SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
GERMAN AMERICAN BANCORP
(Exact name of registrant as specified in its charter)
INDIANA 6022 35-1547518
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
711 Main Street, Box 810 Jasper, Indiana 47546 (812)482-1314
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<TABLE>
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AGENT: COPY TO: COPY TO:
<S> <C> <C>
Mark A. Schroeder, President Mark B. Barnes David A. Butcher
German American Bancorp Ice Miller Donadio & Ryan Bose McKinney & Evans, LLP
711 Main Street, Box 810 One American Square 135 N. Pennsylvania St.
Jasper, Indiana 47546-3042 P.O. Box 82001 Indianapolis, Indiana 46204
(812) 482-1314 (phone) Indianapolis, Indiana 46282-0002 (317) 684-5000 (phone)
(812) 482-0745 (fax) (317) 236-2456 (phone) (317) 684-5173 (fax)
(317) 592-4868 (fax)
</TABLE>
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Proposed maximum Proposed maximum Amount of
of securities to Amount to be offering price aggregate offering registration
be registered(1) registered per share price(2) fee(2)
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Common Shares, no par 947,779 (3) $6,328,000 $1,671
value, $1 stated value
<FN>
(1) This Registration Statement relates to the Common Shares of German American
Bancorp to be issued in exchange for the outstanding shares of Holland
Bancorp, Inc., common stock pursuant to the merger described in the proxy
statement/prospectus included herein, including the Preferred Share
Purchase Rights that are attached to and trade with the Common Shares. Any
value attributable to the Preferred Share Purchase Rights is reflected in
the value of the Common Shares.
(2) Since there is no market for the outstanding stock of Holland Bancorp,
Inc., the registration fee is based on the book value of those shares as of
March 31, 2000, pursuant to Rule 457(f) under the Securities Act of 1933,
as amended, as follows: .000264 multiplied by the proposed maximum
aggregate offering price.
(3) Omitted pursuant to Rule 457(o).
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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[HOLLAND BANCORP, INC., LETTERHEAD]
We have agreed that German American Bancorp will acquire our company
and its subsidiary, The Holland National Bank, through the merger of our company
into German American Bancorp followed by the merger of Holland National into
German American Bank. We believe that the mergers are in the best interests of
our company as a whole, including your interests, and that the mergers will
result in a combined company with expanded opportunities for profitable growth
and enhancement of shareholder value.
If the merger is approved by our shareholders and all other closing
conditions are satisfied, you will receive 3.5 shares of German American Bancorp
common stock (subject to adjustment) for each of our shares of common stock that
you own on the date the merger is completed. German American's common stock is
traded on the Nasdaq National Market System under the symbol "GABC."
Our financial advisor, Olive Corporate Finance, LLC, has issued its
opinion to our Board of Directors that the consideration to be paid in the
proposed merger is fair, from a financial point of view, to our shareholders.
Our Board of Directors unanimously approved the merger agreement and recommends
that the shareholders adopt it. For a discussion of the reasons for this
recommendation and of certain interests of the members of our Board of Directors
in the mergers, see "Proposed Mergers - Reasons for the Mergers," and "--
Interests of Certain Persons in the Mergers" in the accompanying proxy
statement/prospectus. We cannot complete the merger unless the holders of at
least a majority of our outstanding shares adopt the merger agreement. The
special meeting of our shareholders to vote on the merger agreement will be held
on:
[day of week] , [month and day], 2000
.m. (local time)
[address of meeting]
[city], Indiana 47___
Your vote is very important. Whether or not you plan to attend the
special meeting, please take the time to vote by completing and returning the
enclosed proxy card in the pre-addressed envelope provided. The enclosed proxy
statement/prospectus provides you with detailed information about the meeting
and the mergers. We encourage you to read this entire document carefully.
Sincerely,
Jerome W. Blesch
Chairman of the Board
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS PROXY
STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS -----------------, 2000 AND IT IS
BEING MAILED TO SHAREHOLDERS OF HOLLAND BANCORP, INC., ON OR ABOUT THE SAME
DATE.
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HOLLAND BANCORP, INC.
405 N. Meridian Street, Box 8
Holland, Indiana 47541
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ----------, 2000
To Our Shareholders:
We will hold a special meeting of shareholders of Holland Bancorp, Inc.
on:
[day of week] , [month and day], 2000
.m. (local time)
[address of meeting]
[city], Indiana 47___
The purposes of the special meeting are:
1. To consider and vote upon a merger agreement entitled the Plan
and Agreement of Reorganization, dated as of June 27, 2000, by
and among German American Bancorp, Holland Bancorp, Inc., The
German American Bank and The Holland National Bank, pursuant to
which Holland Bancorp, Inc., will merge with German American
Bancorp and The Holland National Bank will immediately thereafter
merge with and into The German American Bank. Under the terms of
the merger agreement, each outstanding share of Holland Bancorp,
Inc., common stock will be converted into 3.5 shares of German
American Bancorp common stock, subject to adjustment, as
described in the accompanying proxy statement/prospectus; and
2. To transact any other business that may properly be presented at
the special meeting or any adjournment or postponement of the
special meeting.
We have fixed the close of business on --------------, 2000 as the
record date for determining those shareholders who are entitled to notice of,
and to vote at, the special meeting and any adjournment or postponement of it.
Adoption of the merger agreement requires the affirmative vote of at least the
majority of the outstanding shares of our common stock.
The merger agreement, which describes the terms of the mergers, is
attached as Appendix A to the accompanying proxy statement/prospectus.
Shareholders of record of our stock have the right to exercise appraisal rights
in connection with the mergers in accordance with the provisions of Section 262
of the Delaware General Corporation Law, the provisions of which are reproduced
on Appendix B to the accompanying proxy statement/prospectus.
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Please do not send your stock certificates at this time. If the mergers
are completed, we will send you instructions regarding the surrender of your
stock certificates.
BY ORDER OF THE BOARD OF DIRECTORS
Ray L. Lindsey
Secretary/Treasurer
, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
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<PAGE>
TABLE OF CONTENTS
Questions and Answers About the Mergers .......................................1
Summary of Information in This Document .......................................4
Summary of Selected Financial Data German American Bancorp ...................14
Summary of Selected Financial Data Holland Bancorp, Inc. .....................16
Special Meeting ..............................................................17
Proposed Mergers..............................................................20
Federal Income Tax Consequences ..............................................37
Holland Bancorp Common Stock Trading and Dividend Data........................40
Description of German American ...............................................41
Description of Holland Bancorp ...............................................54
Legal Matters ............................................................... 54
Experts ......................................................................54
Other Matters ................................................................54
Forward - Looking Statements .................................................55
Where You Can Find More Information ..........................................55
List of Appendices ...........................................................59
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ANSWERS ABOUT THE MERGERS
Q: WHAT DO I NEED TO DO NOW?
A: After you carefully read this document, indicate on your proxy card how you
want to vote, sign it and mail it in the enclosed envelope as soon as
possible. The instructions on the accompanying proxy card will give you
more information on how to vote by mail. This will enable your shares to be
represented at the Holland Bancorp special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will not be able to vote your shares without instructions from
you. You should instruct your broker to vote your shares by following the
directions your broker provides. If you fail to instruct your broker to
vote your shares, your shares will not be voted. If you do not vote or if
you abstain from voting, the effect will be a vote against the merger
agreement.
Q: CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY WITH VOTING INSTRUCTIONS?
A: Yes. There are three ways you can change your vote. First, you may send a
written notice to the person to whom you submitted your proxy stating that
you would like to revoke your proxy. Second, you may complete and submit a
new proxy card by mail or submit your proxy with new voting instructions.
Your shares will be voted in accordance with the latest proxy actually
received by us prior to the shareholders' meeting. Any earlier proxies will
be revoked. Third, you may attend our special meeting and vote in person.
Any earlier proxies will be revoked. Simply attending the meeting without
voting, however, will not revoke your proxy. If you have instructed a
broker to vote your shares, you must follow directions you will receive
from your broker to change or revoke your proxy.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time. Holland
Bancorp shareholders will exchange their Holland Bancorp common stock
certificates for German American Bancorp common stock certificates after
the merger is completed. German American will send you instructions for
exchanging your Holland Bancorp common stock certificates promptly after
the merger is completed.
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Q: WHAT IS THE "EXCHANGE RATIO?"
A: The exchange ratio is the number of shares of German American common stock
into which each share of Holland Bancorp common stock will be converted
when the merger is completed. You will receive 3.5 shares of German
American Bancorp common stock, subject to adjustment, for each share of
Holland Bancorp common stock you own on the date the company merger is
completed.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?
A: For U.S. federal income tax purposes, the conversion of your Holland
Bancorp common stock into German American common stock will not cause you
to recognize any gain or loss. You will, however, recognize income, gain or
loss in connection with any cash received for fractional shares of German
American Bancorp common stock or any cash you received as a result of your
exercise of appraisal rights. Your tax basis for the German American
Bancorp common stock received in the company merger, including the
fractional shares you are deemed to have received and then are redeemed for
cash, will be the same as the tax basis for your Holland Bancorp common
stock and your holding period for the German American common stock received
in the company merger, including the fractional shares you are deemed to
have received and then are redeemed for cash, generally will include the
holding period of your Holland Bancorp common stock exchanged in the
merger. For a more complete description of federal income tax
considerations, see page .
This tax treatment may not apply to certain Holland Bancorp shareholders,
including shareholders who are non-U.S. persons or dealers in securities.
Determining the actual tax consequences of the company merger to you may be
complex. The tax consequences will depend on your specific situation and on
variables not within our control. You should consult your own tax advisor
for a full understanding of the company merger's tax consequences.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE MEETING?
A: We do not expect that any matter other than the merger agreement will be
voted on at the meeting.
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Q: WILL MY SHAREHOLDER RIGHTS CHANGE AS A RESULT OF THE MERGER?
A: Yes. As a Holland Bancorp shareholder, your rights are governed by Delaware
law, the state in which Holland Bancorp is incorporated, and by Holland
Bancorp's Certificate of Incorporation and By-Laws. After the merger, you
will become a German American shareholder, and your rights will be governed
by Indiana law, the state in which German American is incorporated, and by
German American's Articles of Incorporation and By-Laws. For a summary of
some of the differences between the rights of Holland Bancorp shareholders
and the rights of German American shareholders, see page --.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You should call Gene Thewes, our President and Chief Executive Officer, at
(812) 536-3131.
3
<PAGE>
SUMMARY
This summary highlights some of the information contained in this
document. Because this is a summary, it does not contain all the information
that may be important to you. To understand the merger fully and for a more
complete description of the legal terms of the merger, you should read carefully
this entire document and the documents to which we have referred you.
THE PARTIES TO THE HOLDING COMPANY MERGER
GERMAN AMERICAN BANCORP
711 Main Street
P.O . Box 810
Jasper, Indiana 47546
(812) 482-1314
German American Bancorp is a bank holding company, incorporated under
Indiana law and headquartered in Jasper, Indiana. Through its 5 full-service
banking subsidiaries, including The German American Bank, German American
operates from 25 banking offices located in eight contiguous counties in
southwest Indiana. As of March 31, 2000, on a consolidated basis, German
American had assets of approximately $1 billion, deposits of approximately $700
million, and shareholders' equity of approximately $88 million. German
American's common stock is traded on the Nasdaq National Market under the symbol
"GABC."
HOLLAND BANCORP, INC.
405 North Meridian Street
Box 8
Holland, Indiana 47541
(812) 536-3131
Holland Bancorp, Inc. is a bank holding company, incorporated under
Delaware law and headquartered in Holland, Indiana. Holland Bancorp owns and
operates one subsidiary bank, The Holland National Bank, with four offices in
southern Dubois County, Indiana. As of March 31, 2000, Holland Bancorp, Inc., on
a consolidated basis, had assets of approximately $61 million, deposits of
approximately $49 million and shareholders' equity of approximately $6 million.
Holland Bancorp's common stock is not traded on any established securities
market.
THE PARTIES TO THE MERGER AGREEMENT
The parties to the merger agreement include, in addition to German
American Bancorp and Holland Bancorp, Inc.:
o The German American Bank, an Indiana banking corporation, which is one
of the wholly-owned subsidiaries of German American Bancorp; and
4
<PAGE>
o The Holland National Bank, a national banking association, which is
the sole wholly-owned subsidiary of Holland Bancorp, Inc.
For clarity, the parties to the merger agreement will be referred to in
the following manner in this proxy statement/prospectus:
Party: Referred to as:
German American Bancorp German American
Holland Bancorp, Inc. Holland Bancorp
The German American Bank GAB
The Holland National Bank Holland Bank
THE MERGERS
Description of the mergers. We propose mergers in which Holland Bancorp
will merge into German American, and Holland Bank will then immediately merge
into GAB. GAB will survive the bank merger and German American will survive the
holding company merger. German American will issue shares of its common stock to
our shareholders in exchange for their shares of Holland Bancorp common stock.
Recommendation of the Board of Directors of Holland Bancorp. Our Board
of Directors believes that the mergers are in the best interests of our company
and its shareholders, and unanimously recommends that you vote "FOR" the
proposal to adopt the merger agreement. See "Proposed Mergers -- Recommendation
of the Board of Directors" on page . For a discussion of certain interests of
the members of the Board of Directors in the mergers, see "Proposed Mergers -
Interests of Certain Persons in the Mergers."
Our shareholders will receive German American common stock in the
mergers. If the mergers are completed, you will receive 3.5 shares of German
American common stock (subject to adjustment) for each share of our common stock
that you own on the date the mergers are completed, unless you elect to exercise
your appraisal rights.
You will have to surrender your common stock certificates to receive
new stock certificates representing German American common stock. You will
receive written instructions on how to surrender your shares after we complete
the merger. If you hold your shares of our common stock in "street name" through
a bank or broker, your bank or broker is responsible for ensuring that the
certificate or certificates representing your shares are properly surrendered
and that the appropriate number of German American shares are credited to your
account. See "Proposed Mergers -- Conversion of Holland Bancorp Common Stock" on
page , and "Proposed Mergers -- Exchange of Certificates; Fractional Shares" on
page .
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Payments of dividends on shares of Holland Bancorp common stock. After
the mergers become effective, your stock certificates for our shares of common
stock will represent shares of German American common stock. You will not
receive payments of dividends declared on shares of German American common
stock, however, until you surrender your Holland Bancorp common stock
certificates to receive new stock certificates representing German American
common stock.
German American will not issue fractional shares. German American will
not issue any fractional shares of its common stock as a result of the exchange
ratio. Instead, you will receive the value of any fractional share in cash,
based upon the average of the lowest closing asked prices and highest closing
bid prices per share of German American's common stock during the ten trading
days ending on the second business day preceding the closing of the merger.
Merger generally tax-free for our shareholders. We expect that your
exchange of shares of our common stock for shares of German American common
stock generally will not cause you to recognize any gain or loss for U.S.
federal income tax purposes. You will, however, have to recognize a taxable gain
or loss for any cash received instead of fractional shares or if you receive
cash upon exercise of your statutory dissenters' rights. The expected material
federal income tax consequences are set out in greater detail on page .
German American and Holland Bancorp will not be obligated to complete
the merger unless they each receive a legal opinion, dated as of the closing
date, from German American's legal counsel that the merger between the holding
companies will be treated as a transaction of a type that is generally tax-free
for U.S. federal income tax purposes. In that case, the U.S. federal income tax
treatment of the merger will be as described above. However, this legal opinion
will not bind the Internal Revenue Service, which could take a different view.
Tax matters are very complicated, and the tax consequences of the
merger to you will depend on the facts of your own situation. We urge you to
consult with your personal tax advisor for a full understanding of the tax
consequences of the merger to you.
Appraisal rights. If you are a record holder of shares of our stock on
our stock registry books, then you are entitled to exercise appraisal rights
with respect to the merger under Delaware law if certain conditions are met. See
"Special Meeting - Appraisal Rights."
Our reasons for the mergers. Holland Bancorp and German American are
proposing to affiliate because they believe that by combining the companies they
can create a stronger and more diversified company that will provide significant
benefits to their customers. Our Board of Directors believes that by bringing
our customers and banking products together, the companies can do a better job
of growing their combined revenue than if they did not merge. Our Board of
Directors also believes that, in the rapidly changing environment of the banking
industry, our ability to achieve our long-term goal of enhancing shareholder
value will be improved by merging with German American. You can find a more
detailed discussion of the background to the merger agreement and Holland
Bancorp's and German American's reasons for the mergers under "Proposed Mergers
-- Reasons for the Mergers" on page .
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Our financial advisor believes the merger consideration is fair, from a
financial point of view, to our shareholders. Among other factors considered in
deciding to approve the mergers, our Board of Directors received the oral
opinion of our financial advisor, Olive Corporate Finance, LLC, that, as of the
date of the Board of Directors meeting at which the merger was approved, the
consideration payable to the holders of our common stock was fair from a
financial point of view. This oral opinion was subsequently confirmed in writing
by a written opinion dated , 2000, which is attached to this document as
Appendix C. You should read this opinion completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Olive Corporate Finance, LLC. See "Proposed Mergers -- Fairness Opinion of
Holland Bancorp's Financial Advisor" on page .
Accounting Treatment. We expect the mergers to qualify under accounting
rules as a "pooling of interests." This means that, for accounting and financial
reporting purposes, German American will treat our company and our bank
subsidiary as if they had always been part of German American . See "Proposed
Mergers -- Accounting Treatment for the Mergers" on page .
Conditions to completion of the mergers. The completion of the mergers
depend on a number of conditions being met. Some of the conditions are:
- The merger agreement has been adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of our common stock;
- German American and Holland Bancorp have each received an opinion of
German American's counsel dated as of the effective time of the merger, to the
effect that, in counsel's opinion, the mergers will be treated as tax-free for
U.S. federal income tax purposes to each party to the merger agreement and to
the shareholders of Holland, except for cash paid in lieu of fractional shares
and in satisfaction of appraisal rights;
- German American has received a letter, dated as of the closing date,
from its independent public accountants to the effect that, in their opinion,
the merger qualifies for "pooling of interests" accounting treatment; and
- Regulatory approval required under federal banking laws is received
and the waiting periods have expired.
See "Proposed Mergers -- Conditions to Completion of the Mergers" on page .
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Regulatory approvals of the mergers. As noted above, one of the
conditions to completion of the mergers is the receipt of the regulatory
approvals required under the federal banking laws. The bank merger requires the
prior approval of the Federal Deposit Insurance Corporation and the Indiana
Department of Financial Institutions. Applications for the approvals have been
filed with these agencies. We cannot assure you as to when or whether the
approvals will be received. See "Proposed Mergers -- Regulatory Approvals
Required for the Mergers" on page .
We may decide not to complete the mergers. German American and Holland
Bancorp can agree at any time not to complete the mergers, even if the
shareholders of Holland Bancorp have adopted the merger agreement. Also, either
German American or Holland Bancorp may, under certain conditions and without the
consent of any other party to the merger agreement, terminate the merger
agreement if, among other reasons:
- The other party or its subsidiary breaches any representation or
warranty contained in the merger agreement and the breach is not cured within 30
days.
- The other party or its subsidiary materially breaches any covenant
contained in the merger agreement and the breach is not cured within 30 days.
- Certain claims, proceedings or litigation are commenced or
threatened.
- German American experiences a material adverse change in financial
condition or results of operations after March 31, 2000, in which case Holland
Bancorp may terminate.
- Holland Bancorp experiences a material adverse change in financial
condition or results of operations after December 31, 1999, in which case German
American may terminate.
- The mergers are not completed by December 31, 2000.
Termination fee. Holland Bancorp and Holland Bank have agreed to pay
German American a termination fee in the amount of $300,000 (and to reimburse
German American for up to $100,000 of its costs and expenses related to the
merger) if Holland should accept another business combination proposal within 12
months of a termination under the merger agreement after the failure of Holland
Bancorp to have obtained majority approval of Holland Bancorp's shareholders of
the merger. See "Proposed Mergers -- Termination Fee" on page .
Effective time of the mergers. German American and Holland Bancorp
anticipate that the mergers will be completed in early October, 2000. See
"Proposed Mergers -- Effective Time" on page .
Comparative shareholder rights. As a Holland Bancorp shareholder, your
rights are governed by Delaware law, the state in which Holland Bancorp is
incorporated, and by Holland Bancorp's Certificate of Incorporation and By-Laws.
After the mergers, you will become a German American shareholder, and your
rights will be governed by Indiana law, the state in which German American is
incorporated, and by German American's Articles of Incorporation and By-Laws.
See "Comparison of Common Stock" on page .
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INTERESTS OF CERTAIN PERSONS IN THE MERGERS
Certain individuals associated with our company may be deemed to have
certain interests in the mergers in addition to their interests generally as our
shareholders.
Interests of Members of our Board of Directors. Except for Mr. Blesch,
who will become a Director of GAB as a result of the bank merger, none of our
directors will become members of the Board of Directors of German American or of
GAB. The other members of our Board of Directors, however, will continue to meet
periodically to advise GAB concerning matters relating to its banking operations
at the former branches of Holland Bank for two years following the merger. For
these services, they will receive compensation equivalent to that currently
received by them from Holland Bank for their services as directors, including
continued accrual of benefits under our director deferred compensation plan.
Interests of Certain Executive Officers. Three executive officers of
Holland Bank are parties to employment agreements with Holland Bank that were
signed in 1998 prior to the commencement of negotiations with German American
concerning the mergers. With German American's approval, Holland Bank has
entered into amended employment agreements with each of these three officers,
specifying the terms under which their employment will be continued by GAB
following the merger through December 31, 2002. These amended agreements do not
materially increase the benefits payable to these executives from the benefits
to which each of them is already entitled under his or her agreement with
Holland Bank. In addition, German American has agreed that we may make loans on
commercially reasonable terms to employees of Holland Bank who hold options to
acquire our common stock, in order to permit these employees to exercise these
options prior to the merger and thereby receive German American common stock
with respect to those option shares.
Interests of Directors and Officers. Following the merger, German
American will purchase directors' and officers' insurance for all our present
and former directors and officers, and will indemnify them, against the risk
that claims might be made against them for events occurring prior to the closing
of the mergers, including actions related to the merger agreement and the
mergers.
For a more detailed discussion of these and other interests of certain
persons in the mergers, see "Proposed Mergers -- Interests of Certain Persons in
the Mergers."
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SPECIAL MEETING
Date, time and place of special meeting. Our special shareholders'
meeting will be held on , , 2000, at .m., local time, at the , ,_________,
Indiana 47___. Purposes of special meeting. At the special meeting, you will be
asked:
- to adopt the merger agreement; and
- to act upon any other items that may be submitted to a vote at the
special meeting.
As of the date of this document, our Board of Directors does not know
of any other matters that will be presented at the special meeting. See "Notice
of Special Meeting of Shareholders" and the discussions under the captions
"Special Meeting" and "Proposed Mergers" on pages and , respectively.
Required shareholder vote. In order to adopt the merger agreement, the
holders of at least a majority of the issued and outstanding shares of Holland
Bancorp common stock must vote in favor of the merger agreement. The bank merger
has already been approved by Holland Bancorp as the sole shareholder of Holland
Bank.
Proxies. You can revoke your proxy at any time before it is exercised
by delivering a later dated proxy to the person to whom you returned your prior
proxy (i.e., Holland Bancorp, if you are the "record holder" of your shares, or
your bank or broker, if your shares are held in "street name"), by written
notice delivered to the person to whom you returned your prior proxy, or by
attending the special meeting and voting in person. Note, however, that if your
shares are held in "street name" with a bank, broker or other nominee, you will
need to obtain an authorizing proxy from the record holder of your shares
indicating that you were the beneficial owner of those shares as of , 2000, the
record date for voting at the special meeting. Contact your bank or broker as
soon as possible if your shares are held in "street name" and you wish to vote
in person at the special meeting rather than by proxy. You are encouraged to
vote by proxy prior to the special meeting even if you plan to attend the
special meeting. See "Special Meeting -- Proxies" on page .
