relevant to, but not specifically covered by, these
Amended and Restated Bylaws are hereby, by reference, incorporated
in and made a part of these Amended and Restated Bylaws. The term
"Corporation Law" as used in these Amended and Restated Bylaws
means the Indiana Business Corporation Law, as it may hereafter
from time to time be amended and any statute which may in the
future supersede or replace, in whole or in part, the Corporation
Law.
SECTION 10.2. FISCAL YEAR. The fiscal year of the
Corporation shall end on the 31st of December of each year.
SECTION 10.3. CONTROL SHARE ACQUISITIONS.
(a) The provisions of I.C. 23-1-42 of the Corporation
Law are applicable to the Corporation.
(b) In the event (i) that no acquiring person statement
that complies with I.C. 23-1-42-6 has been delivered to the
Corporation with respect to a control share acquisition on or
before the date of mailing a notice of redemption of control
shares pursuant to Section 10.3(c), or (ii) that control
shares are not accorded full voting rights by the shareholders
pursuant to I.C. 23-1-42-9, the Corporation shall have the
power, at its option, to redeem any or all control shares at
the fair value thereof, in accordance with the time and other
requirements specified by I.C. 23-1-42-10 and this Section
10.3. "Fair value" for purposes of the preceding sentence
shall be deemed to be equal to the fair market value per share
of the class or series of which the control shares are part
immediately prior to the first public announcement of the
intent or plan of the acquiring person to make a control share
acquisition ("Announcement Date"). Such fair market value
shall be determined by (i) the highest reported closing sale
price during the 30-day period immediately preceding the
Announcement Date if such shares are listed on a securities
exchange registered under the Securities Exchange Act of 1934
or if closing sale prices are reported on the National
Association of Securities Dealers, Inc. Automatic Quotation
System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices then in
common use, or (ii) if closing sales prices of such shares are
not listed on such securities exchange or reported on NASDAQ
or there are no sales reported by NASDAQ during such 30-day
<PAGE>
period, the highest closing bid quotation with respect to such
shares during the 30-day period immediately preceding the
Announcement Date as reported on NASDAQ or the OTC Bulletin
Board or any similar system then in use, or (iii) if no such
quotations are available during such 30-day period, the fair
market value of such shares immediately prior to the
Announcement Date as determined by the Board of Directors in
good faith by such other reasonable method as the Board of
Directors of the Corporation shall, in its discretion, select
and apply.
(c) In case the Corporation shall desire to exercise its
right to redeem control shares pursuant to Section 10.3(b),
notice of such redemption shall be given to the holders of the
control shares to be redeemed by mailing to such holders,
within the time period, if any, specified by I.C. 23-1-42-10,
a notice of such redemption by first class mail, postage
prepaid, not less than 30 days prior to the redemption date,
to their last addresses as they shall appear upon the stock
transfer records of the Corporation. Any notice which is
mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder
receives the notice, as of the date of mailing of the notice.
In any case, failure to duly give notice by mail to the holder
of any control shares, or any defect in such notice, shall not
affect the validity of the proceedings for the redemption of
any other control share. Each such notice shall specify the
redemption date, the number of control shares to be redeemed
held by such holder, the place of redemption and the
redemption price at which the control shares are to be
redeemed. Such notice shall further state that payment of the
redemption price will be made upon presentation and surrender
of the certificate(s) representing the control shares (with
such instruments of transfer and other assurances as the
Corporation may reasonably request) and that from and after
the redemption date such holder shall have no rights with
respect to such control shares (including no rights to vote or
to receive distributions in respect thereof with respect to
matters for which the record date shall fall on or after the
redemption date) except the right to receive the redemption
price (without interest) upon compliance with the procedures
specified by this Section 10.3.
(d) The Board of Directors may by resolution specify
such other procedures as may in its discretion be deemed
necessary or advisable for the purpose of implementing this
Section 10.3 and is hereby empowered to determine, on the
basis of the information known to it, all matters with respect
to which a determination is required under I.C. 23-1-42 in
connection with redemption of control shares.
<PAGE>
(e) Terms used in this Section 10.3 not otherwise
defined shall, unless the context otherwise requires, have the
meanings assigned to them by I.C. 23-1-42.
SECTION 10.4. DEFINITION OF ARTICLES OF INCORPORATION. The
term "Articles of Incorporation" as used in these Amended and
Restated Bylaws means the Articles of Incorporation of the
Corporation, as amended and restated from time to time.
SECTION 10.5. AMENDMENTS. These Bylaws may be rescinded,
changed, or amended, and provisions hereof may be waived, at any
annual, regular, or special meeting of the Board of Directors by
the affirmative vote of a majority of the number of Directors then
in office, except as otherwise required by the Corporation's
Articles of Incorporation or by the Corporation Law.
July 25, 1997
Heartland Bancshares, Inc.
