SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. _____________]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
GERMAN AMERICAN BANCORP
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than 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:
[ ] 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>1
DEFINITIVE PROXY SOLICITATION MATERIALS
TO BE MAILED TO SHAREHOLDERS
ON OR ABOUT MARCH 29, 1999
GERMAN AMERICAN BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1999
The Annual Meeting of Shareholders of German American Bancorp (the
"Corporation") will be held at the principal office of The German American Bank,
711 Main Street, Jasper, Indiana, on Thursday, April 22, 1999, at 10:00 a.m.,
Jasper time, for the following purposes:
1. To elect seven Directors to hold office until the Annual Meeting of
Shareholders in the year 2001 and until their successors are elected
and have qualified.
2. To consider and vote upon the proposal to adopt the German American
Bancorp 1999 Long-Term Equity Incentive Plan.
3. To consider and vote upon the proposal to adopt the German American
Bancorp 1999 Employee Stock Purchase Plan.
4. To transact such other business as may properly come before the
meeting.
Holders of record of Common Shares of the Corporation at the close of
business on March 1, 1999, are entitled to notice of and to vote at the Annual
Meeting.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ALL
SHAREHOLDERS, EVEN IF THEY PLAN TO ATTEND THE MEETING, ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board
of Directors
URBAN R. GIESLER
Secretary
March 27, 1999
Jasper, Indiana
(ANNUAL REPORT ENCLOSED)
<PAGE>2
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
April 22, 1999
This Proxy Statement is being furnished to shareholders on or about March
27, 1999, in connection with the solicitation by the Board of Directors of
German American Bancorp (the "Corporation"), 711 Main Street, Jasper, Indiana
47546, of proxies to be voted at the Annual Meeting of Shareholders to be held
at 10:00 a.m., Jasper time, on Thursday, April 22, 1999, at the foregoing
address. The Corporation is the parent holding company for five banks: The
German American Bank, Jasper, Indiana ("German American"); Peoples National
Bank, Washington, Indiana ("Peoples"); First State Bank, Southwest Indiana, Tell
City, Indiana ("First State Bank"); Citizens State Bank, Petersburg, Indiana
("Citizens"); and First Federal Bank, a Federal Savings Bank, Vincennes, Indiana
("First Federal"). At times herein, German American, Peoples, First State Bank,
Citizens and First Federal are referred to collectively as the "Banks."
At the close of business on March 1, 1999, the record date for the Annual
Meeting, there were 8,766,592 Common Shares outstanding and entitled to vote at
the Annual Meeting. On all matters, including the election of Directors, each
shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been exercised. The
proxy may be revoked by either (a) filing with the Secretary (or other officer
or agent of the Corporation authorized to tabulate votes) (i) a written
instrument revoking the proxy or (ii) a subsequently dated proxy, or (b)
attending the Annual Meeting and voting in person. Unless revoked, the proxy
will be voted at the Annual Meeting in accordance with the instructions of the
shareholder as indicated on the proxy. If no instructions are given, the shares
will be voted as recommended by the Directors.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
Seven Directors are to be elected at the Annual Meeting. Since the 1998
Annual Meeting of Shareholders, the Board of Directors has been increased from
twelve to fourteen members to include Michael J. Voyles and C. James McCormick.
Mr. Voyles was a Director of Citizens and its holding company, which the
Corporation acquired on June 1, 1998, and Mr. McCormick was the Chairman and
Chief Executive Officer of First Federal and its holding company, which the
Corporation acquired on January 4, 1999. The Board of Directors is divided into
two classes of equal size with the terms of one class expiring each year.
Generally, each Director serves until the annual meeting of the shareholders
held in the year that is two years after such Director's election and thereafter
until such Director's successor is elected and has qualified or until the
earlier of the Director's resignation, disqualification, removal or death. The
terms of the current Directors expire as follows: 1999 -- Directors Astrike,
Buehler, Graham, Hoffman, Lett, McCormick and Place; 2000 -- Directors Mehne,
Ruckriegel, Schroeder, Seger, Steurer, Thompson and Voyles.
<PAGE>3
Each Director will be elected by a plurality of the votes cast in the
election. Shares present but not voted for any nominee do not affect the
determination of whether a nominee has received a plurality of the votes cast.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election to the Board of Directors of the following
nominees: George W. Astrike, David G. Buehler, David B. Graham, William R.
Hoffman, Michael B. Lett, C. James McCormick and A.W. Place, Jr., each of whom
is now a Director whose present term expires this year. The Corporation's Bylaws
provide that no Director shall be elected after reaching the age of 69. The
Board of Directors has waived this Bylaw provision with respect to the election
of Messrs. Graham and McCormick for the additional two-year term for which they
have been nominated. Each nominee has indicated that he will accept nomination
and election as a Director. If, however, any such person is unable or unwilling
to accept nomination or election, it is the intention of the Board of Directors
to nominate such other person as a Director as it may in its discretion
determine, in which event the shares subject to the proxy will be voted for that
person.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE SEVEN NOMINEES
IDENTIFIED ABOVE (ITEM 1 ON THE PROXY).
The following table presents certain information as of March 1, 1999,
regarding the current Directors of the Corporation, including the seven nominees
proposed by the Board of Directors for election at this year's Annual Meeting.
Unless otherwise indicated in a footnote, the principal occupation of each
Director has been the same for the last five years and such Director possesses
sole voting and investment powers with respect to the shares indicated as
beneficially owned by such Director. Unless specified otherwise, a Director is
deemed to share voting and investment powers over shares indicated as held by a
spouse, children or other family members residing with the Director. None of the
persons named below beneficially owns more than one percent of the Common
Shares, except for the following: Mr. Buehler (3.8%); Mr. Ruckriegel (2.9%); and
Mr. Hoffman (1.0%). The Directors and executive officers as a group beneficially
owned 12.7 percent of the Corporation's Common Shares as of March 1, 1999.
(Numbers of shares have been adjusted to reflect the Corporation's December 1998
five percent stock dividend and fractional shares have been rounded to the
nearest whole share.)
<PAGE>4
<TABLE>
<CAPTION>
Name, Present Principal Director
Occupation and Age Since 1 Shares Beneficially Owned
- ------------------ --------- -------------------------
Directors:
<S> <C> <C>
George W. Astrike* 1982 87,5303
Chairman of the Board
of the Corporation2
Age 63
David G. Buehler* 1984 329,2614
President/CEO of Buehler Foods, Inc.
Age 59
David B. Graham* 1997 85,9625
Chairman of the Board of
Graham Farms, Inc. and
Graham Cheese Corporation
Age 72
William R. Hoffman* 1986 91,3126
Farmer; Director of
Patoka Valley Feeds, Inc.
Age 61
Michael B. Lett* 1993 5,9758
Attorney, Lett & Jones 7
Age 54
C. James McCormick*9 1999 11,51210
Chairman of the Board of First Federal;
Chairman of McCormick, Inc. and
Commercial Rentals, Inc. and
President of JAMAC Corp.
Age 73
Gene C. Mehne 1979 20,13911
President and Manager of
Mehne Farms, Inc.
Age 54
A. W. Place, Jr.* 1990 55,19912
President and Chief Executive Officer
of Jasper Rubber Products, Inc.
Age 51
Robert L. Ruckriegel 1983 249,61113
President of B. R. Associates, Inc.
(restaurants)
Age 63
<PAGE>5
Mark A. Schroeder 1991 22,50015
President, Chief Executive Officer
and Chief Operating Officer of
the Corporation 14
Age 45
Larry J. Seger 1990 53,85816
Sales Manager and Secretary/Treasurer
of Wabash Valley Produce, Inc.
(egg and turkey production)
Age 48
Joseph F. Steurer 1983 31,00217
Chairman and Chief Executive Officer
of JOFCO, Inc. (office furniture)
Age 62
Chet L. Thompson 1997 13,39518
President of Thompson
Insurance, Inc.
Age 62
Michael J. Voyles 1998 11,42719
President, Voyles Supermarket, Inc.
and Pike Broadcasting, Inc.
Age 50
Named Executive Officer Who Is Not A Director:
Stan J. Ruhe - - - 11,11220
Executive Vice President of the
Corporation and German American
Age 47
All Directors of the Corporation and
Executive Officers as a Group (19 persons) 1,111,519 21
*Nominee
<FN>
1 Includes service on the Board of German American prior to the
organization of the Corporation. Does not include prior service on the
Board of Directors of the Banks subsequently acquired by the
Corporation.
2 Mr. Astrike also serves as Chairman of the Board of German American, a
Director of each of the Banks, and an officer and/or a Director of all
nonbank affiliates of the Corporation. Mr. Astrike served as Chief
Executive Officer of the Corporation through December 31, 1998.
3 Includes 71,842 shares that Mr. Astrike has the right to purchase upon
the exercise of stock options.
4 Includes 282,842 shares owned by Buehler Foods, Inc., of which Mr.
Buehler is President and majority shareholder and with respect to
which Mr. Buehler shares voting and investment powers; 6,727 shares
held jointly by Mr. Buehler and his wife; and 39,690 shares held by
the David G. Buehler Charitable Trust.
5 Includes 16,125 shares owned by Mr. Graham's wife.
6 Includes 27,535 shares owned by Mr. Hoffman's wife.
7 Mr. Lett and his brother and law partner, J. David Lett, also serve as
Directors of Peoples. Lett & Jones represents the Union Banking
Division of Peoples as legal counsel.
<PAGE>6
8 Includes 655 shares owned jointly by Mr. Lett and his wife, and 529
shares held by Mr. Lett's wife, who also holds 376 shares as custodian
for their son.
9 Mr. McCormick was appointed to the Board on January 4, 1999, in
connection with the Corporation's acquisition of Fist Federal.
10 Mr. McCormick acquired his shares upon the conversion of his share of
First Federal in the Corporation's acquisition of First Federal
effective January 4, 1999.
11 Includes 14,823 shares held by the estate of Mr. Mehne's mother; 2,045
shares owned by Mr. Mehne's wife; and 1,341 shares held by German
American as trustee for the Mehne Farms, Inc. Qualified Plan.
12 Includes 17,146 shares owned jointly by Mr. Place and his wife; 2,688
shares which Mr. Place holds as custodian for his son and two
daughters; and 23,074 shares owned by Jasper Rubber Products, Inc., of
which Mr. Place is President and Chief Executive Officer.
13 Includes 76 shares owned jointly by Mr. Ruckriegel and his wife,
10,203 shares owned by Mr. Ruckriegel's wife; and 224,742 shares held
by Ruckriegel Associates I LP, for which Mr. Ruckriegel and his wife
serve as the partners.
14 Mr. Schroeder was named Chief Executive Officer of the Corporation
effective January 1, 1999. Mr. Schroeder was named President and Chief
Operating Officer of the Corporation effective July 1, 1995, after
having served as President of German American since January 1991. Mr.