Shares outstanding and entitled to vote. As of , 2000, there were
[268,544] shares of Holland Bancorp common stock outstanding. You can vote at
the special meeting of Holland Bancorp if you owned Holland Bancorp common stock
at the close of business on that date. You can cast one vote for each share of
Holland Bancorp common stock you owned on that date.
As of the record date, directors and executive officers of Holland
Bancorp owned or controlled approximately [70,048] shares of Holland Bancorp
common stock, entitling them to exercise [26.08%] of the voting power of the
Holland Bancorp common stock entitled to vote at the special meeting. The
[70,048] shares do not include [2,250] shares of Holland Bancorp common stock
underlying unexercised stock options held by officers of Holland Bancorp as of
the record date; these option shares may not be voted at the special meeting
even if the options are exercised prior to the special meeting. On the basis of
the unanimous approval of the merger agreement by the Board of Directors of
Holland Bancorp, we currently expect that each director and executive officer of
Holland Bancorp will vote the shares of Holland Bancorp common stock owned by
him or her for adoption of the merger agreement.
10
<PAGE>
As of the record date, directors and executive officers of German
American owned approximately shares of Holland Bancorp common stock, entitling
them to exercise % of the voting power of the Holland Bancorp common stock
entitled to vote at the special meeting.
See "Special Meeting -- Record Date and Voting Rights" on page .
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
German American common stock trades on the Nasdaq National Market
System under the symbol "GABC". Holland Bancorp common stock is not traded on
any established market and there are therefore no public reports regarding the
price or other terms of those infrequent purchase and sale transactions that
occur with respect to Holland Bancorp common stock from time to time.
Some examples of recent daily closing prices for German American common
stock (as reported by Nasdaq), on March 23, 2000 (the day before the first
public announcement of our plans to merge) and _________, 2000 (the most recent
practicable date prior to our printing of this proxy statement/prospectus), and
some examples of the per share prices paid for Holland Bancorp common stock in
the transactions that last occurred on or before each of those dates (as
reported by the parties to those transactions to Holland Bancorp management),
are as follows:
GERMAN AMERICAN HOLLAND
BANCORP BANCORP
March 23, 2000 $16.00 $25.90*
_________, 2000 $_____ $_____
*Represents the weighted average price in two transactions involving
250 shares of Holland Bancorp common stock that occurred in 1998,
which were the most recent transactions known to management prior to
March 24, 2000.
Based on the exchange ratio of 3.5 shares of German American common
stock for each share of Holland Bancorp common stock in the merger and the most
recent closing prices of German American common stock as of the dates indicated
in the above table, the market value of the consideration that Holland Bancorp
shareholders will receive in the merger for each share of Holland Bancorp common
stock as of those dates would have been:
March 23, 2000 $56.00
_________, 2000 $_____
11
<PAGE>
Of course, the market price of German American common stock will
fluctuate prior to the completion of the mergers, and will continue to fluctuate
after the mergers. You should obtain current stock price quotations for German
American common stock. You can get these quotations from a newspaper, on the
Internet or by calling your broker. Private transactions in Holland Bancorp
common stock may also occur in the future prior to the closing of the merger at
varying prices. There are, however, no publicly available reports of
transactions in Holland Bancorp common stock.
COMPARATIVE PER SHARE DATA
The table below shows historical information about German American's
and Holland Bancorp's earnings per share, cash dividends per share and book
value per share.
The information listed as equivalent share basis was obtained by
multiplying German American's historical amounts by the exchange ratio of 3.5.
We are presenting this equivalent share basis information to reflect the total
historical amounts associated with the number of shares of German American
common stock that Holland Bancorp shareholders will receive in the merger for
each share of Holland Bancorp common stock exchanged.
The equivalent share information is based solely on German American's
actual historical data reflecting its financial condition and results of
operations. We have not attempted to simulate what German American's financial
condition and results of operations might have been had our company and its bank
subsidiary been part of German American throughout the periods presented or what
German American's financial condition and results of operations (with or without
combining with us) might be in the future.
The information related to German American in the following table is
based on the historical financial information that German American has presented
in its prior SEC filings. German American is incorporating this historical
financial information into this document by reference. See "Where You Can Find
More Information" on page . The information related to Holland in the following
table is based on the historical financial information that Holland has
presented in its annual reports to its shareholders for the years ended December
31, 1997, 1998, and 1999, and on Holland's internal unaudited financial
statements for the three months ended March 31, 2000.
12
<PAGE>
<TABLE>
<CAPTION>
GERMAN AMERICAN HOLLAND BANCORP
--------------- ---------------
EQUIVALENT
HISTORICAL HISTORICAL SHARE BASIS(3)
--------------- -----------------------
<S> <C> <C> <C>
Earnings per share(1)
Three months ended
March 31, 2000 .................. $0.23 $ 0.49 $0.81
Twelve months ended:
December 31, 1999 ............... 0.96 1.98 3.36
December 31, 1998 ............... 0.93 2.43 3.26
December 31, 1997 ............... 0.79 2.02 2.77
Dividends declared per share(2)
Three months ended
March 31, 2000 .................. $0.13 $ -- $ 0.46
Twelve months ended:
December 31, 1999 ............... 0.49 0.80 1.72
December 31, 1998 ............... 0.43 0.77 1.51
December 31, 1997 ............... 0.35 0.67 1.23
Book value per share
At March 31, 2000 ............... $9.75 $23.59 $34.13
At December 31, 1999 ............ 9.69 23.20 33.92
------------------
<FN>
(1) German American's and Holland Bancorp's basic earnings per share.
(2) German American's cash dividends per share are presented without
restatement for poolings. Management believes that acquisitions will have
no significant effect on German American dividend policy.
(3) German American's historical amounts multiplied by the exchange ratio of
3.5.
</FN>
</TABLE>
13
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- GERMAN AMERICAN BANCORP
(Dollars in thousands except per share data)
The following selected data has been taken from German American's consolidated
financial statements that are included in German American's prior SEC filings.
German American is incorporating these SEC filings into this document. See
"Where You Can Find More Information" on page ___. The following selected data
should be read in conjunction with the consolidated financial statements and
related notes.
<TABLE>
<CAPTION>
Quarter Ended March 31 Year Ended December 31
-------------------------- ---------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest and Fees on Loans $ 14,514 $ 13,008 $ 53,868 $ 51,980 $ 49,160 $ 48,316 $ 45,493
Interest on Investments 3,719 3,334 14,061 13,380 14,065 13,572 13,448
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Interest Income 18,233 16,342 67,929 65,360 63,225 61,888 58,941
----------- ----------- ----------- ----------- ----------- ----------- -----------
Interest on Deposits 7,332 6,836 27,860 28,450 27,804 28,037 26,626
Interest on Borrowings 2,863 1,631 7,899 6,155 5,930 5,965 5,240
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Interest Expense 10,195 8,467 35,759 34,605 33,734 34,002 31,866
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Interest Income 8,038 7,875 32,170 30,755 29,491 27,886 27,075
Provision for Loan Losses 315 369 1,718 1,338 773 428 197
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Interest Income after
Provision for Loan Losses 7,723 7,506 30,452 29,417 28,718 27,458 26,878
Noninterest Income 1,552 1,489 6,251 4,996 5,698 12,869(1) 7,418
Noninterest Expense 6,550 5,879 24,832 22,318 24,278(1) 22,714 22,205
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income Before Income Taxes 2,725 3,116 11,871 12,095 10,138 17,613 12,091
Income Tax Expense 688 893 3,049 3,525 2,868 6,230 4,101
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income $ 2,037 $ 2,223 $ 8,822 $ 8,570 $ 7,270 $ 11,383 $ 7,990
=========== =========== =========== =========== =========== =========== ===========
Period-end Balances:
Total Assets $ 993,253 $ 901,502 $ 992,635 $ 896,925 $ 846,332 $ 795,555 $ 839,237
Total Loans, Net 692,930 605,243 685,424 589,765 516,747 500,132 527,431
Total Deposits 699,615 679,190 698,261 665,113 645,349 624,401 664,134
Total Long-term Debt 145,585 109,255 122,902 124,381 100,296 101,885 80,387
Total Shareholders' Equity 87,994 92,164 87,487 91,276 84,412 79,389 70,717
Per Share Data(2):
Net Income $ 0.23 $ 0.24 $ 0.96 $ 0.93 $ 0.79 $ 1.24 $ 0.87
Cash Dividends(3) 0.13 0.12 0.49 0.43 0.35 0.28 0.25
Other Data:
Weighted Average Number of 9,029,109 9,198,534 9,186,474 9,197,274 9,189,349 9,180,938 9,177,367
Shares(2)
<FN>
(1) In 1997, a $1.3 million one-time special SAIF assessment was incurred. In 1996, a gain of $7.3 million was realized on
the sale of branch offices.
(2) Share and per share data has been retroactively adjusted to give effect for stock dividends and splits, and excludes the
dilutive effect of stock options.
(3) Cash dividends represent historical dividends declared per share without retroactive restatement for poolings.
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF SELECTED FINANCIAL DATA -- HOLLAND BANCORP, INC.
(Dollars in thousands except per share data)
The following table presents consolidated financial data for Holland Bancorp, Inc. The
financial data below is based on financial statements previously delivered by Holland Bancorp,
Inc. to its shareholders in its annual reports to shareholders for the years 1999, 1998, 1997,
1996 and 1995 except for the March 31, 1999 and 2000 data, which is based on internal unaudited
financial statements.
Quarter Ended
March 31 Year Ended December 31
----------------- -----------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet:
Cash & Due From Banks $ 1,620 $ 1,498 $ 2,057 $ 1,392 $ 1,133 $ 1,639 $ 1,311
Interest Bearing Balances 6,352 5,259 6,953 5,160 5,167 5,067 3,367
Investment Securities 2,000 3,342 2,633 4,464 5,462 6,301 8,048
Federal Funds Sold 0 875 2,625 1,125 1,200 1,100 2,275
Loans, Net 48,219 43,082 47,084 41,492 33,968 33,880 32,984
Bank Premises & Equipment 1,254 910 1,252 934 845 861 644
Other Assets 1,594 1,392 1,403 1,438 1,379 517 514
----- ----- ----- ----- ----- --- ---
Total Assets $61,039 $56,358 $64,007 $56,005 $49,153 $49,365 $49,143
======= ======= ======= ======= ======= ======= =======
Deposits $49,415 $49,842 $53,168 $49,666 $43,343 $43,959 $43,957
FHLB Advances 4,000 0 4,000 0 0 0 0
Other Liabilities 1,296 489 615 462 376 334 466
Stockholders' Equity 6,328 6,027 6,225 5,877 5,435 5,072 4,720
----- ----- ----- ----- ----- ----- -----
Total Liabilities $61,039 $56,358 $64,007 $56,005 $49,153 $49,365 $49,143
& Equity ======= ======= ======= ======= ======= ======= =======
Income Statement:
Interest Income $ 1,106 $ 1,005 $ 4,206 $ 3,828 $ 3,685 $ 3,661 $ 3,550
Interest Expense 544 445 1,990 1,710 1,620 1,666 1,593
--- --- ----- ----- ----- ----- -----
Net Interest Income 562 560 2,216 2,118 2,064 1,995 1,957
Provision for Loan Losses 0 3 31 6 6 0 0
Non Interest Income 77 75 367 395 263 194 182
Non Interest Expense 435 397 1,751 1,570 1,463 1,385 1,312
FDIC Assessments 5 3 6 5 5 2 50
- - - - - - -
Income Before Taxes 199 232 795 932 853 802 778
Income Taxes 69 83 263 280 311 294 272
-- -- --- --- --- --- ---
Net Income $ 130 $ 150 $ 532 $ 652 $ 542 $ 508 $ 506
======= ======= ======= ======= ======= ======= =======
Per Share Information:*
Net Income $ 0.49 $ 0.56 $ 1.98 $ 2.43 $ 2.02 $ 1.89 $ 1.87
Dividends (None) (None) 0.80 0.77 0.67 0.58 1.12
Book Value at Year 23.59 22.47 23.20 21.91 20.25 18.90 17.59
End
<FN>
* Per Share Information for 1997 and prior years has been restated to reflect the 200% stock
split of July 31, 1998.
</FN>
</TABLE>
15
<PAGE>
SPECIAL MEETING
GENERAL
This document is first being mailed by Holland Bancorp to the holders
of Holland Bancorp common stock on , 2000 and is accompanied by the notice of
the Holland Bancorp special meeting and a form of proxy that is solicited by the
Board of Directors of Holland Bancorp for use at the special meeting. The
special meeting will be held on , , 2000 at .m., local time, at the , ,
,__________, Indiana 47___.
MATTERS TO BE CONSIDERED
The purposes of the special meeting are to consider and vote upon
adoption of the merger agreement, and to consider and vote upon any other
matters that may properly come before the special meeting or any adjournment or
postponement of the special meeting.
PROXIES
The accompanying form of proxy is for your use if you are unable or do
not wish to attend the meeting in person. You may revoke your proxy at any time
before it is exercised by delivering to the Secretary of Holland Bancorp a
written notice of revocation, a properly executed proxy having a later date, or
by attending the special meeting and voting in person. Written notices of
revocation should be addressed to Holland Bancorp, Inc., 405 N. Meridian Street,
Box 8, Holland, Indiana, 47541, Attn: Ray L. Lindsey, Secretary/Treasurer. To be
effective, Holland Bancorp must receive the revocation before the shares are
voted. The shares represented by proxies properly signed and returned will be
voted at the special meeting as instructed by the shareholders of Holland
Bancorp giving the proxies. If you make no specification as to your vote on the
proxy, your proxy will be voted in favor of adoption of the merger agreement.
Please note that if your shares are held in "street name" with a bank, broker or
other nominee, and you wish to revoke your proxy, any later dated proxies or
other written notices of revocation should be sent to your bank, broker or other
nominee and not to Holland Bancorp.
The Board of Directors of Holland Bancorp is unaware of any other
matters that may be presented for action at the special meeting. However, if
other matters do properly come before the special meeting, the shares
represented by properly executed proxies will be voted in accordance with the
best judgment of the person named in the proxy.
SOLICITATION OF PROXIES
Holland Bancorp will bear the entire cost of soliciting proxies from
shareholders. In addition to the solicitation of proxies by mail, Holland
Bancorp will request that banks, brokers and other record holders send proxies
and proxy material to the beneficial owners of stock held by them and secure
their voting instructions, if necessary. These banks, brokers and other record
holders will be reimbursed by Holland Bancorp for their reasonable expenses
incurred. Additionally, proxies may be solicited personally or by telephone by
directors, officers and certain employees of Holland Bancorp, who will not be
specifically compensated for such soliciting. Holland Bancorp will bear its own
expenses in connection with the solicitation of proxies for the special meeting.
16
<PAGE>
RECORD DATE AND VOTING RIGHTS
Holland Bancorp has fixed , 2000 as the record date for determining
those Holland Bancorp shareholders entitled to notice of, and to vote at, the
special meeting. Accordingly, only Holland Bancorp shareholders of record at the
close of business on , 2000 will be entitled to notice of and to vote at the
special meeting. If you are not the record holder of your shares and instead
hold your shares in "street name" through a bank, broker or other record holder,
that person will vote your shares in accordance with the instructions you
provide them on the enclosed proxy card. Each share of Holland Bancorp common
stock you own on the record date entitles you to one vote on each matter
presented for a vote at the special meeting. At the close of business on the
record date, there were approximately [268,544] shares of Holland Bancorp common
stock outstanding held by approximately holders of record. The presence, in
person or by proxy, of shares of Holland Bancorp common stock representing at
least one-third of those shares outstanding and entitled to vote on the record
date is necessary to constitute a quorum at the special meeting.
Shares of Holland Bancorp common stock held by persons attending the
special meeting but not voting, and shares of Holland Bancorp common stock for
which Holland Bancorp has received proxies but with respect to which the holders
have abstained from voting, will be counted as present at the special meeting
for purposes of determining the presence or absence of a quorum for the
transaction of business at the special meeting. Brokers who hold shares of
Holland Bancorp common stock in nominee or "street name" for customers who are
the beneficial owners of those shares are prohibited from giving a proxy to vote
shares held for those customers on matters to be considered and voted upon at
the special meeting without specific instructions from those customers. These
so-called "broker non-votes" will be counted for purposes of determining whether
a quorum exists.
The merger agreement must be adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of Holland Bancorp
common stock entitled to vote at the special meeting.
BECAUSE ADOPTION OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF HOLLAND
BANCORP COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND
BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST ADOPTION OF THE
MERGER AGREEMENT. ACCORDINGLY, THE HOLLAND BANCORP BOARD URGES YOU TO COMPLETE,
DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED,
POSTAGE-PAID ENVELOPE.
17
<PAGE>
As of the record date, directors and executive officers of Holland
Bancorp owned approximately [70,048] shares of Holland Bancorp common stock,
entitling them to exercise [26.08%] of the voting power of the Holland Bancorp
common stock entitled to vote at the special meeting. The [70,048] shares do not
include [2,250] shares of Holland Bancorp common stock underlying unexercised
stock options held by officers of Holland Bank as of the record date; these
option shares may not be voted at the special meeting even if the options are
exercised prior to the special meeting. On the basis of the unanimous approval
of the merger agreement by the Board of Directors of Holland Bancorp, we
currently expect that each director and executive officer of Holland Bancorp
will vote the shares of Holland Bancorp common stock owned by him or her for
adoption of the merger agreement.
Additional information with respect to the beneficial ownership of
Holland Bancorp common stock by individuals and entities owning more than 5% of
that stock and more detailed information with respect to beneficial ownership of
Holland Bancorp common stock by directors and executive officers of Holland
Bancorp is set forth under "Description of Holland Bancorp - Stock Ownership of
Management and Principal Shareholders of Holland Bancorp".
APPRAISAL RIGHTS
You are entitled to assert appraisal rights under Section 262 of the
Delaware General Corporation Law (which is reproduced on Appendix B) if you are
the holder of record of shares of our common stock on our stock transfer books.
To assert those rights, you must execute and deliver to us a written demand for
appraisal before a vote is taken on the merger agreement and the merger. A proxy
or vote against the merger agreement and the merger will not be considered a
demand for appraisal. A demand for appraisal will be sufficient if:
o it is delivered to us before the vote is taken at the meeting;
o it reasonably informs us of your identity; and
o it reasonably informs us of your intention to demand the appraisal of
your stock.
German American will not be required to fulfill its obligations under
the merger agreement if the holders of 10% or more of our outstanding common
stock demand appraisal, because the merger would not qualify as a pooling of
interests under accounting rules in that event.
RECOMMENDATION OF HOLLAND BANCORP BOARD OF DIRECTORS
The Board of Directors of Holland Bancorp has unanimously approved the
merger agreement and the transactions contemplated by the merger agreement. The
Holland Bancorp Board believes that the merger agreement is in the best
interests of Holland Bancorp as a whole, including the interests of Holland
Bancorp shareholders, and recommends that the Holland Bancorp shareholders vote
"FOR" adoption of the merger agreement. See "Proposed Mergers -- Background of
the Mergers, -- Reasons for the Mergers, -- Recommendation of the Holland
Bancorp Board of Directors." For a discussion of certain interests of the
members of the Board of Directors in the mergers, see "Proposed Mergers --
Interests of Certain Persons in the Mergers."
18
<PAGE>
PROPOSED MERGERS
At the special meeting, the shareholders of Holland Bancorp will
consider and vote upon adoption of the merger agreement, certain features of
which are summarized below. The following summary of aspects of the merger
agreement and the transactions contemplated by the merger agreement does not
completely describe the terms and conditions of the merger agreement and is
qualified in its entirety by reference to the merger agreement, which is
attached to this document as Appendix A and is incorporated herein by reference.
GENERAL
The Board of Directors of each party to the merger agreement has
unanimously approved it, and the mergers provided for therein. German American
and Holland Bancorp expect that the mergers will be completed in early October,
2000.
MERGER CONSIDERATION
You will receive 3.5 shares of German American common stock (subject to
adjustment) for each share of Holland Bancorp common stock you own on the date
the merger is completed.
DESCRIPTION OF THE MERGERS
In the holding company merger, which will occur immediately preceding
the bank merger, Holland Bancorp will merge into German American, which will be
the surviving corporation in the holding company merger, and the separate
corporate existence of Holland Bancorp will cease. In the bank merger, Holland
Bank will merge into GAB with GAB as the surviving institution, and the separate
corporate existence of Holland Bank will cease.
BACKGROUND OF THE MERGERS
Over the past several years, the topic of merging into a larger
financial institution had been discussed frequently by the Board of Directors of
Holland Bancorp. Until recently, Holland Bancorp's Board of Directors had
concluded that a small bank could remain profitable if it maintained a high
level of customer service, and that a small bank could provide better customer
service than a larger bank. Holland Bancorp's management believed that its
financial results had supported this conclusion.
Recently, however, developments in the financial services industry
generally have led to increases in competition for bank services. Compliance
with banking regulations continues to be a financial burden, especially for the
smaller community banks that cannot spread the expense over a larger asset base.
These costs and competitive factors had created an environment in which it was
increasingly difficult for the smaller community banks, such as Holland Bank, to
compete effectively with other larger financial institutions and financial
service providers.
19
<PAGE>
In September, 1999, Holland Bancorp was approached by representatives
of German American who introduced the concept of an "in-market" affiliation of
our two banks. Holland Bancorp's Board of Directors initially reacted
unfavorably to this concept, but after continued conversations with German
American representatives, and in light of the competitive and regulatory factors
described above and other financial, legal, and market considerations, the Board
of Directors of Holland Bancorp, Inc. eventually agreed to entertain an offer of
merger.
On December 24, 1999, the President of GAB delivered a formal offer of
merger to the Chairman of the board of directors of Holland Bancorp. A copy of
this offer was distributed to each director at the next regular meeting that was
held on December 28, 1999. Initial reaction to the offer was mixed. Three
special board meetings were held subsequent to the December 28th meeting in
which the benefits of a merger were weighed against the negative aspects. The
initial offer, as modified by German American on January 10, 2000, was rejected
on January 11th.
After receiving our rejection of the merger offer, German American
renewed its offer and asked our board to reconsider. The Holland Bancorp board
met again on February 8th to discuss the proposed merger. Our board was
concerned that the offering price did not adequately reflect the true value of
our bank.
On February 10th, the board of directors of Holland Bancorp rejected
the renewed German American offer and set a price at which each director would
approve a merger, and relayed this information to German American. In response
to this price, German American on February 28 counteroffered with the exchange
ratio that is set forth in the merger agreement, which was somewhat higher than
its last offer, and somewhat lower than the price requested by Holland Bancorp.
German American's counteroffer was considered and denied by our board on March
2nd, by letter renewing Holland Bancorp's most recent offer. On March 3, German
American renewed its February 28 offer and stated that it was its final offer.
At a meeting of the Board of Directors of Holland Bancorp held on March
8, 2000, the basic terms of the latest merger offer received from German
American were approved unanimously by the board of directors of Holland Bancorp,
subject to the negotiation of a definitive agreement and receipt of a fairness
opinion. The board also authorized Holland Bancorp to retain the law firm of
Bose McKinney & Evans to assist us in drafting a definitive agreement, and to
retain the investment-banking firm of Olive Corporate Finance, LLC to provide an
opinion on the fairness of the offer. A news release announcing the agreement in
principle was issued on March 24, 2000.
20
<PAGE>
In May 2000, German American concluded its due diligence examination of
Holland Bancorp. Ongoing negotiations continued in an effort to finalize the
definitive merger agreement. Several drafts of a definitive agreement were
reviewed and amended during the month of June. Special board meetings of Holland
Bancorp were held on June 22, 2000 and June 27, 2000 to discuss the final draft
of the definitive agreement with legal counsel and Olive Corporate Finance LLC.