P.O. Box 469
Franklin, Indiana 46131
Ladies and Gentlemen:
We have represented Heartland Bancshares, Inc. (the
"Company"), in connection with its proposed issuance of up to
1,150,000 shares of Common Stock, no par value (the "Common
Stock"), that are proposed to be registered under the Securities
Act of 1933, as amended, pursuant to a Registration Statement on
Form SB-2 (the "Registration Statement").
As counsel to the Company, we have participated in the
preparation of the Registration Statement. We have examined
originals (or copies certified to our satisfaction) of such
corporate records, documents, agreements, instruments and
certificates of public officials of the State of Indiana and of
officers of the Company, and have examined such questions of law as
we have deemed necessary as a basis for the opinion hereafter
expressed.
Based on the foregoing, we are of the opinion that the Common
Stock is duly authorized and, when issued pursuant to the
Registration Statement and when the full consideration specified in
the Registration Statement has been received, will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to our firm in
the Prospectus under the heading "Legal Matters."
Very truly yours,
/s/ LEAGRE CHANDLER & MILLARD
EXHIBIT 10.1
HEARTLAND BANCSHARES, INC.
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
This Stock Option Plan ("Plan") is designed to provide an
incentive to key employees of Heartland Bancshares, Inc. (the
"Corporation") and any of its subsidiaries, including officers and
employee directors, and to offer an additional inducement in
obtaining the services of key personnel and professional advisors
by granting such persons options to purchase shares of the
Corporation's common stock ("Common Stock"). The Plan provides for
the grant of (i) options intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) non-qualified
options.
2. STOCK SUBJECT TO THE PLAN
The shares of Common Stock to be issued upon exercise of
options granted under the Plan (the "Options") shall be made
available, at the discretion of a committee of the Board of
Directors appointed hereunder, from either authorized but unissued
shares of Common Stock or shares of Common Stock held in the
treasury of the Corporation or any subsidiary of the Corporation,
including shares of Common Stock purchased in the open market or
otherwise.
Subject to the provisions of the next succeeding paragraph of
this Section 2, the aggregate number of shares for which Options
may be granted under the Plan shall be 75,000. If, prior to the
expiration of the plan as provided in Section 13, the Plan remains
in effect and an Option granted under the Plan shall have
terminated for any reason without having been exercised in full,
then the unpurchased shares covered by the terminated Option shall
become available for option to other employees.
In the event that an optionee tenders shares of Common Stock
owned by the optionee in payment of the purchase price of shares
the optionee has elected to purchase pursuant to an Option, only
the net shares issued in connection with such transaction
(calculated by subtracting the number of shares tendered in payment
from the number of shares purchased under the Option) shall be
considered to be shares for which Options have been granted under
the Plan, and the remaining number of shares issued under such
Option shall be considered unpurchased shares that shall again
become available for grants of Options to other employees.
<PAGE>
In the event that the outstanding shares of Common Stock
hereafter are changed into or exchanged for a different number or
kind of shares or other securities of the Corporation by reason of
any recapitalization, reclassification, combination of shares,
stock split-up, stock dividend, or other reorganization or (in the
discretion of the Committee) in the event of any spin-off or other
distribution of a substantial portion of the assets of the
Corporation to the holders of the shares of the Corporation then
subject to Options granted hereunder:
(a) the aggregate number and kind of shares subject to
Options which may be granted hereunder shall be adjusted
appropriately; and
(b) rights under outstanding Options granted hereunder,
both as to the number of subject shares and the Option price,
shall be adjusted appropriately.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Committee,
and any such adjustment may provide for the elimination of
fractional share interests.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee of the Board of
Directors (the "Committee") consisting of two or more members, each
of whom shall qualify at all times as a "Non-Employee Director"
within the meaning of Rule 16b-3 adopted under the Securities
Exchange Act of 1934, as amended, or any successor rule ("Rule 16b-
3"). The members of the Committee shall be appointed by, and may
be changed from time to time in the discretion of, the Board of
Directors of the Corporation. A majority of the members shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, and any acts
approved in writing by all of the members without a meeting, shall
be the acts of the Committee.
4. OPTION PRICE
The purchase price under each Option shall be determined by
the Committee at the time of grant. In the case of Incentive Stock
Options, the purchase price must be set as follows:
(a) for persons who at the time of grant own stock
possessing ten percent or less of the total combined voting
power of all classes of stock of the Corporation or any parent
or subsidiary corporation, the Option price at the time the
Option is granted must be set at no less than the fair market
value of the shares of Common Stock subject to the Option; and
<PAGE>
(b) for optionees who own stock possessing more than ten
percent of the total combined voting power of all classes of
stock of the Corporation or of any parent or subsidiary
corporation, the Option price at the time the Option is
granted must be at least 110 percent of the fair market value
of the shares of Common Stock subject to the Option.
