HORIZON BANCORP /IN/, DEF 14A, 1997-04-29

HORIZON BANCORP /IN/
DEF 14A, 1997-04-29
STATE COMMERCIAL BANKS

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<PAGE> 1

================================================================================

SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

HORIZON BANCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

================================================================================
<PAGE> 2

April 29, 1997

Dear Shareholder:

You are cordially invited to attend the 1997 Annual Meeting of Shareholders of
Horizon Bancorp to be held at the Orak Shrine Temple, 3848 N. Frontage Road,
Michigan City, Indiana on Thursday, May 29, 1996 at 10:00 a.m. (local time). To
ensure that a quorum will be represented at the meeting, we encourage you to
complete, sign, date and return your proxy promptly in the enclosed postage
prepaid envelope. This will not limit your right to vote in person or to attend
the meeting.

The Notice of Annual Meeting and the Proxy Statement on the following pages
cover the business to come before the meeting, which will include election of
directors. We urge you to read these materials carefully.

The Annual Report of Horizon Bancorp for the year ending December 31, 1996 is
also enclosed. The Annual Report is not to be considered as proxy solicitation
material.

We look forward to meeting our shareholders, and welcome the opportunity to
discuss the business of your company with you.

Larry E. Reed Thomas P. McCormick
Chairman of the Board President

1
<PAGE> 3

HORIZON BANCORP
515 FRANKLIN SQUARE
MICHIGAN CITY, INDIANA 46360

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Our Shareholders:

NOTICE IS HEREBY GIVEN THAT PURSUANT TO THE CALL OF ITS DIRECTORS, the Annual
Meeting of Shareholders of Horizon Bancorp will be held on THURSDAY, MAY 29,
1997, 10:00 A.M. (LOCAL TIME), AT THE ORAK SHRINE TEMPLE, 3848 N. FRONTAGE ROAD,
MICHIGAN CITY, INDIANA, for the purpose of considering and voting upon the
following matters:

1) The election of four (4) Directors to serve terms which will expire in
2000.

2) The approval of the First Amendment to the 1987 Stock Option and Stock
Appreciation Rights Plan of Horizon Bancorp.

3) The approval of the 1997 Key Employees' Stock Option and Stock
Appreciation Rights Plan of Horizon Bancorp.

4) To transact such other business as may properly come before the meeting
or any adjournment thereof.

Only shareholders of record at the close of business on April 28, 1997, the
record date fixed by the Board of Directors, are entitled to notice of and to
vote at the meeting.

Your attention is directed to the accompanying Proxy Statement and Proxy.

IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY IN ORDER THAT THERE MAY BE PROPER
REPRESENTATION AT THE MEETING. YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.

By Order of the Board of Directors

Diana E. Taylor
Secretary

April 29, 1997

2
<PAGE> 4

HORIZON BANCORP
515 FRANKLIN SQUARE
MICHIGAN CITY, INDIANA 46360
(219) 879-0211

APRIL 29, 1997

PROXY STATEMENT

GENERAL INFORMATION

This Proxy Statement is furnished to the shareholders of Horizon Bancorp
("Horizon") in connection with the solicitation by the Board of Directors of
proxies to be voted at the Annual Meeting of Shareholders of Horizon to be held
at the Orak Shrine Temple, 3848 N. Frontage Road, Michigan City, Indiana on
Thursday, May 29, 1997 at 10:00 a.m. (local time), and at any adjournment
thereof. This Proxy Statement and accompanying form of proxy have been mailed to
shareholders on or about April 29, 1997.

Only shareholders of record as of April 28, 1997 will be entitled to notice of,
and to vote at, the Annual Meeting. The voting securities of Horizon consist
only of Common Stock, of which 897,311 shares were issued and outstanding on the
record date. For the matters to be voted on at the Annual Meeting, each share of
Horizon Common Stock is entitled to one vote.

EXERCISE AND VOTING OF PROXY
The enclosed proxy is designed to permit each shareholder of record of Horizon
Common Stock at the close of business on April 28, 1997 to vote at the Annual
Meeting. All properly executed proxies delivered pursuant to this solicitation
will be voted at the meeting in accordance with the instructions of the
shareholders given in the proxies. In the absence of any such instructions, the
shares of Horizon Common Stock, represented by proxy, will be voted FOR the
election of the four nominees for directors; FOR the approval of the adoption of
the First Amendment to the 1987 Stock Option and Stock Appreciation Rights Plan
of Horizon Bancorp; and FOR the approval of the adoption of the 1997 Key
Employees' Stock Option and Stock Appreciation Rights Plan of Horizon Bancorp.
On other matters that may properly come before the meeting, this proxy will be
voted, in their discretion, by the named Proxies. Any proxy may be revoked at
any time insofar as it has not been exercised, either by delivery to Horizon of
a written revocation, by a duly executed proxy bearing a later date or by action
of the shareholder at the meeting.

The nominees for election as directors of Horizon named in the Proxy Statement
will be elected by a plurality of the votes cast. Action on other matters
presented at the meeting will be approved if the votes cast in favor exceed the
votes cast in opposition, unless a higher voting requirement is required.
Abstentions or broker non-votes will not be voted for or against any items or
other matters presented at the meeting.

The cost of soliciting proxies in the accompanying form will be borne by
Horizon. In addition to solicitation by mail, proxies may be solicited
personally or by telephone or telegraph, by certain directors, officers or
employees of Horizon or Horizon Bank, N.A. ("Bank", formerly known as First
Citizens Bank, N.A.), its subsidiary, who will not be specially compensated for
such solicitations. No solicitation of proxies will be made by paid solicitors.

3
<PAGE> 5

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the knowledge of Horizon, as of February 28, 1997, the following
are the only beneficial owners of more than five percent (5%) of the outstanding
shares, except as otherwise noted under Nominee's Standing for Election

NAME & ADDRESS OUTSTANDING STOCK PERCENTAGE OF OUTSTANDING STOCK
- -------------- ----------------- -------------------------------
<S> <C> <C>
Cede & Co. 174,155 19.36%
Box #20
Bowling Green Station, NY 10004

IMS Investment Management, N.A.
as trustee 324,121 (1) 36.03%
P.O. Box 1125
Michigan City, IN 46360

Darhap & Co. 81,544 (2) 9.06%
P.O. Box 1125
Michigan City, IN 46360

<FN>
- ----------------------------------------------------------------------------------------------
(1) Shares indicated as beneficially owned include 315,357 share under the
Employee Stock Ownership Plan ("ESOP") and 8,764 shares under the
Employees' Thrift Plan.

(2) Shares indicated as beneficially owned are held by Darhap & Co. as nominee
for IMS Investment Management, N.A. (a subsidiary of Bank) for shares held
for beneficiaries of trusts and estates, not the Employee Stock Ownership
Plan and Employees' Thrift Plan.
</TABLE>

ELECTION OF DIRECTORS
The Articles of Incorporation of Horizon provide that the Board of Directors
shall consist of three classes of directors. One class of directors is to be
elected each year with terms extending to the third succeeding Annual Meeting
after such election.

NOMINEES STANDING FOR ELECTION
TERMS TO EXPIRE IN 2000:

NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- --------------------- ---------- -----
<S> <C> <C> <C>
Farmer 1,272 0.13%

Russell L. Arndt
Age - 68
1976
- --------------------------------------------------------------------------------------------------------
President and Chief Administrative 37,591(3) 3.86%
Officer, Horizon and Bank since 1986,
retired December 31, 1996.