Schroeder also is a Director of each of the Banks, and an officer
and/or a Director of the Corporation's nonbank affiliates.
15 Includes 10,942 shares that Mr. Schroeder has the right to purchase
upon the exercise of stock options.
16 Includes 3,748 shares Mr. Seger owns jointly with his wife and 26,791
shares owned by certain corporations of which Mr. Seger is an
executive officer and a shareholder.
17 Includes 4,554 shares owned by Mr. Steurer's wife.
18 Includes 5,340 shares owned jointly by Mr. Thompson and his wife, and
7,636 shares owned by Mr. Thompson's wife.
19 Includes 1,836 shares owned jointly by Mr. Voyles and his wife, 1,193
shares owned jointly by Mr. Voyles and his daughter and 1,198 shares
owned jointly by Mr. Voyles and his son.
20 Includes 273 owned by Mr. Ruhe's children and 4,725 shares that Mr.
Ruhe has the right to acquire upon the exercise of stock options.
21 Includes 90,268 shares that Directors and Executive Officers have the
right to acquire upon the exercise of stock options and 739,985 shares
as to which voting and investment powers are shared by members of the
group with spouses or others.
</FN>
</TABLE>
Committees and Attendance
The Board of Directors of the Corporation held nine meetings during
1998. The Corporation has standing audit and compensation committees but does
not have a nominating committee. The Audit Committee, consisting of Director
Hoffman, who serves as Chairman, and Directors Lett, Mehne and Seger, met three
times in 1998. The Audit Committee reviews with the Corporation's independent
auditors the scope of the audit to be undertaken and the results of the audit
and also reviews the results of internal audits. The Corporation's Human
Resources Committee (previously named the Compensation Committee) has seven
members. Director Steurer serves as the Chairman and the other members are
Directors Astrike, Buehler, Graham, Place, Ruckriegel and Schroeder. The Human
Resources Committee met six times during 1998. The Human Resources Committee
makes salary and bonus recommendations to the Board of Directors and administers
the Stock Option Plan. Each of the Directors attended at least 75 percent of the
aggregate number of meetings of the Board of Directors of the Corporation and
the committees on which he served during 1998.
<PAGE>7
Compensation of Directors
Each Director of the Corporation, including salaried officers of the
Corporation, receives $1,000 per quarter for service on the Corporation's Board
of Directors, regardless of attendance at meetings. Outside Directors also
receive $100 for each committee meeting attended. All Directors receive an
additional $100 for attending a special meeting of the Corporation's Board of
Directors.
Except for Mr. Graham, all of the members of the Corporation's Board
also served on the Board of at least one of the Banks and received compensation
for such service during 1998. German American pays each Director a monthly
retainer of $500 and $100 for every regular and special Board meeting and
committee meeting attended. Outside Directors who serve on the Boards of
Directors of Peoples, First State Bank, Citizens and First Federal receive a
monthly $500 retainer and do not receive any additional amounts for attending
meetings. Salaried officers of the Corporation do not receive any additional
compensation for serving on the Boards of Directors of Peoples, First State
Bank, Citizens and First Federal.
In 1992 the German American Board of Directors approved a Director
Compensation Deferral Program pursuant to which each of the Directors could
choose to enter into an agreement to defer 100 percent (not to exceed $6,600 per
year) of his Board fees for five years. The agreements provided for interest to
accumulate on deferred amounts at the greater of eight percent or the five-year
moving average of German American's return on equity, subject, however, to a
maximum rate of 11.75 percent. The accumulated amounts are to be paid to the
Director, or the Director's designated beneficiary, upon the retirement,
disability or death of the Director, or, subject to German American's approval,
in the event of an unforeseeable financial emergency experienced by the
Director. The deferred compensation agreements were for a five-year term and all
of the agreements have expired, except for the agreement of one German American
Director who joined the Board in 1995 and who is not a member of the
Corporation's Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid
for the fiscal years indicated to the Corporation's Chief Executive Officer and
the Corporation's other most highly compensated executive officers, based on
salary and bonus earned during fiscal 1998.
<PAGE>8
Summary Compensation Table
==========================
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
============================== --------------- ----------------- --------------- ----------------- ==================
Securities
Underlying
Name and Principal Options/ All Other
Position During 1998 Year Salary Bonus SARs2 Compensation
-------------------- ---- ------ ----- ------ ------------
============================== --------------- ----------------- --------------- ----------------- ==================
<S> <C> <C> <C> <C> <C>
George W. Astrike, 1998 $209,348 $55,089 60,900 $47,7634
Chairman and C.E.O. 1997 $178,000 $46,280 10,939 $44,402
of the Corporation and 1996 $168,000 $47,040 6,807 $33,739
Chairman of German
American1
============================== --------------- ----------------- --------------- ----------------- ==================
Mark A. Schroeder, 1998 $135,000 $35,284 0 $30,5055
President and C.O.O. 1997 $125,000 $32,506 6,189 $26,296
of the Corporation3 1996 $110,000 $30,800 2,084 $24,629
============================== =============== ================= =============== ================= ==================
Stan J. Ruhe, 1998 $ 99,500 $21,622 321 $12,1126
Executive Vice 1997 $ 98,000 $21,070 3,543 $11,907
President of the 1996 $ 96,500 $22,436 2,991 $11,894
Corporation and
German American
============================== =============== ================= =============== ================= ==================
<FN>
1 Mr. Astrike served as Chief Executive Officer through December 31, 1998.
2 The numbers of shares underlying options have been retroactively adjusted
to reflect subsequent stock splits and stock dividends and are rounded to
the nearest whole share.
3 Mr. Schroeder became Chief Executive Officer of the Corporation effective
January 1, 1999.
4 Represents contributions of $8,000 under the Profit Sharing Plan, matching
contributions of $8,000 under the 401(k) Plan, Director fees in the amount
of $11,700, $19,280 in above-market interest credited on deferred salary
and Director fees, and $783 in premiums paid for the term portion of a
split dollar life insurance policy.
5 Represents contributions of $8,000 under the Profit Sharing Plan, matching
contributions of $8,000 under the 401(k) Plan, Director fees in the amount
of $11,700, and $2,805 in above-market interest credited on deferred
Director fees.
6 Represents contributions of $6,056 under the Profit Sharing Plan and
matching contributions of $6,056 under the 401(k) Plan.
</FN>
</TABLE>
In 1992 the German American Board of Directors entered into a Deferred
Compensation Agreement with Mr. Astrike. A primary purpose of the Agreement,
like that of the Director Compensation Deferral Program discussed above, was to
provide a long-term incentive to maximize shareholder value through increases in
German American's return on equity. The Agreement permitted Mr. Astrike to defer
in advance up to $180,000 of the compensation that he would otherwise be
entitled to receive from German American, with interest credited to the amounts
deferred by Mr. Astrike at the rate of the greater of eight percent or the
five-year moving average of German American's return on equity, subject,
however, to a maximum rate of 11.75 percent. The amounts deferred by Mr. Astrike
are unfunded and Mr. Astrike's rights to such deferred amounts are those of an
unsecured general creditor of German American. Mr. Astrike was not eligible to
receive profit sharing and matching contributions pursuant to the German
American Profit Sharing and 401(k) Plan on deferred compensation. The provisions
of the Agreement permitting deferral of compensation expired in 1997.
<PAGE>9
Option/SAR* Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 1998 pursuant to the German American Bancorp 1992 Stock Option
Plan (the "Option Plan"). Except for the option granted to Mr. Astrike, the only
stock options granted during the year were replacement options that were granted
to optionees who tendered already-owned Common Shares of the Corporation in
payment of the exercise price for prior option grants. (Numbers of options and
per share exercise prices have been retroactively adjusted to reflect subsequent
stock splits and dividends and fractional shares have been rounded to the
nearest whole share.)
<TABLE>
<CAPTION>
- -------------------- ============================================================ -------------------------- ===============
Potential Realizable
Value at Assumed Annual Alternative
Rates of Stock Price Grant Date
Individual Grants Appreciation for Value2
Option Term 1
==================== ----------------- --------------- ------------ ------------- ------------ ------------- ===============
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration Grant Date
Name Granted Fiscal Year Price 5% 10% Present Value
- ------- ----- -- -------- ------------ ----- -- --- -- ---- -------------
($/Sh) Date
---------- ----
==================== ----------------- --------------- ------------ ------------- ------------ ------------- ===============
<S> <C> <C> <C> <C> <C> <C> <C>
George W. Astrike 60,9003 97.0% $23.33 9/1/2018 - - $578,550
==================== ================= =============== ============ ============= ============ ------------- ===============
Stan Ruhe 3214 0.5% $27.88 4/19/2003 $ 2,334 $ 5,123 -
==================== ================= =============== ============ ============= ============ ------------- ===============
*The Corporation does not grant Stock Appreciation Rights ("SARs").
<FN>
1 The amounts in the table are not intended to forecast possible future
appreciation, if any, of the Corporation's Common Shares. Actual gains,
if any, are dependent upon the future market price of the Corporation's
Common Shares and there can be no assurance that the amounts reflected
in this table will be achieved.
2 The Alternate Grant Date Value was calculated using the Black-Scholes
option pricing model. The weighted-average fair value at grant date, as
adjusted for the 5 percent stock dividend in December 1998, was $9.50
per share. The fair value of these options was estimated based on a
risk-free interest rate of 5.10 percent, an expected life of ten years,
expected volatility of stock price of .32, and expected dividends of
1.64 percent per year. When Mr. Astrike exercises the option, the
Corporation will receive an income tax deduction equal to the difference
between the option price and the fair market value of the shares
purchased on the exercise date, and Mr. Astrike will pay tax on that
same amount as ordinary income at the time of exercise.
3 The Option Plan provides for the grant of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, and non-qualified options to full-time salaried employees of
the Corporation and its subsidiaries. Effective September 2, 1998, the
Corporation's Board of Directors amended the Option Plan to permit the
grant of non-qualified options with exercise periods of up to twenty
years. Also effective as of September 2, 1998, the Stock Option
Committee approved, as recommended by the Corporation's Board of
Directors, the grant to Mr. Astrike of a non-qualified option covering
60,900 shares as part of the post-retirement benefit package for Mr.
Astrike. The option was fully exercisable on the date of grant and will
remain exercisable through September 1, 2018. The exercise price for
shares covered by the option is the average of the closing bid and asked
price of one Common Share as reported on Nasdaq NMS for the business day
preceding the date of grant. As authorized by the Option Plan, the
Committee waived the Option Plan requirements that otherwise would have
limited the exercise of Mr. Astrike's option upon termination of
employment, total disability and death. For additional information
regarding Mr. Astrike's post-retirement benefit package, see the
Compensation Committee Report below.