The purchase price for nonqualified Options shall be set at the
fair market value of the shares of Common Stock covered by the
Option at the time of grant. Fair market value shall be determined
for purposes of Section 4 by the Committee in good faith in
accordance with all applicable requirements of the Code.
5. OPTIONS AND ELIGIBILITY OF OPTIONEES
The Committee may, consistent with the purposes of the Plan,
from time to time (a) grant Options to any or all salaried
employees (including officers and employee directors) of the
Corporation and any of its future subsidiaries as defined in
applicable sections of the Code, and (b) grant nonqualified Options
to persons who act as consultants (not including non-employee
directors) to the Corporation but who are not employed by the
Corporation. There shall be no limitation on the aggregate number
of shares for which an Option or Options may be granted to any one
individual; provided, however, that the aggregate fair market value
(determined at the time the Option is granted) of the shares with
respect to which Incentive Stock Options are exercisable for the
first time during any calendar year (under all such plans of the
Corporation and any parent or subsidiary corporation) shall not
exceed $100,000 (the "Qualifying Limit"). Incentive Stock Options
may not be granted under the Plan after the expiration date of the
Plan as set forth in Section 13. Notwithstanding the above and in
order that the Corporation retains the flexibility to provide
additional inducement to key personnel, the aggregate fair market
value of shares of which any individual may be granted Options that
first become exercisable in any calendar year may exceed the
Qualifying Limit; provided, however, that the Options granted in
excess of the Qualifying Limit shall not be treated as "Incentive
Stock Options." Employees may receive more than one Option under
the Plan.
The Committee, at the time of each grant under this Plan,
shall specify whether such grant is intended to qualify as an
Incentive Stock Option or constitute a non-qualified Option.
<PAGE>
The Board of Directors, without further approval of the
shareholders, may substitute new Options for prior options of a
constituent corporation or assume the prior options of a
constituent corporation. For the purposes of this Section 5, a
constituent corporation shall include any corporation which has
been merged into or consolidated with the Corporation or one or
more subsidiaries of the Corporation, or whose assets or stock has
been acquired by or liquidated into the Corporation, or by or into
any one or more subsidiaries of the Corporation, or any parent or
any subsidiary of such corporation.
Subject to the terms, provisions and conditions of the Plan,
the Committee shall have exclusive jurisdiction (i) to select the
persons to whom Options may be granted, (ii) to determine the
number of shares subject to each Option, (iii) to determine the
time or times when Options will be granted, (iv) to determine the
Option price of the shares subject to each Option, which price in
the case of Incentive Stock Options shall be not less than the
minimum specified in Section 4 of the Plan, (v) to determine the
time when each option may be exercised within the limits stated in
the Plan, (vi) to prescribe the form, which shall be consistent
with the Plan, of the instruments evidencing any Options granted
under the Plan, and (vi) to take any other action or make any other
determination under this Plan not expressly delegated to others by
the Articles of Incorporation or Bylaws of the Corporation, or by
this Plan, or by applicable law. The Committee's determination or
interpretation of any matter within the Committee's jurisdiction
under the Plan shall be conclusive, final and binding upon the
Corporation, the optionees and all other interested persons.
6. RESTRICTIONS ON TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable by the
optionee unless the Committee, in its sole discretion, authorizes
such transfer and such transfer is permitted by, or is not in
violation of, the provisions of the Code and Rule 16b-3 (to the
extent that such are applicable to the Option). Except as
specifically authorized by the Committee, an Option shall be
exercisable during the optionee's lifetime only by the optionee or,
in the case of the optionee's legal disability, by the optionee's
guardian or legal representative.
7. EXERCISE OF OPTIONS; REPLACEMENT OPTIONS
Each Option granted under the Plan shall expire not later than
ten years from the date the Option was granted. The Committee may,
in its discretion, prescribe a shorter period for the expiration of
any Option or Options.
<PAGE>
Subject to the provisions of this Section 7 and of Section 8
hereof, each Option may be exercised in whole or from time to time
in part with respect to the number of shares as to which it is then
exercisable in accordance with the terms of the Plan and the
determinations of the Committee. Except as otherwise provided in
Section 8 hereof, no Option that is intended to qualify as an
Incentive Stock Option may be exercised unless the optionee shall
have been in the employ of the Corporation or one of its
subsidiaries at all times during the period beginning with the date
of grant of such Option and ending on the date three (3) months
prior to the date of exercise of such Option. The Committee may
impose additional conditions upon the right of an optionee to
exercise any Option granted hereunder that are not inconsistent
with the terms of the Plan or, in the case of an Option intended to
qualify as an Incentive Stock Option, with the requirements for
qualification as an Incentive Stock Option under Section 422 of the
Code.