Robert C. Dabagia
Age - 58
1980
- --------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 6

NOMINEES STANDING FOR ELECTION
TERMS TO EXPIRE IN 2000:

Myles J. Kerrigan
Age - 58
1979

- --------------------------------------------------------------------------------------------------------
Chairman and Chief Executive 47,664 (4) 4.90%
Officer, Horizon and Bank
since 1986

Larry E. Reed
Age - 62
1979
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CONTINUING DIRECTORS
TERMS TO EXPIRE IN 1999:

NAME, AGE, AND
YEAR FIRST
SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED(2) CLASS
- ------- -------- --- --------------------- ----------
Chancellor, Purdue University 1,030 0.11%
- North Central

Dale W. Alspaugh
Age - 64
1986
- --------------------------------------------------------------------------------------------------------
Pathologist, Pathology 3,627 0.37%
Consultants, Inc.

Robert E. McBride, M.D.
Age - 57
1984

</TABLE>

<PAGE> 7

CONTINUING DIRECTORS
TERMS TO EXPIRE IN 1999:

Thomas P. McCormick
Age - 43
1997
- --------------------------------------------------------------------------------------------------------
Farmer 226 0.02%

Gene L. Rice
Age - 64
1979
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CONTINUING DIRECTORS
TERMS TO EXPIRE IN 1998:

George R. Averitt
Age - 65
1973
- --------------------------------------------------------------------------------------------------------
Retired, General Construction Co., Inc. 5,475 0.56%
(general contractor)

James D. Brown
Age - 70
1979
</TABLE>

<PAGE> 8

CONTINUING DIRECTORS
TERMS TO EXPIRE IN 1998:
<TABLE>
<CAPTION>

NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR(1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- --------------------- ---------- -----
<S> <C> <C> <C>
Vice President, Seico, Inc. 2,342 0.24%

Boyd W. Phelps
Age - 68
1971

- --------------------------------------------------------------------------------------------------------
President, Century 21 250 0.03%
Middleton Co., Inc.

Larry N. Middleton, Jr.
Age - 44
1995

- --------------------------------------------------------------------------------------------------------
Executive Vice President, 100 0.01%
McKee Group

Susan D. Sterger
Age - 42
1995

<FN>
- --------------------------------------------------------------------------------
(1) The date indicated in this column reflects the year the person listed was
first elected as a director of Horizon or one of the predecessors of Bank,
namely Citizens Bank of Michigan City ("Citizens Bank") and First Merchants
National Bank ("First Bank").

(2) The information shown regarding shares beneficially owned is based upon
information furnished to Horizon by the individuals listed. The nature of
beneficial ownership, unless otherwise noted, represents sole or shared
voting or investment power.

(3) Shares indicated as beneficially owned by Mr. Dabagia include 22,000 shares
of vested stock options granted under the 1987 Stock Option and Stock
Appreciation Rights Plan ("1987 Plan") of Horizon, 4,117 shares held by the
Horizon Employee Stock Ownership Plan ("ESOP") and 4,354 held by the
Horizon Bancorp Employees' Thrift Plan ("Thrift Plan").

(4) Shares indicated as beneficially owned by Mr. Reed include 30,000 shares of
vested stock options granted under the 1987 Stock Option and Stock
Appreciation Rights Plan ("1987 Plan") of Horizon, 11,028 shares held by
the Horizon Employee Stock Ownership Plan ("ESOP") , 5 shares held by the
Horizon Bancorp Employees' Thrift Plan ("Thrift Plan") and 2,750 shares
owned by Mr. Reed's spouse of which Mr. Reed disclaims ownership.

(5) Shares indicated as beneficially owned by Mr. McCormick include 8,500
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon, 5,367 shares held
by the Horizon Employee Stock Ownership Plan ("ESOP") and 2 shares held by
Horizon Bancorp Employees' Thrift Plan ("Thrift Plan").
</TABLE>
7

<PAGE> 9

Information regarding shares beneficially owned is as of February 28, 1997. As
of February 28, 1996, directors, nominees and executive officers, as a group
(14, including above 13 individuals), beneficially owned 124,644 shares
(including 64,500 shares exercisable under stock options), 12.81% of the shares
outstanding.

BOARD RECOMMENDATION
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
THE NOMINEES. It is intended that the proxies given to the persons named in the
accompanying form of proxy will, unless otherwise indicated therein, be voted
FOR the election of the nominees named above. Although management has no reason
to believe that any nominee will be unable to serve, in the event any nominee
should become unavailable for election, and unless the Board of Directors shall
reduce the size of the Board to a number which shall be equal to the number of
nominees who are able and willing to serve, the persons named in the proxy will
vote for a substitute nominee who will be designated by the Board of Directors.

PROCEDURES FOR NOMINATION OF DIRECTORS
Under Horizon's by-laws, nominations for election to the Board of Directors may
be made by the Board of Directors or by any shareholder of any outstanding class
of capital stock of Horizon entitled to vote for the election of directors.
Horizon does not have a Nominating Committee of the Board of Directors.
Nominations, by any shareholder, must be made in writing and must be delivered
to the President of Horizon not less than 30 days nor more than 50 days prior to
any meeting of shareholders called for the purpose of electing directors and
must include certain detailed information and representations with respect to
such nominee as specified in the by-laws. Nominations not made in accordance
with the by-laws may be disregarded by the chairman of the meeting, in his
discretion, and upon his instructions, the vote tellers may disregard all votes
cast for any such nominee. A complete copy of the applicable provision of the
by-laws will be available upon request to the President of Horizon.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1996, Horizon's Board of Directors held twelve meetings. Horizon
directors attended 75% or more of the aggregate of the meetings of the Board of
Horizon, Bank and all committees upon which the Directors serve. Horizon does
not have any standing committees of its own. However, the Bank Board of
Directors has, among others, an Audit Committee and Compensation Committee,
which also serve as such for Horizon, The Loan Store, Inc., a consumer finance
subsidiary of Horizon, and IMS Investment Management, N.A., an investment
management subsidiary of Bank.

The Audit Committee, whose members at December 31, 1996 were Gene L. Rice,
Chairman, George R. Averitt, James D. Brown, Boyd W. Phelp, Susan D. Sterger and
Donald J. Manaher, director of Bank, met four times in 1996. Larry E. Reed and
Robert C. Dabagia are ex officio members of the Audit Committee. The purpose of
the Committee is to assist the Board of Directors in fulfilling its statutory
and fiduciary responsibilities for examinations of Bank and affiliates and
monitoring of accounting, auditing and financial reporting practices. The
Committee reviews the internal audit program of Bank and recommends to the Board
of Directors the engagement of an outside auditing firm.

The Compensation Committee, whose members at December 31, 1996 were Boyd W.
Phelps, Chairman, Dale W. Alspaugh, Russell L. Arndt, Robert C. Dabagia, Myles
J. Kerrigan, Larry N. Middleton, Jr., Larry E. Reed, and Susan D. Sterger met
four times in 1996. The Committee reviews all salary and employee benefit issues
relating to Bank and affiliates employees and directors.

8
<PAGE> 10

EXECUTIVE OFFICERS OF BANCORP

The following information is provided with respect to executive officers of
Horizon holding office as of December 31, 1996 with all other information as of
February 28, 1997:

SHARES PERCENT
BENEFICIALLY OF OFFICE AND BUSINESS EXPERIENCE DURING THE
NAME AGE OWNED (1) CLASS PAST FIVE YEARS
- -------------------------------- ---------- --------------- --------- - -------------------------------------------------------
<S> <C> <C> <C> <C>
Larry E. Reed 62 47,664(2) 4.90% Chairman and Chief Executive Officer Horizon and
Bank since 1986.

Robert C. Dabagia 58 37,591(3) 3.86% President and Chief Administrative Officer Horizon
and Bank since 1986. Retired 12/31/96.

