<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)
(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)(1) 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
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 28,
1998, 10:00 A.M. (LOCAL TIME), AT THE HOLIDAY INN, 5820 SOUTH FRANKLIN STREET,
MICHIGAN CITY, INDIANA, for the purpose of considering and voting upon the
following matters:
1) The election of five (5) Directors to serve terms which will expire in
2001.
2) 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 13, 1998, 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/Treasurer
April 20, 1998
<PAGE> 3
HORIZON BANCORP
515 FRANKLIN SQUARE
MICHIGAN CITY, INDIANA 46360
(219) 879-0211
APRIL 20, 1998
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 Holiday Inn, 5820 South Franklin Street, Michigan City, Indiana on
Thursday, May 28, 1998 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 20, 1998.
Only shareholders of record as of April 13, 1998 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 883,955 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 13, 1998 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 five nominees for directors. 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") its subsidiary, who will
not be specially compensated for such solicitations. No solicitation of proxies
will be made by paid solicitors.
1
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the knowledge of Horizon, as of February 28, 1998, 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
<TABLE>
<CAPTION>
NAME & ADDRESS OUTSTANDING STOCK PERCENTAGE OF OUTSTANDING STOCK
- -------------- ----------------- -------------------------------
<S> <C> <C>
Cede & Co. 204,256 20.06%
Box #20
Bowling Green Station, NY 10004
IMS Investment Management, N.A.
as trustee 302,059 (1) 34.11%
P.O. Box 1125
Michigan City, IN 46360
Darhap & Co. 79,893 (2) 9.02%
P.O. Box 1125
Michigan City, IN 46360
</TABLE>
- --------------------------------------------------------------------------------
(1) Shares indicated as beneficially owned include 298,560 shares under the
Employee Stock Ownership Plan ("ESOP") and 3,449 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.
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 2001:
<TABLE>
<CAPTION>
NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- -------------------- ---------- -----
<S> <C> <C> <C>
Financial consultant; former publisher 682 0.07%
of Michigan City News-Dispatch
(local newspaper)
George R. Averitt
Age - 66
1973
- ----------------------------------------------------------------------------------------------------------------------------------
President, Century 21 250 0.03%
Middleton Co., Inc.
Larry N. Middleton, Jr.
Age - 45
1995
</TABLE>
2
<PAGE> 5
NOMINEES STANDING FOR ELECTION
TERMS TO EXPIRE IN 2001:
<TABLE>
<CAPTION>
NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- -------------------- ---------- -----
<S> <C> <C> <C>
Executive Vice President, 100 0.01%
McKee Group
Susan D. Sterger
Age - 43
1995
- ----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President, 100 0.01%
Nixon Newspapers
Donald J. Manaher
Age - 43
1998 (6)
- ----------------------------------------------------------------------------------------------------------------------------------
President - Bearing Division 100 0.01%
Emerson Power Transmission Corp.
Robert E. Swinehart
Age - 55
1998 (6)
</TABLE>
3
<PAGE> 6
CONTINUING DIRECTORS
TERMS TO EXPIRE IN 2000:
<TABLE>
<CAPTION>
NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- -------------------- ---------- -----
<S> <C> <C> <C>
Farmer 1,272 0.14%
Russell L. Arndt
Age - 69
1976
- ----------------------------------------------------------------------------------------------------------------------------------
Retired, Formerly President and 27,590 (3) 3.03%
Chief Administrative Officer,
Horizon and Bank
Robert C. Dabagia
Age - 59
1980
- ----------------------------------------------------------------------------------------------------------------------------------
Board Member, Chicago Board 883 0.10%
of Trade
Myles J. Kerrigan
Age - 59
1979
- ----------------------------------------------------------------------------------------------------------------------------------
Chairman and Chief Executive 18,068 (4) 1.99%
Officer, Horizon and Chairman,
Bank
Larry E. Reed
Age - 63
1979
</TABLE>
4
<PAGE> 7
CONTINUING DIRECTORS
TERMS TO EXPIRE IN 1999:
<TABLE>
<CAPTION>
NAME, AGE AND
YEAR FIRST SHARES BENEFICIALLY PERCENT OF
ELECTED DIRECTOR (1) PRINCIPAL OCCUPATION OWNED (2) CLASS
- -------------------- -------------------- ---------- -----
<S> <C> <C> <C>
Chancellor, Purdue University 1,030 0.11%
- North Central
Dale W. Alspaugh
Age - 65
1986
- ----------------------------------------------------------------------------------------------------------------------------------
Pathologist, Pathology 3,627 0.40%
Consultants, Inc.