A person exercising an Option shall give written notice to the
Corporation of such exercise and the number of shares the optionee
has elected to purchase and shall at the time of purchase tender an
amount in cash, in shares of Common Stock of the Corporation owned
by such person, or in any combination of cash and such shares of
Common Stock, equal in value to the purchase price of the shares
the optionee has elected to purchase. Until the purchaser has made
such payment and has been issued a certificate or certificates for
the shares so purchased, the optionee shall possess no shareholder
rights with respect to any such share or shares.
In the event that an optionee tenders shares of Common Stock
owned by such optionee in payment (in whole or in part) of the
purchase price of shares that the optionee has elected to purchase
under an Option, the Corporation shall be obligated to use its best
efforts to issue to such optionee a replacement option of the same
type (Incentive Stock Option or nonqualified Option) (a
"Replacement Option") as the Option exercised (the "Exercised
Option") and with the same expiration date as the Exercised Option.
Such Replacement Option shall entitle the optionee to purchase a
number of shares equal to the number of shares tendered to the
Corporation to purchase shares under the Exercised Option, and
shall specify an exercise price equal to the fair market value of
the shares of Common Stock on the date of exercise of the Exercised
Option. Such Replacement Option shall not be exercisable during
the twelve months following the date of exercise of the Exercised
Option and shall be cancelled if, during such period, the optionee
sells any shares of Common Stock of the Company other than in
payment of the exercise price of another Option under the Plan, or
pursuant to a corporate transaction in which all holders of shares
of Common Stock are obligated to sell or otherwise dispose of their
shares. Replacement Options shall be issuable upon exercise of
other Replacement Options granted under this paragraph if all
conditions for such issuance are satisfied.
<PAGE>
8. TERMINATION OF EMPLOYMENT
(a) Termination Other Than for Disability, Retirement or Upon
Death. In the event that any optionee's employment by the
Corporation and its subsidiaries shall terminate for any reason,
other than permanent and total disability as such term is defined
in Section 22(e)(3) of the Code ("Permanent and Total Disability"),
retirement or death, all of such optionee's Options (regardless of
whether they are intended to be Incentive Stock Options), and all
of such optionee's rights to purchase or receive shares of Common
Stock pursuant thereto, as the case may be, may be exercised, to
the extent that the Optionee was entitled to exercise such Options
at the date of such termination of employment, by the optionee
until the earlier of (i) the respective expiration dates of such
Options or (ii) (x) if the Option is an Incentive Stock Option, on
the date that is three (3) months after the date of such
termination of employment or (y) if the Option is a nonqualified
Option, on the date that is one (1) year after the date of such
termination of employment. If, however, an optionee's employment
is terminated for cause, the provisions of the preceding sentence
shall not apply and any Option held by such optionee will terminate
automatically upon the termination of the optionee's employment.
Options granted under the Plan shall not be affected by any change
in service or employment so long as the optionee continues to be
employed by or in the service of the Corporation or any of its
subsidiaries, or a corporation (or a parent or subsidiary of such
corporation) issuing or assuming an Option in a transaction in
accordance with applicable Code requirements.
(b) Disability. In the event that any optionee's employment
shall terminate as a result of the Permanent and Total Disability
of such optionee, such optionee (or the optionee's guardian or
legal representative), may exercise, to the extent that the
optionee was entitled to exercise any such Options at the date of
such termination of employment, any Options granted to the optionee
pursuant to the Plan at any time prior to the earlier of (i) the
respective expiration dates of any such Options or (ii) (x) if the
Option is an Incentive Stock Option, on the date that is one year
after the date of such termination of employment or (y) if the
Option is a nonqualified Option, on the date that is three (3)
years after the date of such termination of employment.
(c) Death. In the event that any optionee's employment shall
terminate as a result of the death of the optionee, any Options
granted to any such optionee, may be exercised, to the extent that
the optionee was entitled to exercise any such Options at the date
of death, by the person or persons to whom the optionee's rights
under any such Options pass by will or by the laws of descent and
distribution (including the optionee's estate during the period of
administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Options or (ii) the date
which is three (3) years after date of death of such optionee.
(d) Retirement. In the event that any optionee's employment
terminates as a result of the optionee's retirement on or after
attaining the age of 62 and after the optionee has been employed by
the Corporation for at least three (3) years, such optionee (or the
optionee's guardian or legal representative), may exercise, to the
extent that the optionee was entitled to exercise any such Option
at the date of such termination of employment, any Options granted
to the optionee pursuant to the Plan at any time prior to the
earlier of (i) the respective expiration dates of any such Options
or (ii) the date which is three (3) years after the date of such
termination of employment. In the event that an optionee's
employment terminates as a result of the optionee's retirement and
such optionee has not been employed by the Corporation for at least
three (3) years at the time of such retirement, then, on the date
of such optionee's retirement, all of such optionee's Options and
rights to purchase or receive shares of Common Stock pursuant
thereto shall terminate.