Thomas P. McCormick 43 13,869(4) 1.42% President and Chief Administrative Officer Horizon
and Bank since 1/1/97. Executive Vice President
Horizon and Bank since 1986.

Leon A. Dargis 59 9,633(5) 0.99% Senior Vice President Bank since 1986, Vice
Chairman IMS Investment Management, N.A.
since 10/1/96.

<FN>
(1) The information shown regarding shares beneficially owned is based upon
information furnished to Horizon by the individuals listed. The nature of
beneficial ownership, unless otherwise noted, represents sole or shared
voting or investment power.

(2) Shares indicated as beneficially owned by Mr. Reed include 30,000 shares of
vested stock options granted under the 1987 Stock Option and Stock
Appreciation Rights Plan ("1987 Plan") of Horizon, 11,028 shares held by
the Horizon Employee Stock Ownership Plan ("ESOP") , 5 shares held by the
Horizon Bancorp Employees' Thrift Plan ("Thrift Plan") and 2,750 shares
owned by Mr. Reed's spouse of which Mr. Reed disclaims ownership.

(4) Shares indicated as beneficially owned by Mr. McCormick include 8,500
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon, 5,367 shares held
by the Horizon Employee Stock Ownership Plan ("ESOP") and 2 shares held by
Horizon Bancorp Employees' Thrift Plan ("Thrift Plan").

(5) Shares indicated as beneficially owned by Mr. Dargis include 4,000 shares
of vested stock options granted under the 1987 Stock Option and Stock
Appreciation Rights Plan ("1987 Plan") of Horizon, 4,347 shares held by the
Horizon Employee Stock Ownership Plan ("ESOP") and 2 shares held by Horizon
Bancorp Employees' Thrift Plan ("Thrift Plan").
</TABLE>

All of Horizon's executive officers hold office for a term of one year. Messrs.
Reed and McCormick are parties to Employment Agreements ("Agreements") with
Horizon pursuant to which they have been selected to serve as Directors and
Chairman and Chief Executive Officer and President and Chief Administrative
Officer, respectively, of Horizon and Bank (see "Executive Compensation and
Other Information").

REPORT OF THE COMPENSATION COMMITTEE
DECEMBER 31, 1996
The Compensation of all elected officers of the Bank, including that of the
Chief Executive Officer, is set annually by the outside directors who are
members of the Compensation Committee of Bank's Board of Directors
("Committee"). The outside director membership of the Committee is generally
comprised of six outside directors. The appointment of outside directors to the
Committee is rotated.

Compensation is composed of several segments which include base salary,
short-term incentives and long-term incentives. The Committee compares all
management compensation, including that of the Chief Executive Officer, to the
compensation paid to managers holding the same position in similar financial
institutions. Data for this comparison comes from a variety of independent and
credible sources with the principal data contained in an annual study published
by Wyatt Data Services/Cole Surveys, a division of the Wyatt Company, one of the
nation's leading independent consultants in employee compensation. Because of
timing differences, management compensation approved for 1996, including that of
the Chief Executive Officer, was compared to data for 1994. As a result,
management compensation for 1996 was not affected by increases in the
compensation of management's peers in 1995 and 1996.

9
<PAGE> 11

MANAGEMENT SALARIES
All management salaries, including that of the Chief Executive Officer, are
governed by the Bank's formal salary administration program in which all salary
decisions are subject to detailed annual performance reviews. The formal salary
administration program was initiated in 1977 and is based upon a design
submitted by Cole and Associates who provided consulting services to the Bank at
that time. Each year, the salary administration program is updated and the
salary of each member of management is compared to those salaries being paid to
like positions in similar banks. Salary ranges for each management position in
the Bank are then computed from that data. In general, the highest salary that
would be allowable by the Bank is below the highest salary for that position as
reported in the Cole Survey data. In 1996, the highest computed salary allowable
for the Chief Executive Officer was $300,000 and the actual salary paid was
$230,200 or 78% of the maximum allowable under the Bank's salary administration
program.

SHORT TERM INCENTIVE PROGRAMS
All employees are covered by a short-term incentive compensation program which
provides for the payment of annual bonuses. A bonus program was approved for the
years 1987 and 1992 through 1996; no bonus plan was established for 1988 through
1991. In addition, no bonuses were paid under the programs approved in 1987,
1992 and 1995. The bonus program is based on a pool of funds, which, in turn, is
based on the Bank's return on assets for the year. A return on assets which is
below a predetermined level will result in no funding being made to the bonus
program. Funds from the pool are distributed to the participants under a formula
which considers both their salary for that year and their performance rating.
Both officers and staff can qualify to participate in the bonus program;
however, if an individual's performance rating is below a predetermined level,
he or she will not be eligible to receive a bonus.

The Bank sponsors other short-term incentive compensation programs for all
employees. These programs are generally structured as sales incentive programs
which are either nominal or material in value. If a payment under the program is
of only nominal value, it typically is paid in addition to the normal salary
earned by the employee. However, if the program can result in material payments,
such payments are typically made in lieu of a discounted portion of both the
normal salary increase earned and the annual bonus program. In this instance,
the employee loses the discounted portion of the salary increase and annual
bonus even if he or she does not earn any commissions under the applicable sales
incentive program. Neither the Chairman (Chief Executive Officer) nor the
President (Chief Administrative Officer) are permitted to participate in any of
the sales incentive programs.

LONG TERM INCENTIVE PROGRAMS/STOCK OPTIONS
Horizon's long-term incentive program is based on stock options. Stock options
are granted to encourage and facilitate personal stock ownership by executive
officers and thus strengthen their personal commitment to Horizon and gain a
longer-term perspective in their managerial responsibilities. This component of
an executive officer's compensation directly links the officer's interests with
Horizon's shareholders. Horizon also recognizes that stock options are a
necessary element of a competitive compensation program. The program utilizes
vesting periods to encourage key employees to continue in the employ of Horizon
and thereby acts as a retention device for key employees. All options granted
under this program include tandem stock appreciation rights ("SARs").

PERFORMANCE REVIEWS
The Committee conducts an annual review of the performance of the Chairman/Chief
Executive Officer and the President/Chief Administrative Officer who are the
senior executive officers of the Bank. In conducting its review, the Committee
considers a variety of performance factors in analyzing the compensation of each
of these executive officers. These factors generally include traditional
financial results and indicators such as revenues, expenses, assets, credit
issues, reserves, earnings and ratios such as return on equity, loans to
deposits and other significant factors and performance indicators. The business
of commercial banking is complex and is undergoing changes which generate
uncertainties about future events. The Chairman and the President must provide
guidance and leadership in nearly all aspects of this dynamic enterprise. In the
process, however, they are not expected to work alone. The performance
evaluation recognizes that programs initiated at the top level of an
organization are not quick fixes, nor should they be. These programs are
generally long term in nature, bringing benefit to the Bank over many years. For
those reasons, the Committee also focuses on the following issues in determining
performance levels for the Chairman and the President: quality of the
organization, service delivery characteristics, quality of service, leadership
in the community, and risk management.

There are several additional criteria against which the performance of the
Chairman, the President and other executive officers are measured in setting
their annual compensation. Among these are the continued growth and development
of our trust business, a very major portion of our enterprise; efficient and
cost effective use of technology; the management of change; development of
existing and new services; recruitment of and development of skilled people in
the organization; team building; operating cost controls; improvement of fee
income; ability to meet increased competition;

<PAGE> 12

performance of the Bank's investment portfolio; ongoing development of the
Bank's information systems; and a broad variety of banking and management
functions that are typical of a well-managed banking organization. All
management compensation, including that of the Chairman, President and the other
executive officers, is performance related.