At the June 27, 2000 meeting, the board received an oral opinion from Olive
Corporate Finance LLC, that the merger consideration would be fair to Holland
Bancorp's shareholders from a financial point of view. After thorough discussion
and for the reasons stated above, a resolution was unanimously approved by the
boards of directors of Holland Bancorp and Holland Bank to approve the
definitive merger agreement and to authorize company officials to execute all
documents necessary to effect the merger. Formal execution of the merger
agreement took place on the evening of June 27, 2000.
REASONS FOR THE MERGERS
Holland Bancorp's Board of Directors believes that the merger with
German American is in the best interest of Holland Bancorp's shareholders.
Holland Bancorp's Board of Directors considered a number of factors in deciding
to approve and to recommend the terms of the merger to its shareholders,
including the following:
o German American's philosophy about banking, specifically its focus on
customer service, which is very similar to Holland Bancorp's philosophy,
making the combination a logical one.
o German American already has in place many products and services that
Holland Bancorp had identified as crucial to its continued success. Holland
Bancorp's customers will have the advantages of these services immediately.
o German American's branching network complements and enhances our position
in Jasper and Dubois County.
o An "in-market" combination gains more financial efficiencies for our
shareholders than would an "out-of-market" merger.
o German American's stock is listed on the Nasdaq National Market System,
which provides much more liquidity to our shareholders.
o German American agreed to continue the employment of all Holland Bancorp
employees.
o Pooling-of-interest accounting may be eliminated at the end of 2000 thus
potentially decreasing our value to an acquiring bank.
o German American's history of not closing branches, and retaining local
employees is beneficial to our customers and to our staff.
o German American has more resources than Holland Bancorp to improve our
physical facilities.
The foregoing factors considered by Holland Bancorp's board of directors
are not intended to be exhaustive. Holland Bancorp's board of directors did not
assign any relative or specific weight to the foregoing factors, and individual
directors may have given different weights to different factors.
21
<PAGE>
THE BOARD OF DIRECTORS OF HOLLAND BANCORP HAS UNANIMOUSLY APPROVED THE AGREEMENT
AND PLAN OF REORGANIZATION AND THE TRANSACTIONS CONTEMPLATED THEREBY.
RECOMMENDATION OF THE HOLLAND BANCORP BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF HOLLAND BANCORP HAS CAREFULLY CONSIDERED AND
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGERS AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS OF HOLLAND BANCORP VOTE "FOR" ADOPTION OF THE
MERGER AGREEMENT.
For a discussion of certain interests of the members of the Board of Directors
in the mergers, see "Proposed Mergers -- Interests of Certain Persons in the
Mergers."
German American's Board of Directors considered a number of financial
and non-financial factors in connection with its approval of the mergers,
including its respect for the ability and integrity Holland Bancorp's management
and staff and its belief that expanding its operations in the areas served by
Holland Bank through the mergers offers important long range strategic benefits
to German American.
FAIRNESS OPINION OF HOLLAND BANCORP'S FINANCIAL ADVISOR
Olive Corporate Finance LLC ("Olive") was engaged by Holland Bancorp to
advise the Holland Bancorp Board of Directors as to the fairness of the
consideration, from a financial perspective, to be paid by German American to
Holland Bancorp shareholders as set forth in the merger agreement.
As part of its investment banking business, Olive is regularly engaged
in reviewing the fairness of transactions involving financial institutions from
a financial perspective and in valuing financial institutions and other
businesses and their securities in connection with mergers, acquisitions, and
other transactions. Neither Olive nor any of its affiliates has a material
financial interest in Holland Bancorp or German American. Olive was selected to
advise the Holland Bancorp Board of Directors based upon its familiarity with
financial institutions and its knowledge of the banking industry as a whole.
Except as described in this section, neither Holland Bancorp nor German
American have had any material or compensable relationship with Olive, its
affiliates, and/or unaffiliated representatives during the past two years.
Olive performed certain analyses of the proposed transaction. The
procedures performed and the corresponding results are described below. The
results of Olive's analyses and the range of values for Holland Bancorp have
been discussed with the Board of Directors of Holland Bancorp in connection with
Olive's advice as to the fairness of the consideration to be paid by German
American.
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In arriving at its Opinion, Olive reviewed certain publicly available
business and financial information relating to German American. Olive considered
certain financial and stock market data of German American and compared that
data with similar data for certain other publicly-held banks and bank holding
companies that own similar financial institutions. Olive also considered the
financial terms of certain other comparable bank transactions that have recently
been announced. Olive also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria that it
deemed relevant. In connection with its review, Olive did not independently
verify the foregoing information and relied on such information as being
complete and accurate in all material respects. Olive did not make an
independent evaluation or appraisal of the assets of Holland Bancorp or German
American.
As part of preparing the Opinion, Olive performed a due diligence
review of German American. As part of the due diligence review, Olive spoke with
German American management and reviewed the following documents: Annual Reports
to Shareholders and Annual Reports on Form 10-K for each of the three years
ended December 31, 1997, 1998 and 1999; Quarterly Report on Form 10-Q for the
period ended March 31, 2000; the most recent Uniform Bank Performance Report
dated March 31, 2000; Consolidated Reports of Condition and Income filed with
the Federal Deposit Insurance Corporation dated December 31, 1999 and March 31,
2000; various internal financial reports regarding the operations and the
financial condition; each of the filings on Form 8-K during the year ended
December 31, 1999 and through June 20, 2000; and certain communications from
German American to its shareholders. Olive also reviewed investment security
holdings, pending litigation provided by management, the analysis and
calculation of the Allowance for Loan and Lease Losses as of March 31, 2000, and
internally identified special assets and related reports.
As part of the due diligence review, Olive also spoke with Holland
Bancorp management and reviewed the following documents: Annual Reports to
Shareholders for each of the five years ended December 31, 1995 through December
31, 1999; audited financial statements for the years ended December 31, 1995
through December 31, 1999, year to date information through March 31, 2000;
Consolidated Reports of Condition and Income filed with the Federal Deposit
Insurance Corporation dated December 31, 1999 and March 31, 2000, Uniform Bank
Performance Report Bank dated March 31, 2000; various internal financial reports
regarding the operations and the financial condition; and certain communications
from Holland Bancorp to its shareholders. Olive also reviewed statistical
performance data regarding the loan portfolio, securities portfolio, and other
financial holdings of Holland Bancorp. In review of the aforementioned
information, Olive took into account its assessment of general market and
financial conditions, its experience in other transactions, and its knowledge of
the banking industry, generally.
In connection with rendering the Opinion and preparing its written and
oral presentations to Holland Bancorp's Board of Directors, Olive performed a
variety of financial analyses, including those summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by Olive in this engagement. The preparation of an Opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances of the transaction. Therefore, such an opinion is not readily
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susceptible to summary description. Accordingly, notwithstanding the separate
factors summarized below, Olive believes that its analyses must be considered as
a whole and that selecting portions of its analyses and of the factors
considered by it, without considering all analyses and factors, could create an
incomplete view of the evaluation process underlying its Opinion. In performing
its analyses, Olive made numerous assumptions with respect to industry
performance, business and economic conditions, and other matters, many of which
are beyond Holland Bancorp's or German American's control. The analyses
performed by Olive are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. In addition, analyses relating to the values of businesses do not
purport to be appraisals or to reflect the process by which businesses actually
may be sold.
Comparable Company Analysis: Olive reviewed and compared actual stock
market data and actual and estimated selected financial information for German
American with corresponding information for 29 publicly traded banks with assets
between $900 million and $1,100 million ("German American Peer Group 1") and for
14 publicly traded banks with assets between $750 million and $1,250 million and
equity to assets between 8% and 9% ("German American Peer Group 2"). The
information was based on market prices as of the close of ______, 2000 and the
latest publicly available financial data for each company included in the
analysis.
The analysis of German American Peer Group 1 indicated: (i) the mean
and median multiples of price to respective last twelve months' earnings were
_____x and _____x, respectively, compared to _____x for German American; (ii)
the mean and median multiples of price to tangible book value were _____% and
_____%, respectively, compared to _____% for German American; (iii) the mean and
median dividend yields were _____% and _____%, respectively, compared to _____%
for German American; (iv) the mean and median return on average assets ("ROAA")
for the last twelve months were _____% and _____%, respectively, compared to
_____% for German American; (v) the mean and median return on average equity
("ROAE") for the last twelve months were _____% and _____%, respectively,
compared to _____% for German American.
The analysis of German American Peer Group 2 indicated: (i) the mean
and median multiples of price to respective last twelve months' earnings were
_____x and _____x, respectively, compared to _____x for German American; (ii)
the mean and median multiples of price to tangible book value were _____% and
_____%, respectively, compared to _____% for German American; (iii) the mean and
median dividend yields were _____% and _____%, respectively, compared to _____%
for German American; (iv) the mean and median return on average assets ("ROAA")
for the last twelve months were _____% and _____%, respectively, compared to
_____% for German American; (v) the mean and median return on average equity
("ROAE") for the last twelve months were _____% and _____%, respectively,
compared to _____% for German American.
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Comparable Transactions Analysis: Olive reviewed and compared actual
information for comparable pending or closed transactions it deemed pertinent to
the Merger, including; (i) 56 US bank merger and/or acquisition transactions for
banks with assets between $50 to $100 million since January 1, 1999; (ii) 95 US
bank merger and/or acquisition transactions for banks with returns on average
assets between .80% and 1.20% since January 1, 1999; (iii) 50 US bank merger
and/or acquisition transactions for banks with returns on average equity between
8.00% and 11.00% since January 1, 1999; (iv) 83 Midwest bank merger and/or
acquisition transactions since January 1, 1999; and (v) 9 Midwest bank merger
and/or acquisition transactions for banks with assets between $50 to $100
million since January 1, 1999.
In order to determine a peer group of transactions that were comparable
for the analysis, Olive reviewed transactions over the period January 1, 1997 to
the present. Public information was accumulated for pending or closed
transactions involving banks during this period and examined on a yearly basis.
Based on the accumulated transaction pricing information, Olive determined that
pricing trends for transactions pending or closed in 1997 and 1998 were not
representative of current market developments in the banking industry and the
overall economic environment. Therefore, Olive determined that only pending or
closed transactions occurring from January 1, 1999 to the present were relevant
for this analysis.
The analysis of US transactions for banks with assets between $50 and
$100 million indicated, among other things, that based on the announced
transaction value: (i) the mean and median multiples of transaction value to
respective last twelve months' earnings were _____x and _____x, respectively,
compared to an implied valuation of _____x Holland Bancorp's 1999 earnings; (ii)
the mean and median ratios of transaction value to tangible book value were
_____% and _____%, respectively, compared to an implied valuation of _____% of
Holland Bancorp's tangible book value as of December 31, 1999.
The analysis of US transactions involving banks with returns on average
assets between .80% and 1.20% indicated, among other things, that based on the
announced transaction value: (i) the mean and median multiples of transaction
value to respective last twelve months' earnings were _____x and _____x,
respectively, compared to an implied valuation of _____x Holland Bancorp's 1999
earnings; (ii) the mean and median ratios of transaction value to tangible book
value were _____% and _____%, respectively, compared to an implied valuation of
_____% of Holland Bancorp's tangible book value as of December 31, 1999.
The analysis of US transactions involving banks with returns on average
equity between _____% and _____% indicated, among other things, that based on
the announced transaction value: (i) the mean and median multiples of
transaction value to respective last twelve months' earnings were _____x and
_____x, respectively, compared to an implied valuation of _____x Holland
Bancorp's 1999 earnings; (ii) the mean and median ratios of transaction value to
tangible book value were _____% and _____%, respectively, compared to an implied
valuation of _____% of Holland Bancorp's tangible book value as of December 31,
1999.
The analysis of Midwest transactions indicated, among other things,
that based on the announced transaction value: (i) the mean and median multiples
of transaction value to respective last twelve months' earnings were _____x and
_____x, respectively, compared to an implied valuation of _____x Holland
Bancorp's 1999 earnings; (ii) the mean and median ratios of transaction value to
tangible book value were _____% and _____%, respectively, compared to an implied
valuation of _____% of Holland Bancorp's tangible book value as of December 31,
1999.
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The analysis of Midwest transactions for banks with assets between $50
and $100 million indicated, among other things, that based on the announced
transaction value: (i) the mean and median multiples of transaction value to
respective last twelve months' earnings were _____x and _____x, respectively,
compared to an implied valuation of _____x Holland Bancorp's 1999 earnings; (ii)
the mean and median ratios of transaction value to tangible book value were
_____% and _____%, respectively, compared to an implied valuation of _____% of
Holland Bancorp's tangible book value as of December 31, 1999.
Olive also reviewed pending or closed Indiana transactions occurring
from January 1, 1999 to the present. Public information was accumulated for five
pending or closed transactions involving banks. Olive determined that the five
transactions were not a representative or comparable group of transactions, and,
therefore, were not used in this analysis.
Adjusted Net Asset Value Analysis: Olive reviewed Holland Bancorp's
balance sheet data to determine the amount of material adjustments required to
the stockholder's equity of Holland Bancorp based on differences between the
market value of Holland Bancorp's assets and their value reflected on Holland
Bancorp's financial statements. Olive determined that one adjustment was
warranted. Olive reflected a value of the noninterest bearing deposits of
approximately $_____. The adjusted net asset value was determined to be $_____
per share of Holland Bancorp 's common stock.
Discounted Earnings Analysis: A dividend discount analysis was
performed by Olive pursuant to which a range of stand-alone values of Holland
Bancorp was determined by adding (i) the present value of estimated future
dividend streams that Holland Bancorp could generate over a five-year period
beginning in 2000 and ending in 2004, and (ii) the present value of the
"terminal value" of Holland Bancorp's common equity at the end of 2004. The
"terminal value" of Holland Bancorp's common equity at the end of the five-year
period was determined by applying a multiple of _____x the projected terminal
year's book value. The median price paid as a multiple of book value for all US
bank transactions for banks with assets between $50 and $100 million since
January 1, 1999 was _____x.
Dividend streams and terminal values were discounted to present values
using a discount rate of 10.00%. The rate reflects assumptions regarding the
required rate of return of holders or buyers of Holland Bancorp's common stock.
The value of Holland Bancorp, determined by adding the present values of the
total cash flows, was $_____ per share of Holland Bancorp Common Stock. In
addition, using the five-year projection as a base, a twenty-year projection was
prepared assuming an annual growth rate of 5.00%, return on assets of 1.00% for
years one through five, and return on assets of 1.05% for years six through
twenty. Dividends also were assumed to be 40% of income for all years. This
long-term projection resulted in a value of $_____ per share of Holland Bancorp
Common Stock.
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Specific Acquisition Analysis: Olive valued Holland Bancorp based on an
acquisition analysis assuming a "break-even" earnings scenario to an acquirer as
to price, current interest rates, and amortization of the premium paid. Based on
this analysis, an acquiring institution would pay $_____ per share of Holland
Bancorp Common Stock, assuming they were willing to accept no impact to their
net income in the initial year. This analysis was based on a funding cost of
10.00% adjusted for taxes, amortization of the acquisition premium over 15 years
and earnings for 1999 of $_____.
Pro Forma Merger Analysis: Olive compared the historical and pro forma
financial data of Holland Bancorp to that of German American. This included,
among other things, a comparison of profitability, asset quality and capital
adequacy measures. In addition, the contribution of each of Holland Bancorp and
German American to the income statement and balance sheet of the pro forma
combined company was analyzed.
The Opinion is directed only to the question of whether the
consideration to be received by Holland Bancorp's shareholders under the merger
agreement is fair and equitable from a financial perspective and does not
constitute a recommendation to any Holland Bancorp shareholder to vote in favor
of the Holland Bancorp merger. German American and Holland Bancorp imposed no
limitations on Olive regarding the scope of its investigation or otherwise.
Based on the results of the various analyses described above, Olive
concluded that the consideration to be received by Holland Bancorp shareholders
under the merger agreement (the amount of which was determined on the basis of
arms-length negotiation between German American and Holland Bancorp) is fair and
equitable from a financial perspective to the shareholders of Holland Bancorp.
Olive will receive a fee of $19,000 plus reimbursement for all
reasonable out-of-pocket expenses from Holland Bancorp for its services. In
addition, Holland Bancorp has agreed to indemnify Olive and its directors,
officers and employees from liability in connection with the merger, and to hold
Olive harmless from any losses, actions, claims, damages, expenses or
liabilities related to any of Olive's acts or decisions made in good faith and
in the best interest of Holland Bancorp.
THE FULL TEXT OF THE OPINION OF OLIVE CORPORATE FINANCE, LLC, WHICH IS
ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT, SETS FORTH CERTAIN ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY OLIVE
CORPORATE FINANCE, LLC, AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY OF THE
OPINION OF OLIVE CORPORATE FINANCE, LLC, SET FORTH IN THIS PROXY STATEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPINION. OLIVE CORPORATE FINANCE,
LLC'S OPINION SHOULD NOT BE CONSTRUED BY HOLDERS OF HOLLAND BANCORP SHARES AS A
RECOMMENDATION AS TO HOW SUCH HOLDERS SHOULD VOTE AT THE SPECIAL MEETING.
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CONVERSION OF HOLLAND BANCORP COMMON STOCK
Under the terms of the merger agreement, upon completion of the merger,
shareholders of Holland Bancorp will be entitled to receive 3.5 shares of German
American common stock for each share of Holland Bancorp common stock, subject to
further adjustment, if any, for additional stock dividends or for stock splits
or any similar recapitalization of German American that might occur prior to the
completion of the mergers.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Immediately after the effective time of the mergers, German American
will mail a letter of transmittal to Holland Bancorp shareholders. This
transmittal letter will contain instructions with respect to the surrender of
certificates representing shares of Holland Bancorp common stock. YOU SHOULD NOT
RETURN YOUR HOLLAND BANCORP STOCK CERTIFICATES WITH THE ENCLOSED PROXY AND
SHOULD NOT FORWARD THEM UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL FROM GERMAN
AMERICAN'S EXCHANGE AGENT. If you hold your shares of Holland Bancorp common
stock in "street name" through a bank or broker, your bank or broker is
responsible for ensuring that the certificate or certificates representing your
shares are properly surrendered and that the appropriate number of German
American shares are credited to your account.
If your certificate for your shares of Holland Bancorp common stock has
been lost, stolen or destroyed, German American's exchange agent will issue the
German American common stock and pay cash for any fractional shares after the
exchange agent receives from you an agreement to indemnify German American
against loss from such lost, stolen or destroyed certificate, a surety bond, and
appropriate evidence of the loss, theft or destruction, such as an affidavit.
After the effective time of the mergers, stock certificates previously
representing Holland Bancorp common stock will represent German American common
stock. However, following the effective time of the mergers and prior to the
surrender by holders of Holland Bancorp of their stock certificates to German
American's exchange agent in exchange for German American common stock, the
holders will not be entitled to receive payment of dividends or other
distributions declared on shares of German American common stock. Upon the
subsequent exchange of such certificates, however, German American will pay,
without interest, any accumulated dividends or other distributions previously
declared and withheld on the shares of German American common stock. After the
effective time of the mergers, there will be no transfers on the stock transfer
books of Holland Bancorp of shares of Holland Bancorp issued and outstanding
immediately prior to the effective time. If, after the effective time of the
mergers, you present certificates representing shares of Holland Bancorp common
stock for registration or transfer, the certificates will be canceled and
exchanged for shares of German American common stock.
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No fractional shares of German American common stock will be issued to
shareholders of Holland Bancorp in connection with the mergers. Each shareholder
of Holland Bancorp who otherwise would be entitled to a fractional interest in a
share of German American common stock as a result of the exchange ratio will be
paid a cash amount equal to the fractional interest multiplied by the average of
the per share highest closing bid prices and lowest closing asking prices of
German American common stock as reported on the Nasdaq National Market System
for the ten trading days ending on the second business day immediately before
the effective time of the mergers.
German American will instruct its exchange agent to distribute stock
certificates representing shares of common stock and to pay any cash payment for
fractional shares (without interest) to each former shareholder of Holland
Bancorp as soon as practical following the shareholder's delivery to German
American's exchange agent of the certificate(s) representing the shareholder's
shares of Holland Bancorp common stock.
RESALE OF GERMAN AMERICAN COMMON STOCK BY AFFILIATES OF HOLLAND BANCORP
Shares of German American common stock to be issued to Holland Bancorp
shareholders in the merger have been registered under the Securities Act of
1933, as amended. These shares may be traded freely and without restriction by
those shareholders not considered to be affiliates (as defined below) of Holland
Bancorp. However, shares held by any person who is an affiliate of Holland
Bancorp at the time the mergers are submitted for a vote at the special meeting
will not, under existing law, be permitted to sell or transfer those shares
without:
- the further registration under the Securities Act of the shares of
German American common stock to be transferred;
- compliance with Rule 145 promulgated under the Securities Act, which
permits limited sales in certain circumstances; or
- the availability of another exemption from registration.
An "affiliate" of Holland Bancorp is a person who directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, Holland Bancorp. These restrictions are expected to
apply to the directors and executive officers of Holland Bancorp and any holders
of 10% or more of the Holland Bancorp common stock. The same restrictions apply
to certain relatives or the spouses of those persons and any trusts, estates,
corporations or other entities in which those persons have a 10% or greater
beneficial or equity interest. German American will give stop transfer
instructions to the transfer agent with respect to the shares of Holland Bancorp
common stock to be received by persons subject to these restrictions, and the
certificates for their shares may contain a legend indicating the resale
restrictions.
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Each affiliate of Holland Bancorp has agreed to deliver to German
American a written agreement to the effect that the affiliate (1) will not sell,
exchange, pledge, transfer, or otherwise dispose of the shares of German
American common stock to be received by such person pursuant to the merger
agreement, unless such shares of German American common stock are made in a
manner and to the extent permitted by Rule 145 under the Securities Act of 1933
or are made pursuant to an effective registration statement under, or an
exemption from the registration requirements of, the Securities Act of 1933; and
(2) will not sell, exchange, pledge, transfer, or otherwise dispose of (or
otherwise reduce the affiliate's risk in) any shares of Holland Bancorp or
German American common stock prior to the date on which German American reports
its earnings for a period of not less than 30 days of combined operations of
German American and Holland Bancorp following the effective time of the merger.
This is only a general statement of certain restrictions regarding the
sale or transfer of the shares of German American common stock to be issued in
the merger. Therefore, those shareholders of Holland Bancorp who may be deemed
to be affiliates of Holland Bancorp should consult with their legal counsel
regarding the resale restrictions that may apply to them.
CONDITIONS TO THE COMPLETION OF THE MERGERS
Holland Bancorp's and German American's obligations to complete the
mergers are subject to the satisfaction of the certain conditions at or prior to
the effective time of the mergers, including the following:
- The merger agreement has been adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of Holland Bancorp
common stock;
- German American and Holland Bancorp have received all regulatory
approvals required for the mergers;
- German American and Holland Bancorp have each received an opinion of
German American's counsel dated as of the effective time of the merger, to
the effect that, in counsel's opinion, the mergers will be treated as
tax-free for U.S. federal income tax purposes to each party to the merger
agreement and to the shareholders of Holland, except for cash paid in lieu
of fractional shares or in satisfaction of appraisal rights;
- German American has received a letter, dated as of the closing date,
from its independent public accountants to the effect that, in their
opinion, the merger qualifies for "pooling of interests" accounting
treatment;
- The registration statement of which this document is a part is
effective and no stop order suspending its effectiveness is issued or
threatened;
- German American and Holland Bancorp have received certain officers'
certificates and other closing documents;
- The representations and warranties contained in the merger agreement
are accurate at the effective time of the mergers; and
- Certain covenants set forth in the merger agreement have been
fulfilled.