<PAGE>10
4 On August 3, 1998, Mr. Ruhe exercised an incentive stock option that had
been granted on April 20, 1993, at the estimated aggregate fair market
value of the Common Shares covered by the option on the grant date. The
Option Plan provides that if the optionee tenders Common Shares of the
Corporation already owned by the optionee as payment, in whole or in
part, of the exercise price for the shares the optionee has elected to
purchase under the option, then the Corporation is obligated to use its
best efforts to issue a replacement option of the same type (incentive
or non-qualified option), with the same expiration date as the option
that was exercised, and covering a number of Common Shares equal to the
number of Common Shares tendered. The per share exercise price of the
replacement option is the fair market value of a Common Share of the
Corporation on the date of exercise of the original option. Replacement
options are not exercisable for a period of twelve months following
their date of grant and are subject to cancellation if during such
twelve-month period the optionee sells any Common Shares of the
Corporation other than in payment of the exercise price of another
option under the Option Plan. The Option Plan also provides that if a
corporate reorganization would result in the termination of the Plan and
unexercised options, then all unexercised options will become
immediately exercisable regardless of any vesting requirements. Upon the
exercise of the option, Mr. Ruhe was granted a replacement option for
321 shares at an exercise price of $27.88.
</FN>
</TABLE>
Aggregated Option/SAR Exercises In
Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information with respect to options that
have been granted to Messrs. Astrike, Schroeder and Ruhe pursuant to the Option
Plan and the option exercises that occurred during 1998. (Numbers of options and
per share exercise prices have been retroactively adjusted to reflect subsequent
stock splits and dividends.)
<TABLE>
<CAPTION>
========================== --------------- ================= ------------------------------ =====================================
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs at Fiscal
Year-End (#) Year-End ($)
========================== --------------- ----------------- ------------------------------ =====================================
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
========================== --------------- ----------------- ------------------------------ =====================================
<S> <C> <C> <C> <C>
George W. Astrike 0 0 71,842/0 options1 $66,572/0
========================== --------------- ----------------- ------------------------------ =====================================
Mark A. Schroeder 0 0 10,942/0 options2 $93,996/0
========================== --------------- ================= ============================== =====================================
Stan Ruhe 1,008 $19,122 4,725/321 options3 $36,519/0
========================== --------------- ================= ============================== =====================================
<FN>
1 In 1993 Mr. Astrike was granted an option to purchase 6,000 Common
Shares at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 21,879 Common Shares at an
exercise price of $8.91 per share. The original 1993 option has been
fully exercised by Mr. Astrike; the remaining options are replacement
options and the option for 60,900 shares that was granted on September
2, 1998.
<PAGE>11
2 In 1993 Mr. Schroeder was granted an option to purchase 5,000 Common
Shares at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 18,233 Common Shares at an
exercise price of $8.91 per share. The option became exercisable with
respect to twenty percent of the shares covered by the option on each
of the five anniversary dates beginning on the first anniversary date
after the grant of the option. Of the shares covered by the option,
3,648 remain unexercised; Mr. Schroeder's other unexercised options are
replacement options.
3 In 1993 Mr. Ruhe was granted an option to purchase 3,000 Common Shares
at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 10,940 Common Shares at an
exercise price of $8.91 per share. The option became exercisable with
respect to twenty percent of the shares covered by the option on each
of the five anniversary dates beginning on the first anniversary date
after the grant of the option. Of the shares covered by the option,
1,182 remain unexercised; Mr. Ruhe's other unexercised options are
replacement options.
4 Represents the difference between the last per share trade price of the
Corporation's Common Shares as reported on Nasdaq on December 30, 1998
($23.00), which was the last trade reported for 1998, and the exercise
price of those options having an exercise price less than the last
trade price, multiplied by the number of options.
</FN>
</TABLE>
Committee Report
on Executive Compensation
Overall Compensation Policy
The Human Resources Committee (the "Committee") of the Board of
Directors of the Corporation (formerly called the Compensation Committee) has
the responsibility for recommending the salaries, bonuses and other compensation
to be paid to the executive officers of the Corporation. The Committee's
recommendations as to compensation are submitted to the full Board of Directors
for approval. The Committee is composed of seven members, consisting of five
independent, outside directors and two executive officers of the Corporation,
Mr. Astrike and Mr. Schroeder. Messrs. Astrike and Schroeder absent themselves
from, and do not participate in, any Committee proceedings relating to the
determination of their own compensation. The primary goals of the Committee in
determining compensation policy are to provide a level of compensation that will
attract, motivate and help retain well-qualified executive officers and to
further enhance shareholder return by more closely aligning the interests of
executive officers with the interests of the Corporation's shareholders. The
Committee attempts to attain these goals by setting total compensation at
competitive levels considering an executive officer's individual performance
while also providing effective incentives tied to the Corporation's overall
financial performance. The executive compensation program consists of three
basic elements: (1) base salary, (2) annual incentive bonus awards, and (3)
stock option awards.
Base Salary
The Corporation attempts to provide Mr. Astrike and the other executive
officers with a base salary that is competitive with the salaries offered by
other bank holding companies of comparable size in Indiana and the surrounding
states. Each year the Committee reviews salary surveys provided by trade
associations and accounting firms. Increases in base compensation are not
automatically based on increased compensation at comparable institutions,
however, but also reflect the performance of the individual executive officer
and of the Corporation.
<PAGE>12
Based on an evaluation of individual performance, the performance of
the Corporation in 1997 and on information provided by salary surveys, the
Committee recommended, and the Board approved the recommendation, that Mr.
Astrike's annual base salary for 1998 be increased to $193,000. During 1998, the
Committee approved an additional increase to Mr. Astrike's base salary to
$243,000 on an annualized basis.
Annual Incentive Bonus Awards
Annual bonuses are awarded based on the extent that the Committee
believes that they are merited based on the attainment of certain goals relating
to the Corporation's return of equity and return on assets. Based on these
criteria, the bonus awarded for 1998 to Mr. Astrike exceeded the bonus he
received for 1997.
Stock Option Awards
In 1992 the Corporation adopted a Stock Option Plan that provides for
the award of incentive stock options and non-qualified stock options. The
purpose of granting options is to provide long-term incentive compensation to
complement the short-term focus of annual incentive bonus awards. The size of
stock option awards depends upon the executive officer's level of responsibility
and individual performance. Stock options are granted at the estimated fair
market value of a Common Share of the Corporation on the date of grant.
The five independent outside directors on the Committee also serve as
the Stock Option Committee of the Corporation, which administers the Stock
Option Plan. In April 1993 incentive stock options were awarded to Mr. Astrike
and four other executive officers. Mr. Astrike was granted options covering
21,879 shares and the options granted the other executive officers ranged in
amount from 5,470 shares to 18,233 shares each (all share amounts have been
adjusted to reflect subsequent stock splits and stock dividends and have been
rounded to the nearest whole number). The option granted to Mr. Astrike vested
immediately with respect to half of the shares covered by the option in
recognition of his past years of service as Chief Executive Officer of the
Corporation and vested with respect to the other half of the shares on April 20,
1994. The options granted to the other executive officers vested in twenty
percent increments beginning one year after the date of grant and became fully
exercisable on April 20, 1998, the fifth anniversary of the grant date. The
Board approved certain amendments to the Plan effective September 2, 1998 for
the purpose of removing the limit previously imposed by the Plan on the length
of time a non-qualified option could remain exercisable.
<PAGE>13
Other than replacement options, the only option granted under the Stock
Option Plan during 1998 was an option covering 58,000 shares granted to Mr.
Astrike on September 2, 1998 (pursuant to the Stock Option Plan, the number of
shares covered by the option was automatically increased to 60,900 shares to
reflect the December 1998 stock dividend). Mr. Astrike intends to retire
following the 1999 Annual Meeting of Shareholders. On June 5, 1998, the
Corporation's Board of Directors approved a post-retirement benefit package for
Mr. Astrike, including the grant of the option. In addition to the option and as
part of the post-retirement benefit package, the Corporation's Board also
approved a consulting agreement with Mr. Astrike that calls for him to provide
to the Corporation for a term of five years after his retirement consulting
services concentrating on bank acquisitions and real estate development.
Pursuant to the agreement, Mr. Astrike would receive a monthly consulting fee of
$20,250 following his retirement and until August 31, 2000, and, thereafter he
would receive a monthly fee of $1,250. On August 21, 1998, the Human Resources
Committee also approved for the benefit of Mr. Astrike a Non-Qualified Index
Executive Supplemental Agreement, which is designed to provide Mr. Astrike with
an annual benefit of approximately $50,000 commencing in the year 2003, and a
Split Dollar Life Insurance Plan Agreement, which would provide a $1,000,000
death benefit payable upon Mr. Astrike's death to his beneficiary.
The Stock Option Plan provides that if an optionee tenders Common
Shares of the Corporation already owned by the optionee in whole or partial
payment of the exercise price of an option, the Corporation will use its best
efforts to grant the optionee a replacement option covering a number of shares
equal to the number of already owned shares tendered. A replacement option is of
the same type (incentive or non-qualified option) and has the same expiration
date as the option exercised. The per share exercise price of a replacement
option is the fair market value of a Common Shares of the Corporation on the
date of exercise of the original option. A replacement option was granted to one
of the named executive officers on August 3, 1998.
The Omnibus Budget Reconciliation Act enacted by the United States
Congress in August 1993 amended the Internal Revenue Code of 1986 to disallow a
public company's compensation deduction with respect to certain highly-paid
executives in excess of $1 million unless certain conditions are satisfied. The
Corporation presently believes that this provision is unlikely to become
applicable in the near future to the Corporation because (a) the levels of base
salary and annual incentive bonus awards of the Corporation's executive officers
are substantially less than $1 million per annum, and (b) the law generally does
not apply to stock option plans that require that options be granted at not less
than fair market value, subject to certain conditions. Therefore, the
Corporation has not taken any action to adjust its compensation plans or
policies in response to the adoption of this law.
SUBMITTED BY THE MEMBERS OF THE COMMITTEE:
George W. Astrike Robert L. Ruckriegel
David Buehler Mark A. Schroeder
A. W. Place, Jr. Joseph F. Steurer
David B. Graham
<PAGE>14
Committee Interlocks and Insider Participation
Two of the persons who served during 1998 on the Human Resources
Committee of the Corporation's Board of Directors, Messrs. Astrike and
Schroeder, were executive officers of the Corporation. Messrs. Astrike and
Schroeder were not present for, and did not participate in, any Committee
proceedings relating to the determination of their own compensation. None of the
other five members of the Committee is, or previously was, an officer or
employee of the Corporation. Mr. Buehler, a member of the Committee, is a
principal shareholder, officer and director of Buehler Foods, Inc., which
subleases space for three branch banking facilities to two of the Banks.