COMPENSATION COMMITTEE MEMBERSHIP
Mr. Reed, Chief Executive Officer of the Bank, and Mr. Dabagia, President* of
the Bank, are members of the Committee but do not participate in the Committee's
evaluations of their performances or in voting on their compensation. As members
of the Committee, they participate in reviewing the performance of other
officers, engage in the discussion of non-compensation human resource related
issues, provide technical assistance to the Committee, provide liaison between
the Committee and management and undertake to enact the decisions of the
Committee on its behalf. On occasion, Ms. Judy Dodge, Vice President of Human
Resources, also engages in many of the above duties, but is not a member of the
Committee.

No other officers, employees, former officers or employees of the Bank or
individuals requiring disclosure under Item 404 of Regulation S-K are members of
the Committee. In addition, there are no executive officer/director interlocks
in which an executive officer/director of one company serves on the compensation
committee of another company, which itself has an executive officer/director
serving on the first company's board of directors or compensation committee.

<TABLE>
<S> <C> <C> <C>
Boyd W. Phelps, Chairman Dale W. Alspaugh Russell L. Arndt Robert C. Dabagia

Myles J. Kerrigan Larry N. Middleton, Jr. Larry E. Reed Susan D. Sterger
<FN>
- ------------------------------
* Mr. Dabagia retired as President of Horizon and Bank effective December 31, 1996.
</TABLE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

SUMMARY COMPENSATION TABLE

The following information is provided with respect to compensation paid by Bank
to each executive officer of Horizon and/or Bank in 1996 whose compensation
exceeded $100,000. Horizon pays no direct remuneration to its executive
officers, all of whom are compensated as officers of Bank.

-------------------Annual Compensation---------- --------------------Long-term Compensation------------
----------Awards---------- ------Payouts-------------

Securities
Restricted Underlying
Name and Salary($) Bonus($) Other Annual Stock Options/ LTIP Other
Principal Position Year (1)(2) (1)(3) Compensation(4) Award(s) SARs(#) Payouts($) Compensation(5)
- ------------------ ---- ------- ------- ---------------- -------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larry E. Reed 1996 $230,200 $11,296 $2,187 -- -- -- $56,286
Chairman and 1995 $220,400 -- $5,004 -- -- -- $35,526
Chief Executive Officer 1994 $209,100 $11,519 $3,579 -- -- -- $34,739

Robert C. Dabagia 1996 $189,600 $9,305 $4,634 -- -- -- $38,488
President and Chief 1995 $178,300 -- $6,073 -- -- -- $29,981
Administrative Officer 1994 $168,100 $9,260 $4,033 -- -- -- $26,798

Thomas P. McCormick 1996 $127,500 $6,258 $3,186 -- -- -- $16,489
Executive Vice 1995 $121,000 -- $2,301 -- -- -- $12,151
President 1994 $114,100 $6,286 $2,396 -- -- -- $ 8,690

Leon A. Dargis 1996 $114,200 $5,605 $3,882 -- -- -- $21,794
Senior Vice 1995 $107,400 -- $5,666 -- -- -- $14,068
President 1994 $100,600 $5,542 $4,898 -- -- -- $12,766

</TABLE>
11

<PAGE> 13

(1) Salary and benefit numbers included herein for years have been restated to
indicate actual paid, and actual deferred compensation pursuant to each
category of payment

(2) Includes salary amounts paid and salary amounts deferred by the individual
named pursuant to Horizon's Thrift Plan and Supplemental Executive
Retirement Plan ("SERP").

(3) Includes bonus amounts paid and bonus amounts deferred by the individual
named pursuant to Horizon's Thrift Plan and SERP.

(4) Includes car allowance and a portion of the group term life insurance
premium taxable to the individual named.

(5) Includes Horizon's contribution to Horizon's ESOP and it's matching
contribution to the Thrift Plan and SERP.

EMPLOYMENT AGREEMENTS
Messrs. Reed and McCormick are parties to Employment Agreements with Horizon and
Bank which provide for their continued service as Chairman of the Board and
President, respectively, until December 31, 1998, subject to the right of
Horizon and Bank to extend such Agreements. These Agreements are in place to
assure that senior executive decisions are made with the long-term benefit of
Horizon and its shareholders in mind even if those decisions expose the senior
executives to criticism in the short term. Under the Agreements, Messrs. Reed
and McCormick receive minimum benefits and are paid salaries based upon their
salaries in existence at the time the Agreements were executed with periodic
increases in accordance with the salary administration program applicable to all
executives of Horizon and Bank. The salary administration program is regulated
by the Committee and measures individual salaries against published compensation
data for comparably sized financial institutions. If the employment of either
executive is terminated for reasons other than "cause", as defined in the
Agreements, the individual is entitled to an amount equal to three times his
annual salary rate at that time. There is no change of control arrangement which
would benefit either officer under the Agreements.

AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized on exercise in 1996 by Horizon's
executive officers named in the Summary Compensation Table. The table also sets
forth the number of shares covered by exercisable and unexercisable options held
by such executives on December 31, 1996. As of December 31, 1996, SARs were
exercised with respect to 3,000 shares.

Number of Shares Covered Value of Unexercised In-The
by Unexercised Options on Money Options as of
----------Shares Acquired------ ---------12/31/96------------- ---------12/31/96(2)----------

On Exercise Value
Name During 1996 Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry E. Reed -0- -0- 30,000 -0- $258,500 -0-
Robert C. Dabagia -0- -0- 23,000 -0- $205,600 -0-
Thomas P. McCormick -0- -0- 10,000 -0- $ 99,100 -0-
Leon A. Dargis 3,000(3) $44,250 4,000 -0- $ 57,300 -0-

<FN>
(1) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.

(2) Market value of shares covered by in-the-money options on December 31, 1996
less option exercise price. Options are in-the-money if the market value of
shares covered thereby is greater than the option exercise price.

(3) Mr. Dargis exercised SARs with respect to up to 3,000 shares and received
the value realized above in cash. Therefore, 3,000 shares are no longer
eligible to be issued under the 1987 Plan, but Mr. Dargis did not increase
his holding by 3,000 shares as such shares were not issued.
</TABLE>

COMPENSATION OF DIRECTORS
Horizon paid its non-employee directors $12,000 each for their services in 1996.
Active officers of Horizon receive no separate compensation for their services
as directors. There is no additional compensation for meetings of committees of
the Board, special assignments or special meetings.

12
<PAGE> 14

DIRECTORS' DEFERRED COMPENSATION PLAN
Horizon sponsors a Directors' Deferred Compensation Plan, which allows Directors
of Horizon and Bank who are not also employees to elect to defer the receipt of
fees for their services. Fees deferred under the plan accrue interest compounded
annually. Payments of deferred fees are made to participants or their
beneficiaries in a lump sum or monthly installments upon death or disability of
the participants, or as designated by participants, when they are no longer a
member of the Board of Directors or attain a specific age. Participants have no
rights to amounts deferred other than rights as general creditors of Horizon.

PERFORMANCE GRAPH
<TABLE>
<CAPTION>

Comparison of Five Year Cumulative Total Return
Among Horizon Bancorp Common Stock, S&P 500 Index
and Bank Composite Index

(Total return assumes $100 invested on
January 1, 1991 with reinvested dividends)

[GRAPHIC OMITTED]

1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Horizon Bancorp 100.00 142.86 150.95 170.95 190.95 252.38
S&P 500 Index 100.00 107.62 118.46 120.03 165.13 203.06
Bank Composite Index 100.00 131.87 145.37 137.92 219.13 311.08
</TABLE>

The comparison of total return on investment (change in December year end stock
price plus reinvested dividends) for each of the periods shown, assumes that
$100 was invested on December 31, 1991 in each of Horizon Common Stock, the
Standard and Poor 500 Index and the Standard and Poor Bank Composite Index.
Other companies in the Standard and Poor indices are in general larger than
Horizon, with greater market capitalization, and with shares which trade on a
national exchange. Horizon's shares are not traded on any exchange and trade
only infrequently in the over-the-counter market. Information with respect to
the market price of Horizon's shares was provided by The Chicago Corporation,
the principal market maker for the shares, and does not include mark-ups,
mark-downs or commissions and may not reflect either actual trades or all trades
which occur.