Robert E. McBride, M.D.
Age - 58
1984
- ----------------------------------------------------------------------------------------------------------------------------------
President and Chief Administrative 12,710 (5) 1.40%
Officer, Horizon and President and
Chief Executive Officer, Bank
Thomas P. McCormick
Age - 44
1997
- ----------------------------------------------------------------------------------------------------------------------------------
Farmer 226 0.02%
Gene L. Rice
Age - 65
1979
</TABLE>
5
<PAGE> 8
(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 12,000
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon.
(4) Shares indicated as beneficially owned by Mr. Reed include 11,432
shares held by the Horizon Bancorp 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 7,000
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon, 5,708 shares
held by the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") and
2 shares held by Horizon Bancorp Employees' Thrift Plan ("Thrift
Plan").
(6) Mr. Manaher and Mr. Swinehart were appointed by the Board of Directors
on January 20, 1998 to fullfil the unexpired terms of Mr. Brown and Mr.
Phelps who retired on December 31, 1997.
Information regarding shares beneficially owned is as of February 28, 1998. As
of February 28, 1998, directors, nominees and executive officers, as a group
(18, including above 13 individuals), beneficially owned 77,442 shares
(including 22,400 shares exercisable under stock options), 8.51% 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 1997, 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, 1997 were George R. Averitt,
Chairman, Russell L. Arndt, James D. Brown, Robert C. Dabagia, Susan D. Sterger
and Donald J. Manaher, director of Bank, met four times in 1997. Larry E. Reed
and Thomas P. McCormick 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.
6
<PAGE> 9
The Compensation Committee, whose members at December 31, 1997 were Susan D.
Sterger, Chairman, Dale W. Alspaugh, Russell L. Arndt, George R. Averitt, Myles
J. Kerrigan, Robert E. McBride, Thomas P. McCormick and Larry E. Reed, met two
times in 1997. The Committee reviews all salary and employee benefit issues
relating to Bank and affiliates employees and directors.
EXECUTIVE OFFICERS OF BANCORP
The following information is provided with respect to executive officers of
Horizon holding office as of December 31, 1997 with all other information as of
February 28, 1998:
<TABLE>
<CAPTION>
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 63 18,068 (2) 1.99% Chairman and Chief Executive Officer, Horizon and Chairman,
Bank since 1986.
Thomas P. McCormick 44 12,710 (3) 1.40% President and Chief Administrative Officer, Horizon since 1997;
President and Chief Executive Officer, Bank since 1998;
Executive Vice President, Horizon and Bank since 1986.
Diana E. Taylor 33 633 (4) 0.07% Vice President and Chief Financial Officer, Horizon and Bank since
1995; Senior Auditor, Bank since 1991.
Craig M. Dwight 41 2,485 (5) 0.27% Vice President and Senior Lender, Bank since 1997; Vice President
and Senior Commercial Lender, Bank since 1990
Diana L. Alinsky 41 1,741 (6) 0.19% President, IMS Investment Management, N.A. since 1998.
Executive Vice President, IMS Investment Management, N.A.
since 1997. Trust Officer, IMS Investment Management, N.A. since
1982.
David G. Rose 39 5,343 (7) 0.59% Vice President and Senior Operations Officer, Bank since 1988.
Carla J. Kanney 44 602 (8) 0.07% Vice President and Senior Retail Officer, Bank since 1995; Retail
Sales Officer, Bank since 1991.