(e) Nonqualified Options. Notwithstanding the above
provisions of this Section 8, the Committee in its sole discretion
may extend the termination date of any nonqualified Option to a
date not later than the scheduled expiration date of the
nonqualified Option.
(f) Termination of Options. To the extent that any Option
granted under the Plan to any optionee whose employment by the
Corporation terminates shall not have been exercised within the
applicable period set forth in this Section 8, as it may be
extended by the Committee hereunder, any such Option, and all
rights to purchase shares pursuant thereto, shall terminate on the
last date of the applicable period.
9. EFFECT OF CORPORATE REORGANIZATIONS
Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation of the Corporation
as a result of which the outstanding securities of the class then
subject to Options hereunder are changed into or exchanged for cash
or property or securities not of the Corporation's issue, or upon
a sale of substantially all the property of the Corporation to
another corporation or person, the Plan shall terminate, unless
provision shall be made in writing in connection with such
transaction for the continuance of the Plan and/or for the
assumption of Options theretofore granted, or the substitution for
such Options of options covering the stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, in
which event the Plan and Options theretofore granted shall continue
in the manner and under the terms so provided. If the Plan and
unexercised Options shall terminate pursuant to the foregoing
sentence, all persons entitled to exercise any unexercised portions
<PAGE>
of Options then outstanding shall have the right, at such time
prior to the consummation of the transaction causing such
termination as the Corporation shall designate, to exercise the
unexercised portions of their Options, including the portions
thereof which would, but for this Section 9, not yet be
exercisable.
10. OTHER EMPLOYEE STOCK BENEFIT PLANS
The Corporation reserves the right, in the discretion of its
Board of Directors, to establish other plans during the term of
this Plan under which employees and others providing services to
the Corporation and its subsidiaries (including officers and
Directors thereof) may be entitled (in addition to their rights
under Options granted under this Plan) to receive or purchase
shares of the Corporation's capital stock or other securities, or
cash amounts determined in relation to the earnings, dividends, net
worth or market appreciation of shares of the Corporation's capital
stock or other securities, including, but not limited to,
restricted stock, stock appreciation rights, stock bonuses, book
value stock, and the like.
11. AMENDMENTS TO PLAN
The Committee may from time to time prescribe, amend and
rescind rules and regulations relating to the Plan and, subject to
the approval of the Board of Directors of the Corporation, may at
any time terminate, modify or suspend the operation of the Plan,
provided that no such modification shall be effected without
approval of the shareholders if such modification would cause the
Plan to no longer to comply with Rule 16b-3 or any successor rule
or other regulatory or legal requirements.
12. MISCELLANEOUS
(a) Compliance with Law.
(i) The Corporation shall not be required to sell or issue
any shares under any Option if the issuance of such shares shall
constitute or result in a violation by the optionee or the
Corporation of any provisions of any law, statute or regulation of
any governmental authority. Without limiting the generality of the
foregoing, in connection with the Securities Act of 1933 (the
"Securities Act"), upon exercise of any Option, the Corporation
shall not be required to issue shares unless the Committee has
received evidence satisfactory to it to the effect that
registration under the Securities Act and applicable state
securities laws is not required or that such registration is
effective. Any determination in this connection by the Committee
shall be final, binding and conclusive. If shares are issued under
any Option without registration under the Securities Act or
applicable state securities laws, the Optionee may be required to
<PAGE>
accept the shares subject to such restrictions on transferability
as may in the reasonable judgment of the Committee be required to
comply with exemptions from registration under such laws. The
Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act or
applicable state securities laws. The Corporation shall not be
obligated to take any other affirmative action in order to cause
the exercise of an option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental
authority.
(ii) With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934 (the "1934 Act"), transactions
under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To
the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee.
(b) Vesting. The Committee, in its sole discretion, shall
determine the conditions, if any, for the vesting of rights in
Options granted pursuant to the Plan.
(c) Tenure. Nothing in the Plan or in any Option granted
hereunder or in any agreement relating thereto shall confer upon
any officer or employee the right to continue in such position with
the Corporation or any subsidiary thereof.
(d) Withholding Taxes. Where an optionee is entitled to
receive shares pursuant to the exercise of an Option pursuant to
the Plan, the Corporation shall have the right to require the
optionee to pay the Corporation the amount of any taxes which the
Corporation is required to withhold with respect to such shares,
or, in lieu thereof, to retain, or sell without notice, a number of
such shares sufficient to cover the amount required to be withheld.
(e) Singular, Plural; Gender. Whenever used herein, nouns in
the singular shall include the plural, and the feminine pronoun
shall include the masculine gender.
(f) Headings, Etc., No Part of the Plan. Headings of
sections and paragraphs hereof are inserted for convenience of
reference; they constitute no part of the Plan.