13
<PAGE> 15

TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of Horizon and their associates were customers
of, and have had transactions with, Bank in the ordinary course of business
during 1996. Comparable transactions may be expected to take place in the
future. During 1996, various directors and officers of Horizon and their
respective associates were indebted to Bank from time to time. These loans were
made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features.

EMPLOYEE STOCK OWNERSHIP PLAN
Generally, all regular employees of Horizon and Bank who are at least 21 years
old and have completed one year of employment with Horizon or Bank are eligible
to participate in the Horizon Bancorp Employee Stock Ownership Plan. Under the
terms of the ESOP, Horizon and Bank, as participating employers may, in their
discretion, contribute Horizon Common Stock to the ESOP or contribute cash to
the ESOP which is invested primarily in Horizon Common Stock. The amount of such
contributions is determined by the Board of Directors. Contributions are
allocated to each participant who completed 1,000 hours of service (as defined)
during the year and is employed by Horizon or Bank on the last day of the year
in the proportion that such participant's compensation (as defined) for the year
bears to the total compensation for all participants for the year. No
participant contributions are required or allowed under the ESOP.

Participants are vested in their accounts under the ESOP on a graduated basis
commencing with 20% after 2 years of service and reaching 100% after 6 years of
service. Distributions to participants or their beneficiaries under the ESOP may
be in a lump sum as a result of retirement or other termination of employment,
death or permanent and total disability. In general, distributions are made in
the form of whole shares of Horizon Common Stock or cash, as elected by
participants. If a participant or beneficiary receives a distribution in the
form of Horizon Common Stock, the shares are subject to a "put" option. The
terms of the put option entitle the participant to require Horizon (or the ESOP)
to repurchase all or any part of the distributed shares at their current fair
market value. The put option right applies when the stock is distributed and, if
the distributee does not elect to exercise the put at that time, the distributee
may again exercise the put option in the next year after the end of year
valuation of Horizon stock held by the ESOP is communicated to the distributee.
Additionally, participants have the right to direct the voting of the shares of
Horizon Common Stock allocated to their accounts on all matters.

After a participant has attained age 55 and completed 10 years of participation
in the ESOP, the participant may begin to elect to diversify his or her ESOP
account by taking a distribution of up to 25% of the Horizon Common Stock
allocated to the account. The stock distributed pursuant to this diversification
election is subject to the put option rights discussed above. Eligible
participants may elect, for a period of up to five consecutive years, to
diversify their ESOP account in this manner; in the sixth year, eligible
participants may elect to diversify up to 50% of the Horizon Common Stock
allocated to their ESOP accounts. This diversification right is cumulative so
that, in the aggregate, in any one of the first five years, no more than 25% of
the total value of the Horizon Common Stock allocated to the account, and in the
sixth year no more than 50% of the total value of the Horizon Common Stock
allocated to the account, is subject to the diversification election.

In August, 1985, prior to the issuance of Horizon Common Stock in connection
with the merger of Horizon and Citizens Michiana Financial Corporation, the ESOP
acquired 30.95% of the issued and outstanding shares of Horizon Common Stock
from individual shareholders. The transaction was financed through a loan of
$3,400,000 from The Northern Trust Company to the ESOP which loan was guaranteed
by Horizon ("1985 Loan"). The acquisition was made by the ESOP with the prior
approval of the Federal Reserve Bank of Chicago ("Federal Reserve"). On January
17, 1995, the ESOP made the final payment on the 1985 loan. Such payment was
made with cash held by the ESOP and with a contribution to the ESOP by Horizon
in the amount of $146,500. The final principal payment on the loan was $297,500.

On August 26, 1994, the ESOP acquired 172,414 shares of Horizon Common Stock
directly from Horizon at a purchase price of $29.00 per share. The transaction
was evidenced by a Term Note and Security Agreement under which the ESOP, as
borrower, agreed to pay Horizon, as lender, a total of $5,000,006 over a period
of 10 years, in annual installments without interest ("1994 Loan"). The ESOP's
acquisition of the Horizon Common Stock was made pursuant to the prior approval
of the Federal Reserve. The ESOP's obligations under the Term Note and Security
Agreement are secured by a security interest in the Horizon Common Stock
acquired in the transaction and any proceeds therefrom--subject to the release
of such security interest by Horizon as the note is paid. For the year ended
December 31, 1996, a $500,000 principal payment was made by the ESOP to Horizon
from the cash available to the ESOP and 17,241 shares of Horizon Common Stock
were released from collateral and allocated to ESOP participants.

14
<PAGE> 16

On March 22, 1996, the ESOP borrowed $253,981 directly from Horizon; the
proceeds were utilized by the ESOP to fund its acquisition of a total of 7,312
share of Horizon Common Stock with respect to distributions to participants who
had terminated employment during 1995 and the election by eligible participants
to diversify a portion of their ESOP accounts invested in Horizon Common Stock.
The transaction was evidenced by a Term Note and Security Agreement under which
the ESOP, as borrower, agreed to pay Horizon, as lender, a total of $253,981
over 20 years, in annual installments without interest ("1995 Loan"). The ESOP's
obligation under the Term Note and Security Agreement are secured by a security
interest in the Horizon Common Stock acquired in the transaction and any
proceeds therefrom--subject to the release of such security interest by Horizon
as the note is paid. For the year ended December 31, 1996, a $12,700 principal
payment was made by the ESOP to Horizon from the cash available to the ESOP and
366 shares of Horizon Common Stock were released from collateral and allocated
to ESOP participants.

On June 20, 1996, the ESOP borrowed $456,469 directly from Horizon; the proceeds
were utilized by the ESOP to fund its acquisition of a total of 10,999 shares of
Horizon Common Stock with respect to distributions to participants who had
terminated employment during 1996 and the election by eligible participants to
diversify a portion of their ESOP accounts invested in Horizon Common Stock. The
transaction was evidenced by a Term Note and Security Agreement under which the
ESOP, as borrower, agreed to pay Horizon, as lender, a total of $456,469 over 20
years, in annual installments without interest ("1996 Loan"). The ESOP's
obligation under the Term Note and Security Agreement are secured by a security
interest in the Horizon Common Stock acquired in the transaction and any
proceeds therefrom--subject to the release of such security interest by Horizon
as the note is paid. The first installment under the 1996 Loan is due on
December 31, 1997.

On January 16, 1997, the ESOP borrowed $152,064 directly from Horizon; the
proceeds were utilized by the ESOP to fund its acquisition of a total of 3,638
share of Horizon Common Stock with respect to distributions to participants
during 1996 and the election by eligible participants to diversify a portion of
their ESOP accounts invested in Horizon Common Stock. The transaction was
evidenced by a Term Note and Security Agreement under which the ESOP, as
borrower, agreed to pay Horizon, as lender, a total of $152,064 over 20 years,
in annual installments without interest ("1997 Loan"). The ESOP's obligation
under the Term Note and Security Agreement are secured by a security interest in
the Horizon Common Stock acquired in the transaction and any proceeds
therefrom--subject to the release of such security interest by Horizon as the
note is paid. The first installment under the 1997 Loan is due on December 31,
1997.