</TABLE>
(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 11,432
shares held by the Horizon Bancorp 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.
(3) Shares indicated as beneficially owned by Mr. McCormick include 7,000
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon, 5,708 shares
held by the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") and
2 shares held by Horizon Bancorp Employees' Thrift Plan ("Thrift
Plan").
(4) Shares indicated as beneficially owned by Ms. Taylor include 633 shares
held by the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") .
(5) Shares indicated as beneficially owned by Mr. Dwight include 1,200
shares of vested stock options granted under the 1987 Stock Option and
Stock Appreciation Rights Plan ("1987 Plan") of Horizon, 1,284 shares
held by the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") and
1 share held by Horizon Bancorp Employees' Thrift Plan ("Thrift Plan").
(6) Shares indicated as beneficially owned by Ms. Alinsky include 1,291
shares held by the Horizon Bancorp Employee Stock Ownership Plan
("ESOP") and 293 shares held by Horizon Bancorp Employees' Thrift Plan
("Thrift Plan").
(7) Shares indicated as beneficially owned by Mr. Rose include 2,200 shares
of vested stock options granted under the 1987 Stock Option and Stock
Appreciation Rights Plan ("1987 Plan") of Horizon, 3,142 shares held by
the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") and 1 share
held by Horizon Bancorp Employees' Thrift Plan ("Thrift Plan").
(8) Shares indicated as beneficially owned by Ms. Kanney include 602 shares
held by the Horizon Bancorp Employee Stock Ownership Plan ("ESOP").
7
<PAGE> 10
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 (Chief Executive Officer) and President (Chief Administrative Officer),
respectively, of Horizon (see "Executive Compensation and Other Information").
REPORT OF THE COMPENSATION COMMITTEE
DECEMBER 31, 1997
The Compensation of all elected officers of the Horizon and subsidiaries,
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.
SALARIES
All salaries, including that of the Chief Executive Officer, are governed by
Horizon'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
Horizon is compared to those salaries being paid to like positions in similar
size organizations. Salary ranges for each position in Horizon are then computed
from that data. In general, the highest salary that would be allowable by
Horizon is below the highest salary for that position as reported in the Cole
Survey data. In 1997, the highest computed salary allowable for the Chief
Executive Officer was $305,000 and the actual salary paid was $239,312 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 1997; no bonus plan was established for 1988 through
1991. In addition, no officer bonuses were paid under the programs approved in
1987, 1992, 1995 and 1997. The bonus program is based on a pool of funds, which,
in turn, is based on the Horizon'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. All employees 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.
Horizon 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.
8
<PAGE> 11
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 Horizon. 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
financial services business 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 Horizon 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. Compensation levels are also affected by
changes in responsibilities and duties of executive officers over time and may
be adjusted more or less frequently than annually when circumstances warrant.
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 investment management 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; performance of
Horizon's investment portfolio; ongoing development of Horizon's information
systems; and a broad variety of financial services industry and management
functions that are typical of a well-managed organization. All management
compensation, including that of the Chairman, President and the other executive
officers, is performance related.
COMPENSATION COMMITTEE MEMBERSHIP
Mr. Reed, Chairman (Chief Executive Officer) of Horizon, and Mr. McCormick,
President (Chief Administrative Officer) of Horizon, 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 voting member of the Committee.
No other officers, employees, former officers or employees of Horizon or
individuals requiring disclosure under Item 404 of Regulation S-K are voting
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>
Susan D. Sterger, Chairman Dale W. Alspaugh Russell L. Arndt George R. Averitt
Myles J. Kerrigan Robert E. McBride Thomas P. McCormick Larry E. Reed
</TABLE>
9
<PAGE> 12
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 1997 whose compensation
exceeded $100,000.