Certain Business Relationships And Transactions
During 1998, the bank subsidiaries of the Corporation had (and expect
to continue to have in the future) banking transactions in the ordinary course
of business with Directors, officers and principal shareholders of the
Corporation and their associates. These transactions have been made on
substantially the same terms, including interest rates, collateral and repayment
terms on extensions of credit, as those prevailing at the same time for
comparable transactions with others and did not involve more than the normal
risk of collectibility or present other unfavorable features.
Stock Performance Graph
The SEC requires the Corporation to include in this proxy statement a
line-graph presentation comparing the Corporation's cumulative, five-year
shareholder returns with market and industry returns. The following graph
compares the Corporation's performance with the performance of the NASDAQ Stock
Market (U.S. Companies), NASDAQ Bank Stocks, and a peer group of bank holding
companies headquartered in Southern Indiana. The peer group includes the
following: CNB Bancshares, Inc.; First Financial Corporation; Indiana United
Bancorp; National City Bancshares, Inc.; and Old National Bancorp (AMBANC Corp,
which was included previously in the peer group, was acquired by Union Planters
Corp. during 1998). The returns of each company in the peer group have been
weighted to reflect the company's market capitalization.
Comparison of Five-Year Cumulative Total Return
German American Bancorp, Southern Indiana Peer Group
and Nasdaq Stock Market (U.S. Companies)
[Table substituted for graph in EDGAR version]
Nasdaq Stock Market Southern Indiana
German American Bancorp (U.S. Companies) Bank Peer Group
12/31/1993 $100.00 $100.00 $100.00
12/31/1994 $108.18 $ 97.75 $104.58
12/31/1995 $111.70 $138.26 $109.95
12/31/1996 $146.10 $170.02 $147.50
12/31/1997 $264.47 $208.58 $202.11
12/31/1998 $201.77 $293.21 $214.92
Return based on $100 invested on December 31, 1993 and the reinvestment of
dividends.
<PAGE>15
PROPOSAL 2
PROPOSAL TO APPROVE THE GERMAN AMERICAN BANCORP
1999 LONG-TERM EQUITY INCENTIVE PLAN
On March 26, 1999, the Board of Directors adopted the German American
Bancorp 1999 Long-Term Equity Incentive Plan (the "Incentive Plan"). The Board's
adoption of the Incentive Plan is subject to approval by the shareholders at the
Annual Meeting.
The only equity plan the Corporation currently has in place is the
previously discussed German American Bancorp 1992 Stock Option Plan (the "Option
Plan"). The Option Plan provides for the grant of incentive and non-qualified
options to full-time salaried employees of the Corporation and its subsidiaries.
Approximately eighty-seven percent of the Common Shares authorized for grant
under the Option Plan have been granted. The Incentive Plan is intended to
address the shortage of shares remaining under the Option Plan and to give the
Board of Directors and the Human Resources Committee of the Board broader
discretion and increased flexibility in designing incentives to attract, reward
and retain employees and Directors and to ensure the continued close alignment
of their interests with the interests of shareholders generally. As discussed in
detail below, the Incentive Plan allows the Board and the Human Resources
Committee broader discretion in designing long-term equity incentive
compensation packages by determining the types, sizes, terms and conditions of
awards to be granted, subject to the provisions of the Incentive Plan. The
Incentive Plan provides for a number of different types of stock-based awards in
addition to stock options. The Incentive Plan also expands the persons eligible
to receive certain incentive awards to include Directors of the Corporation and
its subsidiaries.
The following summary of the material features of the Incentive Plan
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Incentive Plan, which is set forth in Appendix A to this
Proxy Statement.
Administration
The Incentive Plan will be administered by a Committee, which has the
authority, subject to the terms of the Plan, to (i) select employees and
Directors who will receive awards under the Plan; (ii) grant awards; (iii)
determine the types and sizes of the awards; (iv) determine the terms and
conditions of the awards; (v) adopt, alter, and repeal administrative rules and
practices governing the Plan; (vi) interpret the terms and provisions of the
Plan and any awards granted thereunder; (vii) prescribe the forms of any award
agreements or other instruments relating to awards; and (viii) otherwise
supervise the administration of the Plan. The Human Resources Committee of the
Board will serve as the Committee for awards made to employees. For awards made
to non-employee Directors of the Corporation or its subsidiaries, the entire
Board of Directors of the Corporation will serve as the Committee.
<PAGE>16
Common Shares Subject to the Incentive Plan
The aggregate number of the Corporation's Common Shares available for
the grant of awards under the Incentive Plan in a fiscal year is equal to the
sum of (i) 1 percent of the number of Common Shares outstanding as of the last
day of the Corporation's prior fiscal year, plus (ii) the number of Common
Shares that were available for the grant of awards, but were not granted, under
the Plan in any previous fiscal year. Under no circumstances, however, may the
number of Common Shares available for the grant of awards in any fiscal year
under the Plan exceed 1.5 percent of the Common Shares outstanding as of the
last day of the prior fiscal year. The maximum aggregate number of shares of the
Corporation's common stock that may be issued under the Incentive Plan upon the
exercise of incentive stock options (as described under Section 422 of the
Internal Revenue Code of 1986, as amended) is 425,000 shares, as adjusted to
reflect any changes in the Corporation's capitalization, such as pursuant to a
merger, consolidation, stock split, stock dividend, or similar event. Since the
number of Common Shares that will be available for grant in future years cannot
be determined in advance, the aggregate market value of the Common Shares that
would be available for the grant of awards under the Incentive Plan also cannot
be determined at this time. If the market value of the 425,000 shares available
for grant as incentive stock options were based on the closing price of a Common
Share as reported on the Nasdaq National Market System for March 1, 1999, the
Common Shares available for the grant of awards under the Incentive Plan would
have an aggregate market value of $8,871,875.
Eligibility
Employees and Directors of the Corporation and its subsidiaries who are
designated as participants by the Committee will be eligible to receive awards
under the Incentive Plan, but only employees will be eligible to receive grants
of incentive stock options. The total number of employees and Directors who
could receive awards under the Incentive Plan cannot be determined at this time
because the Committee will determine the employees and Directors to receive
awards. If the Incentive Plan were currently in effect, there would be
twenty-four non-employee subsidiary Directors and twelve non-employee Directors
of the Corporation who could be eligible to receive awards under the Incentive
Plan.
Types of Awards
The Committee will have broad discretion under the Incentive Plan to
establish stock-based incentive awards designed to attract and retain key
personnel and to motivate them to maximize shareholder value by more closely
aligning their interests with those of the shareholders. The awards may be in
the form of restricted stock, incentive stock options, non-qualified stock
options, stock equivalent units, stock appreciation rights and other
stock-related forms of incentive compensation. The Committee has the authority,
subject to the terms of the Incentive Plan, to select the employees and
Directors who will receive awards and to determine the types and amounts of the
awards and the terms, conditions, and restrictions applicable to the awards.
<PAGE>17
The benefits or amounts that will be received by or allocated to the
executive officers named in the Summary Compensation Table above, to all current
executive officers as a group, and to all employees -- including all current
officers who are not executive officers -- as a group, and to all non-executive
Directors as a group under the Incentive Plan are not determinable. It is also
not possible to determine the benefits or amounts that would have been received
by or allocated to the executive officers named in the Summary Compensation
Table above or to the groups identified in the preceding sentence under the Plan
if the Incentive Plan had been in effect for 1998.
Exercise Price
In general, the Committee may permit a participant to pay the exercise
price for a stock option and/or the participant's tax withholding obligations
associated with an award in cash, by the transfer of the Corporation's Common
Shares, by the surrender of all or part of an award (except for incentive stock
options), or by a combination of these methods.
Change of Control
In general, in the event of a change of control (as defined in the
Incentive Plan) of the Corporation, (i) all outstanding stock options will
become fully exercisable, and (ii) all restrictions and conditions applicable to
restricted stock and stock options will be deemed to have been satisfied as of
the date of the change of control.
Amendment, Effective Date and Termination
The Board of Directors may amend, suspend, or terminate the Incentive
Plan at any time. Shareholder approval of an amendment will be required only to
the extent necessary to satisfy applicable legal and regulatory agency rules.
Subject to shareholder approval, the Plan will become effective as of April 22,
1999. No incentive stock options may be granted under the Plan after April 21,
2009, without further shareholder approval.
Federal Income Tax Consequences
The federal income tax consequences to a participant and the
Corporation will vary depending upon the type of award granted under the
Incentive Plan. Generally, there are no federal income tax consequences to the
recipient or the Corporation upon the grant or exercise of an incentive stock
option. If the recipient holds the shares purchased through the exercise of an
incentive stock option for more than one year after the exercise date and two
years after the option was granted (the "holding period"), the recipient will be
eligible upon selling the shares for long-term capital gain treatment on any
excess in the amount of the sale price over the option price. The Corporation
will not receive an income tax deduction in the event the recipient disposes of
the shares after completion of the holding period. However, if the recipient
sells the shares before the expiration of the holding period, the recipient will
have made a "disqualifying disposition" and will realize ordinary income on the
date of sale equal to the difference between the option price and the fair
market value of the shares on the exercise date. The balance of the recipient's
gain, if any, on the sale of the shares is subject to capital gains treatment.
The Corporation will receive an income tax deduction in the same amount and at
the same time as the recipient realizes ordinary income.
<PAGE>18
The recipient of a non-qualified stock option will realize ordinary
income upon exercising the option, equal to the difference between the option
price and the fair market value on the exercise date of the shares purchased.
The Corporation will receive an income tax deduction in the same amount and at
the same time as the recipient realizes ordinary income. Upon the subsequent
sale of any such shares by the recipient, any appreciation or depreciation in
the value of the shares after the exercise date will be treated as a capital
gain or loss.
With respect to restricted stock, a recipient generally will not
realize income on the date of the grant and the Corporation will not be entitled
to a deduction at that time. The recipient will realize ordinary income in an
amount equal to the fair market value of the awarded shares at the time the
restrictions lapse on such shares, and the Corporation will be entitled to a
corresponding income tax deduction. Dividends paid to recipients prior to the
lapse of restrictions will be taxed as ordinary income to the recipient and
deductible as such by the Corporation.
Shareholder Approval
The Incentive Plan will be adopted if it is approved by a majority of
the votes cast at the Annual Meeting, provided a majority of the outstanding
Common Shares is represented and entitled to vote at the Annual Meeting. Shares
voted "for" the Incentive Plan and shares represented by return proxies that do
not contain instructions to vote against the Incentive Plan or to abstain from
voting will be counted as shares cast for the approval of the Incentive Plan.