For the year ended December 31, 1996, $86,000 was contributed to the ESOP, of
which $2,598 in value of Horizon Common Stock was allocated to the account of
Larry E. Reed, $2,602 in value of Horizon Common Stock was allocated to the
account of Robert C. Dabagia, $2,356 in value of Horizon Common Stock was
allocated to the account of Thomas P. McCormick, $2,124 in value of Horizon
Common Stock was allocated to the account of Leon A. Dargis for a total of
$9,680 in value of Horizon Common Stock allocated to accounts of all executive
officers as a group. The accounts of Messrs. Reed, Dabagia, McCormick, and
Dargis under the ESOP are 100% vested.

THRIFT PLAN
Generally, all regular employees of Horizon and Bank who are at least 21 years
old and have completed one year of employment with Horizon or Bank are eligible
to participate in the Horizon Bancorp Employees' Thrift Plan. For the year ended
December 31, 1996, the Thrift Plan was funded by matching contributions by the
Bank of 100% of participants' salary redirection contributions of up to 2% of
compensation (as defined in the Thrift Plan) and 50% of salary redirection
contributions in excess of 2% of compensation but not more than 6% of
compensation.Salary redirection contributions by participants and matching
contributions by Bank are allocated to each participant based upon individual
contribution elections. The value of each participant's account attributable to
Bank's matching contributions vests on a graduated basis commencing with 20%
after 2 years of service and reaching 100% after 6 years of service. All other
accounts under the Thrift Plan are fully vested at all times. Distribution of
benefits under the Thrift Plan is made in the form of a joint 50% survivor
annuity for married participants and life annuity for single participants.
However, the Thrift Plan allows participants to elect to receive their benefits
in the form of a lump sum or in installment distributions over a period not
exceeding 10 years.

For the year ended December 31, 1996, Bank contributed $172,000 to the Thrift
Plan of which $3,778 was allocated to the account of Mr. Reed, $3,900 was
allocated to the account of Mr. Dabagia, $4,517 was allocated to the account of
Mr. McCormick, $4,342 was allocated to the account of Mr. Dargis for a total of
$16,537 allocated to the accounts of all executive officers as a group. The
accounts of Messrs. Reed, Dabagia, McCormick, and Dargis under the Thrift Plan,
are 100% vested.

15
<PAGE> 17

STOCK OPTION AND STOCK APPRECIATION RIGHTS PLANS
Awards under the 1987 Stock Option and Stock Appreciation Rights Plan of Horizon
Bancorp, ("1987 Plan") were made by the Compensation Committee, exclusive of
those members who were eligible to participate in the 1987 Plan (the
"Committee"). The Committee selected any key employee of Horizon or Bank to
participate in the 1987 Plan. Awards were granted from time to time until
January 20, 1990 when the 1987 Plan terminated pursuant to its terms. A maximum
of 85,000 shares of Horizon Common Stock could have been issued under the 1987
Plan. However, less than that number of shares of Horizon Common Stock were
issued under the 1987 Plan. On December 18, 1990, the Board adopted resolutions
which authorized the Committee to grant new options and SARs, solely to
non-executive officers, to receive up to 10,000 shares of Horizon Common Stock.
The Board authorized the grants under the same terms and conditions as the 1987
Plan. All of the options and SARs authorized by the Board resolutions were
granted on January 28, 1991. At December 31, 1996, options to purchase 79,750
shares of Horizon Common Stock were outstanding under the 1987 Plan and the 1990
Board resolutions, and 4,150 SARs have been exercised thereunder.

Awards under the 1987 Plan and the Board's 1990 resolutions include
non-qualified stock options ("NSOs") and SARs. SARs were granted only in
conjunction with NSOs. An award cannot be exercised by a recipient until one
year after grant. Thereafter, after the first year and through the second year
from the date of award, an option may be exercised as to not more than 20% of
the total option shares; through the third year as to not more than 40% of the
total option shares; through the fourth year as to not more than 60% of the
total option shares; through the fifth year as to not more than 80% of the total
option shares; and during the sixth year and any time thereafter (during the
remaining term of the option) all or part of the option shares may be exercised.
Upon the death of the recipient, the option is exercisable in full within one
year from the date of the recipient's death.
In the event of a change of control of Horizon (as defined) all outstanding
options may be exercised immediately.

The following is provided with respect to those stock options granted under the
1987 plan and the 1990 Board resolutions:

NAME OF INDIVIDUAL SHARES SUBJECT TO PER SHARE
OR NUMBER OF PERSONS OPTIONS WITH STOCK EXERCISE
IN GROUP APPRECIATION RIGHTS PRICE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Executive officers with
granted options (4 individuals) 64,500 $31.50 - 22.50

Horizon and Bank employees
with granted options,
(14 individuals, including
above 4) 79,750 (1)(2) $31.50 - 13.50

<FN>
(1) Net of NSOs and SARs forfeited and reallocated pursuant to the terms of the
Plans.

(2) There were no NSOs or SARs granted in 1996.
</TABLE>

16
<PAGE> 18

PROPOSAL TO APPROVE THE ADOPTION OF THE FIRST AMENDMENT TO THE 1987 STOCK OPTION
AND STOCK APPRECIATION RIGHTS PLAN OF HORIZON BANCORP

On December 17, 1996, the Board adopted, subject to shareholder approval, the
First Amendment ("Amendment") to the 1987 Plan. The 1987 Plan was approved by
the shareholders on April 19, 1988. The Amendment applies only to Options and
SARs granted under the 1987 Plan which have not otherwise terminated before
January 1, 1997 and provides for the following changes to such Options and SARs:

(a) Extends the maximum option period to 20 years from a period of 10
years;

(b) Requires that an optionee's right to exercise an option will
terminate 30 days after the optionee's employment terminates for any reason
other than death or retirement. The Amendment allows the Committee to treat
employment as terminated if the duties and responsibilities of the optionee are
substantially reduced, for reasons other than retirement, from those duties and
responsibilities held when the option was granted. In addition, the Amendment
allows an optionee's right to exercise options to be terminated prior to the
expiration of the 30 day period or at any time during the term of the 1987 Plan,
only with the written consent of the optionee.

(c) Requires that an optionee's right to exercise an option be
terminated five (5) years after the optionee's employment is terminated due to
retirement. In addition, the Amendment provides that an optionee shall be deemed
to have "retired" only if the optionee's employment is voluntarily terminated on
or after the date on which the optionee attains age 55 and completes 10 full
years of employment with Horizon or Bank.

(d) Allows the Committee to, at any time and without shareholder
approval, alter, amend, modify, suspend, or discontinue the 1987 Plan. The
Amendment also allows the Committee to, at any time and without shareholder
approval, extend the term of the 1987 Plan or the maximum period during which
any option may be exercised. However, the Amendment provides that the Committee
may not, without the consent of the holder of an option, or an option and a SAR,
make any alteration which would adversely affect an option or SAR previously
granted under the 1987 Plan.

All other provisions of the 1987 Plan will remain the same.

BOARD RECOMMENDATION
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL THE
ADOPTION OF THE FIRST AMENDMENT TO THE 1987 STOCK OPTION AND STOCK APPRECIATION
RIGHTS PLAN OF HORIZON BANCORP. It is intended that the proxies given to the
persons named in the accompanying form of proxy will, unless otherwise indicated
therein, be voted FOR approval the above amendment.