(g) Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Indiana
except to the extent that Federal law shall be deemed to apply.
<PAGE>
13. EFFECTIVE DATE
The Plan shall become effective on the date of adoption by the
Board of Directors and the Shareholders (the "Effective Date").
The Plan shall expire ten years from the date of adoption of this
Plan, after which no Options may be granted under the Plan.
EXHIBIT 10.2
HEARTLAND BANCSHARES, INC.
1997 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
SECTION 1. PURPOSE
The purpose of this Heartland Bancshares, Inc. 1997 Stock
Option Plan for Nonemployee Directors ("Plan") is to increase the
proprietary interest of those members of the Board of Directors who
are not employees of the Corporation or its affiliates
("Nonemployee Directors") in the success of Heartland Bancshares,
Inc. (the "Corporation") and to enhance the Corporation's ability
to retain and attract experienced and knowledgeable directors.
SECTION 2. STOCK SUBJECT TO THIS PLAN
The Stock to be issued under this Plan shall be shares of
common stock of the Corporation (the "Common Stock"). The Common
Stock shall be made available from authorized but unissued shares
(including shares acquired in the open market). The total number
of shares of Common Stock that may be issued under this Plan
pursuant to Options granted hereunder shall be 40,000. Such number
of shares shall be subject to adjustment in accordance with Section
9 hereof. Common Stock subject to any unexercised portion of an
Option which expires, is cancelled, or is terminated for any
reason, may again be subject to the grant of Options under this
Plan.
SECTION 3. ADMINISTRATION
This Plan shall be administered by a committee appointed by
the Board of Directors (the "Committee"), consisting of two or more
members, each of whom shall qualify at all times as a "Non-Employee
Director" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, or any successor rule
("Rule 16b-3"). The amount, nature, and timing of Options shall be
automatic, as described in Section 5, and not subject to the
determination of the Committee. The Committee may, subject to the
provisions of this Plan, establish such rules and regulations as it
deems necessary or advisable for the proper administration of this
Plan, and may make determinations and may take such other action in
connection with or in relation to this Plan as it deems necessary
or advisable. Each determination or other action made or taken by
the Committee pursuant to this Plan, including interpretations of
this Plan, shall be final and conclusive for all purposes and upon
all persons, including, but without limitation, the Corporation and
its subsidiaries, the Board of Directors, the affected Nonemployee
Directors, and their respective successors in interest.
<PAGE>
SECTION 4. ELIGIBILITY
Each Nonemployee Director is eligible to participate in this
Plan. Options shall be automatically granted to Nonemployee
Directors as provided for herein.
SECTION 5. GRANT AND EXERCISE OF OPTION
(a) Automatic Option Grants. Effective as of the close of
business on the day immediately preceding the date of the
final Prospectus for the initial public offering of Common
Stock, each Nonemployee Director shall be granted one Option
to purchase 4,000 shares of Common Stock at the price of
$10.00 per share, which the Board has determined to be not
less than the fair market value as of the date of the adoption
of this Plan and which the Board has determined will, by
definition, be not less than the fair market value as of the
effective date of grant of the Options. Nonemployee Directors
who are appointed or elected after the date of the Prospectus,
shall receive an Option for a lesser number of shares, the
number of which will depend on which annual meeting is the
first annual meeting occurring concurrently with, or after, he
or she becomes a Nonemployee Director, as set forth in the
table below:
The Nonemployee Director's
If the Nonemployee Director's Option will be for the
First Annual Meeting is the: Following Number of Shares:
----------------------------- ---------------------------
1998 Annual Meeting 3,000
1999 Annual Meeting 2,000
2000 Annual Meeting 1,000
(b) Schedule Under Which Options Become Fully Exercisable.
Each Option granted under the Plan shall be immediately
exercisable for 1,000 shares of Common Stock. Each Option
will become exercisable for an additional 1,000 shares of
Common Stock as of the date of each successive Annual Meeting,
until it is exercisable in full.
(c) Option Price. The Option price of each share of Common
Stock purchasable under an Option shall be the Fair Market
Value per Share on the date of grant. "Fair Market Value per
Share" on a particular date shall mean (i) if the common stock
is quoted on the OTC Bulletin Board (the "Bulletin Board"),
the mean between the closing high bid and low asked quotations
for such day (or, in the event that the common stock was not
quoted on such day, the most recent preceding business day on
which the common stock was quoted) of the common stock on the
Bulletin Board, (ii) if the common stock is quoted on The
<PAGE>
Nasdaq Stock Market ("Nasdaq"), the mean between the closing
high bid and low asked quotations for such day of the common
stock on Nasdaq, or (iii) if neither clause (i) nor (ii) is
applicable, a value determined by any fair and reasonable
means prescribed by the Committee.