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The conditions to consummation of the mergers, which are more fully
enumerated in the merger agreement, are requirements subject to waiver by the
party entitled to the benefit of such conditions, as set forth in the merger
agreement. See "Proposed Mergers -- Resale of German American Common Stock by
Affiliates of Holland Bancorp," "-- Regulatory Approvals Required for the
Merger", "Federal Income Tax Consequences" and Appendix A.
TERMINATION FEE
Holland Bancorp and Holland Bank have agreed to pay German American a
termination fee in the amount of $300,000 (and to reimburse German American for
up to $100,000 of its costs and expenses related to the mergers) if Holland
should accept another business combination proposal within 12 months of a
termination under the merger agreement for the failure of Holland Bancorp to
have obtained majority approval of Holland Bancorp's shareholders of the merger.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated by German American or Holland
Bancorp, before or after the shareholders of Holland Bancorp have adopted the
merger agreement as follows:
- by the mutual consent of the Boards of Directors of German American
and Holland Bancorp;
- by either German American or Holland Bancorp if the mergers have not
been completed by December 31, 2000;
- by either German American or Holland Bancorp in the event of a
material breach by the other party of any of its representations and
warranties or covenants under the merger agreement which is not cured
within 30 days after notice to cure such breach is given by the
non-breaching party;
- by either German American or Holland Bancorp if the approval of the
Federal Deposit Insurance Corporation or other required governmental
approval is not received, or if legal action to enjoin the merger is taken
by a court or governmental agency;
- by German American if environmental inspection reports on real
property owned or leased by Holland Bank provided to German American by
Holland pursuant to the merger agreement disclose any environmental issues,
the estimated remedial and corrective costs of which exceed $150,000 , as
reasonably estimated by an environmental consultant retained for such
purpose by German American and reasonably acceptable to Holland Bancorp;
- by German American in the event that any bank regulatory agency
takes action against Holland Bancorp or Holland Bank seeking to enforce
banking laws or regulations;
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- by either German American or Holland Bancorp, if the conditions to
its obligations set forth in the merger agreement are not satisfied or
waived on or prior to the Closing Date; and
- by either German American or Holland Bancorp, if the merger
agreement and the consummation of the mergers are not approved by the
affirmative vote of the holders of at least a majority of the outstanding
shares of Holland Bancorp common stock entitled to vote at the shareholders
meeting.
Upon termination for any of these reasons, the merger agreement will be
of no further force or effect.
RESTRICTIONS AFFECTING HOLLAND BANCORP
The merger agreement requires that Holland Bancorp and Holland Bank
continue to operate their businesses in the ordinary course and contains a
number of restrictions regarding the conduct of business of Holland Bancorp and
its subsidiary bank until the mergers are completed. Among other items, Holland
Bancorp or any subsidiary of Holland Bancorp may not, without the prior written
consent of German American:
- issue any additional capital stock or change its capitalization
other than shares issued pursuant to the exercise of outstanding stock
options;
-solicit proposals for or otherwise seek a merger or business
combination or sale of Holland Bancorp or its subsidiaries to any person or
entity other than German American;
- amend its Articles of Incorporation or Bylaws;
- make or agree to make or pay any general or unusual increases in
compensation or employee benefits to any of its directors, employees or
agents; or
- pay any dividends with respect to its capital stock other than a
cash dividend to Holland Bancorp shareholders not exceeding $.40 per
Holland Bancorp share (which dividend was in fact declared by the Holland
Bancorp Board of Directors on June 13, 2000 and paid on or about June 30,
2000).
This discussion of the restrictions imposed by the merger agreement is not
intended to be exhaustive. Please refer to Article V of the merger agreement,
attached as Appendix A, for a complete listing of the restrictions.
REGULATORY APPROVALS REQUIRED FOR THE MERGERS
German American and Holland Bancorp have agreed to use their best
efforts to obtain all regulatory approvals required to complete the transactions
contemplated in the merger agreement. The bank merger requires the prior
approval of the Federal Deposit Insurance Corporation (the "FDIC") and the
Indiana Department of Financial Institutions (the "IDFI"). GAB and Holland Bank
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have filed the required applications with the FDIC and the IDFI for approval of
the bank merger. Approval of the bank merger by the FDIC and IDFI is not to be
interpreted as the opinion of either of those agencies that the bank merger is
favorable to the shareholders of Holland Bancorp from a financial point of view
or that they have considered the adequacy of the terms of the bank merger. An
approval by the FDIC or IDFI in no way constitutes an endorsement or a
recommendation of the bank merger by the either of those agencies. Assuming the
FDIC and the IDFI approve the bank merger, GAB and Holland Bank may not complete
the bank merger until 30 days after the FDIC approval, unless the Department of
Justice waives the 30-day requirement, in which event only 15 days must elapse
between FDIC approval and completion of the bank merger.
Pursuant to the Bank Merger Act, the Department of Justice has the
authority to review the bank merger. Accordingly, during the 30-day period
following FDIC approval, the Department of Justice may challenge the bank merger
with respect to the competitive factors of the bank merger under federal
antitrust laws. The commencement of an antitrust action by the Department of
Justice would stay the effectiveness of FDIC approval of the bank merger, unless
a court specifically orders otherwise.
German American and Holland Bancorp believe that the proposed mergers
are not subject to the prior approval of the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act of 1956, as amended.
ACCOUNTING TREATMENT FOR THE MERGERS
The acquisition of Holland Bancorp by German American will be accounted
for by using the "pooling of interests" method for accounting and financial
reporting purposes. German American is not obligated to complete the merger with
Holland Bancorp unless it has received on or before the closing date a letter
from its independent accountants to the effect that, in their opinion, the
merger will qualify as a pooling of interests transaction under generally
accepted accounting principles.
EFFECTIVE TIME
The holding company merger will become effective immediately preceding
the bank merger and at the close of business on the day and at the time
specified in the Articles of Merger of Holland Bancorp with and into German
American as filed with the Indiana Secretary of State and the Delaware Secretary
of State. The bank merger will become effective on the date and at the time
specified in the Articles of Merger of Holland Bank into GAB which will be filed
with the IDFI and the Indiana Secretary of State. The effective time of the
mergers will occur on the first business day of the month following the month
during which (a) all conditions precedent to the mergers set forth in the merger
agreement have been fulfilled or waived, and (b) all waiting periods in
connection with the bank regulatory applications filed for approval of the
mergers have expired, unless, in each case, otherwise mutually agreed to by
German American and Holland Bancorp.
German American and Holland Bancorp currently anticipate that mergers
will be consummated in early October, 2000. However, completion of the mergers
could be delayed if there is a delay in obtaining the required regulatory
approvals or in satisfying other conditions to the mergers.
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<PAGE>
MANAGEMENT AFTER THE MERGERS
German American will be the surviving corporation in the holding
company merger and, upon consummation of such merger, the separate corporate
existence of Holland Bancorp will cease. Consequently, the directors and
officers of Holland Bancorp will no longer serve in such capacities after the
effective time of the holding company merger.
GAB will be the surviving institution in the bank merger and, upon
consummation of such merger, the separate corporate existence of Holland Bank
will cease. Consequently, the directors and officers of Holland Bank will no
longer serve in such capacities after the effective time of the bank merger.
Section 5.09 of the merger agreement confirms that GAB will continue to
provide employment on an at-will basis for the former at-will employees of
Holland Bank after consummation of the Bank Merger. In addition, Holland Bank
has entered into amended employment agreements with the three officers of
Holland Bank with whom Holland Bank has employment agreements in order to
continue those agreements following the bank merger until December 31, 2002.
The merger agreement provides for the appointment of Holland Bank's
Chairman, Jerome W. Blesch, to GAB's Board of Directors at the effective time of
the mergers, and for the other members of the Board of Directors of Holland Bank
to continue to meet and advise GAB's management for a period of at least two
years after the mergers concerning issues of significance to the communities
served by the former Holland Bank offices.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
Certain individuals associated with Holland Bancorp or Holland Bank may
be deemed to have certain interests in the mergers in addition to their
interests generally as shareholders of Holland Bancorp.
Interests of Members of the Board of Directors of Holland Bancorp.
Members of the Board of Directors of Holland Bancorp (who are the same persons
who serve as the Board of Directors of Holland Bank) will continue to meet
periodically to advise GAB concerning matters relating to the operations of the
former branches of Holland Bank for two years following the merger, for
compensation equivalent to that currently received by them from Holland Bank.
Holland Bank's Director Deferred Compensation Plan will be continued for Holland
Bancorp's former directors during this two year period. Except for Mr. Blesch,
who will become a director of GAB as a result of the bank merger, none of the
directors of Holland Bancorp will become members of the Board of Directors of
GAB.
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<PAGE>
Interests of Certain Executive Officers. Three executive officers of
Holland Bank are parties to employment agreements with Holland Bank, which were
entered into in 1998 prior to the commencement of negotiations with German
American concerning the merger. Holland Bank has entered into amended employment
agreements specifying the terms under which their employment will be continued
by GAB following the merger, which agreements do not materially increase the
benefits payable to these executives from the benefits to which each of them are
already entitled under their prior agreements with Holland Bank. In addition,
German American has agreed that Holland Bancorp may make loans on commercially
reasonable terms to officers of Holland Bank who hold stock options with respect
to Holland Bancorp common stock in order to permit them to exercise these
options prior to the merger and thereby receive German American common stock
with respect to those option shares.
Indemnification; directors' and officers' liability insurance. The
merger agreement provides that for a period of six years after the effective
time of the merger, German American will indemnify, defend and hold harmless the
present directors, officers and employees of Holland Bancorp and its
subsidiaries against all losses arising out of any claim that relates to any act
or omission occurring at or prior to the effective time of the merger in the
person's capacity as a director, officer or employee, to the fullest extent
Holland Bancorp is now entitled to indemnify and advance expenses to such
persons under its certificate of incorporation and bylaws. The merger agreement
also provides that German American will maintain in effect for at least two
years from the effective time of the merger the directors' and officers'
liability insurance policies carried by Holland Bancorp or substitute policies
providing similar coverage.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax
consequences to holders of Holland Bancorp common stock who hold such stock as a
"capital asset" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). Special tax consequences may apply to
particular classes of taxpayers, such as financial institutions, insurance
companies, tax-exempt organizations, broker-dealers, certain traders in
securities, persons that hold Holland Bancorp common stock as part of a hedge,
straddle or conversion transaction, persons who are not citizens or residents of
the United States and persons who acquired their shares through the exercise of
an employee stock option or who otherwise received such shares as compensation.
This discussion represents general information only and is based on the Code,
its legislative history, existing and proposed Treasury Regulations, and
administrative pronouncements as each is in effect as of the date hereof.
Subsequent changes to any of these materials may affect the tax consequences
described below. Tax considerations under state, local and foreign laws are not
addressed in this document.
TAX OPINION
German American and Holland Bancorp have each requested the law firm of
Ice Miller Donadio & Ryan, counsel to German American, to render an opinion on
the closing date that each merger to be effected pursuant to the merger
agreement constitutes a tax-free reorganization under the Code to each party
thereto and to the shareholders of Holland Bancorp, except with respect to cash
received by Holland Bancorp shareholders for fractional share interests of
German American common stock and shareholders of Holland Bancorp who elect to
exercise their appraisal rights under Delaware law.
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In rendering its opinion, Ice Miller Donadio & Ryan may require and
rely upon representations contained in letters received from German American and
Holland Bancorp, and may rely on customary assumptions of certain facts. Under
the merger agreement, the obligations of German American and of Holland Bancorp
to consummate the merger are conditioned upon the receipt of an opinion by Ice
Miller Donadio & Ryan substantially to the effect as set forth above. However,
such a legal opinion will not bind the Internal Revenue Service, which may
challenge the conclusions set forth in the tax opinion and as set forth herein.
TAX CONSEQUENCES TO GERMAN AMERICAN, HOLLAND BANCORP, GAB AND HOLLAND BANK
Provided that the merger of Holland Bancorp into German American and
the merger of Holland Bank into GAB are consummated as described in the merger
agreement and each merger constitutes a statutory merger under Indiana law, each
merger should constitute a tax-free reorganization for federal income tax
purposes. As a result, each such party to the merger agreement should not be
required to recognize gain or loss with respect to appreciation of the
transferred assets.
TAX CONSEQUENCES TO HOLLAND BANCORP SHAREHOLDERS
A Holland Bancorp shareholder who receives solely German American stock
(including rights to acquire German American Series A Preferred stock) in
exchange for shares of Holland Bancorp common stock should not be required to
recognize gain or loss upon such exchange for federal income tax purposes.
A Holland Bancorp shareholder who receives cash for a fractional share
interest of German American common stock will be treated for federal income tax
purposes as if the shareholder first received a fractional share of German
American common stock and then as if the shareholder received cash in redemption
of the shareholder's fractional interest in Holland Bancorp under Code Section
302. The deemed redemption will be treated as a sale of the fractional share,
unless it is both "essentially equivalent to a dividend" and is not
"substantially disproportionate" with respect to the redeeming shareholder. If
the deemed redemption is treated as a sale, the redeeming shareholder generally
will recognize capital gain or capital loss equal to the difference between the
amount of cash received and the portion of the basis of the shares of Holland
Bancorp common stock allocable to the fractional interest, which will be treated
as long term capital gain or long term capital loss if, as of the date of the
merger, the holding period during which the shareholder is deemed to have held
the Holland Bancorp common stock is greater than one year. If the deemed
redemption is treated as a dividend, the amount received generally will be
includible in the redeeming shareholder's gross income as ordinary income.
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<PAGE>
A Holland Bancorp shareholder who receives cash in exchange for Holland
Bancorp common stock pursuant to appraisal rights under Delaware law and as
described in the merger agreement will be treated as having received cash in
redemption of the shareholder's interest in Holland Bancorp, in which case the
redemption generally will be treated as a sale of the shareholder's stock
subject to the provisions of Code Section 302(b) and the analysis set forth in
the prior paragraph.
The aggregate adjusted tax basis of the shares of German American
common stock received in the exchange (excluding fractional shares deemed
received and redeemed as described herein) by the Holland Bancorp shareholders
generally will be equal to the aggregate adjusted tax basis of the shares of
Holland Bancorp common stock surrendered. The holding period of the German
American common stock received generally will include the holding period of such
surrendered shares.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of cash to a person surrendering shares of Holland Bancorp
common stock may be subject to information reporting and "backup" withholding at
a rate of 31% of the amount of cash to be paid unless the shareholder furnishes
its taxpayer identification number in the manner prescribed in applicable
Treasury regulations, certifies that the number is correct, certifies as to no
loss of exemption from backup withholding and meets certain other conditions.
Amounts withheld from payments under the backup withholding rules will be
allowed as a refund or credit against federal income tax liability, provided the
required information is furnished to the Internal Revenue Service.
The discussion set forth above is intended for general information
only. The Internal Revenue Service has not confirmed the federal income tax
consequences presented above. Shareholders of both German American and Holland
Bancorp are urged to consult their personal tax advisors with respect to all tax
consequences of the mergers including the effect of federal, state, local and
foreign tax laws and any other tax consequences as a result of the mergers.
37
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HOLLAND BANCORP COMMON STOCK TRADING AND DIVIDEND DATA
Shares of Holland Bancorp common stock are not traded on any
established securities market and transactions in the shares are infrequent.
Based on the limited information that is available to Holland Bancorp's
management, there were two sales transactions in Holland Bancorp's shares in
1998 involving an aggregate of 250 shares (restated to reflect the 3-for-1 split
of 7/31/98) at a weighted average price of $25.90 per share; no sales
transactions in the shares during 1999; and one sales transaction in 2000
(involving 200 shares at a price of $45.00 per share) that occurred on April 11,
2000 (after the date of the first public announcement of the proposed mergers on
March 24, 2000).
The following table sets forth the per share cash dividends paid on
shares of Holland Bancorp common stock since January 1, 1997. All dividends have
been retroactively adjusted to give effect to stock dividends and stock splits.
1997
First Quarter.................................... None
Second Quarter................................... $.333
Third Quarter.................................... None
Fourth Quarter................................... $.333
1998
First Quarter.................................... None
Second Quarter................................... $.367
Third Quarter.................................... None
Fourth Quarter................................... $.40
1999
First Quarter.................................... None
Second Quarter................................... $.40
Third Quarter.................................... None
Fourth Quarter................................... $.40
2000
First Quarter.................................... None
Second Quarter................................... $.40
Third Quarter (through _____, 2000).............. None
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<PAGE>
DESCRIPTION OF GERMAN AMERICAN
GENERAL
German American is a multi-bank holding company based in Jasper,
Indiana. The Company's Common Stock is traded on the Nasdaq National Market
System under the symbol GABC. German American operates five affiliate community
banks with 25 banking offices and 5 full-service insurance offices in the eight
contiguous Southwestern Indiana counties of Daviess, Dubois, Gibson, Knox,
Martin, Perry, Pike and Spencer. The banks' wide range of personal and corporate
financial services include making commercial and consumer loans; marketing,
originating, and servicing mortgage loans; providing trust, investment advisory
and brokerage services; accepting deposits and providing safe deposit
facilities. German American's insurance activities include issuing a full range
of property, casualty, life and credit insurance products.
As of March 31, 2000, German American had consolidated assets of
approximately $1 billion, consolidated deposits of approximately $700 million
and stockholders' equity of approximately $88 million.
German American's principal office is located at 711 Main Street,
Jasper, Indiana 47546. Its telephone number is (812) 482-1314.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Detailed information relating to the business, management, executive
and director compensation, voting securities including the principal holders of
those securities, certain relationships and related transactions and other
matters relating to German American is incorporated by reference from or set
forth in German American's Annual Report on Form 10-K for the year ended
December 31, 1999, its Quarterly Report on Form 10-Q for the quarter ended March
31, 2000, and other documents filed by German American and listed under "Where
You Can Find More Information" in this document, which are specifically
incorporated herein by reference. If you desire copies of any of these
documents, you may contact German American at its address or telephone number
indicated under "Where You Can Find More Information."
DESCRIPTION OF HOLLAND BANCORP
BUSINESS
Holland Bancorp is a one-bank holding company located in Holland,
Indiana. Holland Bancorp provides banking services through its subsidiary bank,
Holland Bank, which operates four banking offices in southern Dubois County,
Indiana. As of March 31, 2000, Holland Bancorp had consolidated assets of
approximately $61 million, consolidated deposits of approximately $49 million
and stockholders' equity of approximately $6 million.
Holland Bancorp's principal office is located at 405 Meridian Street,
Box 8, Holland, Indiana 47541. Its telephone number is (812) 536-3131.
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<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF HOLLAND
BANCORP
The following table sets forth the number of shares and percentage of
Holland Bancorp Common Stock beneficially owned at June 30, 2000 by each person
known to be the beneficial owner of more than five percent of the outstanding
Holland Bancorp Common Stock, each Director of Holland Bancorp, and all
Directors and executive officers of Holland Bancorp as a group. Except for the
Ervin Caldmeyer Trust and its related parties, there are no beneficial owners of
more than five percent of the outstanding Holland Bancorp Common Stock who are
not also Directors or officers or related to a Director or officer.
<TABLE>
<CAPTION>
NAME SHARES Percentage(1)
---- ------ ----------
<S> <C> <C>
Jerome and Elizabeth Blesch and 24,425 9.10%
related trust
Ervin Caldemeyer Trust and related 18,714 6.97%
parties
Marlin and Linda Gray 18,021 6.91%
Lynn Kahle 4,338 1.60%
Ray Lindsey 6,543 2.42%
Alan Nass 3,345 1.24%
Lloyd Prusz 8,679 3.21%
Philip Schneider 300 0.11%
James Siebert 100 0.04%
Gene Thewes 3,769(3) 1.40%
Henrietta Hemmer Trust 910(4) 0.34%
Dale Altstadt 968(5) 0.36%
All directors and executive 71,398 26.37%
officers as a group
<FN>
(1) Percentages assume the exercise of all options to acquire 2,250 shares
to Holland Bancorp common stock prior to the merger, and are therefore
calculated on a base of 270,794 shares (pro forma for such exercise)
(2) Includes 13,332 shares owned by the Ervin Caldemeyer Trust and 2,691
shares owned by each of Mark Caldemeyer and Judith Satkamp, its
co-trustees.
(3) Includes 750 unissued shares that Mr. Thewes has the right to acquire
from Holland Bancorp under stock options.
(4) Includes 800 shares held by a trust and 100 unissued shares that Ms.
Hemmer has the right to acquire from Holland Bancorp under stock
options.
(5) Includes 500 unissued shares that Ms. Altstadt has the right to
acquire from Holland Bancorp under stock options.
</FN>
</TABLE>
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<PAGE>
COMPARISON OF COMMON STOCK
Following the mergers, the rights of former Holland Bancorp
shareholders will be governed by the laws of the State of Indiana, the state in
which German American is incorporated, and by German American's Articles of
Incorporation, as amended, and German American's By-Laws, as amended. The rights
of the shareholders of Holland Bancorp are presently governed by the laws of the
State of Delaware, the state in which Holland Bancorp is incorporated, and by
Holland Bancorp's Certificate of Incorporation and By-Laws, as amended. The
rights of the shareholders of Holland Bancorp differ in certain respects from
the rights they will have as German American shareholders, including
anti-takeover measures and the vote required for the amendment of significant
provisions of the Articles of Incorporation and for the approval of significant
corporate transactions. The following summary comparison of German American
common stock and Holland Bancorp common stock highlights certain material
differences in the rights accruing to holders of such shares and is qualified in
its entirety by reference to German American's Articles of Incorporation and
By-Laws and Holland Bancorp's Certificate of Incorporation and By-Laws.
AUTHORIZED BUT UNISSUED SHARES
- GERMAN AMERICAN
German American's Articles of Incorporation authorize the issuance of
20,000,000 shares of German American Common Stock, of which approximately
9,029,109 shares were outstanding as of May 10, 2000. The remaining authorized
but unissued shares of common stock may be issued upon authorization of the
Board of Directors of German American without prior shareholder approval.
German American has 500,000 shares of preferred stock authorized. No
shares of preferred stock are presently outstanding. These shares are available
to be issued, without prior shareholder approval, in classes with relative
rights, privileges and preferences determined for each class by the Board of
Directors of German American. Of these 500,000 shares, the Board of Directors of
German American has created a series designated as Series A preferred stock
consisting of 400,000 shares of Series A preferred stock in connection with the
shareholder rights plan of German American. The German American Series A
preferred stock may not be issued except upon exercise of certain rights
pursuant to such shareholder rights plan. No shares of Series A preferred stock
have been issued as of the date of this Proxy Statement. See "Comparison of
Common Stock -- Anti-Takeover Provisions -- German American's Series A Preferred
Stock and Shareholder Rights Plan" below.
The issuance of additional shares of German American common stock or,
depending on its terms (such as convertibility to common stock), the issuance of
German American preferred stock may adversely affect holders of German American
common stock by diluting their voting and ownership interests.
- HOLLAND BANCORP
Holland Bancorp's Certificate of Incorporation authorizes the issuance
of up to 500,000 shares of Holland common stock, of which 268,544 shares were
issued and outstanding as of June 30, 2000. Holland Bancorp is generally
authorized to issue additional shares of common stock up to the amounts
authorized under its Certificate of Incorporation without shareholder approval.
Following the merger, each outstanding share of Holland Bancorp common stock
will convert into shares of German American common stock as described in
"Proposed Mergers -- Conversion of Holland Common Stock."
PREEMPTIVE RIGHTS
As permitted by Indiana law, German American's Articles of
Incorporation do not provide for preemptive rights to subscribe for any new or
additional German American common stock or other securities. Preemptive rights
may be granted to German American's shareholders if German American's Articles
of Incorporation are amended to permit such rights. As permitted by Delaware
law, Holland Bancorp's Certificate of Incorporation does provide for preemptive
rights to subscribe for new or additional shares of Holland Bancorp common stock
or other securities, subject to certain exceptions.