17
<PAGE> 19

PROPOSAL TO APPROVE THE ADOPTION OF THE 1997 KEY EMPLOYEES STOCK OPTION
AND STOCK APPRECIATION RIGHTS PLAN OF HORIZON BANCORP

GENERAL
On December 17, 1996, the Board adopted, subject to shareholder
approval, the 1997 Key Employee's Stock Option and Stock Appreciation Rights
Plan of Horizon Bancorp ("1997 Plan"). The 1997 Plan, which became effective as
of January 1, 1997 subject to approval by the shareholders, is designed to
promote the interests of Horizon and Bank by encouraging officers and key
employees (also referred to collectively herein as "Participants") of Horizon
and Bank, upon whose judgment, initiative and industry Horizon and Bank are
largely dependent for the successful conduct and growth of their business, to
continue their association with Horizon and Bank by providing additional
incentive through ownership of Horizon Common Stock. The 1997 Plan provides for
the granting of: (i) incentive stock options ("ISOs") (as defined and described
in Section 422 of the Internal Revenue Code ("Code")), (ii) NSOs and (iii) SARs.
ISOs and NSOs, (also referred to collectively as "Options"), may be granted with
or without SARs under the 1997 Plan.

NUMBER OF SHARES SUBJECT TO THE 1997 PLAN
If approved, the 1997 Plan will reserve for issuance 90,000 shares of
Horizon Common Stock pursuant to the exercise of Options granted thereunder.
This maximum is subject to adjustment for any future stock dividends, splits,
combinations or other changes of shares as described in the plan document.

GRANTING OF SARS UNDER THE 1997 PLAN
Options under the 1997 Plan may be granted in tandem with SARs with
respect to all or a portion of such Options. In general, a SAR granted in tandem
with a stock option permits the Participant to realize the appreciated value of
the stock over the option price without an option exercise in the form of cash,
shares of Horizon Common Stock or a combination thereof. Each SAR granted under
the 1997 Plan by its terms shall: (i) expire when the underlying Option expires;
(ii) become transferable only when the underlying Option is transferable and
under the same terms and conditions; and (iii) become exercisable only when and
to the extent the underlying Option is eligible to be exercised. The economic
value of each SAR granted under the 1997 Plan may not exceed 100% of the
difference between the exercise price of the number of shares covered by the
underlying Option and the fair market value ("Fair Market Value") of such shares
determined at the time the SAR is exercised. In the event a Participant elects
to exercise a SAR, the underlying Option or applicable portion thereof must be
surrendered. Underlying Options will not be exercisable by a Participant to the
extent they are surrendered upon the exercise of related SARs.

ADMINISTRATION AND DURATION OF THE 1997 PLAN
Authority to administer the 1997 Plan and to grant ISOs, NSOs, and SARs
thereunder rests with the Committee. The Committee is authorized to carry out
the following under the 1997 Plan: (i) to grant ISOs, NSOs and SARs; (ii) to
determine the key employees to be granted ISOs, NSOs and SARs; (iii) to
determine the option period, the option price and, subject to the limitations of
the 1997 Plan, the number of shares subject to each Option and SAR; (iv) to
determine the time or times at which Options and SARs will be granted; (v) to
determine the time or times which each Option and related SAR becomes
exercisable and the duration of the exercise period; (vi) to determine other
conditions and limitations, if any, applicable to the exercise of each Option
and related SAR; and (vii) to determine the nature and duration of the
restrictions, if any, that will be imposed upon the sale or other disposition of
shares acquired pursuant to any Option granted under the 1997 Plan. The
Committee may also determine, in its sole discretion, with respect to each
officer or key employee, the following: (i) whether the Options granted shall be
ISOs or NSOs, or a combination of the two; (ii) whether any SARs shall be
granted in connection with such Options; and (iii) whether any key employee will
be given discretion to determine whether any Options granted to him will be ISOs
or NSOs or a combination of the two. In addition, the Committee will be
authorized to adopt any rule or procedure which it deems necessary or desirable
for the proper and efficient administration of the 1997 Plan, provided that such
rule or procedure is consistent with the terms of the 1997 Plan.

The provisions of the 1997 Plan also authorize the Committee to amend,
modify, suspend or discontinue the 1997 Plan. However, any alteration which
would: (i) increase the aggregate number of shares subject to Options (except to
the extent otherwise provided for stock dividends, splits, combinations, and
other changes of shares as described in the plan document); (ii) decrease the
minimum option price; (iii) permit any member of the Committee to become
eligible for Options or SARs under the 1997 Plan; (iv) withdraw administration
of the 1997 Plan from the Committee or Board of Directors; (v) extend the term
of the 1997 Plan or the maximum period during which any Option may be exercised
thereunder; (vi) change the manner of determining the Option price; or (vii)
change the class of individuals eligible for options or SARs, requires
shareholder approval.

18
<PAGE> 20

ISOs under the 1997 Plan may be granted for a period of 10 years
commencing January 1, 1997. NSOs and SARs under the 1997 Plan may be granted for
a period of 20 years commencing January 1, 1997. The 1997 Plan will expire on
December 31, 2016, except as to outstanding Options and SARs. Such Options and
SARs will remain in effect until they have been exercised or terminated or have
expired.

ELIGIBILITY FOR PARTICIPATION
Options and SARs may be granted under the 1997 Plan to officers and
other key employees of Horizon, Bank, or their subsidiaries as selected by the
Committee in its discretion.

The Options and SARs to be granted during the 1997 calendar year is not
currently determinable; and, no Options or SARs have been granted under the 1997
Plan during any prior calendar years.

TERMS AND TRANSFERABILITY OF OPTIONS AND SARS
The dates upon which Options granted under the 1997 Plan are
exercisable will be determined by the Committee and embodied in the stock option
agreement between Horizon and the optionee. However, in the event of a Change in
Control (as defined) of Horizon or upon the death, Permanent and Total
Disability (as defined), or Retirement (as defined) of an optionee, all
outstanding Options (and any related SARs) may be exercisable in full, without
regard to any restrictions on the vesting of Options contained in the stock
option agreement.

Although the option price will be determined by the Committee, such
option price shall not be less than 100% of the Fair Market Value of the shares
of Horizon Common Stock to which the Option relates as of the date on which the
Option is granted. The Fair Market Value of a share of Horizon Common Stock as
of March 11, 1997 was $48.88. However, as to any optionee who, at the time an
ISO is granted, owns (within the meaning of Code ss.424(d)) more than 10% of the
total combined voting power of all classes of stock of Horizon, the purchase
price per share of stock under each ISO shall not be less than 110% of the Fair
Market Value of the stock on the date on which the Option is granted.

In any calendar year, no optionee under the 1997 Plan may be granted
ISOs to the extent that the aggregate exercise price (determined at the time the
ISO is granted) of such ISO or part thereof, together with the aggregate
exercise price of all other ISOs that are exercisable for the first time by the
optionee, exceeds $100,000.

All rights to exercise an Option or SAR granted under the 1997 Plan
will terminate immediately upon the optionee's termination of employment For
Cause (as defined) with Horizon or Bank. If an optionee's employment terminates
due to Permanent and Total Disability or death, his Options and any related SARs
will terminate one year after the termination of his employment due to Permanent
and Total Disability or death (but no later than the date the Options and any
related SARs would expire pursuant to their terms). During such period, subject
to the limitations of the 1997 Plan and the stock option agreement between
Horizon and the optionee, the optionee, his guardian, attorney-in-fact, personal
representative or administrator, as the case may be, may exercise the Options or
related SARs in full. If an optionee's employment terminates due to Retirement,
the optionee's Options and any related SARs will terminate five (5) years after
termination of his employment due to Retirement (but not later than the date on
which the Options and any related SARs would expire pursuant to their respective
terms). However, if the optionee dies after his Retirement but before he
exercises his Options or related SARs, his Options or related SARs will
terminate one year after the optionee's date of death (but no later than the
date on which the Options and any related SARs would expire pursuant to
their respective terms). If the optionee terminates employment with Horizon or
Bank for any reason other than For Cause, death, Permanent and Total Disability,
or Retirement, all rights to exercise any Options or any related SARs shall
terminate 30 days after the effective date of the optionee's termination of
employment, but not later than the date the Options and related SARs expire
pursuant to their respective terms.