<TABLE>
<CAPTION>
------------Annual Compensation------------- ----------------Long-term Compensation-----------------
-------Awards--------- -----------Payouts-------------
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Salary ($) Bonus ($) Compensation Stock Options/ Payouts Compensation
Principal Position Year (1) (2) (1) (3) (4) Award(s) SARs (#) ( $) (5)
------------------ ---- ------- ------- --- -------- -------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larry E. Reed 1997 $239,312 $24,926 $5,546 -- -- -- $43,659
Chairman and 1996 $230,200 $11,296 $2,187 -- -- -- $56,286
Chief Executive Officer 1995 $220,400 -- $5,004 -- -- -- $35,526
Thomas P. McCormick 1997 $188,788 $13,810 $2,268 -- -- -- $21,470
President and Chief 1996 $127,500 $6,258 $3,186 -- -- -- $16,489
Administrative Officer 1995 $121,000 -- $2,301 -- -- -- $12,151
</TABLE>
(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. Mr. McCormick's 1997 salary reflects his
promotion to President and Chief Administrative Officer and is
consistent with similarly situated executive officers at comparable
financial institutions.
(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
which provide for their continued service as Chairman of the Board and
President, respectively, until December 31, 1998, subject to the right of
Horizon 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. 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.
10
<PAGE> 13
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 1997 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, 1997.
<TABLE>
<CAPTION>
Number of Shares Covered Value of Unexercised In-The
by Unexercised Options on Money Options as of
---------Shares Acquired--------- ---------12/31/97------------ --------12/31/97 (2)-----
On Exercise Value
Name During 1997 Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry E. Reed 2,600 (3) $83,575 27,400 -0- $796,200 -0-
Thomas P. McCormick 3,000 (4) $84,188 7,000 -0- $204,600 -0-
</TABLE>
(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,
1997 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. Reed exercised SARs with respect to up to 2,600 shares and received
the value realized above in cash. Therefore, 2,600 shares are no longer
eligible to be issued under the 1987 Plan, but Mr. Reed did not
increase his holding by 2,600 shares as such shares were not issued.
(4) Mr. McCormick 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. McCormick
did not increase his holding by 3,000 shares as such shares were not
issued.
COMPENSATION OF DIRECTORS
Horizon paid its non-employee directors $12,000 each for their services in 1997.
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.
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. Earnings on fees deferred under the plan are based on
the performance of investments selected by the participating director. 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. Participants have no rights to amounts deferred
other than rights as general creditors of Horizon.
11
<PAGE> 14
PERFORMANCE GRAPH
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, 1992 with reinvested dividends)
STOCK PERFORMANCE
FIVE YEAR TOTAL RETURN
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Horizon Bancorp $100.00 $105.86 $120.34 $134.83 $179.31 $226.03
S&P 500 Index 100.00 110.08 111.53 153.45 188.68 251.63
Bank Composite Index 100.00 110.24 104.58 166.66 235.90 340.76
</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 ABN AMRO, 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.
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 1997. Comparable transactions may be expected to take place in the
future. During 1997, 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.
12
<PAGE> 15
EMPLOYEE STOCK OWNERSHIP PLAN
Generally, all regular employees of Horizon, and its subsidiaries and
affiliates, who are at least 21 years old and have completed one year of
employment with Horizon are eligible to participate in the Horizon Bancorp
Employee Stock Ownership Plan. Under the terms of the ESOP, Horizon in its
discretion, contributes 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 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, 1997, a $142,650 principal payment was made by the ESOP to Horizon
from the cash available to the ESOP and 4,919 shares of Horizon Common Stock
were released from collateral and allocated to ESOP participants.
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
shares 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
13
<PAGE> 16
31, 1997, 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 $456,439 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. For the year ended December 31, 1997, a $30,429 principal
payment was made by the ESOP to Horizon from the cash available to the ESOP and
733 shares of Horizon Common Stock were released from collateral and allocated
to ESOP participants.
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
shares 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,
1998.
On June 27, 1997, the ESOP borrowed $475,454 directly from Horizon; the proceeds
were utilized by the ESOP to fund its acquisition of a total of 9,703 shares of
Horizon Common Stock with respect to distributions to participants during 1997
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 $475,454 over 20 years, in annual
installments without interest ("1997 Loan #2"). 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 #2 is due on December
31, 1998.