DIVIDEND RIGHTS
The holders of common stock of German American and Holland Bancorp are
entitled to dividends and other distributions when, as and if declared by their
respective Boards of Directors out of funds legally available therefor. Under
Indiana law, German American may not pay a dividend if, after giving effect to
the dividend, (1) German American would not be able to pay its debts as they
become due in the usual course of business, or (2) German American's total
assets would be less than the sum of its total liabilities plus, unless German
American's Articles of Incorporation permitted otherwise, the amount that would
be needed to satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those receiving the dividend if German
American were to be dissolved at the time of the dividend. Under Delaware law,
Holland Bancorp may pay dividends either (1) out of its surplus (i.e., capital
in excess of par value) or (2) if there is no surplus, out of the corporation's
net profit for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.
The amount of dividends, if any, that may be declared by German
American in the future will necessarily depend upon many factors, including,
without limitation, future earnings, capital requirements, business conditions
and capital levels of subsidiaries (since German American is primarily dependent
upon dividends paid by its subsidiaries for its revenues), the discretion of
German American's Board of Directors and other factors that may be appropriate
in determining dividend policies.
Cash dividends paid to German American by its affiliate banks are
limited by the laws under which they are chartered and regulated. Affiliate
banks will ordinarily be restricted to a lesser amount than is legally
permissible because of the need for the banks to maintain adequate capital
consistent with the capital adequacy guidelines promulgated by the banks'
principal federal regulatory authorities. If a bank's capital levels are deemed
inadequate by the regulatory authorities, payment of dividends to its parent
holding company may be prohibited without prior regulatory approval. None of
German American's affiliate banks are currently subject to such a restriction.
Cash dividends paid to Holland Bancorp by Holland Bank, a national
banking association, are subject to the regulations of the Office of the
Comptroller of the Currency. The approval of the OCC is required prior to
Holland Bank's payment of a dividend if the total amount of dividends declared
by Holland Bank in the then-current calendar year exceeds the total of its net
income for that calendar year to date combined with its retained net income for
the preceding two years.
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VOTING RIGHTS
The holders of the outstanding shares of German American common stock
and Holland Bancorp common stock are entitled to one vote per share on all
matters presented for shareholder vote. Shareholders of German American and
Holland Bancorp do not have cumulative voting rights in the election of
directors.
German American's By-Laws provide that the holders of a majority of the
outstanding shares entitled to vote shall constitute a quorum at a meeting of
shareholders. German American's By-Laws further provide that unless a greater
vote is required under Indiana law, German American's Articles of Incorporation
or By-Laws, the affirmative vote of the holders of a majority of the voting
power present will decide any matter before the shareholders (except the
election of directors, which is determined by a plurality of the votes cast).
Holland Bancorp's By-Laws provide that the holders of at least one-third of the
shares entitled to vote at a meeting shall constitute a quorum. Holland
Bancorp's By-Laws further provide that except as otherwise required by law or
Holland Bancorp's Certificate of Incorporation or By-Laws, all matters other
than the election of directors (also determined by a plurality of the votes
cast) are determined by a majority of the votes cast at the meeting.
Indiana law and Delaware law generally require that mergers,
consolidations and sales, leases, exchanges or other dispositions of all or
substantially all of the assets of a corporation be approved by the affirmative
vote of a majority of the issued and outstanding shares entitled to vote at the
shareholders meeting, subject in each case to provisions in the corporation's
articles or certificate of incorporation requiring a higher percentage vote for
certain transactions. German American's Articles of Incorporation and Holland
Bancorp's Certificate of Incorporation provide that certain business
combinations may, under certain circumstances, require approval of more than a
simple majority of the issued and outstanding shares of common stock. See
"Comparison of Common Stock -- Anti-Takeover Provisions."
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<PAGE>
CHARTER AND BYLAW AMENDMENTS
Indiana law generally requires shareholder approval by a majority of a
quorum present at a shareholders' meeting (and, in certain cases, a majority of
all shares held by any voting group entitled to vote) for amendments to a
corporation's articles of incorporation. Delaware law generally requires
approval by the holders of a majority of the shares outstanding for amendments
to a corporation's certificate of incorporation. Both Indiana law and Delaware
law permit a corporation in its articles or certificate of incorporation to
prescribe a higher shareholder vote for certain amendments. German American's
Articles of Incorporation require a super-majority shareholder vote of 80% of
its outstanding shares of common stock for the amendment of certain significant
provisions.
German American's Articles of Incorporation and By-Laws provide that
the German American By-Laws may be amended only by the Board of Directors.
Holland Bancorp's Certificate of Incorporation provides that Holland Bancorp's
By-Laws may be amended by the Board of Directors or by the stockholders.
SPECIAL MEETINGS OF SHAREHOLDERS
German American's Articles of Incorporation provide that a special
meeting of shareholders may be called by the Board of Directors, the President
or the holders of at least one-fourth of the shares outstanding. Holland
Bancorp's By-Laws provide that special meetings of shareholders may be called by
the Board of Directors or by the President or the Secretary.
NUMBER OF DIRECTORS AND TERM OF OFFICE
German American's By-Laws provide that the number of directors shall be
set by the Board of Directors. Currently there are thirteen directors of German
American. The Bylaws of German American divide the Board of Directors of German
American into two equal (or as nearly equal as possible) classes of directors
serving staggered two-year terms. As a result, one half of the Board is elected
each year. Any vacancy is filled by a majority vote of the remaining directors
of such Board. Any director elected to fill a vacancy holds office for an
unexpired term of the class of which he is a member.
Holland Bancorp's Certificate of Incorporation provides that the number
of directors shall be determined from time to time by the Board of Directors.
Currently there are nine directors of Holland Bancorp. Holland Bancorp's Board
of Directors is divided into three classes with three directors in each class
and with directors elected for three-year staggered terms.
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<PAGE>
REMOVAL OF DIRECTORS
German American's By-Laws provide that any director or all directors of
German American may be removed, with or without cause, at a meeting of
shareholders upon the vote of the holders of at least 80% of the outstanding
shares entitled to vote in the election of directors. Under Delaware law,
directors of a classified board such as Holland Bancorp's, may be removed only
for cause.
APPRAISAL RIGHTS
Under Delaware law, appraisal rights may be available in connection
with a statutory merger or consolidation in certain specific situations.
Appraisal rights are not available when a corporation is to be the surviving
corporation and no vote of its stockholders is required to approve the merger or
consolidation. In addition, no appraisal rights are available to holders of
shares of any class of stock that is either: (i) listed on a national securities
exchange or on the Nasdaq National Market or (ii) held of record by more than
2,000 stockholders, unless such stockholders are required by the terms of the
merger or consolidation to accept anything other than:
o shares of the surviving corporation;
o shares of stock that are listed on a national securities exchange or
designated as a national market system security on the Nasdaq National
Market or held of record by more than 2,000 stockholders;
o cash in lieu of fractional shares; or
o any combination of the foregoing.
Stockholders do not have appraisal rights with respect to any transaction
involving the sale, lease or exchange of all or substantially all of the assets
of the corporation, but do have those rights in a merger. Stockholders who
perfect their appraisal rights are entitled to receive cash from the corporation
equal to the value of their shares as established by judicial appraisal.
Corporations may enlarge these statutory rights by including in their
certificate of incorporation a provision allowing the appraisal rights in any
merger or consolidation in which the corporation is a constituent corporation.
Holland Bancorp's certificate of incorporation does not enlarge these rights.
See Appendix B - Section 262 of the Delaware General Corporation Law.
Shareholders of Indiana corporations possess dissenters' rights in
connection with certain mergers and other significant corporate actions. Under
Indiana law, a shareholder is entitled to dissent from and obtain payment of the
fair value of the shareholder's shares in the event of (1) consummation of a
plan of merger, if shareholder approval is required and the shareholder is
entitled to vote on the plan, (2) consummation of a plan of share exchange by
which the shareholder's shares will be acquired, if the shareholder is entitled
to vote on the plan, (3) consummation of a sale or exchange of all, or
substantially all, the property of the corporation other than in the usual
course of business, if the shareholder is entitled to vote on the sale or
exchange, (4) approval of a "control share acquisition" under Indiana law
(discussed below under "Anti-takeover Provisions"), and (5) any corporate action
taken pursuant to a shareholder vote to the extent the articles of
incorporation, by-laws or a resolution of the board of directors provides that
voting or non-voting shareholders are entitled to dissent and obtain payment for
their shares.
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<PAGE>
The Indiana dissenters' rights provisions described above do not apply,
however, to the holders of shares of any class or series with respect to any
transaction described above if the shares of that class or series were
registered on a United States securities exchange registered under the Exchange
Act or traded on the Nasdaq National Market. As of the date of this Proxy
Statement-Prospectus, shares of German American common stock are traded on the
Nasdaq National Market System and, therefore, German American shareholders
presently are not entitled to assert dissenters' rights under Indiana law with
respect to any of the transactions discussed above.
LIQUIDATION RIGHTS
In the event of any liquidation or dissolution of German American, the
holders of shares of German American common stock are entitled to receive pro
rata with respect to the number of shares held by them any assets distributable
to shareholders, subject to the payment of German American's liabilities and any
rights of creditors and holders of shares of German American preferred stock
then outstanding. Shareholders of Holland Bancorp have similar liquidation
rights.
REDEMPTION AND ASSESSMENT
Under Indiana law, shares of German American common stock are not
liable to further assessment. German American may redeem or acquire shares of
German American common stock with funds legally available therefor, and shares
so acquired constitute authorized but unissued shares. German American may not
redeem or acquire shares of German American common stock if, after giving such
redemption or acquisition effect, German American would not be able to pay its
debts as they become due in the usual course of business, or German American's
total assets would be less than the sum of its total liabilities plus, unless
German American's Articles of Incorporation permitted otherwise, the amount that
would be needed to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those whose stock is
being redeemed or acquired if German American were to be dissolved at the time
of the redemption or acquisition.
Under Delaware law, shares of Holland Bancorp common stock are not
liable to further assessment. Holland may acquire shares of Holland Bancorp
common stock with funds legally available for that purpose.
ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to German American and Holland
Bancorp described below may have the effect of discouraging or rendering it more
difficult for a person or other entity to acquire control of German American or
Holland Bancorp. These measures may have the effect of discouraging certain
tender offers for shares of German American or Holland Bancorp common stock that
might otherwise be made at premium prices or certain other acquisition
transactions which might be viewed favorably by a significant number of
shareholders.
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German American -- Indiana Business Corporation Law. Under the business
combinations provision of the Indiana Business Corporation Law, any shareholder
who acquires a 10%-or-greater ownership position in an Indiana corporation with
a class of voting shares registered under Section 12 of the Exchange Act (and
that has not opted-out of this provision) is prohibited for a period of five
years from completing a business combination (generally a merger, significant
asset sale or disposition or significant issuance of additional shares) with the
corporation unless, prior to the acquisition of such 10% interest, the board of
directors of the corporation approved either the acquisition of such interest or
the proposed business combination. If such board approval is not obtained, then
five years after a 10% shareholder has become such, a business combination with
the 10% shareholder is permitted if all provisions of the articles of
incorporation of the corporation are complied with and either a majority of
disinterested shareholders approve the transaction or all shareholders receive a
price per share determined in accordance with the fair price criteria of the
business combinations provision of the Indiana Business Corporation Law. German
American's Articles of Incorporation provide that this "business combinations"
provision of Indiana law does not apply to it. However, German American could
elect in the future to avail itself of the protection provided by the Indiana
business combinations provision through an amendment to its articles of
incorporation approved by a majority of the outstanding shares; however, such an
election would not apply to a combination with a shareholder who acquired a 10%
ownership position prior to the effective time of the election.
In addition to the business combinations provision, the Indiana
Business Corporation Law also contains a "control share acquisition" provision
which, although different in structure from the business combinations provision,
may have a similar effect of discouraging or making more difficult a hostile
takeover of an Indiana corporation. This provision also may have the effect of
discouraging premium bids for outstanding shares. Under the control share
acquisition provision, unless otherwise provided in the corporation's articles
of incorporation or by-laws, if a shareholder acquires shares of the
corporation's voting stock (referred to as control shares) within one of several
specified ranges (one-fifth or more but less than one-third, one-third or more
but less than a majority, or a majority or more), approval by shareholders of
the control share acquisition must be obtained before the acquiring shareholder
may vote the control shares. If such approval is not obtained, the shares held
by the acquiror may be redeemed by the corporation at the fair value of the
shares as determined by the control share acquisition provision. The control
share acquisition provision does not apply to a plan of affiliation and merger
or share exchange, if the corporation complies with the applicable merger
provisions and is a party to the plan of merger or plan of share exchange.
German American is subject to the control share acquisition provision.
Holland Bancorp -- Delaware General Corporation Law. The Delaware
General Corporation Law contains a business combination provision which provides
that a corporation may not engage in any business combination with an interested
shareholder (one who owns 15% or more of the outstanding voting stock of the
corporation) for a period of three years after the person became an interested
shareholder unless (1) prior to the time the person became an interested
shareholder, the board of directors approved either the business combination or
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the transaction pursuant to which the person became an interested shareholder,
(2) upon consummation of the transaction which resulted in the person becoming
an interested shareholder, the interested shareholder owned at least 85% of the
voting shares outstanding at the time the transaction commenced (excluding
shares owned by management and employee benefit plans) or (3) the business
combination is approved at or after the time the person became an interested
shareholder by the board of directors and by 66 2/3% of the outstanding voting
stock not owned by the interested shareholder. A corporation may opt-out of the
statute through a provision in its original certificate of incorporation or an
amendment to its certificate of incorporation. Holland Bancorp has not opted-out
of the Delaware business combination statute; however, because Holland Bancorp's
Board of Directors has approved the company merger, the statute will not apply
to the company merger.
Unlike the Indiana Business Corporation Law, the Delaware General
Corporation Law does not contain a control share acquisition statute.
German American's Articles of Incorporation. In addition to the
protections provided by the Indiana Business Corporation Law, the Articles of
Incorporation of German American include a provision imposing certain
supermajority vote and minimum price requirements on any "Business Combination"
with a "Related Person" unless the combination has been approved by the vote of
two thirds of certain members of the Board of Directors of German American who
are not associated with the Related Person. This provision defines "Business
Combination" very broadly to include, subject to certain conditions, (i) any
merger or consolidation of German American or any of its subsidiaries into or
with a Related Person, its affiliates or associates; (ii) any sale, exchange,
lease, transfer or other disposition by German American or any of its
subsidiaries of all or any substantial part of its or their assets or businesses
to or with a Related Person, its affiliates or associates; (iii) the purchase,
exchange, lease or acquisition by German American or any of its subsidiaries of
all or any substantial part of the assets or businesses of a Related Person, its
affiliates or associates; (iv) any reclassification of securities,
recapitalization or other transaction that has the effect of increasing the
proportionate amount of German American's Common Stock (or other voting capital
security) beneficially owned by a Related Person; (v) any partial or complete
liquidation, spinoff or splitup of German American or any of its subsidiaries;
and (vi) the acquisition by a Related Person of beneficial ownership upon
issuance of Common Stock (or other voting capital shares) of German American or
any of its subsidiaries or any securities convertible into, or any rights,
warrants or options to acquire, any such shares. "Related Person" also is
defined broadly to mean any person (which includes any individual, corporation
or entity other than German American or its subsidiaries) who (i) beneficially
owns ten percent or more of German American Common Stock (or other voting
capital security) (a "Ten Percent Shareholder"); (ii) any person who within the
preceding two-year period has been a Ten Percent Shareholder and who directly or
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indirectly controls, is controlled by, or is under common control with German
American; or (iii) any person who has received, other than pursuant to or in a
series of transactions involving a public offering within the meaning of the
Securities Act of 1933, German American Common Stock (or other voting capital
security) that has been owned by a Related Person within the preceding two-year
period. In the absence of approval by the German American Directors who are not
associated with the Related Person or, in the alternative, the agreement by the
Related Person to pay all other shareholders a certain minimum price for their
shares, a Business Combination with a Related Person would require the approval
of 80 percent of the outstanding voting stock plus the approval of a majority of
the outstanding shares that are riot controlled by the Related Person. In
general terms, the restrictions apply to mergers or consolidations of German
American or any subsidiary with any Related Person, transfers or encumbrances of
all or substantially all of the assets of German American to a Related Person,
the adoption of any plan of liquidation proposed by a Related Person or any
transaction which would have the effect, directly or indirectly, of increasing
the proportionate share of any class of equity securities of German American or
any shareholder (including affiliates and associates) who is the beneficial
owner of more than 10 percent of the voting power of the then outstanding shares
entitled to vote generally in the election of directors of German American.
Absent the provision regulating Business Combinations, mergers, consolidations,
and sales of all or substantially all assets would require only the approval of
a majority of the Board of Directors and (subject to the rights of any preferred
stock issued in the future) the affirmative vote of a majority of the total
number of outstanding shares of German American entitled to vote on the matter.
German American's Articles of Incorporation also include provisions
requiring (1) the Board of Directors to consider non-financial factors in the
evaluation of business combinations and tender or exchange offers, such as the
social and economic effects on employees, customers, creditors and the
communities in which German American operates, and (2) any person acquiring 15%
of the then issued and outstanding stock of German American to pay equal
consideration in connection with the acquisition of any further shares. These
provisions require an 80% affirmative vote of the issued and outstanding shares
of German American common stock entitled to vote thereon in order to be amended
or repealed.
German American Shareholder Rights Plan. On April 27, 2000, the Board
of Directors of German American adopted a shareholder rights plan and declared a
dividend of one right for each issued and outstanding share of German American
common stock as of May 10, 2000, and each share of German American common stock
issued after that date (including German American shares issued to holders of
Holland Bancorp common stock pursuant to the merger agreement). See "--
Authorized But Unissued Shares-German American." The purpose of the rights plan
is to deter certain coercive tactics that have been used to acquire control of
public corporations and to enable the Board of Directors to represent
effectively the interests of the shareholders in the event of a takeover
attempt. The plan will not deter negotiated mergers or business combinations
that the Board of Directors determines to be in the shareholders' best interests
and in the best interests of German American. The plan is designed to force an
acquiror to deal with the Board of Directors. If the acquiror's proposal is not
approved by the Board, the issuance of the rights provided for in the plan would
dramatically alter the capital structure of German American, thereby making the
acquiror's proposals unattractive to it. The involvement of the Board of
Directors could improve the price and terms of any acquisition proposal.
The German American Series A Preferred Shares that underly the rights
are non-redeemable and, unless otherwise provided in connection with the
creation of a subsequent series of preferred stock, are subordinate to all other
series of preferred stock of German American. The terms of the Series A
preferred shares are intended to make the value of one one-hundredth of a Series
A preferred share equivalent to one German American common share. Each German
American Series A preferred share will be entitled to receive, when, as and if
declared, a quarterly dividend in an amount equal to the greater of $1.00 per
share or 100 times the quarterly cash dividend declared on German American
common stock. In addition, the German American Series A preferred stock is
entitled to 100 times any non-cash dividends (other than dividends payable in
equity securities) declared on the German American common stock, in like kind.
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In the event of liquidation, the holders of German American Series A preferred
stock will be entitled to receive a liquidation payment in an amount equal to
100 times the liquidation payment made per share of German American common
stock. Each share of German American Series A preferred stock will have 100
votes, subject to adjustment, voting together with the German American common
stock and not as a separate class unless otherwise required by law or German
American's Articles of Incorporation. In the event of any merger, consolidation
or other transaction in which common shares are exchanged, each share of German
American Series A preferred stock will be entitled to receive 100 times the
amount received per share of German American common stock. The rights of the
German American Series A preferred stock as to dividends, voting rights and
liquidation are protected by anti-dilution provisions. No shares of the German
American Series A preferred stock will be issued unless and until the rights to
purchase such shares under German American's shareholder rights plan become
exercisable.
The terms and conditions of the rights and of the Series A Preferrred
Shares are specified by a Rights Agreement, dated April 27, 2000, between German
American and UMB Bank, N.A., as Rights Agent. The above description of German
American's shareholder rights plan and related Series A Preferred Shares does
not purport to be complete. For additional information, see the Rights
Agreement, which is attached to German American's current report on Form 8-K
filed May 5, 2000 as Exhibit 4.01 and is specifically incorporated herein by
reference. See "Where You Can Find More Information."
Holders of Holland common stock will receive one German American right
for each share of German American common stock that they receive pursuant to the
merger agreement. Holland Bancorp does not have a shareholder rights plan.
DIRECTOR LIABILITY
Under Indiana law, a director of German American will not be personally
liable to shareholders for any action taken as a director, or any failure to
take any action, unless (1) the director has breached or failed to perform his
duties as a director in good faith with the care an ordinarily prudent person in
a like position would exercise under similar circumstances and in a manner the
director reasonably believes to be in the best interests of the corporation and
(2) such breach or failure to perform constitutes willful misconduct or
recklessness.
LEGAL MATTERS
The validity of the shares of German American common stock to be issued
in the merger and the federal income tax consequences of the merger will be
passed upon by Ice Miller Donadio & Ryan, Indianapolis, Indiana, as counsel for
German American.
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EXPERTS
Crowe, Chizek and Company LLP, independent certified public
accountants, have audited the consolidated balance sheets of German American as
of December 31, 1999 and 1998 and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the years ended December 31,
1999, 1998 and 1997. Crowe, Chizek and Company LLP's reports thereon are
incorporated by reference herein in reliance upon their authority as experts in
accounting and auditing.
The opinion of Olive Corporate Finance LLC, and the information
provided by Olive Corporate Finance LLC, under "THE MERGER -- Opinion of
Financial Adviser to Holland Bancorp," has been included herein in reliance upon
its authority as experts in valuation of financial institutions and their
securities in connection with mergers and acquisitions.
OTHER MATTERS
The special meeting is called for the purposes set forth in the Notice
attached to this Proxy Statement. The Board of Directors of Holland Bancorp
knows of no other matters for action by shareholders at the special meeting
other than the matters described in the Notice. However, the enclosed proxy will
confer discretionary authority to the persons named therein with respect to any
such matters, none of which are known to the Board of Directors of Holland
Bancorp as of the date hereof, which may properly come before the Special
Meeting. It is the intention of the persons named in the proxy to vote pursuant
to the proxy with respect to such matters in accordance with the best judgment
of the person named in the proxy.
FORWARD-LOOKING STATEMENTS
This document (including information included or incorporated by
reference herein) contains certain forward-looking statements with respect to
the financial condition, results of operations, plans, objectives, future
performance and business of each of German American and Holland Bancorp, as well
as certain information relating to the mergers, including, without limitation
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "estimates" or similar expressions. Such
forward-looking statements are based on assumptions rather than historical or
current facts and, therefore, are inherently uncertain and subject to risk. To
comply with the terms of a "safe harbor" provided by the Private Securities
Litigation Reform Act of 1995 that protects the making of such forward-looking
statements from liability under certain circumstances, German American notes
that a variety of factors could cause the actual results or experience to differ
materially from the anticipated results or other expectations described or
implied by such forward-looking statements. These risks and uncertainties that
may affect the operations, performance, development and results of German
American's business include, but are not limited to, the following: (a) the risk
of adverse changes in business and economic conditions generally and in the
specific markets in which its bank subsidiaries operate which might adversely
affect credit quality and deposit and loan activity; (b) the risk of rapid
increases or decreases in interest rates, which could adversely affect German
American's net interest margin if changes in its cost of funds do not correspond
to the changes in income yields; (c) possible changes in the legislative and
regulatory environment that might negatively impact German American and its
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subsidiaries through increased operating expenses or restrictions on authorized
activities; (d) the possibility of increased competition from other financial
and non-financial institutions; (e) the risk that borrowers may misrepresent
information to management of its bank subsidiaries, leading to loan losses,
which is an inherent risk of the activity of lending money; (f) the risk that
banks that German American may acquire in the future may be subject to
undisclosed asset quality problems, contingent liabilities or other
unanticipated problems; and (g) other risks detailed from time to time in German
American's filings with the Securities and Exchange Commission. German American
does not undertake any obligation to update or revise any forward-looking
statements subsequent to the date on which they are made.