Abstentions and broker non-votes will not be treated as votes cast "for" or
"against" the Incentive Plan but shall be included for purposes of determining
whether a quorum is present.
BECAUSE OF THE INTEREST OF THE MEMBERS OF THE BOARD OF DIRECTORS IN GRANTS THAT
MAY BE AWARDED TO THEM IN THE FUTURE UNDER THE INCENTIVE PLAN, THE BOARD OF
DIRECTORS MAKES NO RECOMMENDATION TO SHAREHOLDERS REGARDING THE INCENTIVE PLAN
(ITEM 2 ON THE PROXY). UNLESS A SHAREHOLDER INDICATES OTHERWISE, PROXY HOLDERS
WILL VOTE FOR THE PROPOSAL.
<PAGE>19
PROPOSAL 3
PROPOSAL TO APPROVE THE GERMAN AMERICAN BANCORP
1999 EMPLOYEE STOCK PURCHASE PLAN
On March 26, 1999, the Board of Directors adopted the German American
Bancorp 1999 Employee Stock Purchase Plan (the "Purchase Plan"). The Board's
adoption of the Purchase Plan is subject to approval by the shareholders at the
Annual Meeting.
The effective date of the Purchase Plan will be April 22, 1999, if it
is approved by the shareholders. The Board of Directors of the Corporation will
determine the effective date of the first offering, if any, under the Purchase
Plan. The purpose of the Purchase Plan is to provide, subject the determination
of Board of Directors in its sole discretion to implement the Plan, eligible
employees of the Corporation and its subsidiaries with a convenient opportunity
to purchase the Corporation's Common Shares financed by payroll deductions. The
Board recommends approval of the Purchase Plan.
The following summary of the material features of the Purchase Plan
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Purchase Plan, which is set forth in Appendix B to this
Proxy Statement.
Options to Purchase Shares in Offerings
The Purchase Plan provides for the grant of options to purchase Common
Shares of the Corporation to eligible employees. If implemented, the Common
Shares will be offered to eligible employees in a maximum of ten offerings, each
of twelve months' duration. A total of 425,000 Common Shares will be reserved
for issuance if the Board decides to implement the Purchase Plan. If the market
value of the 425,000 shares available for grant were based on the closing price
of a Common Share as reported on the Nasdaq National Market System for March 1,
1999, the Common Shares available for the grant of awards under the Purchase
Plan would have an aggregate market value of $8,871,875.
Eligibility
The employees who would be eligible to participate in the Purchase Plan
would be all employees of the Corporation or a subsidiary who customarily work
more than twenty hours per week and who have been employed for at least six
months as of the first day of the offering. If the Purchase Plan had been in
effect as of March 1, 1999, approximately 406 employees would have been eligible
to participate.
<PAGE>20
Purchase of Shares
Prior to each offering period, eligible employees would be entitled to
elect to have a specified percentage of their total cash compensation deducted
from their pay. The Committee will establish the maximum percentage that any one
employee may have deducted. No participant may be granted an option under the
Purchase Plan if such option would entitle the participant to purchase Common
Shares having a market value in excess of the amount specified by the Committee,
but in no event will the amount specified by the Committee exceed $25,000 per
employee per offering period. Participants may increase, decrease or suspend
their payroll deductions one time each offering period and may withdraw the
balance of their payroll deduction account at any time during each offering
period. At the end of each offering period, the balance of each participant's
payroll deduction account will be applied towards the purchase of the largest
number of full Common Shares possible, and each participant will receive a
certificate evidencing such shares.
The benefits or amounts that will be received by or allocated to the
participants under the Purchase Plan, including the executive officers named in
the Summary Compensation Table above, are not determinable. It also is not
possible to determine the benefits or amounts that would have been received by
or allocated to the participants under the Purchase Plan, including the
executive officers named in the Summary Compensation Table above, if the
Purchase Plan had been in effect for 1998.
Price
The price at which the shares will be deemed to have been purchased
(the "option price") will be determined by the Committee appointed by the Board
to administer the Purchase Plan (the "Committee"), and will be in the range of
eighty-five percent (85%) to one-hundred percent (100%) of the fair market value
of the Common Shares at the time the option is granted (the "grant date") or on
the last day of the offering period (the "exercise date"), as determined by the
Committee in its discretion. In general, for purposes of the Purchase Plan "fair
market value" means the average of the closing "bid" and lowest "asked"
quotations of the stock as reported by Nasdaq on the day immediately preceding
the particular date.
Administration
If the Board of Directors determines to implement the Purchase Plan,
the Board will appoint a Committee to administer the Purchase Plan. The
Committee has the authority, subject to the terms of the Purchase Plan, to (i)
adopt, alter, and repeal administrative rules and practices governing the
Purchase Plan; (ii) interpret the terms and provisions of the Purchase Plan; and
(iii) otherwise supervise the administration of the Purchase Plan.
<PAGE>21
Federal Income Tax Consequences
The Purchase Plan is intended to qualify as an employee stock purchase
plan under Section 423 of the Internal Revenue Code of 1986, as amended.
Generally, the Committee's purchase of stock on behalf of a participant pursuant
to the Plan will not cause any federal income tax consequences to the
participant or the Corporation. If the participant holds the shares purchased
pursuant to the Plan for more than one year after the exercise date and two
years after the grant date (the "holding period"), upon selling the shares the
participant's gain will be subject to capital gains treatment. The Corporation
will not receive an income tax deduction in the event the participant disposes
of the shares after completion of the holding period. If the participant sells
the shares before the expiration of the holding period, however, the participant
will have made a "disqualifying disposition" and will realize ordinary income on
the date of sale equal to the difference between the option price and the fair
market value of the shares on the exercise date. Upon the subsequent sale of any
such shares, any appreciation or depreciation in the value of the shares after
the date the option was exercised is treated as a capital gain or loss. The
Corporation will receive an income tax deduction in the same amount and at the
same time as the participant realizes ordinary income, but not as to any amount
which is subject to capital gains treatment.
Shareholder Approval
The Purchase Plan will be adopted if it is approved by a majority of
the votes cast at the Annual Meeting, provided a majority of the outstanding
Common Shares is represented and entitled to vote at the Annual Meeting. Shares
voted "for" the Purchase Plan and shares represented by return proxies that do
not contain instructions to vote against the Purchase Plan or to abstain from
voting will be counted as shares cast for the approval of the Purchase Plan.
Abstentions and broker non-votes will not be treated as votes cast "for" or
"against" the Purchase Plan but shall be included for purposes of determining
whether a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE GERMAN AMERICAN BANCORP 1999 EMPLOYEE STOCK PURCHASE PLAN (ITEM 3 ON
THE PROXY).
APPOINTMENT OF AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for
the Corporation in 1998. Although it is anticipated that Crowe Chizek will be
selected, the Audit Committee has not yet considered the appointment of auditors
for 1999. The Audit Committee expects to make a recommendation to the Board
following the Audit Committee's April 1999 meeting. Representatives of Crowe
Chizek will be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
PRINCIPAL OWNERS OF COMMON SHARES
As of March 1, 1999, the Corporation had no knowledge of any
shareholder or group of shareholders who beneficially owned more than five
percent of the Corporation's outstanding Common Shares.
<PAGE>22
SECTION 16(a): BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers and persons who beneficially own
more than ten percent of the Corporation's Common Shares to file with the
Securities and Exchange Commission reports showing ownership of and changes in
ownership of the Corporation's Common Shares and other equity securities. On the
basis of reports and representations submitted by the Corporation's Directors,
executive officers, and greater-than-ten-percent owners, the Corporation
believes that all required Section 16(a) filings for fiscal 1998 were timely
made, except that the filing to report the grant of an option to Mr. Astrike was
filed late.
OTHER MATTERS
The Board of Directors knows of no matters, other than those reported
above, that are to be brought before the Annual Meeting. However, if other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed form of proxy to vote such proxy in accordance
with their judgment on such matters.
EXPENSES
All expenses in connection with this solicitation of proxies will be
borne by the Corporation.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the
Corporation's proxy statement for the Annual Meeting of Shareholders to be held
in the year 2000 must deliver the proposal so that it is received by the
Corporation no later than November 26, 1999. Proposals should be mailed to Urban
R. Giesler, Secretary of the Corporation, 711 Main Street, Jasper, Indiana
47546, by certified mail, return-receipt requested.
<PAGE>A-1
APPENDIX A
GERMAN AMERICAN BANCORP
1999 LONG-TERM EQUITY INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
Section 1.01. Establishment and Term of Plan. German American Bancorp,
an Indiana corporation (the "Company"), hereby establishes the German American
Bancorp 1999 Long-Term Equity Incentive Plan (the "Plan"), effective as of April
22, 1999, subject to the approval of the Plan at the Company's 1999 Annual
Meeting of Shareholders.
Section 1.02. Purpose. The Plan is designed to promote the interests of
the Company, its subsidiaries, and its shareholders by providing stock-based
incentives to selected Employees and Non-Employee Directors of the Company and
its subsidiaries who are expected to contribute materially to the success of the
Company and its subsidiaries. The purpose of the Plan is to provide a means of
rewarding performance and to provide an opportunity to increase the personal
ownership interest of Employees and Non-Employee Directors in the continued
success of the Company. The Company believes that the Plan will assist its
efforts to attract and retain quality Employees and Non-Employee Directors.
ARTICLE II
ADMINISTRATION
Section 2.01. Administrative Committee. The Plan shall be administered
by the Committee, which shall serve at the pleasure of the Board of Directors,
except that, for the purpose of awards made to Non-Employee Directors, the full
Board of Directors shall serve as the Committee. The Committee shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary to comply with the requirements
of the Plan or any applicable law.
Section 2.02. Powers of the Committee. The Committee shall, subject to
the terms of this Plan, have the authority to: (i) select the eligible Employees
and Directors who shall receive Awards, (ii) grant Awards, (iii) determine the
types and sizes of Awards to be granted to Employees and Directors under the
Plan, (iv) determine the terms, conditions, vesting periods, and restrictions
applicable to Awards, (v) adopt, alter, and repeal administrative rules and
practices governing this Plan, (vi) interpret the terms and provisions of this
Plan and any Awards granted this Plan, (vii) prescribe the forms of any Award
Agreements or other instruments relating to Awards, and (viii) otherwise
supervise the administration of this Plan. The Committee may delegate any of its
authority to any other person or persons that it deems appropriate with respect
to Awards granted to Employees who are not officers of the Company.
<PAGE>A-2
Section 2.03. Actions of the Committee. All actions taken and all
interpretations and determinations made in good faith by the Committee, or made
by any other person or persons to whom the Committee has delegated authority,
shall be final and binding upon all Participants, the Company, and all other
interested persons. All decisions by the Committee (including decisions made by
the Board of Directors when serving as the Committee) shall be made with the
approval of not less than a majority of its members. Members of the Committee
who are eligible for Awards may vote on any matters affecting the administration
of the Plan or the grant of any Awards pursuant to the Plan, except that no such
member shall act upon the granting of an Award to himself or herself; but any
such member may be counted in determining the existence of a quorum of the
Committee.