On September 9, 1997, the ESOP borrowed $378,998 directly from Horizon; the
proceeds were utilized by the ESOP to fund its acquisition of a total of 6,800
shares of Horizon Common Stock with respect to distributions to participants
during 1997 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 $378,998 over 20 years,
in annual installments without interest ("1997 Loan #3"). 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 #3 is due on December
31, 1998.
RESTRUCTURING OF ESOP LOANS As of December 31, 1997, the ESOP was indebted to
Horizon in the amount of $6,420,275 under 7 loans made to the ESOP by Horizon;
none of the loans are interest bearing. The original principal amount of all
such loans was $7,682,492. Management has determined that the rate at which the
loans are required to be amortized by their original terms should be reduced to
a level which results in a lower level of annual cash contributions to the ESOP.
The Administrative Committee under the ESOP, which is comprised of the members
of the Compensation Committee of the Board who are not employees of Horizon or
Bank, has retained the services of an independent financial advisor and
independent counsel to represent the interests of the ESOP and its participants
in connection with the restructuring.
On December 16, 1997, the Administrative Committee approved a restructuring of
the loans which was based principally on the recommendations of the independent
advisors. The restructuring would reduce Horizon's annual compensation expense
for contributions to the ESOP while enabling ESOP participants to receive a
reasonable level of contributions to their ESOP accounts. The restructuring
program provides for the following major elements:
(a) The amortization period with respect to the 1994 Loan would be extended
from 9 to 25 years, effective January 1, 1997. There would be no
minimum annual contribution by Horizon to the ESOP to pay principal on
the 1994 Loan; the balance of the 1994 Loan would be due, in the form
of a balloon payment, at the end of the 25 year period.
14
<PAGE> 17
(b) The amortization period and all other terms and conditions of the other
6 loans would remain the same;
(c) All 7 loans will be amortized through the use of cash dividends on the
shares of Horizon stock held by the ESOP.
(d) If the cash dividends on the Horizon stock held by the ESOP are
inadequate to amortize any loan, other than the 1994 Loan, Horizon
would make contributions to the ESOP in an amount which is sufficient
for the plan to amortize the loan.
(e) The fair market value of Horizon stock to be allocated to participants'
ESOP accounts for each plan year, taking into account shares purchased
by the ESOP from terminated participants and shares released from the
loan suspense account under the ESOP, would range from a minimum of 7%
of all participants' "compensation" (as defined) to a maximum of
approximately 9% of compensation. This level of contributions does not
include the Bank's matching contributions to the Thrift Plan or
participants' salary deferral contributions thereunder.
(f) Horizon and IMS Investment Management, N.A. (a subsidiary of the Bank)
which is the Trustee under the ESOP, will make every reasonable effort
to cause the ESOP to purchase from terminated participants, and, to the
extent necessary, Horizon will make contributions to the ESOP to fund
such purchase, at least 2,000 shares of Horizon stock each year
commencing with the plan year beginning January 1, 2001. This
commitment is subject to 2,000 shares of Horizon stock becoming
available for purchase each year.
(g) The Trustee will make every reasonable effort to cause the ESOP to
maintain, and, to the extent necessary, Horizon will make contributions
to the ESOP to enable the ESOP to maintain, a continuous ownership of
Horizon stock equal to or greater than 30% of the issued and
outstanding stock of the Horizon on a fully diluted basis.
Horizon expects that the independent advisors will approve the restructuring
program adopted by the Administrative Committee on December 16, 1997.
For the year ended December 31, 1997, no contributions were made to the ESOP.
THRIFT PLAN
Generally, all regular employees of Horizon who are at least 21 years old and
have completed one year of employment with Horizon are eligible to participate
in the Horizon Bancorp Employees' Thrift Plan. For the year ended December 31,
1997, 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 Horizon
are allocated to each participant based upon individual contribution elections.