WHERE YOU CAN FIND MORE INFORMATION
German American is subject to the reporting requirements of the
Exchange Act and in accordance therewith file reports, proxy statements and
other information with the SEC. Such reports, proxy statements and other
information may be inspected and copied at prescribed rates at the following
locations of the SEC:
Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661-2511
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding German American, and the address of that site is http://www.sec.gov.
German American's common stock is quoted on the Nasdaq National Market System
and reports, proxy statements and other information concerning German American
are available for inspection and copying at prescribed rates at the office of
the National Association of Securities Dealers, Inc., 1735 K Street, Washington,
D.C. 20006.
German American has filed with the SEC a Registration Statement on Form
S-4 under the Securities Act with respect to the shares of German American
common stock to be issued in connection with its merger with Holland Bancorp.
This Proxy Statement -- Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to the
Registration Statement, including the exhibits filed as a part thereof or
incorporated therein by reference, which can be inspected and copied at
prescribed rates at the public reference facilities maintained by the SEC at the
addresses set forth above or retrieved from the SEC's website at the address set
forth above.
The SEC allows German American to "incorporate by reference"
information into this document. This means that German American can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this document, except for any information that is superseded by
information that is included directly in this document. This document
incorporates by reference the documents listed below that German American has
previously filed with the SEC. They contain important information about German
American and its financial condition and results of operations.
The following documents previously filed by German American (SEC File
No. 0-11244) with the SEC pursuant to the Exchange Act are incorporated herein
by reference:
Annual Report on Form 10-K Year ended December 31, 1999
as filed March 29, 2000
Quarterly Report on Form 10-Q Quarter ended March 31, 2000
as filed May 12, 2000
Current Reports on Form 8-K Filed March 24, 2000 and
May 5, 2000
German American also incorporates by reference into this document:
- the description of German American's Common Shares set forth in
Pre-Effective Amendment No. 3 to German American's Registration Statement
(File No. 333-46913) filed on Form S-4 on May 5, 1998, and the description
of German American's Preferred Share Purchase Rights set forth in its
Registration Statement on Form 8-A filed May 15, 2000, including any
subsequent amendment or report filed with the Commission for the purpose of
updating such descriptions; and
- additional documents that it may file with the SEC between the date
of this document and the date of the Holland Bancorp special meeting,
including such documents as periodic reports, such as Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this document to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this document.
German American has supplied all information contained or incorporated
by reference in this Proxy Statement-Prospectus relating to German American, and
Holland Bancorp has supplied all information relating to Holland Bancorp.
You can obtain any of the documents incorporated by reference in this
document through German American or from the SEC through the SEC's Internet
world wide web site at the address listed above. Documents incorporated by
reference are available from German American without charge, excluding any
exhibits to those documents, unless the exhibit is specifically incorporated by
reference as an exhibit in this document. You can obtain documents incorporated
by reference in this document by requesting them in writing or by telephone from
German American at the following address:
German American Bancorp
Investor Relations
711 Main Street, Box 810
Jasper, Indiana 47546
(812) 482-1314
If you would like to request documents, please do so by [___________,
2000] to receive them before the meeting. If you request any incorporated
documents, German American will mail them to you by first class mail, or another
equally prompt means, within one business day after German American receives
your request.
Neither German American nor Holland Bancorp has authorized anyone to
give any information or make any representation about the merger or our
companies that is different from, or in addition to, that contained in this
Prospectus/Proxy Statement or in any of the materials that we've incorporated
into this document. Therefore, if anyone does give you information of this sort,
you should not rely on it. If you are in a jurisdiction where offers to exchange
or sell, or solicitations of offers to exchange or purchase, the securities
offered by this document or the solicitation of proxies is unlawful, or if you
are a person to whom it is unlawful to direct these types of activities, then
the offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.
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LIST OF APPENDICES
Agreement and Plan of Reorganization, dated June 27, 2000........ Appendix A
Section 262 of the Delaware General Corporation Law.............. Appendix B
Fairness Opinion of Olive Corporate Finance, LLC................. Appendix C
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AGREEMENT AND PLAN OF REORGANIZATION
by and among
HOLLAND BANCORP, INC.
a Delaware corporation,
THE HOLLAND NATIONAL BANK,
a national banking association,
GERMAN AMERICAN BANCORP,
an Indiana corporation,
and
THE GERMAN AMERICAN BANK,
an Indiana banking corporation,
June 27, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
June 27, 2000, by and among HOLLAND BANCORP, INC., a Delaware corporation
("Holland"), THE HOLLAND NATIONAL BANK, a national banking association ("Holland
Bank"), GERMAN AMERICAN BANCORP, an Indiana corporation ("German American"), and
THE GERMAN AMERICAN BANK, an Indiana banking corporation ("GAB").
Recitals
A. Holland is a corporation duly organized and existing under the General
Corporation Law of Delaware ("DGCL") that is duly registered with the Board
of Governors of the Federal Reserve System ("FRB") as a bank holding
company under the Bank Holding Company Act of 1956, as amended ("BHC Act").
Holland owns all of the outstanding capital stock of Holland Bank.
B. Holland Bank is an association duly organized and existing as a bank under
the National Bank Act, and a wholly owned subsidiary of Holland.
C. German American is a corporation duly organized and existing under the
Indiana Business Corporation Law ("IBCL") that is duly registered as a bank
holding company under the BHC Act. German American owns all of the
outstanding capital stock of GAB.
D. GAB is a corporation duly organized and existing as a bank under the
Indiana Financial Institutions Act ("IFIA").
E. The parties desire to effect simultaneous transactions whereby, in
consideration of the issuance of German American Common Stock to the
shareholders of Holland, Holland will be merged with and into German
American and Holland Bank will be merged with and into GAB.
Agreements
In consideration of the premises and the mutual terms and provisions
set forth in this Agreement, the parties agree as follows:
ARTICLE I
TERMS OF THE MERGERS & CLOSING
Section 1.01. The Holding Company Merger. Pursuant to the terms and
provisions of this Agreement, the DGCL, the IBCL and the Plan of Merger attached
hereto as Appendix A and incorporated herein by reference (the "Holding Company
Plan of Merger"), Holland shall merge with and into German American (the
"Holding Company Merger"), immediately preceding the Bank Merger (as defined
below). Holland shall be the "Merging Holding Company" in the Holding Company
Merger and its corporate identity and existence, separate and apart from German
American, shall cease on consummation of the Holding Company Merger. German
American shall be the "Surviving Holding Company" in the Holding Company Merger,
and its name shall not be changed pursuant to the Holding Company Merger.
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Section 1.02. Effect of the Holding Company Merger. The Holding Company
Merger shall have all the effects provided by the DGCL and the IBCL.
Section 1.03. The Holding Company Merger - Conversion of Shares.
(a) (I) At the time of filing with the Indiana Secretary of State
of appropriate Articles of Merger, or at the time of filing with the
Delaware Secretary of State of an appropriate Certificate of Merger,
whichever is later, each with respect to the Holding Company Merger,
or (II) at such later time as shall be specified by such Articles of
Merger and Certificate of Merger (the "Effective Time"):
(i) Except as provided by Section 1.03(f), the shares of
common stock, $10.00 par value, of Holland ("Holland Common")
that are issued and outstanding immediately prior to the
Effective Time shall thereupon and without further action be
converted into (A) shares of common stock, no par value, $1.00
stated value, of German American ("German American Common"), and
(B) rights to purchase one one-hundredth of a Series A Preferred
Share of German American under the terms and conditions of the
Rights Agreement between German American and UMB Bank, N.A., as
Rights Agent, dated April 27, 2000 ("Rights"), at the ratio of
3.5 shares of German American Common and 3.5 Rights for each
share of Holland Common (the "Exchange Ratio").
(ii) The shares of German American Common issued and
outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding shares of German American
Common.
(b) No fractional shares of German American Common shall be
issued and, in lieu thereof, holders of shares of Holland Common who
would otherwise be entitled to a fractional share interest (after
taking into account all shares of Holland Common held by such holder)
shall be paid an amount in cash equal to the product of multiplying
such fractional share by the average of the lowest closing asked
prices and highest closing bid prices of German American Common as
reported by the NASDAQ National Market System for each trading day
within the period of ten trading days that ends on the second business
day preceding the Closing Date (as defined by Section 1.09 hereof).
(c) At the Effective Time, all of the outstanding shares of
Holland Common, by virtue of the Holding Company Merger and without
any action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificate or certificates which
immediately prior to the Effective Time represented outstanding shares
of Holland Common (the "Certificates") shall thereafter cease to have
any rights with respect to such shares, except the right of such
holders to receive, without interest, certificates for the shares of
German American Common, the Rights, and (if applicable) the cash
payment to which such holder is entitled (the "Merger Consideration")
upon the surrender of such Certificate or Certificates in accordance
with Section 1.08.
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(d) At the Effective Time, each share of Holland Common, if any,
held in the treasury of Holland or by any direct or indirect
subsidiary of Holland (other than shares held in trust accounts for
the benefit of others or in other fiduciary, nominee or similar
capacities) immediately prior to the Effective Time shall be canceled.
(e) If (i) German American shall hereafter declare a stock
dividend or other distribution of property or securities (other than a
cash dividend) upon the German American Common or shall subdivide,
split up, reclassify or combine the German American Common, and (ii)
the record date for such transaction is prior to the date on which the
Effective Time occurs, appropriate adjustment or adjustments will be
made to the Exchange Ratio.
(f) If any holders of Holland Common dissent from the Holding
Company Merger and demand appraisal rights under the DGCL, any issued
and outstanding shares of Holland Common held by such dissenting
holders shall not be converted as described in this Section 1.03 but
shall from and after the Effective Time represent only the right to
receive such consideration as may be determined to be due to such
dissenting holders pursuant to the DGCL; provided, however, that each
share of Holland Common outstanding immediately prior to the Effective
Time and held by a dissenting holder who shall, after the Effective
Time, withdraw his demand for appraisal rights or lose his right to
exercise appraisal rights shall have only such rights as provided
under the DGCL.
Section 1.04. The Bank Merger.
(a) Pursuant to the terms and provisions of this Agreement, the
Indiana Financial Institutions Act ("IFIA"), the National Bank Act,
and the Agreement and Plan of Bank Merger attached hereto as Appendix
B and incorporated herein by reference (the "Bank Plan of Merger"),
Holland Bank shall merge with and into GAB (the "Bank Merger")
immediately following the Holding Company Merger. Holland Bank shall
be the "Merging Bank" in the Bank Merger and GAB shall be the
"Surviving Bank" and shall continue its corporate existence under its
charter under the provisions of the IFIA.
(b) For a reasonable transitional period from and after the
effective time of the Bank Merger, and subject to compliance with law,
GAB shall conduct its operations from the former offices of Holland
Bank under the assumed name "Holland National Bank."
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Section 1.05. Effect of the Bank Merger. The Bank Merger shall have all
of the effects provided by the IFIA.
Section 1.06. The Bank Merger - No Conversion of Shares. At the
effective time of the Bank Merger, the shares of GAB that were issued and
outstanding immediately prior to the Bank Merger shall continue to be issued and
outstanding, and the shares of Holland Bank shall be canceled.
Section 1.07. The Closing. The closing of the Mergers (the "Closing")
shall take place on the Closing Date described in Section 1.09 of this
Agreement, and at such time and at such place as the parties may determine.
Section 1.08. Exchange Procedures; Surrender of Certificates.
(a) UMB Bank, N.A., Kansas City, Missouri, shall act as Exchange
Agent in the Holding Company Merger (the "Exchange Agent").
(b) As soon as reasonably practicable but in no event more than
five working days after the Effective Time, the Exchange Agent shall
mail to each record holder of any Certificate or Certificates whose
shares were converted into the right to receive a pro rata portion of
the Merger Consideration, a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent and shall be in such form and have such other
provisions as German American may reasonably specify) (each such
letter the "Merger Letter of Transmittal") and instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. As soon as reasonably practical but in no event more
than fifteen days after surrender to the Exchange Agent of a
Certificate, together with a Merger Letter of Transmittal duly
executed and any other required documents, the Exchange Agent shall
transmit to the holder of such Certificate(s) representing shares of
German American Common the applicable aggregate amount of Merger
Consideration, including shares of German American Common computed by
application of the Exchange Ratio, plus a check representing any cash
payable in lieu of issuance of a fractional share, if any. No interest
on the Merger Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit of holders of
Certificates. If the Merger Consideration is to be issued to a person
other than a person in whose name a surrendered Certificate is
registered, it shall be a condition of issuance that the surrendered
Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such issuance shall pay to the
Exchange Agent any required transfer or other taxes or establish to
the satisfaction of the Exchange Agent that such tax has been paid or
is not applicable. German American reserves the right in all cases to
require that a surety bond on terms and in an amount satisfactory to
German American be provided to German American at the expense of the
Holland shareholder in the event that such shareholder claims loss of
a Certificate and requests that German American waive the requirement
for surrender of such Certificate.
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(c) No dividends that are otherwise payable on shares of German
American Common constituting the Merger Consideration shall be paid to
persons entitled to receive such shares of German American Common
until such persons surrender their Certificates. Upon such surrender,
there shall be paid to the person in whose name the shares of German
American Common shall be issued any dividends which shall have become
payable with respect to such shares of German American Common (without
interest and less the amount of taxes, if any, which may have been
imposed thereon), between the Effective Time and the time of such
surrender.
Section 1.09. The Closing Date. The Closing shall take place on the
last business day of the month during which each of the conditions in Sections
6.01(d) and 6.02(d) is satisfied or waived by the appropriate party, or on such
later or earlier date as Holland and German American may agree (the "Closing
Date"). The parties shall use their best efforts to cause the Effective Time of
both Mergers to be as of the first day of the calendar month that follows the
month in which the Closing occurs.
Section 1.10. Actions At Closing.
(a) At the Closing, Holland shall deliver to German American:
(i) a certified copy of the Certificate of Incorporation and
Bylaws of Holland, as amended, and a certified copy of the
Articles of Association and Bylaws of Holland Bank, as amended;
(ii) a certificate or certificates signed by the chief
executive officer of Holland and Holland Bank stating, to
the best of his knowledge and belief, after due inquiry,
that (A) each of the representations and warranties
contained in Article Two hereof is true and correct in all
material respects at the time of the Closing with the same
force and effect as if such representations and warranties
had been made at Closing, and (B) Holland and Holland Bank
have performed and complied in all material respects, unless
waived by German American, with all of their obligations and
agreements required to be performed hereunder prior to the
Closing Date;
(iii) certified copies of the resolutions of Holland's
Board of Directors and shareholders, approving and
authorizing the execution of this Agreement and the Plan of
Merger and authorizing the consummation of the Holding
Company Merger;
(iv) a certified copy of the resolutions of Holland
Bank's Board of Directors and shareholder, as required for
valid approval of the execution of this Agreement and the
consummation of the Bank Merger;
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(v) a certificate of the Delaware Secretary of State,
dated a recent date, stating that Holland is duly organized
and exists under the DGCL;
(vi) a certificate of the Office of the Comptroller of
the Currency ("OCC") dated a recent date, stating that
Holland Bank is duly organized and exists under the laws of
the United States; and
(vii) the legal opinion of Bose McKinney & Evans LLP,
counsel for Holland to the effect set forth as Exhibit
1.10(a)(vii).
(b) At the Closing, German American shall deliver to Holland:
(i) a certificate signed by the Chief Executive Officer
of German American stating, to the best of his knowledge and
belief, after due inquiry, that (A) each of the
representations and warranties contained in Article Three is
true and correct in all material respects at the time of the
Closing with the same force and effect as if such
representations and warranties had been made at Closing and
(B) German American has performed and complied in all
material respects, unless waived by Holland, with all of its
obligations and agreements required to be performed
hereunder prior to the Closing Date;
(ii) a certified copy of the resolutions of German
American's Board of Directors authorizing the execution of
this Agreement and the Plan of Merger and the consummation
of the Holding Company Merger;
(iii) a certified copy of the resolutions of GAB's
Board of Directors and shareholder, as required for valid
approval of the execution of this Agreement and the
consummation of the Bank Merger;
(iv) the legal opinion of Ice Miller Donadio & Ryan
Miller Donadio & Ryan, counsel for German American, in the
form attached hereto as Exhibit 1.10(b)(iv); and
(v) certificates of the Indiana Secretary of State,
dated a recent date, stating that German American and GAB
each exist under the IBCL and IFIA, respectively.
(c) At the Closing, the parties shall execute and/or deliver to
one another such documents and instruments and take such other actions
as shall be necessary or appropriate to consummate the Mergers.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HOLLAND AND HOLLAND BANK
Holland and Holland Bank hereby severally make the following
representations and warranties to German American and GAB:
Section 2.01. Organization and Capital Stock.
(a) Holland is a corporation duly organized and validly existing
under the DGCL and has the corporate power to own all of its property
and assets, to incur all of its liabilities and to carry on its
business as now being conducted.
(b) Holland Bank is an association duly organized and validly
existing under the National Bank Act and has the corporate power to
own all of its property and assets, to incur all of its liabilities
and to carry on its business as now being conducted.
(c) Holland has authorized capital stock of 500,000 shares of
Holland Common, $10.00 par value, of which, as of the date of this
Agreement, 268,544 shares are issued and outstanding. All such shares
of Holland Common are duly and validly issued and outstanding, fully
paid and non-assessable. None of the outstanding shares of Holland
Common has been issued in violation of any preemptive rights of the
current or past shareholders of Holland or in violation of any
applicable federal or state securities laws or regulations.
(d) Holland Bank has authorized capital stock of 45,000 shares of
common stock, $10.00 par value, all of which shares are issued and
outstanding ("Holland Bank Common"). All of such shares of Holland
Bank Common are duly and validly issued and outstanding and are fully
paid and nonassessable. None of the outstanding shares of Holland Bank
Common has been issued in violation of any preemptive rights of the
current or past shareholders of Holland Bank or in violation of any
applicable federal or state securities laws or regulations.
(e) There are no shares of capital stock or other equity
securities of Holland or Holland Bank authorized, issued or
outstanding (except as set forth in this Section 2.01) and, except for
outstanding stock options issued by Holland to employees of Holland
Bank with respect to the right to purchase 2,250 shares of Holland
Common, there are no outstanding options, warrants, rights to
subscribe for, calls, puts, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of Holland or Holland Bank, or
contracts, commitments, understandings or arrangements by which
Holland or Holland Bank are or may be obligated to issue additional
shares of its capital stock or options, warrants or rights to purchase
or acquire any additional shares of its capital stock.
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Section 2.02. Authorization; No Defaults. The Boards of Directors of
Holland and Holland Bank have each, by all appropriate action, approved this
Agreement, the applicable Plan of Merger and the Merger or Bank Merger, as
applicable and contemplated thereby, and have authorized the execution of this
Agreement and the applicable Plan of Merger on their behalf by their duly
authorized officers and the performance by Holland and Holland Bank of their
respective obligations hereunder. Nothing in the Articles of Incorporation or
Bylaws of Holland, as amended, or the Articles of Association or Bylaws of
Holland Bank, as amended, or in any material agreement or instrument, or any
decree, proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which Holland or Holland Bank is bound
or subject, would prohibit Holland or Holland Bank from consummating, or would
be violated or breached by Holland's or Holland Bank's consummation of, this
Agreement, the Merger or the Bank Merger and other transactions contemplated
herein on the terms and conditions herein contained. This Agreement has been
duly and validly executed and delivered by Holland and Holland Bank and
constitutes a legal, valid and binding obligation of Holland and Holland Bank,
enforceable against Holland and Holland Bank in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles. No corporate acts
or proceedings, other than the approval of the Holding Company Merger by the
shareholders of Holland in accordance with the DGCL, are required by law to be
taken by Holland or Holland Bank to authorize the execution, delivery and
performance of this Agreement. Neither Holland nor Holland Bank is, nor will be
by reason of the consummation of the transactions contemplated herein, in
material default under or in material violation of any provision of, nor will
the consummation of the transactions contemplated herein afford any party a
right to accelerate any indebtedness under, its certificate of incorporation,
charter or bylaws, any material promissory note, indenture or other evidence of
indebtedness or security therefor, or any material lease, contract, or other
commitment or agreement to which it is a party or by which it or its property is
bound.
Section 2.03. Subsidiaries. Except as otherwise disclosed in a
confidential writing delivered by Holland and Holland Bank to German American
and executed by all the parties concurrently with the execution of this
Agreement (the "Disclosure Schedule"), and except for the ownership by Holland
of all the capital stock of Holland Bank, to the knowledge of Holland, neither
Holland nor Holland Bank has (or has had at any time in the last five years) any
direct or indirect ownership interest in any corporation, partnership, limited
liability company, joint venture or other business.
Section 2.04. Financial Information.
(a) Holland has furnished to German American the consolidated
balance sheets of Holland as of December 31, 1999 and 1998 and the
related consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended, together with the
unqualified opinion thereon of Krueger & Associates, independent
certified public accountants. Such financial statements were prepared
in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be reflected in the notes thereto),
and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity
and cash flows of Holland in all material respects as of the dates and
for the periods indicated.
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(b) Holland Bank has furnished to German American its
Consolidated Reports of Condition and Income as filed with the FFIEC
for the quarter ended March 31, 2000, and for each of the quarters
ended during 1999 and 1998 (the "Call Reports"). The Call Reports were
prepared in accordance with the applicable regulatory instructions on
a consistent basis with previous such reports, and fairly present the
financial position and results of operations of Holland Bank in all
material respects as of the dates and for the periods indicated,
subject, however, to normal recurring year-end adjustments, none of
which were material.
(c) Neither Holland nor Holland Bank has any material liability,
fixed or contingent, except to the extent set forth in the financial
statements and the Call Reports described in subsections (a) and (b)
of this Section 2.04 (collectively, the "Holland Financial
Statements") or incurred in the ordinary course of business since the
date of the most recent balance sheet of Holland or Holland Bank
included in the Holland Financial Statements.
(d) Holland does not engage in the lending business (except by
and through Holland Bank) or any other business or activity other than
that which is incident to its ownership of all the capital stock of
Holland Bank, and to the knowledge of Holland does not own any
investment securities (except the capital stock of Holland Bank).
Section 2.05. Absence of Changes. Since December 31, 1999, and except
to the extent reflected in the Call Reports, there has not been any material
adverse change in the financial condition, the results of operations or the
business of Holland or Holland Bank, taken as a whole.
Section 2.06. Absence of Agreements with Banking Authorities. Except as
disclosed in the Disclosure Schedule, neither Holland nor Holland Bank is
subject to any order (other than orders applicable to bank holding companies or
banks generally) and neither is a party to any agreement or memorandum of
understanding with any federal or state agency charged with the supervision or
regulation of banks or bank holding companies, including without limitation, the
Federal Deposit Insurance Corporation ("FDIC"), the OCC, the FRB, and the DFI.
Section 2.07. Tax Matters. Holland and Holland Bank have filed all
federal, state and local tax returns due in respect of any of its business,
income and properties in a timely fashion and has paid or made provision for all
amounts shown due on such returns. All such returns fairly reflect the
information required to be presented therein in all material respects. All
provisions for accrued but unpaid taxes contained in the Holland Financial
Statements were made in accordance with generally accepted accounting
principles.
Section 2.08. Absence of Litigation. There is no material litigation,
claim or other proceeding pending or, to the knowledge of Holland, threatened,
before any judicial, administrative or regulatory agency or tribunal, to which
Holland or Holland Bank is a party or to which any of their properties are
subject.
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Section 2.09. Employment Matters.