ARTICLE III
ELIGIBILITY
Any Employee or Director of the Company or any of its Subsidiaries who
is selected by the Committee to be a Participant under the Plan shall be
eligible for the grant of Awards, except that only employees will be eligible to
receive Incentive Stock Options. The selection of the Employees and Directors to
receive Awards shall be within the discretion of the Committee. More than one
Award may be granted to the same Employee or Director.
ARTICLE IV
SHARES SUBJECT TO AWARDS
Section 4.01. Number of Common Shares. The shares subject to the Awards
and other provisions of the Plan shall be the Company's authorized but unissued,
or reacquired Common Shares. The aggregate number of Common Shares that may be
subject to Awards granted under this Plan in any fiscal year shall be equal to
the sum of (i) one percent (1%) of the number of Common Shares Outstanding as of
the last day of the Company's prior fiscal year, plus (ii) the number of Common
Shares that were available for the grant of Awards, but not granted, under this
Plan in any previous fiscal year; provided that in no event will the number of
Common Shares available for the grant of Awards in any fiscal year exceed
one-and-one-half percent (1 1/2%) of the Common Shares Outstanding as of the
last day of the prior fiscal year. The aggregate number of Common Shares that
may be issued under the Plan upon the exercise of Incentive Stock Options is
425,000, as adjusted pursuant to Section 4.02. No fractional shares shall be
issued under this Plan; if necessary, the Committee shall determine the manner
in which the value of fractional shares will be treated.
The assumption of awards granted by an organization acquired by the
Company, or the grant of Awards under this Plan in substitution for any such
awards, shall not reduce the number of Common Shares available for the grant of
Awards under this Plan. Common Shares subject to an Award that is forfeited,
terminated or canceled without having been exercised shall again be available
for grant under this Plan, subject to the limitations noted in the foregoing
paragraph of this Section 4.01.
<PAGE>A-3
Section 4.02. Adjustment. In the event of any change in the Common
Shares by reason of a merger, consolidation, reorganization, recapitalization or
similar transaction, or in the event of a stock split, stock dividend or
distribution to shareholders (other than normal cash dividends), spin-off or any
other change in the corporate structure of the Company, the Committee may adjust
the number and class of shares that may be issued under this Plan, the aggregate
number of Common Shares that may be issued under the Plan upon the exercise of
Incentive Stock Options, the number and class of shares subject to outstanding
Awards, the exercise price applicable to outstanding Awards, and the Fair Market
Value of the Common Shares and other value determinations applicable to
outstanding Awards, if and to the extent deemed appropriate. All determinations
made by the Committee with respect to adjustments under this Section 4.02 shall
be conclusive and binding for all purposes of the Plan.
ARTICLE V
AWARDS
Section 5.01. Grant of Awards. Awards authorized under this Article V
may be granted pursuant to another incentive program which incorporates by
reference the terms and conditions of this Plan. Awards may be granted singly or
in combination or tandem with other Awards. Awards may also be granted in
replacement of, or in substitution for, other awards granted by the Company
whether or not such other awards were granted under this Plan; without limiting
the foregoing, if a Participant pays all or part of the exercise price or taxes
associated with an Award by the transfer of Common Shares or the surrender of
all or part of an Award (including the Award being exercised), the Committee
may, in its discretion, grant a new Award to replace the Common Shares that were
transferred or the Award that was surrendered. The Company may assume awards
granted by an organization acquired by the Company or may grant Awards in
replacement of, or in substitution for, any such awards.
Section 5.02. Types of Awards. Awards may include, but are not limited to,
the following:
(a) Stock Award. A Stock Award is a grant of Common Shares or
a right to receive Common Shares (or their cash equivalent or a
combination of both). All or part of any Stock Award may be subject to
conditions, restrictions and risks of forfeiture, as and to the extent
established by the Committee. Stock Awards may be based on the Fair
Market Value of the Common Shares, or on other specified values or
methods of valuation, as determined by the Committee.
(b) Stock Option. A right to purchase a specified number of
Common Shares, during a specified period and at a specified exercise
price, all as determined by the Committee. A Stock Option may be an
Incentive Stock Option or a Non-Qualified Stock Option. Incentive Stock
Options may only be issued to Employees. In addition to the terms,
conditions, vesting periods, and restrictions established by the
Committee in the Award Agreement, Incentive Stock Options must comply
with the requirements of Section 422 of the Code, Section 5.03(f), and
this Article V.
<PAGE>A-4
(c) Stock Appreciation Right. A right to receive a payment, in
cash or Common Shares, equal to the excess of (i) the Fair Market Value
or other specified valuation, of a specified number of Common Shares on
the date the right is exercised over (ii) the Fair Market Value, or
other specified valuation, on the date the right is granted, all as
determined by the Committee. The right may be conditioned upon the
occurrence of certain events, such as a Change In Control, or may be
unconditional, as determined by the Committee.
Section 5.03. Terms and Conditions of Awards; Agreements. Awards
granted under the Plan shall be evidenced by an Award Agreement executed by the
Company and the Participant, which shall contain such terms and be in such form
as the Committee may from time to time approve, subject to the following
limitations and conditions:
(a) Number of Shares. The Award Agreement shall state, as
appropriate, the type and total number of shares granted under a Stock
Award, and/or the type and total number of shares with respect to which
Stock Options and Stock Appreciation Rights are granted.
(b) Award Prices. The Award Agreement shall state, as
applicable, the exercise price per share or other operative value of
the Common Shares covered by each Award. The price or other value shall
be determined by the Committee. For Incentive Stock Options, the
exercise price shall satisfy all of the requirements of the Code and of
Section 5.03(f) of this Plan.
(c) Payment of Exercise Price; Deferral. The exercise price of
a Stock Option (other than an Incentive Stock Option), and any Stock
Award for which the Committee has established an exercise price, may be
paid in cash, by the transfer of Common Shares, by the surrender of all
or part of an Award (including the Award being exercised), or by a
combination of these methods, as and to the extent permitted by the
Committee. The exercise price of an Incentive Stock Option may be paid
in cash, by the transfer of Common Shares, or by a combination of these
methods, as and to the extent permitted by the Committee at the time of
grant, but may not be paid by the surrender of all or part of an Award.
The Committee may prescribe any other method of paying the exercise
price that it determines to be consistent with applicable law and the
purpose of this Plan.
With the approval of the Committee, the delivery of the Common
Shares, cash, or any combination thereof subject to an Award may be
deferred, either in the form of installments or a single future
delivery. The Committee may also permit selected Participants to defer
the payment of some or all of their Awards, as well as other
compensation, in accordance with procedures established by the
Committee to assure that the recognition of taxable income is deferred
under the Code. The Committee may also establish rules and procedures
for the crediting of interest on deferred cash payments and dividend
equivalents on Awards.
<PAGE>A-5
(d) Issuance of Shares and Compliance with Securities Laws.
The Company may postpone the issuance and delivery of certificates
representing shares until (a) the admission of such shares to listing
on any stock exchange on which shares of the Company of the same class
are then listed, and (b) the completion of such registration or other
qualification of such shares under any state or federal law, rule or
regulation as the Company shall determine to be necessary or advisable,
which registration or other qualification the Company shall use it best
efforts to complete; provided, however, a person purchasing shares
pursuant to the Plan has no right to require the Company to register
the Common Shares under federal or state securities laws at any time.
Any person purchasing shares pursuant to the Plan may be required to
make such representations and furnish such information as may, in the
opinion of counsel for the Company, be appropriate to permit the
Company, in light of the existence or non-existence with respect to
such shares of an effective registration under the Securities Act of
1933, as amended, or any similar state statute, to issue the shares in
compliance with the provisions of those or any comparable acts.
(e) Rights as a Shareholder. A Participant shall have no
rights as a shareholder with respect to shares covered by an Award,
including voting rights or rights to dividends, unless and until such
shares are validly issued to such Participant pursuant to the terms of
the Award.
(f) Incentive Stock Options. To the extent any Award granted
pursuant to this Plan contains an Incentive Stock Option, the following
limitations and conditions shall apply to such Incentive Stock Option
and the Award Agreement relating thereto in addition to the terms and
conditions provided herein:
(1) Price. The price of an Incentive Stock Option
shall be an amount per share not less than the Fair Market
Value per share of the Common Shares on the date of granting
of the option. In the case of Incentive Stock Options granted
to an Employee of the Company who is a ten percent (10%)
shareholder, the option price shall be an amount per share not
less than one hundred ten percent (110%) of the Fair Market
Value per share of the Common Shares on the date of the
granting of the Incentive Stock Option.
(2) Exercise Period. Unless terminated earlier
pursuant to other terms and provisions of the Award Agreement,
the term of each Incentive Stock Option shall expire within
the period prescribed in the Agreement relating thereto, which
shall not be more than five (5) years from the date the
Incentive Stock Option is granted if the Participant is a ten
percent (10%) shareholder, and not more than ten (10) years
from the date the Incentive Stock Option is granted if the
Participant is not a ten percent (10%) shareholder.
<PAGE>A-6
(3) Limitation on Grants. No Incentive Stock Option
shall be granted under this Plan after April 21, 2009.
(4) Limitation on Transferability. No Incentive Stock
Option shall be assignable or transferable except by will or
under the laws of descent and distribution. During the
lifetime of a Participant, the Incentive Stock Option shall be
exercisable only by the Participant and may not be transferred
or assigned pursuant to a qualified domestic relations order.
(5) Maximum Exercise Rule. The aggregate Fair Market
Value (determined at the time the option is granted) of the
shares with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any
calendar year under all such plans of the Company and any
parent or Subsidiary of the Company shall not exceed One
Hundred Thousand Dollars ($100,000).
(g) Termination of Awards Under Certain Conditions. The
Committee may cancel any unexpired, unpaid or deferred Awards at any
time, if the Participant is not in compliance with all applicable
provisions of this Plan or with any Award Agreement, or if the
Participant, whether or not he or she is currently employed by the
Company, engages in any of the following activities without the prior
written consent of the Company:
(1) Directly or indirectly renders services to or for
an organization, or engages in a business that is, in the
judgment of the Committee, in competition with the Company.
(2) Discloses to anyone outside of the Company, or
uses for any purpose other than the Company's business, any
confidential or proprietary information or material relating
to the Company, whether acquired by the Participant during or
after employment with the Company.
The Committee may, in its discretion and as a condition to the exercise of an
Award, require a Participant to acknowledge in writing that he or she is in
compliance with all applicable provisions of this Plan and of any Award
Agreement and has not engaged in any activities referred to in clauses (1) and
(2) above.