(d) Option Agreement. Each Option granted under this Plan
shall be evidenced by a stock option agreement ("Stock Option
Agreement") that is duly executed on behalf of the Corporation
and by the Nonemployee Director to whom the Option is granted.
Each Stock Option Agreement shall be subject to the terms and
conditions of this Plan and in such form, not inconsistent
with this Plan, as the Board of Directors or the Committee
shall from time to time approve. Appropriate officers of the
Corporation are hereby authorized to execute and deliver Stock
Option Agreements on behalf of the Corporation.
(e) Manner of Exercise. Any Option (subject to Section 5(b))
may be exercised from time to time, in whole, or in part, by
giving written notice to the Corporation, signed by the person
exercising the Option, stating the number of shares of Common
Stock with respect to which the Option is being exercised,
accompanied by payment of the full consideration for the
shares as to which the Option is being exercised, in one or a
combination of the following alternative forms: (i) cash, or
(ii) shares of Common Stock already owned by the person
exercising the Option, valued at the Fair Market Value per
Share of Common Stock on the date of exercise.
(f) Expiration of Options. The unexercised portion of each
Option shall automatically and without notice expire and
become null and void at the time of the earliest to occur of
the following:
(i) the expiration of ten years from the date the Option
was granted;
(ii) the expiration of three months after the person
granted an Option under this Plan (an "Optionee") ceases
to be a Nonemployee Director, other than by reason of
permanent disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code")), death, or for cause;
(iii) the expiration of one year following the death
or permanent disability (as defined in Section 22(e)(3)
of the Internal Revenue Code) of the Optionee; or
(iv) the termination of the Optionee's service as a
Nonemployee Director, if such termination is for cause
(the Committee or the Board of Directors shall have the
right to determine what constitutes cause, and such
determination shall be conclusive and binding for all
purposes).<PAGE>
(g) Options are Nonqualified. Each Option granted under this
Plan shall be a nonqualified stock option which does not
qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code.
SECTION 6. TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable by the
optionee unless the Committee, in its sole discretion, authorizes
such transfer and such transfer is permitted by, or is not in
violation of, the provisions of the Code and Rule 16b-3 (to the
extent that such are applicable to the Option). Except as
specifically authorized by the Committee, an Option shall be
exercisable during the optionee's lifetime only by the optionee or,
in the case of the optionee's legal disability, by the optionee's
guardian or legal representative.
SECTION 7. NO RIGHT TO CONTINUE AS DIRECTOR
Neither this Plan nor the granting of an Option, nor any other
action taken pursuant to this Plan shall constitute or be evidence
of any agreement or understanding, express or implied, that the
Board of Directors will nominate any director for re-election, or
that the Corporation will retain a director for any period of time,
or at any particular rate of compensation.
SECTION 8. RIGHTS AS A SHAREHOLDER
An Optionee or a transferee of an Option pursuant shall have
no rights as a Shareholder with respect to any Common Stock that is
the subject of either an unexercised or exercised Option until the
Optionee or such transferee shall have become the holder of record
of such Common Stock, and no adjustments shall be made for
dividends in cash or other property or other distributions or
rights in respect of such Common Stock for which the record date is
prior to the date on which the Optionee or such transferee shall
have in fact become the holder of record of the Common Stock
acquired pursuant to the Option.
<PAGE>
SECTION 9. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the number of shares of
Common Stock through the declaration of stock dividends or stock
splits or through recapitalization or merger or consolidation or
combination of shares or otherwise, the Committee or the Board of
Directors shall make such adjustment, if any, as it may deem
appropriate in the number of shares of Common Stock available for
Options as well as the number of shares of Common Stock subject to
any outstanding Options, the option price thereof and any other
terms it deems appropriate. Any such adjustment may provide for
the elimination of any fractional shares which might otherwise
become subject to any Option without payment therefor. The grant of
Options under this Plan shall not affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its
business or assets.
SECTION 10. USE OF PROCEEDS
The cash proceeds received by the Corporation from the
issuance of shares pursuant to Options under this Plan shall be
used for general corporate purposes.
SECTION 11. TAX WITHHOLDING
The delivery of any shares of Common Stock under the Plan
shall be for the account of the Company and any such delivery or
distribution shall not be made until the recipient shall have made
satisfactory arrangements for the payment of any applicable
withholding taxes.
SECTION 12. EFFECTIVE DATE AND TERM OF THIS PLAN
(a) This Plan shall become effective on the date of adoption
by the Board of Directors (the "Effective Date").
(b) Unless previously terminated in accordance with Section
13 of this Plan, this Plan shall terminate at the close of
business on the date that is five years subsequent to the date
of the Effective Date, after which no Options shall be granted
under this Plan. Such termination shall not affect any
Options granted prior to such termination.