(a) Except as disclosed in the Disclosure Schedule, neither
Holland nor Holland Bank is a party to or bound by any material
contract, arrangement or understanding (written or otherwise) for the
employment, retention or engagement of any past or present officer,
employee, agent, consultant or other person or entity which, by its
terms, is not terminable by Holland or Holland Bank, respectively, on
thirty (30) days' written notice or less without the payment of any
amount by reason of such termination.
(b) Holland and Holland Bank are and have been in material
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, including, without limitation, any such laws respecting
employment discrimination and occupational safety and health
requirements, and (i) neither Holland nor Holland Bank is engaged in
any unfair labor practice; (ii) there is no unfair labor practice
complaint against Holland or Holland Bank pending or, to the knowledge
of Holland, threatened before the National Labor Relations Board;
(iii) there is no labor dispute, strike, slowdown or stoppage actually
pending or, to the knowledge of Holland, threatened against or
directly affecting Holland or Holland Bank; and (iv) neither Holland
nor Holland Bank has experienced any material work stoppage or other
material labor difficulty during the past five years.
(c) Except as set forth in the Disclosure Schedule, neither the
execution nor the delivery of this Agreement, nor the consummation of
any of the transactions contemplated hereby, will (i) result in any
payment (including without limitation severance, unemployment
compensation or golden parachute payment) becoming due to any director
or employee of Holland or Holland Bank from either of such entities,
(ii) increase any benefit otherwise payable under any of their
employee plans or (iii) result in the acceleration of the time of
payment of any such benefit. No amounts paid or payable by Holland or
Holland Bank to or with respect to any employee or former employee of
Holland of Holland Bank will fail to be deductible for federal income
tax purposes by reason of Section 280G of the Internal Revenue Code of
1986, as amended ("Code") or otherwise.
Section 2.10. Reports. Since January 1, 1998, Holland and Holland Bank
have, to their knowledge, filed all reports, notices and other statements,
together with any amendments required to be made with respect thereto, if any,
that were required to be filed with (i) the Securities and Exchange Commission
("SEC"), (ii) the FRB, (iii) the FDIC, (iv) the OCC, (v) the DFI, and (vi) any
other governmental authority with jurisdiction over Holland or Holland Bank. As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits and schedules thereto, complied in all material
respects with the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed.
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Section 2.11. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by Holland Bank, as reflected in the
Call Reports, are carried on the books of Holland Bank in accordance with
generally accepted accounting principles, consistently applied. Holland Bank
does not engage in activities that would require that it establish a trading
account under applicable regulatory guidelines and interpretations.
Section 2.12. Loan Portfolio. To the knowledge of Holland, all loans
and discounts shown in the Call Reports, or which were entered into after March
31, 2000, but before the Closing Date, were and will be made in all material
respects for good, valuable and adequate consideration in the ordinary course of
the business of Holland Bank, in accordance in all material respects with
Holland Bank's lending policies and practices unless otherwise approved by
Holland Bank's Board of Directors, and are not, to Holland Bank's knowledge,
subject to any material defenses, set offs or counterclaims, including without
limitation any such as are afforded by usury or truth in lending laws, except as
may be provided by bankruptcy, insolvency or similar laws or by general
principles of equity. To the knowledge of Holland, the notes or other evidences
of indebtedness evidencing such loans and all forms of pledges, mortgages and
other collateral documents and security agreements are and will be, in all
material respects, enforceable, valid, true and genuine. Holland Bank has in all
material respects complied and will through the Closing Date continue to comply
in all material respects with all laws and regulations relating to such loans,
or to the extent there has not been such compliance, such failure to comply will
not materially interfere with the collection of any such loan. Except as
disclosed in the Disclosure Schedule, Holland Bank has not sold, purchased or
entered into any loan participation arrangement except where such participation
is on a pro rata basis according to the respective contributions of the
participants to such loan amount. Holland has no knowledge that any condition of
property in which Holland Bank has an interest as collateral to secure a loan or
that is held as an asset of any trust violates the Environmental Laws (defined
in Section 2.15) in any material respect or obligates Holland, or Holland Bank,
or the owner or operator of such property to remedy, stabilize, neutralize or
otherwise alter the environmental condition of such property.
Section 2.13. ERISA.
(a) Except as disclosed in the Disclosure Schedule, no person
participates in any "employee welfare benefit plan" or "employee
pension benefit plan" (as those terms are respectively defined in
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act
of 1974 ("ERISA")), nor may any person reasonably expect to
participate in any such plan, in either case, on account of his or her
past or present employment with Holland or Holland Bank. Holland and
Holland Bank do not maintain any retirement or deferred compensation
plan, savings, incentive, stock option or stock purchase plan,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements (referred to collectively hereinafter as
"fringe benefit arrangements") for any past or present employee,
director, consultant or agent of Holland or Holland Bank, whether
pursuant to contract, arrangement, custom or informal understanding,
which does not constitute an "employee benefit plan" (as defined in
Section 3(3) of ERISA), except as listed in the Disclosure Schedule.
For purposes of this Section 2.13, each "employee welfare benefit
plan," each "employee pension benefit plan" and each "fringe benefit
plan" shall be referred to individually as a "Plan" and collectively
as the "Plans," unless otherwise specifically provided herein.
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(b) During the past sixty months, neither Holland nor Holland
Bank has maintained any employee welfare benefit plan or any employee
pension benefit plan except for those plans listed on the Disclosure
Schedule. Except as disclosed on the Disclosure Schedule, neither
Holland nor Holland Bank has amended any employee welfare plan or any
employee pension benefit plan listed on the Disclosure Schedule since
December 31, 1998."
(c) To the knowledge of Holland, all Plans listed on the
Disclosure Schedule comply in form and in operation in all material
respects with all applicable requirements of law and regulation,
including but not limited to the Code and ERISA. Except as listed on
the Disclosure Schedule, all employee pension benefit plans maintained
by Holland and Holland Bank have at all times qualified under Section
401(a) of the Code and have been and continue to be tax exempt under
Section 501(a) of the Code, and a favorable determination as to the
qualification under the Code of each plan and each amendment thereto
has been made by the Internal Revenue Service. Except as disclosed in
the Disclosure Schedule, neither Holland nor Holland Bank has (i)
incurred any liability for tax under Section 4971 of the Code on
account of any accumulated funding deficiency and no Plan listed in
the Disclosure Schedule has incurred any accumulated funding
deficiency within the meaning of Section 412 or 418(B) of the Code;
(ii) applied for or obtained a waiver by the IRS of any minimum
funding requirement under Section 412 of the Code; (iii) become
subject to any disallowance of deductions under Sections 419 or 419(A)
of the Code; (iv) incurred any liability for excise tax under Sections
4972, 4975, or 4976 of the Code or any liability or penalty under
ERISA; (v) incurred any liability to the Pension Benefit Guaranty
Corporation; (vi) had a reportable event (within the meaning of
Section 4043 of ERISA); or (vii) to the knowledge of Holland or
Holland Bank breached any of the duties or failed to perform any of
the obligations imposed upon the fiduciaries or plan administrators
under Title I or ERISA.
(d) A true and correct copy of each of the Plans listed on the
Disclosure Schedule as in effect on the date hereof and each trust
agreement relating to each such plan and arrangement, including all
amendments to such Plans and trusts, has been supplied to German
American, and a true and correct copy of each summary plan
description, to the extent required by ERISA, for each Plan listed in
the Disclosure Schedule has been supplied to German American. A true
and correct copy of the annual report (as described in Section 103 of
ERISA) most recently filed for each Plan listed in the Disclosure
Schedule, to the extent required by ERISA, has been supplied to German
American, and there have been no material changes in the financial
condition in the respective Plans from that stated in the annual
reports supplied. In the case of any Plan which is not in written
form, the Disclosure Schedule includes an accurate description of such
Plan. Neither Holland nor Holland Bank would have any liability or
contingent liability if any Plan listed on the Disclosure Schedule
(including without limitation the payment by Holland or Holland Bank
of premiums for health care coverage for active employees or retirees)
were terminated or if Holland or Holland Bank were to cease its
participation therein. Except as disclosed in the Disclosure Schedule,
neither Holland nor Holland Bank nor any of their affiliates or
persons acting on their behalf have made any written or oral promises
or statements to employees or retirees who are now living which might
reasonably have been construed by them as promising "lifetime" or
other vested rights to benefits under any Plan that cannot be
unilaterally terminated or modified by Holland Bank or Holland at
their discretion at any time without further obligation.
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(e) Except as disclosed in the Disclosure Schedule, in the case
of each Plan listed in the Disclosure Schedule which is a defined
benefit plan (within the meaning of Section 3(35) of ERISA), the net
fair market value of the assets held to fund such Plan equals or
exceeds the present value of all accrued benefits thereunder, both
vested and nonvested, as determined in accordance with an actuarial
costs method acceptable under section 3(31) of ERISA.
(f) On a timely basis, Holland and Holland Bank have made all
contributions or payments to or under each Plan listed in the
Disclosure Schedule as required pursuant to each such Plan, any
collective bargaining agreements or other provision for reserves to
meet contributions and payments under such Plans which have not been
made because they are not yet due.
(g) No Plan listed in the Disclosure Schedule has ever acquired
or held any "employer security" or "employer real property" (each as
defined in Section 407(d) of ERISA).
(h) Neither Holland nor Holland Bank has ever contributed or is
obligated to contribute under any "multi-employer plan" (as defined in
Section 3(37) of ERISA).
(i) Holland and Holland Bank have complied with all requirements
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") to the extent so required. Except as listed in the
Disclosure Schedule, neither Holland nor Holland Bank provides or is
obligated to provide health or welfare benefits to any current or
future retired or former employee other than any benefits required to
be provided under COBRA.
(j) Except as disclosed in the Disclosure Schedule, the Bank
Merger will not result in the payment, vesting or acceleration of any
benefit under any Plan sponsored or contributed to by Holland or
Holland Bank.
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Section 2.14. Title to Properties; Insurance. Holland and Holland Bank
have marketable title, insurable at standard rates, free and clear of all liens,
charges and encumbrances (except taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the Holland Financial Statements and
easements, rights-of-way, and other restrictions which are not material and, in
the case of Other Real Estate Owned, as such real estate is internally
classified on the books of Holland Bank, rights of redemption under applicable
law) to all real properties reflected on the Holland Financial Statements as
being owned by Holland or Holland Bank, respectively. All material leasehold
interests used by Holland and Holland Bank in their respective operations are
held pursuant to lease agreements which are valid and enforceable in accordance
with their terms. All such properties owned by Holland or Holland Bank comply in
all material respects with all applicable private agreements, zoning
requirements and other governmental laws and regulations relating thereto and
there are no condemnation proceedings pending or, to the knowledge of Holland,
threatened with respect to such properties. Holland and Holland Bank have valid
title or other ownership or use rights under licenses to all material intangible
personal or intellectual property used by Holland and Holland Bank in their
respective businesses free and clear of any claim, defense or right of any other
person or entity which is material to Holland's and/or Holland Bank's ownership
or use rights to such property, subject only to rights of the licensor pursuant
to applicable license agreements, which rights do not materially adversely
interfere with the use or enjoyment of such property. All insurable properties
owned or held by Holland or Holland Bank are insured in such amounts, and
against fire and other risks insured against by extended coverage and public
liability insurance, as is customary with companies of the same size and in the
same business.
Section 2.15. Environmental Matters.
(a) As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental laws and regulations in all
jurisdictions in which Holland or Holland Bank has done business or
owned property, including, without limitation, the Federal Resource
Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Water Act,
and the Federal Clean Air Act.
(b) Except as disclosed in the Disclosure Schedule or in the
environmental reports generated pursuant to Sections 4.01(a)(xv) or
4.06, to the knowledge of Holland, neither (i) the conduct by Holland
and Holland Bank of operations at any property, nor (ii) any condition
of any property owned by Holland or Holland Bank within the past ten
(10) years and used in their business operations, nor (iii) to the
knowledge of Holland the condition of any property owned by them
within the past ten (10) years but not used in their business
operations, nor (iv) to the knowledge of Holland or Holland Bank the
condition of any property held by them as a trust asset within the
past ten (10) years, violates or violated Environmental Laws in any
material respect, and no condition or event has occurred with respect
to any such property that, with notice or the passage of time, or
both, would constitute a material violation of Environmental Laws or
obligate (or potentially obligate) Holland or Holland Bank to remedy,
stabilize, neutralize or otherwise alter the environmental condition
of any such property. Neither Holland nor Holland Bank has received
any notice from any person or entity that Holland or Holland Bank or
the operation of any facilities or any property owned by either of
them, or held as a trust asset, are or were in violation of any
Environmental Laws or that either of them is responsible (or
potentially responsible) for the cleanup of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials
at, on or beneath any such property.
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Section 2.16. Compliance with Law. Holland and Holland Bank each have
all material licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
as presently conducted and are in compliance in all material respects with all
applicable laws and regulations, the violation of which would be material.
Section 2.17. Brokerage. There are no claims, agreements, arrangements,
or understandings (written or otherwise) for brokerage commissions, finders'
fees or similar compensation in connection with the Merger and the Bank Merger
payable by Holland or Holland Bank.
Section 2.18. Material Contracts. Except as set forth in the Disclosure
Schedule, neither Holland nor Holland Bank is a party to or bound by any oral or
written (i) material agreement, contract or indenture under which it has
borrowed or will borrow money (not including federal funds and money deposited,
including without limitation, checking and savings accounts and certificates of
deposit and borrowings from the FHLBB and the FRB); (ii) material guaranty of
any obligation for the borrowing of money or otherwise, excluding endorsements
made for collection and guarantees made in the ordinary course of business and
letters of credit issued in the ordinary course of business; (iii) material
contract, arrangement or understanding with any present or former officer,
director or shareholder (except for deposit or loan agreements entered into in
the ordinary course of business); (iv) material license, whether as licensor or
licensee; (v) contract or commitment for the purchase of materials, supplies or
other real or personal property in an amount in excess of $10,000 or for the
performance of services over a period of more than thirty days and involving an
amount in excess of $10,000; (vi) joint venture or partnership agreement or
arrangement; (vii) material contract, arrangement or understanding with any
present or former consultant, advisor, investment banker, broker, attorney or
accountant; or (viii) contract, agreement or other commitment not made in the
ordinary course of business.
Section 2.19. Compliance with Americans with Disabilities Act. (a) To
the best of Holland's knowledge, Holland and Holland Bank and their respective
properties (including those held by either of them in a fiduciary capacity) are
in compliance with all applicable provisions of the Americans with Disabilities
Act (the "ADA"), and (b) no action under the ADA against Holland, Holland Bank
or any of its properties has been initiated nor, to the best of Holland's
knowledge, has been threatened or contemplated.
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Section 2.20. Statements True and Correct. To the best of the knowledge
of Holland, none of the information supplied or to be supplied by Holland or
Holland Bank for inclusion in any documents to be filed with the FRB, the SEC,
the OCC, the DFI, the FDIC, or any other regulatory authority in connection with
the Mergers will, at the respective times such documents are filed, be false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein not misleading.
Section 2.21. Holland's Knowledge. With respect to representations and
warranties herein that are made or qualified as being made "to the knowledge of
Holland" or words of similar import, it is understood and agreed that matters
within the knowledge of the directors and the executive officers of Holland and
Holland Bank shall be considered to be within the knowledge of Holland.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GERMAN AMERICAN AND GAB
German American and GAB hereby severally make the following
representations and warranties to Holland and Holland Bank:
Section 3.01. Organization and Capital Stock
(a) German American is a corporation duly incorporated and
validly existing under the IBCL and has the corporate power to own all
of its property and assets, to incur all of its liabilities and to
carry on its business as now being conducted.
(b) GAB is a corporation duly incorporated and validly existing
under the IFIA and has the corporate power to own all of its property
and assets, to incur all of its liabilities and to carry on its
business as now being conducted. All of the capital stock of GAB is
owned by German American.
(c) German American has authorized capital stock of (i)
20,000,000 shares of German American Common, no par value, $1 stated
value, of which, as of the date of this Agreement, 9,048,593 shares
are issued and outstanding, and (ii) 500,000 shares of preferred
stock, $10 par value per share, of which no shares are issued and
outstanding, including 400,000 unissued shares that have been
designated "Series A Preferred Shares" and that have been reserved for
potential issuance upon exercise of Rights. All of the issued and
outstanding shares of German American Common are duly and validly
issued and outstanding, fully paid and non-assessable.
(d) The shares of German American Common that are to be issued to
the shareholders of Holland pursuant to the Holding Company Merger
have been duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued and outstanding, fully
paid and non-assessable.
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Section 3.02. Authorization. The Boards of Directors of German American
and GAB have each, by all appropriate action, approved this Agreement and the
Mergers and authorized the execution hereof on their behalf by their duly
authorized officers and the performance by each such entity of its obligations
hereunder. Nothing in the Articles of Incorporation or Bylaws of German American
or GAB, as amended, or any other agreement, instrument, decree, proceeding, law
or regulation (except as specifically referred to in or contemplated by this
Agreement) by or to which either of them or any of their subsidiaries is bound
or subject would prohibit German American or GAB from entering into and
consummating this Agreement and the Mergers on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
German American and GAB and constitutes a legal, valid and binding obligation
enforceable against each of them in accordance with its terms , except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and similar laws of general applicability relating to or
affecting creditors' rights or by general equitable principles. No other
corporate acts or proceedings are required by law to be taken by German American
or GAB to authorize the execution, delivery and performance of this Agreement.
Except for any requisite approvals of the FRB, FDIC and DFI, compliance with and
notices to the OCC under the National Bank Act, and the SEC's order declaring
effective German American's registration statement under the 1933 Act with
respect to the Holding Company Merger, no notice to, filing with, authorization
by, or consent or approval of, any federal or state regulatory authority is
necessary for the execution and delivery of this Agreement or the consummation
of the Mergers by German American or GAB. Neither German American nor GAB is,
nor will be by reason of the consummation of the transactions contemplated
herein, in material default under or in material violation of any provision of,
nor will the consummation of the transactions contemplated herein afford any
party a right to accelerate any indebtedness under, its articles of
incorporation or bylaws, any material promissory note, indenture or other
evidence of indebtedness or security therefor, or any material lease, contract,
or other commitment or agreement to which it is a party or by which it or its
property is bound.
Section 3.03. Subsidiaries. Each of German American's subsidiaries is
duly organized and validly existing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective properties and
assets, to incur its respective liabilities and to carry on its respective
business as now being conducted.
Section 3.04. Financial Information. The consolidated balance sheet of
German American and its subsidiaries as of December 31, 1999 and 1998 and
related consolidated statements of income, changes in shareholders' equity and
cash flows for the three years ended December 31, 1999, together with the notes
thereto, included in German American's Annual Report on Form 10-K, as filed with
the SEC on March 29, 2000 (the "10-K") and the consolidated balance sheet of
German American and its subsidiaries as of March 31, 2000 and related
consolidated statements of income and cash flows for the three months then ended
, together with the notes thereto, included in German American's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000 (the "10-Q") (together,
the "German American Financial Statements") have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as disclosed therein) and fairly present the consolidated financial
position and the consolidated results of operations, changes in shareholders'
equity and cash flows of German American and its consolidated subsidiaries as of
the dates and for the periods indicated.
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Section 3.05. Absence of Changes. Since March 31, 2000, there has not
been any material adverse change in the consolidated financial condition or the
consolidated results of operations or the business of German American and its
subsidiaries, taken as a whole.
Section 3.06. Reports. Since January 1, 1998 (or, in the case of
subsidiaries of German American, the date of acquisition thereof by German
American, if later), German American and each of its subsidiaries have filed all
reports, notices and other statements, together with any amendments required to
be made with respect thereto, that it was required to file with (i) the SEC,
(ii) the FRB, (iii) the FDIC, (iv) the DFI, (v) the OCC, (vi) any applicable
state securities or banking authorities, and (vii) any other governmental
authority with jurisdiction over German American or any of its subsidiaries. As
of their respective dates, each of such reports and documents, as amended,
including the financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they were filed.
Section 3.07. Absence of Litigation. There is no material litigation,
claim or other proceeding pending or, to the knowledge of German American,
threatened, before any judicial, administrative or regulatory agency or tribunal
against German American or any of its subsidiaries, or to which the property of
German American or any of its subsidiaries is subject, which is required to be
disclosed in SEC reports under Item 103 of Regulation S-K, and which has not
been so disclosed.
Section 3.08. Absence of Agreements with Banking Authorities. Neither
German American nor any of its subsidiaries is subject to any order (other than
orders applicable to bank holding companies or banks generally) or is a party to
any agreement or memorandum of understanding with any federal or state agency
charged with the supervision or regulation of banks or bank holding companies,
including without limitation the FDIC, the DFI, the OCC and the FRB.
Section 3.09. Compliance with Law. German American and its subsidiaries
have all material licenses, franchises, permits and other governmental
authorizations that are legally required to enable them to conduct their
respective businesses as presently conducted and are in compliance in all
material respects with all applicable laws and regulations, the violation of
which would be material.
Section 3.10. Brokerage. There are no claims, agreements, arrangements,
or understandings (written or otherwise) for brokerage commissions, finders'
fees or similar compensation in connection with the Merger and the Bank Merger
payable by German American and its subsidiaries or GAB.
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Section 3.11. Statements True and Correct. To the best of the knowledge
of German American, none of the information supplied or to be supplied by German
American and its subsidiaries or GAB for inclusion in any documents to be filed
with the FRB, the SEC, the OCC, the DFI, the FDIC, or any other regulatory
authority in connection with the Mergers will, at the respective times such
documents are filed, be false or misleading with respect to any material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading.
Section 3.12. German American's Knowledge. With respect to
representations and warranties herein that are made or qualified as being made
"to the knowledge of German American" or words of similar import, it is
understood and agreed that matters within the knowledge of the directors and the
executive officers of German American and GAB shall be considered to be within
the knowledge of German American.
ARTICLE IV
COVENANTS OF HOLLAND AND HOLLAND BANK
Section 4.01. Conduct of Business.