Payment of the exercise price of the Options granted under the 1997
Plan may be made in cash, or in the discretion of the Committee, in the form of
shares of Horizon Common Stock or a combination of cash and Horizon Common
Stock.

19
<PAGE> 21

FEDERAL INCOME TAX CONSEQUENCES
Under current tax law, in the case of ISOs, no income is recognized by
the optionee at the time of either grant or exercise of the ISO. If: (i) the
shares thereby acquired are held for a period of time that is both more than two
years from the date the ISO was granted and more than one year from the date the
ISO was exercised; and (ii) at all times from the date the ISO is granted and
ended on the day three months before the ISO is exercised, the optionee was an
employee of Horizon or Bank, any gain realized by the optionee on the subsequent
sale of such shares is treated as long-term capital gain for federal income tax
purposes and no corresponding tax deduction is allowable to Horizon. A sale of
such shares prior to such time(s) will, depending upon the time at which such
sale occurs and the price for which such shares are sold, cause the optionee to
recognize ordinary income and entitle Horizon to a corresponding compensation
expense deduction for federal income tax purposes.

Under the Income Tax Regulations, NSOs granted under the 1997 Plan
would not have a readily ascertainable Fair Market Value. If an NSO does not
have a readily ascertainable Fair Market Value when granted, it is not subject
to federal income tax at that time. Rather, any amount by which the stock's Fair
Market Value on exercise exceeds the option price constitutes ordinary income to
the Optionee at the time of exercise. The Fair Market Value of the shares at the
time of exercise is the basis for determination of capital gain or loss upon any
subsequent sale or other taxable disposition of the shares. Whenever an optionee
recognizes income in connection with the exercise of an NSO, Horizon recognizes
a compensation expense deduction for federal income tax purposes in an equal
amount.

No income will be recognized by optionees as the result of the grant of
a SAR in tandem with an Option under the 1997 Plan. Upon the exercise of a SAR,
the optionee will realize ordinary income (which will constitute personal
service income) to the extent of any cash received plus the Fair Market Value of
any Horizon Common Stock received, and Horizon will be entitled to a
corresponding deduction for federal income tax purposes. Upon a subsequent sale
or other taxable disposition of shares of Horizon Common Stock acquired pursuant
to the exercise of a SAR, the holder will normally realize capital gain or loss
to the extent of the difference between the sale price and the Fair Market Value
of the shares on the date of acquisition.

BOARD RECOMMENDATION
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL THE
ADOPTION OF THE 1997 KEY EMPLOYEES STOCK OPTION AND STOCK APPRECIATION RIGHTS
PLAN OF HORIZON BANCORP. It is intended that the proxies given to the persons
named in the accompanying form of proxy will, unless otherwise indicated
therein, be voted FOR the approval the above plan.

20
<PAGE> 22

INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, Chicago, Illinois, served as Horizon's independent auditors
for 1996. The services performed by Arthur Andersen LLP in this capacity
included conducting an examination in accordance with generally accepted
auditing standards and expressing an opinion on Horizon's 1996 consolidated
financial statements. The Board of Directors has selected Arthur Andersen as the
Independent Public Accountants for the year ending December 31, 1997. It is
expected that representatives of Arthur Andersen LLP will be present at the
Annual Meeting.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Horizon's executive officers, directors, and owners of more than 10% of Horizon
Common Stock are required to file reports of their ownership and changes in
ownership of Horizon Common Stock with the Securities and Exchange Commission.
Copies of these reports must also be furnished to Horizon. Based solely upon a
review of copies furnished to Horizon, through the date of this Proxy Statement,
or written representation that no reports were required, Horizon believes that
through 1996, all filing requirements of the Securities and Exchange Commission
applicable to Horizon's executive officers, directors, and 10% shareholders
relating to stock ownership were complied with.

SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any shareholder who intends to present a proposal for action at Horizon's 1998
annual meeting of shareholders through the inclusion of such proposal in
Horizon's Proxy Statement relating to that meeting must furnish Horizon such
proposal in writing together with notification of such intention no later than
December 2, 1997, in order to be considered for inclusion in next year's Proxy
Statement.

OTHER MATTERS
Management does not intend, and presently knows of no intention by any other
person, to present to the meeting any action by shareholders other than as set
forth herein. However, the enclosed proxy confers discretionary authority with
respect to the transaction of any other business that may properly come before
the meeting and it is the intention of the persons named in the proxy to vote in
their discretion on any such matter.

Insofar as any of the information in this Proxy Statement may rest peculiarly
within the knowledge of persons other than Horizon, Horizon relies upon
information furnished by others for the accuracy and completeness thereof.

WE STRONGLY URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT
THE EARLIEST POSSIBLE DATE EVEN THOUGH YOU PLAN TO ATTEND THE MEETING. IN THE
EVENT YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.

Diana E. Taylor
Secretary
Michigan City, Indiana
April 29, 1997

AVAILABILITY OF FORM 10-K

A COPY OF HORIZON'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN
REQUEST TO DIANA E. TAYLOR, CHIEF FINANCIAL OFFICER OF HORIZON, AT 515 FRANKLIN
SQUARE, MICHIGAN CITY, INDIANA 46360.

<PAGE> 23
HORIZON BANCORP
515 FRANKLIN SQUARE, MICHIGAN CITY, IN 46360
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, hereby appoints Marjorie McGill and Barbara Ludlow, or either
of them, as Proxies, each with the power to appoint her substitute, and hereby
authorizes them to represent and to vote, as designated below, all shares of
common stock of Horizon Bancorp, which the undersigned is entitled to vote at
the Annual Meeting of Shareholders to be held on Thursday, May 29, 1997, at
10:00 a.m. (local time), at the Orak Temple, 3848 N. Frontage Road, Michigan
City, Indiana, or any adjournment thereof, on the following matters:
<TABLE>
<S> <C> <C>
1. Election of Four Directors
[ ] For all nominees listed below (except as marked to the contrary below) [ ] Withhold authority to vote for all nominees
listed below
Nominees for Terms to Expire in 2000: Russell L. Arndt, Robert C. Dabagia, Myles J. Kerrigan and Larry E. Reed
(INSTRUCTION: To withhold authority to vote for any individual, write the nominee's name on the space provided below.)

2. The approval of the First Amendment to the 1987 Stock Options and Stock Appreciation Rights Plan of Horizon Bancorp.
[ ] For proposal [ ] Withhold authority to vote for proposal

3. The approval of the 1997 Key Employee Stock Option and Stock Appreciation Rights Plan of Horizon Bancorp.
[ ] For proposal [ ] Withhold authority to vote for proposal

4. In their discretion, on such other business as may properly be brought before the Annual Meeting or any adjournment thereof.
</TABLE>

ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING, THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE ABOVE-STATED PROXIES. THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR THE FOUR NOMINEES STATED ABOVE, AND FOR THE
PROPOSALS IN ITEMS #2 AND #3 ABOVE.

Please sign on the reverse side thereof

(Continued from other side)

Please sign exactly as name appears below. If there are two or more owners, both
must sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.

Date , 1997
----------------------------

--------------------------------------
(Signature)

--------------------------------------
(Signature if held jointly)
Your vote is important. Please mark,
sign, date and return this Proxy
promptly using the enclosed envelope.

================================================================================
Please indicate your intentions of attending the meeting May 29, 1997 by
completing the section below.
<TABLE>
<S> <C>
[ ] I WILL attend the Annual Meeting. [ ] I WILL NOT attend the Annual Meeting.
Number of persons attending will be_______
</TABLE>