The value of each participant's account attributable to Horizon'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, 1997, Bank contributed $172,000 to the Thrift
Plan of which $3,957 was allocated to the account of Mr. Reed, $3,848 was
allocated to the account of Mr. McCormick, a total of $23,807 was allocated to
the accounts of all executive officers as a group (seven individuals, including
the above two). The accounts of Messrs. Reed and McCormick under the Thrift
Plan, are 100% vested.
1987 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
15
<PAGE> 18
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, 1997, options to
purchase 51,800 shares of Horizon Common Stock were outstanding under the 1987
Plan and the 1990 Board resolutions, and 32,100 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 as of December 31, 1997:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL SHARES SUBJECT TO PER SHARE
OR NUMBER OF PERSONS OPTIONS WITH STOCK EXERCISE
IN GROUP APPRECIATION RIGHTS PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Executive officers and directors with
granted options (5 individuals) 49,800 $31.50 - 13.50
Horizon and Bank employees
with granted options,
(10 individuals, including
above 5) 51,800 (1)(2) $31.50 - 13.50
</TABLE>
(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 1997.
1997 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
On December 17, 1997, the Board adopted, subject to shareholder approval, the
1997 Key Employees' Stock Option and Stock Appreciation Rights Plan of Horizon
Bancorp ("1997 Plan"). In connection therewith, the Board reserved for issuance,
subject to shareholder approval, 90,000 shares of Horizon Common Stock. On May
29, 1997, Horizon shareholders approved the 1997 Plan and the reservation of
90,000 shares for issuance thereunder. The 1997 Plan provides for the granting
of NSOs, SARs and "incentive stock options" ("ISOs"). NSOs and ISOs may be
granted with or without SARs under the 1997 Plan. The Committee is responsible
for administering the 1997 Plan. NSOs and SARs may be granted under the 1997
Plan for a period of twenty (20) years commencing January 1, 1997; ISOs may be
granted for a period of ten (10) years commencing January 1, 1997.
No NSOs, SARs or ISOs were granted under the 1997 Plan during the 1997 calendar
year; and, no NSO, ISOs or SARs have been granted under the 1997 Plan during any
prior calendar years.
16
<PAGE> 19
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, Chicago, Illinois, served as Horizon's independent auditors
for 1997. 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 1997 consolidated
financial statements. As of this date, no determination has been made as to the
selection of Independent Public Accountants for the year ending December 31,
1998. It is expected that representatives of Arthur Andersen LLP will be present
at the Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
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. Form 4's for the
exercise of Stock Appreciation Rights were not filed on a timely basis due to a
clerical error for Larry E. Reed, Thomas P. McCormick and Robert C. Dabagia.
However, the transactions were reported on annual report Form 5's in a timely
manner.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder who intends to present a proposal for action at Horizon's 1999
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, 1998, 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/Treasurer
Michigan City, Indiana
April 20, 1998
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.
17
<PAGE> 20
PROXY HORIZON BANCORP
515 FRANKLIN SQUARE, MICHIGAN CITY, IN 46360
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby appoints Marjorie Nasser and Catherine Tempel, or
either of them, as Proxies, each with the power to appoint here 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 28, 1998 at
10:00 a.m. (local time) at the Holiday Inn, 5820 S. Franklin Street, Michigan
City, Indiana, or any adjournment thereof, on the following matters:
1. Election of Five 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 2001:
George R. Averitt, Larry N. Middleton, Susan D. Sterger, Donald J.
Manaher and Robert E. Swinehart.
(INSTRUCTION: To withhold authority to vote for any individual, write the
nominee's name on the space provided below.)
- -------------------------------------------------------------------------------
2. In their discretion, on such other business as may properly be brought
before the Annual Meeting or any adjournment thereof. ON ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BEST JUDGEMENT 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 THREE NOMINEES STATED 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 should 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 , 1998
--------------------
-------------------------------
(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 on May 28, 1998 by
completing the section below.
[ ] I WILL attend the Annual Meeting. [ ] I WILL NOT attend the Annual
Number of Persons attending will be Meeting.
------