<PAGE>A-7
(h) Nontransferability. Unless otherwise determined by the
Committee and provided in the Award Agreement, (i) no Award granted
under this Plan may be transferred or assigned by the Participant to
whom it is granted other than by will, pursuant to the laws of descent
and distribution, or pursuant to a qualified domestic relations order,
and (ii) an Award granted under this Plan may be exercised, during the
Participant's lifetime, only by the Participant or by the Participant's
guardian or legal representative.
Section 5.04. Election to Defer Grant or Receipt of Award.
Notwithstanding any provision herein to the contrary, the Committee may provide,
in any Award Agreement or in any program granting Awards under this Plan, that
the Participant may elect to defer receipt of the Award as provided in the Award
Agreement or program.
ARTICLE VI
TAX WITHHOLDING OBLIGATIONS
Prior to the payment of an Award, the Company may withhold, or require
a Participant to remit to the Company, an amount sufficient to pay any federal,
state and local withholding taxes associated with the Award. The Committee may,
in its discretion and subject to such rules as the Committee may adopt, permit a
Participant to pay any or all withholding taxes associated with the Award in
cash, by the transfer of Common Shares, by the surrender of all or part of an
Award (including the Award being exercised), or by a combination of these
methods.
ARTICLE VII
TERMINATION OF EMPLOYMENT OR TERMINATION OF SERVICE
Section 7.01. Termination of Employment. Unless the Committee provides
otherwise in the Award Agreement, if a Participant's employment or service with
the Company or a Subsidiary terminates for any reason other than Retirement,
Disability or death of the Participant, he or she may, but only within the
thirty (30) day period immediately following such termination of employment or
service, and in no event later than the expiration date specified in the Award
Agreement, exercise his or her Award to the extent that he or she was entitled
to exercise it at the date of such termination; provided, however, if a
Participant's employment or service is terminated for deliberate, willful or
gross misconduct, as determined by the Board of Directors, all rights under the
Award shall expire upon receipt of the notice of such termination. The transfer
of an Employee from the employ of the Company to a Subsidiary, or vice versa, or
from one Subsidiary to another Subsidiary, shall not be deemed a termination of
employment for purposes of the plan.
Section 7.02. Retirement or Disability. Unless the Committee provides
otherwise in the Award Agreement, if a Participant's employment with the Company
or any Subsidiary, or his or her service as a Non-Employee Director terminates
due to Retirement or Disability, the Participant (or if he or she becomes
incapacitated, the Participant's legal representative) may, but only within the
five (5)-year period immediately following such termination of employment or
termination of service, and in no event later than the expiration date specified
in the Award Agreement, exercise his or her Award to the extent that he or she
was entitled to exercise it at the date of such termination; provided, however,
if the Award being exercised under this paragraph is an Incentive Stock Option,
it may be exercised as such only during the three (3)-month period immediately
following such Retirement or Disability, and in no event later than the
expiration date specified in the Award Agreement. During the remainder of the
five (5)-year period (or, if shorter, the exercise period specified in the Award
Agreement), the option may be exercised as a Non-Qualified Stock Option.
<PAGE>A-8
Section 7.03. Death. Unless the Committee provides otherwise in the
Award Agreement, if a Participant dies (whether prior to or after termination of
employment or termination of service as a Non-Employee Director) while he or she
is entitled to exercise an Award, it may be exercised within the one (1) year
period immediately following the Participant's death, but in no event later than
the expiration date specified in the Award Agreement, by the person or persons
to whom his or her rights to it shall pass by his or her will or by the
applicable laws of descent and distribution; provided, however, if the Award
being exercised under this paragraph is an Incentive Stock Option, it may be
exercised as such only during the three (3)-month period immediately following
the Participant's death and in no event later than the expiration date specified
in the Award Agreement. During the remainder of such one (1) year period (or, if
shorter, the exercise period specified in the Award Agreement), the option may
be exercised as a Non-Qualified Stock Option.
ARTICLE VIII
CHANGE OF CONTROL
Unless and to the extent the terms and conditions of a Change of
Control agreement between the Company and a Participant provide otherwise and
unless and to the extent otherwise determined by the Board of Directors, in the
event of a Change of Control of the Company, (i) all Stock Appreciation Rights,
Stock Options and other stock purchase rights then outstanding will become fully
exercisable as of the date of the Change of Control, and (ii) all restrictions
and conditions applicable to Restricted Stock and other Stock Awards will be
deemed to have been satisfied as of the date of the Change of Control. Any such
determination by the Board of Directors that is made after the occurrence of a
Change of Control will not be effective unless a majority of the Directors then
in office were in office at the beginning of a period of twenty-four (24)
consecutive months and the determination is approved by a majority of such
Directors.
ARTICLE IX
AMENDMENT OF PLAN OR AWARDS
Section 9.01. Amendment, Suspension or Termination of Plan. The Board
of Directors may, from time to time, amend, suspend or terminate this Plan at
any time, and, in accordance with such amendments, may thereupon change terms
and conditions of any Awards not theretofore issued. Shareholder approval for
any such amendment will be required only to the extent necessary to satisfy the
rules of Nasdaq or any national exchange on which the Common Shares are listed,
or to satisfy any applicable federal or state law or regulation.
<PAGE>A-9
Section 9.02. Amendment of Outstanding Awards. The Committee may, in
its discretion, amend the terms of any Award, prospectively or retroactively,
but no such amendment may impair the rights of any Participant without his or
her consent. Shareholder approval for any such amendment will be required only
to the extent necessary to satisfy the rules of Nasdaq or any national exchange
on which the Common Shares are listed, or to satisfy any applicable federal or
state law or regulation. The Committee may, in whole or in part, waive any
restrictions or conditions applicable to, or accelerate the vesting of, any
Award.
ARTICLE X
MISCELLANEOUS
Section 10.01. Governing Law. The interpretation, validity and
enforcement of this Plan will, to the extent not otherwise governed by the Code
or the securities laws of the United States, be governed by the laws of the
State of Indiana.
Section 10.02. Rights of Employees. Nothing in this Plan will confer
upon any Participant the right to continued employment by the Company or limit
in any way the Company's right to terminate any Participant's employment at
will.
ARTICLE XI
DEFINITIONS
Section 11.01. Definitions. When capitalized in this Plan, unless the
context otherwise requires:
(a) "Award" means a grant made to a Participant pursuant to Article V
of this Plan.
(b) "Award Agreement" means a written instrument between the Company
and a Participant evidencing an Award and prescribing the terms,
conditions, and restrictions applicable to the Award.
(c) "Board of Directors" means the Board of Directors of the Company,
as constituted at any time.
(d) "Change of Control" means the first to occur of the following
events:
(1) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") other than the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more of
the combined voting power of the Company's then-outstanding
securities;
<PAGE>A-10
(2) those persons who constitute a majority of the
Board of Directors of the Company are persons who were not
directors of the Company for at least the twenty-four (24)
months preceding months;
(3) the shareholders of the Company approve a merger
or consolidation of the Company with any other company, other
than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
another entity) more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or such
other entity outstanding immediately after such merger or
consolidation; or
(4) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Human Resources Committee of the Board of
Directors, consisting of two or more "Non-Employee Directors" as such term
is defined by paragraph (b)(3) of Rule 16b-3, except that the term
Committee shall mean the entire Board of Directors with respect to awards
made to Non-Employee Directors of the Company or any Subsidiary.
(g) "Common Share" means a share of common stock of German American
Bancorp.
(h) "Common Shares Outstanding" means the total number of Common
Shares outstanding as reflected in the Company's financial statements as of
the most recent fiscal year-end.
(i) "Company" means German American Bancorp.
(j) "Director" means a director of the Company or any Subsidiary.
(k) "Disabled" or "Disability" means a permanent disability as defined
in the applicable long-term disability plan of the Company; except that
"Disabled" or "Disability" with respect to Awards made to Directors shall
mean total and permanent disability as defined in Section 22(e)(3) of the
Code.
<PAGE>A-11
(l) "Employee" means any individual employed by the Company or any of
its Subsidiaries, including officers and Employees who are members of the
Board of Directors of the Company or any of its Subsidiaries.
(m) "Fair Market Value" of a Common Share means the value of the share
on a particular date, determined as follows:
(1) if the stock is not listed on such date on any
national securities exchange but is authorized to be quoted by
Nasdaq or an other established "over-the-counter" market, the
average between the highest "bid" and lowest "asked"
quotations of a share at the close of trading on the day
immediately preceding such date (or, if none, on the most
recent date on which there were closing bid and asked
quotations of a share), as reported by Nasdaq, or other
similar service selected by the Committee;
(2) if the stock is listed on such date on one (1) or
more national securities exchanges, the last reported sale
price of a share on the last trading day preceding such date
as recorded on the composite tape system, or, if such system
does not cover the stock, the last reported sale price of a
share on such date on the principal national securities
exchange on which the stock is listed, or, if no sale of the
stock took place on such date, the last reported sale price of
a share on the most recent day on which a sale of a share took
place as recorded by such system or on such exchange, as the
case may be; or
(3) if the stock is neither listed on such date on a
national securities exchange nor traded in the
over-the-counter market, the fair market value of a share on
such date as determined in good faith by the Committee, on a
basis consistent with regulations under the Code.
(n) "Incentive Stock Options" means stock options issued to Employees
which qualify under and meet the requirements of Section 422 of the Code.
(o) "Non-Employee Director" means any Director of the Company or any
of its Subsidiaries who is not an Employee of the Company or any of its
Subsidiaries.
(p) "Non-Qualified Stock Options" means stock options which do not
qualify under or meet the requirements of Section 422 of the Code.
(q) "Participant" means any person to whom an Award has been granted
under this Plan.
<PAGE>A-12
(r) "Plan" means this German American Bancorp 1999 Long-Term Equity
Incentive Plan authorized by the Board of Directors at its meeting held on
March 26, 1999, as such Plan from time to time may be amended as herein
provided.
(s) "Restricted Stock" means an Award of Common Shares that are
nontransferable and are subject to a substantial risk of forfeiture.
(t) "Retirement", in the case of an Employee, means the termination of
all employment with the Company and its Subsidiaries for any reason other
than death or Disability after the day on which the Employee has attained
age 55, and in the case of a Non-Employee Director means withdrawal after
obtaining the age of 55.
(u) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission, under the Securities Exchange Age of 1934, as amended.
(v) "Stock Appreciation Rights" means the Stock Appreciation Rights
issued pursuant to the Plan.
(w) "Stock Options" means the Incentive Stock Options and the
Non-Qualified Stock Options issued pursuant to the Plan.