<PAGE>
SECTION 13. AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN
The Board of Directors may, from time to time, terminate or
suspend this Plan, in whole or in part, or amend this Plan from
time to time, including the adoption of amendments deemed necessary
or desirable to qualify the Options under rules and regulations
promulgated by the Securities and Exchange Commission with respect
to directors who are subject to the provisions of Section 16 of the
Securities Exchange Act of 1934 (the "Act"), or to correct any
defect or supply any omission or reconcile any inconsistency in
this Plan or in any Option granted hereunder, without the approval
of the Shareholders of the Corporation; except that no such action
may be taken which would (i) cause this Plan not to satisfy all
applicable requirements of Rule 16b-3, or (ii) impair the rights of
any Optionee under any Option previously granted
under this Plan without the Optionee's consent.
SECTION 14. LIMITATION ON ISSUE OR TRANSFER OF SHARES
Notwithstanding any provisions of this Plan or the terms of
any Option, the Corporation shall not be required to issue any
shares of Common Stock or transfer on its books and records any
shares of Common Stock if such issue or transfer would, in the
judgment of the Committee or of counsel for the Corporation,
constitute a violation of any state or Federal law, or of the rules
or regulations of any governmental regulatory body, or any
securities exchange or automated dealer quotation system. An
Optionee desiring to exercise an Option may be required by the
Corporation, as a condition of the effectiveness of any exercise of
an Option, to agree in writing that all securities to be acquired
pursuant to such exercise shall be held for his or her account
without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to
that effect, and that such shares will not be transferred or
disposed of except in compliance with applicable federal and state
securities laws.
<PAGE>
SECTION 15. EFFECT OF CORPORATE REORGANIZATIONS
Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation of the Corporation
as a result of which the outstanding securities of the class then
subject to Options hereunder are changed into or exchanged for cash
or property or securities not of the Corporation's issue, or upon
a sale of substantially all the property of the Corporation to
another corporation or person, the Plan shall terminate, unless
provision shall be made in writing in connection with such
transaction for the continuance of the Plan and/or for the
assumption of Options theretofore granted, or the substitution for
such Options of options covering the stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, in
which event the Plan and Options theretofore granted shall continue
in the manner and under the terms so provided. If the Plan and
unexercised Options shall terminate pursuant to the foregoing
sentence, all persons entitled to exercise any unexercised portions
of Options then outstanding shall have the right, at such time
prior to the consummation of the transaction causing such
termination as the Corporation shall designate, to exercise the
unexercised portions of their Options, including the portions
thereof which would, but for this Section 15, not yet be
exercisable.
SECTION 16. NO SEGREGATION OF CASH OR SHARES
The Corporation shall not be required to segregate any shares
of Common Stock that may at any time be represented by Options, and
the Plan shall constitute an "unfunded" plan of the Corporation.
No employee shall have rights with respect to shares of Common
Stock prior to the delivery of such shares. The Corporation shall
not, by any provisions of the Plan, be deemed to be a trustee of
any Common Stock or any other property and the liabilities of the
Corporation to any employee pursuant to the Plan shall be those of
a debtor pursuant to such contract obligations as are created by or
pursuant to the Plan, and the rights of any employee, former
employee or beneficiary under the Plan shall be limited to those of
a general creditor of the Corporation.
SECTION 17. DELIVERY OF SHARES
No shares shall be delivered pursuant to any exercise of an
Option under the Plan unless the requirements of such laws and
regulations as may be deemed by the Committee to be applicable
thereto are satisfied. All certificates for shares of Common Stock
delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
<PAGE>
Securities and Exchange Commission, any stock exchange upon which
the Common Stock is then listed, and any applicable Federal or
state securities law, and the committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
SECTION 18. GOVERNING LAW
This Plan and all determinations made and actions taken
pursuant thereto shall be governed by the laws of the State of
Indiana and construed in accordance therewith.
SECTION 19. SEVERABILITY
If any provision of the Plan, or any term or condition of any
Option granted thereunder, is invalid, such provision, term,
condition or application shall to that extent be void (or, in the
discretion of the Board of Directors, such provision, term or
condition may be amended so as to avoid such invalidity or
failure), and shall not affect other provisions, terms or
conditions or applications thereof, and to this extent such
provisions, terms and conditions are severable.
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Heartland Bancshares, Inc.
We consent to the inclusion in Registration Statement Form SB-2
and Prospectus of Heartland Bancshares, Inc., relating to the
issuance of securities for the initial public offering, of our
Independent Auditor's Report, dated July 25, 1997, on the
financial statements of Heartland Bancshares, Inc. for the
period from May 27, 1997 (date of inception) to June 30, 1997,
and we consent to the use of our name and the statements with
respect to us appearing under the heading "Experts" in the
Prospectus.
/s/ Crowe, Chizek and Company LLP
Crowe, Chizek and Company LLP
July 25, 1997
Indianapolis, Indiana
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