(x) "Subsidiary" means a corporation or other form of business
association of which shares (or other ownership interests) having fifty
percent (50%) or more of the voting power are, or in the future become,
owned or controlled, directly or indirectly, by the Company.
<PAGE>B-1
APPENDIX B
GERMAN AMERICAN BANCORP
1999 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The German American Bancorp Employee Stock Purchase Plan (the "Plan")
was adopted by the Board of Directors (the "Board") of German American Bancorp
(the "Company") on March 26, 1999, subject to approval of the Company's
shareholders at their annual meeting on April 22, 1999. The effective date of
the Plan shall be April 22, 1999, if it is approved by the shareholders. The
Board of Directors of the Company shall determine the effective date of the
first offering, if any, under the Plan. The purpose of the Plan is to provide,
subject the determination of Board of Directors in its sole discretion to
implement the Plan, eligible employees of the Company and its subsidiaries a
convenient opportunity to purchase common shares of the Company financed by
payroll deductions. As used in this Plan, "Subsidiary" means a corporation or
other form of business association of which shares (or other ownership
interests) having fifty percent (50%) or more of the voting power are, or in the
future become, owned or controlled, directly or indirectly, by the Company.
The Plan may continue until all the stock allocated to it has been
purchased or until after the tenth offering is completed, whichever is earlier.
The Board may terminate the Plan at any time, or make such amendment of the Plan
as it may deem advisable, but no amendment may be made without the approval of
the Company's shareholders if it would materially: (i) increase the benefits
accruing to participants under the Plan; (ii) modify the requirements as to
eligibility for participation in the Plan; (iii) increase the number of shares
which may be issued under the Plan, (iv) increase the cost of the Plan to the
Company; or (v) alter the allocation of Plan benefits among participating
employees.
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code of 1986 (the "Code") and is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). It is the Company's intention to
have the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Code, and the provisions of the Plan shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that Section
of the Code.
ADMINISTRATION
The Plan is administered by a Committee appointed by the Company's
Board of Directors (the "Committee"), which consists of two or more members of
the Board, none of whom is eligible to participate in the Plan and all of whom
are "Non-Employee Directors," as such term is defined in Rule 16b-3(b)(3) of the
Securities and Exchange Commission, under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or as required by any successor rule. The Committee
shall prescribe rules and regulations for the administration of the Plan and
interpret its provisions. The Committee may correct any defect, reconcile any
inconsistency or resolve any ambiguity in the Plan. The actions and
determinations of the Committee on matters relating to the Plan are conclusive.
The Committee and its members may be addressed in care of the Company at its
principal office. The members of the Committee do not serve for fixed periods
but may be appointed or removed at any time by the Board.
<PAGE>B-2
STOCK SUBJECT TO THE PLAN
An aggregate of 425,000 shares of common stock, without par value, of
the Company (the "Common Shares") is available for purchase under the Plan.
Common Shares which are to be delivered under the Plan may be obtained by the
Company by authorized purchases on the open market or from private sources, or
by issuing authorized but unissued Common Shares. In the event of any change in
the Common Shares through recapitalization, merger, consolidation, stock
dividend or split, combination or exchanges of shares or otherwise, the
Committee may make such equitable adjustments in the Plan and the then
outstanding offering as it deems necessary and appropriate including, but not
limited to, changing the number of Common Shares reserved under the Plan and the
price of the current offering. If the number of Common Shares that participating
employees become entitled to purchase is greater than the number of Common
Shares available, the available shares shall be allocated by the Committee among
such participating employees in such manner as it deems fair and equitable. No
fractional Common Shares shall be issued or sold under the Plan.
ELIGIBILITY
All employees of the Company and its subsidiaries will be eligible to
participate in the Plan. No employee shall be eligible to participate in the
Plan if his or her customary employment is less than 20 hours per week. No
employee shall be eligible to participate in an offering unless he or she has
been continuously employed by the Company or subsidiary for at least six months
as of the first day of such offering. No employee shall be eligible to
participate in the Plan if, immediately after an option is granted under the
Plan, the employee owns more than five percent (5%) of the total combined voting
power or value of all classes of shares of the Company or of any parent or
subsidiary of the Company.
OFFERINGS, PARTICIPATING, DEDUCTIONS
The Company may make up to ten offerings of twelve months' duration
each to eligible employees to purchase Common Shares under the Plan. An eligible
employee may participate in such offering by authorizing at any time prior to
the first day of such offering a payroll deduction for such purpose in whole
dollar amounts, of at least the minimum amount and up to the maximum amount of
total cash compensation determined by the Committee. The Committee may at any
time suspend an offering or change the terms of the Offering, subject to the
provisions of this Plan and Section 423 of the Code, if required by law or if
determined by the Committee to be in the best interests of the Company.
The Company will maintain or cause to be maintained payroll deduction
accounts for all participating employees. All funds received or held by the
Company or its subsidiaries under the Plan may be, but need not be, segregated
from other corporate funds. Any balance remaining in any employee's payroll
deduction account at the end of an offering period will be refunded to the
employee.
<PAGE>B-3
Each participating employee will receive a statement of his or her
payroll deduction account and the number of Common Shares purchased therewith
following the end of each offering period.
Subject to rules, procedures and forms adopted by the Committee, a
participating employee may at any time during the offering period increase,
decrease or suspend his or her payroll deduction, or may withdraw the entire
balance of his or her payroll deduction account and thereby withdraw from
participation in an offering. Under the initial rules established by the
Committee, payroll deductions may not be altered more than once in each offering
period and withdrawal requests may be received on or before the last day of such
offering. In the event of a participating employee's retirement, death or
termination of employment, his or her participation in any offering under the
Plan shall cease, no further amounts shall be deducted pursuant to the Plan, and
the balance in the employee's account shall be paid to the employee, or, in the
event of the employee's death, to the employee's beneficiary designated on a
form approved by the Committee (or, if the employee has not designated a
beneficiary, to his or her estate).
PURCHASE, LIMITATIONS, PRICE
Each employee participating in any offering under the Plan will be
granted an option, upon the effective date of such offering, for as many full
Common Shares as the amount of his or her payroll deduction account at the end
of any offering period can purchase. No employee may be granted an option under
the Plan which permits his or her rights to purchase Common Shares under the
Plan, and any other stock purchase plan of the Company or a parent or subsidiary
of the Company qualified under Section 423 of the Code, to accrue at a rate
which exceeds the maximum amount established by the Committee, but which maximum
amount may in no event exceed $25,000 of Fair Market Value of such Common Shares
(determined at the time the option is granted) for each calendar year in which
the option is outstanding at any time. As of the last day of the offering
period, the payroll deduction account of each participating employee shall be
totaled. If such account contains sufficient funds to purchase one or more full
shares of Common Stock as of that date, the employee shall be deemed to have
exercised an option to purchase the largest number of full Common Shares at the
offering price. Such employee's account will be charged for the amount of the
purchase and a stock certificate representing such shares will be issued.
The Committee shall determine the purchase price of the shares of
Common Stock which are to be sold under each offering, which price shall be an
amount in the range from eighty-five percent (85%) and one hundred percent
(100%) of the Fair Market Value of the Common Shares at the time such option is
granted or at the time such option is exercised, as determined by the Committee
in its discretion. "Fair Market Value" of a share of Common Shares on a given
date is defined as the average price between the highest "bid" and lowest
"asked" quotations of a share on such date (or, if none, on the most recent date
on which there were bid and offered quotations of a share), as reported by the
National Association of Securities Dealers Automated Quotation System, or other
similar service selected by the Committee. However, if the Common Shares are
listed on a national securities exchange, "Fair Market Value" is defined as the
last reported sale price of a share on such date, or if no sale took place, the
last reported sale price of a Common Share on the most recent day on which a
sale of a Common Share took place as recorded on such exchange. If the Common
Shares are neither listed on such date on a national securities exchange nor
traded in the over-the-counter market, "Fair Market Value" is defined as the
fair market value of a share on such date as determined in good faith by the
Committee.
<PAGE>B-4
TRANSFER OF INTERESTS, STOCK CERTIFICATES
No option, right or benefit under the Plan may be transferred by a
participating employee other than by will or the laws of descent and
distribution, and all options, rights and benefits under the Plan may be
exercised during the participating employee's lifetime only by such employee or
the employee's guardian or legal representative. There are no restrictions
imposed by or under the Plan upon the resale of Common Shares issued under the
Plan.
Certain officers of the Company are subject to restrictions under
Section 16(b) of the 1934 Act. With respect to such officers, transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the 1934 Act. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void if
permitted by law and deemed advisable by the Committee.
Certificates for Common Shares purchased under the Plan may be
registered only in the name of the participating employee, or, if such employee
so indicates on his or her authorization form, in his or her name jointly with a
member of his or her family, with right of survivorship. An employee who is a
resident of a jurisdiction which does not recognize such a joint tenancy may
have certificates registered in the employee's name as tenant in common with a
member of the employee's family, without right of survivorship.
<PAGE>
DEFINITIVE PROXY SOLICITATION MATERIALS TO BE MAILED
TO SHAREHOLDERS ON OR ABOUT MARCH 29, 1999
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
I hereby appoint Robert L. Ruckriegel and Joseph F. Steurer, and each
of them, my proxies, with power of substitution, to vote all Common Shares of
German American Bancorp that I am entitled to vote at the Annual Meeting of
Shareholders to be held at the principal office of The German American Bank, 711
Main Street, Jasper, Indiana, on April 22, 1999, at 10:00 a.m., Jasper time, and
any adjournments thereof, as provided herein.
THIS PROXY WILL BE VOTED AS SPECIFIED. IN THE ABSENCE OF
SPECIFICATIONS, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 3, BUT BECAUSE OF THE BOARD'S
INTEREST, MAKES NO RECOMMENDATION REGARDING ITEM 2.
This proxy may be revoked at any time prior to its exercise upon
compliance with the procedures set forth in the Corporation's Proxy Statement,
dated March 27, 1999.
SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED POST-PAID ENVELOPE.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below, as set forth in the Corporation's Proxy
Statement, dated March 27, 1999 (except as marked to the contrary
below -- see "Instructions")
George W. Astrike David G. Buehler David B. Graham William K. Hoffman
Michael B. Lett C. James McCormick A.W. Place, Jr.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
2. PROPOSAL TO ADOPT THE GERMAN AMERICAN BANCORP 1999 LONG-TERM EQUITY
INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO ADOPT THE GERMAN AMERICAN BANCORP 1999 EMPLOYEE STOCK PURCHASE
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: _________________ _______________________________
_______________________________
Signature or Signatures
(Please sign exactly as your name appears on this proxy. If
shares are issued in the name of two or more persons, all
such persons should sign. Trustees, executors and others
signing in a representative capacity should indicate the
capacity in which they sign.)