(a) From the date hereof until the earlier of the termination of
this Agreement or the Effective Time, except as expressly contemplated
by this Agreement, Holland and Holland Bank shall continue to carry on
their respective businesses, and shall discharge or incur obligations
and liabilities, only in the ordinary course of business as heretofore
conducted and, by way of amplification and not limitation with respect
to such obligation, neither Holland nor Holland Bank will, without the
prior written consent of German American:
(i) declare or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other
property, except for a semiannual cash dividend that may be
declared and paid not earlier than June 30, 2000, in an amount
not exceeding the amount specified by Section 4.09; or
(ii) issue (or agree to issue) any common or other capital
stock (except for the issuance of up to 2,250 shares of Holland
Common pursuant to the terms of, and upon exercise by the holders
of, those stock options held by employees of Holland Bank as of
the date of this Agreement) or any options, warrants or other
rights to subscribe for or purchase common or any other capital
stock or any securities convertible into or exchangeable for any
capital stock; or
(iii) directly or indirectly redeem, purchase or otherwise
acquire (or agree to redeem, purchase or acquire) (except for
shares acquired in satisfaction of a debt previously contracted)
any of their own common or any other capital stock; or
(iv) effect a split, reverse split, reclassification, or
other similar change in, or of, any common or other capital stock
or otherwise reorganize or recapitalize; or
(v) change the Articles of Incorporation or Bylaws of
Holland or the Articles of Association or Bylaws of Holland Bank;
or
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(vi) pay or agree to pay, conditionally or otherwise, any
bonus, additional compensation (other than ordinary and normal
bonuses and salary increases consistent with past practices) or
severance benefit or otherwise make any changes out of the
ordinary course of business with respect to the fees or
compensation payable or to become payable to consultants,
advisors, investment bankers, brokers, attorneys, accountants,
directors, officers or employees or, except as required by law or
as contemplated by this Agreement, adopt or make any change in
any Employee Plan or other arrangement or payment made to, for or
with any of such consultants, advisors, investment bankers,
brokers, attorneys, accountants, directors, officers or
employees; provided, however, that Holland and Holland Bank may
pay the fees, expenses and other compensation of consultants,
advisors, investment bankers, brokers, attorneys and accountants
when, if, and as earned in accordance with the terms of the
contracts, arrangements or understandings of Holland or Holland
Bank specifically disclosed on the Disclosure Schedule, or
(vii) borrow or agree to borrow any material amount of funds
except in the ordinary course of business, or directly or
indirectly guarantee or agree to guarantee any material
obligations of others except in the ordinary course of business
or pursuant to outstanding letters of credit; or
(viii) make or commit to make any new loan or issue or
commit to issue any new letter of credit or any new or additional
discretionary advance under any existing line of credit, or
purchase or agree to purchase any interest in a loan
participation, in aggregate principal amounts that would cause
Holland Bank's credit extensions or commitments to any one
borrower (or group of affiliated borrowers) to exceed $250,000;
or
(ix) other than U.S. Treasury obligations or asset-backed
securities issued or guaranteed by United States governmental
agencies or financial institution certificates of deposit insured
by the FDIC, in either case having an average remaining life of
five years or less (except that maturities may extend to seven
years on variable-rate securities), purchase or otherwise acquire
any investment security for their own accounts, or sell any
investment security owned by either of them which is designated
as held-to-maturity, or engage in any activity that would require
the establishment of a trading account for investment securities;
or
(x) increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices; or
(xi) enter into or amend any material agreement, contract or
commitment out of the ordinary course of business; or
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(xii) except in the ordinary course of business, place on
any of their assets or properties any mortgage, pledge, lien,
charge, or other encumbrance; or
(xiii) except in the ordinary course of business, cancel,
release, compromise or accelerate any material indebtedness owing
to Holland or Holland Bank, or any claims which either of them
may possess, or voluntarily waive any material rights with
respect thereto; or
(xiv) sell or otherwise dispose of any real property or any
material amount of any personal property other than properties
acquired in foreclosure or otherwise in the ordinary course of
collection of indebtedness to Holland or Holland Bank; or
(xv) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase
one environmental report thereon, prepared by a reliable and
qualified person or firm acceptable to German American, which
does not indicate the presence of material quantities of
pollutants, contaminants or hazardous or toxic waste materials on
the property; provided, however, that neither Holland nor Holland
Bank shall be required to obtain such a report with respect to
single family, non-agricultural residential property of five
acres or less to be foreclosed upon unless it has reason to
believe that such property might contain such materials or
otherwise might be contaminated; or
(xvi) commit any act or fail to do any act which will cause
a material breach of any material agreement, contract or
commitment; or
(xvii) violate any law, statute, rule, governmental
regulation or order, which violation might have a material
adverse effect on its business, financial condition, or earnings;
or
(xviii) purchase any real or personal property or make any
other capital expenditure where the amount paid or committed
therefor is in excess of $10,000 other than purchases of property
made in the ordinary course of business in connection with loan
collection activities or foreclosure sales in connection with any
of Holland's or Holland Bank's loans; or
(xix) issue certificate(s) for shares of Holland Common to
any Holland shareholder in replacement of certificate(s) claimed
to have been lost or destroyed without first obtaining from such
shareholder(s), at the expense of such shareholder(s), a surety
bond from a recognized insurance company in an amount that would
indemnify Holland (and its successors) against lost
certificate(s) (but in an amount not less than 150% of the
estimated per share value of the Merger Consideration under this
Agreement) per share of Holland Common, and obtaining a usual and
customary affidavit of loss and indemnity agreement from such
shareholder(s); provided, however, that Holland may waive the
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surety bond requirement in connection with the issuance of
replacement certificates to any shareholder if the number of
shares of Holland Common so reissued (together with the number of
shares previously reissued since December 31, 1999 to such
shareholder and all other shareholders who are affiliated or
associated with such shareholder) does not exceed for such
shareholder an aggregate of 50 shares; or
(xx) hold a special, regular or annual meeting (or take
action by consent in lieu thereof) of the Board of Directors or
the sole shareholder of Holland Bank for the purpose of
appointing or electing any new member to the Board of Directors
of Holland Bank (whether to fill a vacancy or otherwise) unless
such new member is approved in advance in writing by German
American.
(b) Neither Holland nor Holland Bank shall, without the prior written
consent of German American, engage in any transaction or take any other
action that would render untrue in any material respect any of the
representations and warranties of Holland or Holland Bank contained in
Article Two hereof if such representations and warranties were given as of
the date of such transaction or action.
(c) Holland shall promptly notify German American in writing of the
occurrence of any matter or event known to Holland or Holland Bank that is,
or is likely to become, materially adverse to the business, operations,
properties, assets or condition (financial or otherwise) of Holland and
Holland Bank taken as a whole.
(d) Neither Holland nor Holland Bank shall (a) directly or indirectly
solicit, encourage or facilitate (nor shall they permit any of their
respective officers, directors, employees or agents directly or indirectly
to solicit, encourage or facilitate), including by way of furnishing
information other than the terms of this Agreement, any inquiries or
proposals from third parties for a merger, consolidation, share exchange or
similar transaction involving Holland or Holland Bank or for the
acquisition of the stock or substantially all of the assets or business of
Holland or Holland Bank, or (b) subject to the fiduciary duties of the
Directors of Holland as advised by counsel in a written opinion, discuss
with or enter into conversations with any person concerning any such
merger, consolidation, share exchange, acquisition or other transaction.
Holland shall promptly notify German American orally (to be confirmed in
writing as soon as practicable thereafter) of all of the relevant details
concerning any inquiries or proposals that it may receive relating to any
such matters, including actions it intends to take with respect to such
matters.
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Section 4.02. Subsequent Discovery of Events or Conditions. Holland
shall, in the event it obtains knowledge of the occurrence of any event or
condition which would have been materially inconsistent with any of its
representations and warranties made to German American and GAB under Article II
had such event or condition occurred or existed (or, as to events or conditions
that occurred or came into existence in whole or in part prior to the date of
this Agreement, been known to Holland) on or before the date of this Agreement,
or which would be materially inconsistent with its past or expected future
satisfaction of any of its agreements or covenants included in Article IV of
this Agreement, give prompt notice thereof to German American.
Section 4.03. Submission to Shareholders. Holland shall cause to be
duly called and held, on a date mutually selected by German American and
Holland, a special meeting of its shareholders (the "Holland Shareholders'
Meeting") for submission of this Agreement and the Holding Company Merger for
approval of Holland shareholders as required by the DGCL. In connection with the
Holland Shareholders' Meeting, (i) Holland shall cooperate with and assist
German American in preparing and filing a Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") with the SEC in accordance with SEC requirements and
Holland shall mail it to its shareholders, (ii) Holland shall furnish German
American all information concerning itself that German American may reasonably
request in connection with such Proxy Statement/Prospectus, and (iii) the Board
of Directors of Holland shall (unless in the written opinion of counsel for
Holland the fiduciary duties of the Board of Directors prohibit such a
recommendation, in which event the individual members of the Board of Directors
shall nevertheless remain personally obligated to support the Agreement and the
Holding Company Merger pursuant to their personal undertakings on the signature
page of this Agreement) unanimously recommend to its shareholders the approval
of this Agreement and the Holding Company Merger contemplated hereby and use its
reasonable best efforts to obtain such shareholder approval.
Section 4.04. Consummation of Agreement. Holland shall use its best
efforts to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Mergers in
accordance with the terms and provisions hereof. Holland shall furnish to German
American in a timely manner all information, data and documents in the
possession of Holland or Holland Bank requested by German American as may be
required to obtain any necessary regulatory or other approvals of the Mergers or
to file with the SEC a registration statement on Form S-4 (the "Registration
Statement") relating to the shares of German American Common to be issued to the
shareholders of Holland pursuant to the Mergers and this Agreement, and shall
otherwise cooperate fully with German American to carry out the purpose and
intent of this Agreement.
Section 4.05. Financial Information. German American shall direct its
independent accounting firm, at German American's expense, to assist Holland in
preparing, to the extent required by SEC rules and regulations, Guide 3
statistical data, selected financial data, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (Items 301, 302, and
303 of SEC Regulation S-K) ("MD&A") concerning Holland in compliance with SEC
requirements for inclusion in the Registration Statement, including any required
unaudited financial statements and related Guide 3 and MD&A as of and for the
appropriate quarterly and year-to-date periods ending during 2000. Holland shall
cooperate with German American and its accounting firm in connection with the
preparation of all such information, and Holland shall use its best efforts to
provide such information, data and MD&A to German American as soon as
practicable.
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Section 4.06. Environmental Reports. Except as German American shall
otherwise consent with respect to any residential real estate (which consent
will not be unreasonably withheld by German American), Holland shall, at German
American's expense, cooperate with an environmental consulting firm designated
by German American, and reasonably acceptable to Holland, (the "designated
environmental consultant") in connection with the conduct by the designated
environmental consultant of a phase one environmental investigation on all real
property owned or leased (other than in connection with the operation of ATMs
located on leased real estate) by Holland or its subsidiaries as of the date of
this Agreement, and any real property acquired or leased (other than in
connection with the operation of ATMs located on leased real estate) by Holland
or its subsidiaries after the date of this Agreement, except as otherwise
provided in Section 4.01(a)(xv). If further investigation procedures are
required as to any such property by the report of the phase one investigation in
German American's reasonable opinion, Holland shall as soon as practicable, at
German American's expense, cooperate with the designated environmental
consultant for the taking of such further procedures, as reasonably prescribed
by German American, and provide a report of the results of such further
procedures (the "Phase II report") to German American. Should (a) the costs of
taking any such further investigative procedures and obtaining the report of the
results thereof, when aggregated with the costs of taking all remedial and
corrective actions and measures (i) required by applicable law, or (ii)
recommended or suggested by such report or reports and prudent in light of the
findings of such report, in the aggregate, exceed the sum of $150,000, as
reasonably estimated by the designated environmental consultant retained for
such purpose by German American, or (b) the designated environmental consultant
advise German American that the costs of taking such actions and measures
referred to in clause (a)(ii) above cannot be reasonably estimated with any
reasonable degree of certainty, then in either case German American shall have
the right pursuant to Section 7.03 hereof, for a period of 10 business days
following receipt of the Phase II report, to terminate this Agreement without
further obligation to Holland, which shall be German American's sole remedy in
such event.
Section 4.07. Restriction on Resales. Holland shall obtain and deliver
to German American, at least thirty (30) days prior to the Closing Date, signed
representations, in form reasonably acceptable to German American, of each
shareholder who may reasonably be deemed an "affiliate" of Holland as of the
date of the Shareholders' Meeting within the meaning of such term as used in
Rule 145 under the Securities Act of 1933, as amended (the "1933 Act"),
regarding their prospective compliance with the provisions of such Rule 145.
Holland shall also obtain and deliver to German American at least 30 days prior
to the Closing Date, the signed agreements of each shareholder who may
reasonably be deemed an "affiliate" (as such term is described in the preceding
sentence) of Holland as of the date of the Shareholders' Meeting agreeing not to
sell any shares of German American Common or otherwise reduce his or her risk
relative to such shares, until such time as financial results covering at least
thirty (30) days of post-Merger combined operations have been filed by German
American with the SEC in a quarterly report on Form 10-Q or in an annual report
on Form 10-K.
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Section 4.08. Access to Information.
(a) Holland shall permit German American reasonable access to its
and Holland Bank's properties and shall disclose and make available to
German American all books, documents, papers and records relating to
its and Holland Bank's assets, stock, ownership, properties,
operations, obligations and liabilities, including, but not limited
to, all books of account (including general ledgers), tax records,
minute books of directors' and shareholders' meetings, organizational
documents, material contracts and agreements, loan files, trust files,
investments files, filings with any regulatory authority, accountants'
workpapers, litigation files, plans affecting employees, and any other
business activities or prospects in which German American may have an
interest in light of the transactions contemplated by this Agreement.
(b) During the period from the date of this Agreement to the
Effective Time or the date this Agreement is terminated pursuant to
Article VII, Holland will cause one or more of it or Holland Bank's
designated representatives to confer on a regular basis with the
President of German American, or any other person designated in a
written notice given to Holland by German American pursuant to this
Agreement, to report the general status of the ongoing operations of
Holland and Holland Bank. Holland will promptly notify German American
of any material change in the normal course of the operation of its
business or properties and of any regulatory complaints,
investigations or hearings (or communications indicating that the same
may be contemplated), or the institution or the threat of litigation
involving Holland or Holland Bank, and will keep German American fully
informed of such events.
Section 4.09. Dividends. Notwithstanding Section 4.01(a) of this
Agreement, Holland may (in the absence of any material adverse change in its
consolidated financial condition, results of operations, or business) declare on
or after June 1, 2000, and thereafter pay a cash dividend to Holland
shareholders in an amount not exceeding $.40 per share.
ARTICLE V
COVENANTS OF GERMAN AMERICAN AND GAB
Section 5.01. Regulatory Approvals and Registration Statement.
(a) German American shall file or cooperate with Holland and
Holland Bank in filing all regulatory applications required in order
to consummate the Mergers, including all necessary applications for
the prior approvals of the FRB under the Bank Holding Company Act, the
FDIC under the Bank Merger Act, and the DFI. German American shall
keep Holland reasonably informed as to the status of such applications
and promptly send or deliver copies of such applications, and of any
supplementally filed materials, to counsel for Holland.
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(b) German American shall file with the SEC the Registration
Statement relating to the shares of German American Common to be
issued to the shareholders of Holland pursuant to this Agreement, and
shall use its best efforts to cause it to become effective as soon as
practicable. At the time the Registration Statement becomes effective,
the form of the Registration Statement shall comply in all material
respects with the provisions of the 1933 Act and the published rules
and regulations thereunder, and shall (to the best of the knowledge of
German American) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not false or misleading. At
the time of the mailing thereof to the shareholders and at the time of
any Shareholders' Meeting, the Proxy Statement/Prospectus included as
part of the Registration Statement, as amended or supplemented by any
amendment or supplement, shall (to the best of the knowledge of German
American) not contain any untrue statement of a material fact or omit
to state any material fact regarding German American, GAB or the
Holding Company Merger necessary to make the statements therein not
false or misleading. German American shall promptly and properly
prepare and file any other filings required under the Securities
Exchange Act of 1934 (the "1934 Act") relating to the Mergers, or
otherwise required of it under the 1934 Act prior to the Effective
Time.
Section 5.02. Subsequent Discovery of Events or Conditions. German
American shall, in the event it obtains knowledge of the occurrence of any event
or condition which would have been materially inconsistent with any of its
representations and warranties made to Holland and Holland Bank under Article
III had such event or condition occurred or existed (or, as to events or
conditions that occurred or came into existence in whole or in part prior to the
date of this Agreement, been known to German American) on or before the date of
this Agreement, or which would be materially inconsistent with its past or
expected future satisfaction of any of its agreements or covenants included in
Article V of this Agreement, give prompt notice thereof to Holland.
Section 5.03. Consummation of Agreement. German American shall use its
best efforts to perform and fulfill all conditions and obligations to be
performed or fulfilled under this Agreement and to effect the Mergers in
accordance with the terms and conditions of this Agreement, and use its best
efforts to cause the Closing to occur on Friday, September 29, 2000 and for the
Mergers to become effective (with the Bank Merger becoming effective immediately
following the effectiveness of the Holding Company Merger) at 12:01 a.m. on
Sunday, October 1, 2000, or as soon thereafter as practicable.
Section 5.04. Directors' and Officers' Indemnification.
(a) At or before the Effective Time, German American, at the
written request of Holland made on or before the Closing Date, shall
pay an amount not exceeding the Insurance Amount to the agent for the
insurance company that provides that portion of the current director's
and officer's liability insurance that serves to reimburse the present
and former officers and directors of Holland and Holland Bank or any
of their subsidiaries (determined as of the Effective Time) in order
to continue for up to two years following the Effective Time such
reimbursement coverage (and associated reimbursement coverage for
corporate indemnification and expense payments that German American as
successor to Holland may make after the Effective Time) with respect
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to claims that might be made against such directors and officers after
the Effective Time but arise from facts or events that allegedly
occurred before the Effective Time ("Tail Coverage"). If German
American obtains on or before the Closing Date an endorsement to
German American's director and officer liability insurance policies
that provides each of the present and former officers and directors of
Holland and Holland Bank or any of their subsidiaries (determined as
of the Effective Time) with the same coverage as is then afforded by
German American to its own directors and officers, with full
retroactive coverage for claims that might be made against such
directors and officers after the Effective Time but arise from facts
or events that allegedly occurred before the Effective Time, and
German American shall keep all such present and former directors and
officers of Holland and Holland Bank insured under German American's
director and officer liability insurance policy as in effect from time
to time for claims that might be made during the six-year period
following the Effective Time, then German American shall have no
obligation to pay or reimburse the costs of obtaining Tail Coverage
under the existing policy of Holland or Holland Bank and Holland, and
Holland Bank shall not purchase such Tail Coverage from the funds of
Holland or Holland Bank. German American shall notify Holland not
later than two weeks prior to the Closing Date whether German American
has obtained an endorsement as described in the preceding sentence and
has elected to include the parties referenced in the preceding
sentence under its policy for the time periods specified. In the event
that German American shall pay for the Tail Coverage, it shall not be
obligated to pay premium for Tail Coverage that has greater coverage
or amounts, or that contains terms and conditions that are more
advantageous, than the coverage currently provided by Holland and
Holland Bank, or (if less advantageous) the coverage in the face
amount of $3,000,000 that is currently provided by German American to
directors and officers of its bank affiliates. In no event shall
German American be required to pay under this Section 5.04(a) an
annual for Tail Coverage that is more than twice the most recent
annual amount spent by Holland and Holland Bank (as so doubled, the
"Insurance Amount") for directors' and officers' reimbursement
insurance coverage. Although German American shall cooperate by using
its commercially reasonable best efforts in connection with Holland's
and Holland Bank's attempts to procure such Tail Coverage on or before
the Closing Date, German American shall have no independent obligation
to procure any such Tail Coverage (other than its obligation to pay
the premium therefor when presented with a written request to do so by
Holland or Holland Bank on or before the Closing Date in accordance
with this Section 5.04(a)) or thereafter maintain in force any such
Tail Coverage or otherwise act for any of the insureds under such Tail
Coverage.
(b) If German American or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or
shall transfer all or substantially all of its assets to any entity,
then and in each case, proper provision shall be made so that the
successors and assigns of German American shall assume the obligations
set forth in this Section 5.04.
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(c) For six (6) years after the Effective Time, German American
shall (and shall cause the Surviving Bank to) indemnify, defend and
hold harmless the present and former officers and directors of Holland
and Holland Bank (each, an "Indemnified Party") against all losses,
expenses, claims, damages or liabilities arising out of actions or
omissions (arising from their present or former status as officers or
directors of Holland or Holland Bank) occurring on or prior to the
Effective Time to the fullest extent then permitted under the
applicable provisions of the IBCL and the IFIA and public policy, and
except to the extent that director and officer liability insurance has
paid such losses, expenses, claims, damages or liabilities.
(d) If during the six (6) year period after the Effective Time
German American or the Surviving Bank or any of its or their
successors or assigns (i) shall consolidate with or merge into any
other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in
each such case, proper provision shall be made so that the successors
and assigns of German American and/or the Surviving Bank shall assume
the obligations set forth in this Section 5.04.
Section 5.05. Preservation of Business. German American shall: (a)
conduct its business substantially in the manner as is presently being conducted
and in the ordinary course of business and not amend its articles of
incorporation in any manner that requires the approval of shareholders of German
American under the IBCL; (b) file, and cause its subsidiaries to file, all
required reports with applicable regulatory authorities; (c) comply with all
laws, statutes, ordinances, rules or regulations applicable to it and to the
conduct of its business, the noncompliance with which results or could result in
a material adverse effect on the financial condition, results of operations,
business, assets or capitalization of German American on a consolidated basis;
and (d) comply in all material respects with each contract, agreement,
commitment, obligation, understanding, arrangement, lease or license to which it
is a party by which it is or may be subject or bound, the breach of which could
result in a material adverse effect on the financial condition, results of
operations, business, assets or capitalization of German American on a
consolidated basis. German American shall promptly notify Holland in writing of
the occurrence of any matter or event known to German American or GAB that is,
or is likely to become, materially adverse to the businesses, operations,
properties, assets or condition (financial or otherwise) of German American and
GAB taken as a whole.
Section 5.06. Securities and Exchange Commission Filings.
(a) German American will provide Holland with copies of all
filings made by German American with the SEC under the 1934 Act and
the 1933 Act and the respective rules and regulations of the SEC
thereunder as soon as practicable after such filings are made at any
time prior to the Effective Time.
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(b) Following the Effective Time, and for so long as any Holland
shareholder who may be deemed an "affiliate" of Holland as of the date
of the Shareholders' Meeting remains subject to Rule 145 of the 1933
Act in respect of any disposition of the Merger Consideration, German
American shall make available adequate current public information
about itself as that terminology is used in and as required by Rule
144(c) of the SEC under the 1933 Act.
Section 5.07. Continuation of Service by Directors; Representation on
GAB Board. GAB shall cause the Chairman of the Board of Holland Bank (or another
mutually acceptable member of the Board of Holland Bank) to be appointed to the
Board of Directors of GAB as of the Effective Time and shall take appropriate
action to waive the retirement provision of GAB's Bylaws to allow him to serve
as a Director until at least the second annual meeting of GAB following the
Effective Time. The other members of the Board of Directors of Holland Bank
immediately prior to the Effective Time shall continue for a period of not less
than two years after the Effective Time to meet for the purpose of advising the
continuing management of Holland Bank's offices concerning transitional matters,
with a view to continuing the high level of community service established by
Holland Bank prior to the Effective Time; and they shall continue to receive the
same compensation which they had received as members of the Board of Directors
of Holland, but not greater than the amount of compensation to which members of
the GAB Board are entitled during the same period of time.
Section 5.08. Authorization of Common Stock. At the Effective Time, the
shares of German American Common to be exchanged with former shareholders of
Holland shall have been duly registered under the 1933 Act and shall have been
duly authorized and validly issued by German American and shall be fully paid
and non-assessable and subject to no pre-emptive rights.
Section 5.09. Director Deferred Fee Plan. From and after the Effective
Time, German American and GAB will assume the rights and obligations of Holland
Bank under its director deferred fee agreements with Marlin R. Gray, MD, Thomas
G. Hoffman, Lynn Kahle, Alan Nass, Philip C. Schneider, James Siebert, and
Eugene L. Thewes. Prior to the Effective Time, and without further consent by
GAB or German American, Holland Bank may amend such agreements to provide that
having the position of advisor to GAB concerning transitional matters will be
treated the same as being "a member of the Company's Board of Directors" for
purposes of such agreements for a period not to exceed two years. No other
revisions may be made to such agreements by Holland or Holland Bank prior to the
Effective Time without the express written consent of GAB. GAB shall not amend
such agreements subsequent to the Effective Time without the consent of the
affiliated director (or former director) or his or her successor, it being
intended that interest will continue to be credited under such agreements at an
annual rate approximating the average tax equivalent yield on earning assets of
the Bank, rounded to the nearest one-fourth of one percent and that benefits
will be paid out under such agreements in the form elected by the affiliated
director (or former director) on his or her applicable Election Form as referred
to in such agreements.
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Section 5.10. Benefit Plan Eligibility and Past Service Credit.
Following the Effective Time, the employees of Holland Bank who were employees
at will of Holland Bank as of December 24, 1999 and continue to be employees at
will through the Effective Time shall continue as employees at will of GAB on
substantially the same terms and conditions of employment as other
similarly-situated employees at will of GAB. Employees of Holland Bank who
become employees of German American or GAB immediately after the Effective Time
will receive credit for vesting and eligibility purposes under German American's
and GAB's defined contribution retirement and other employee benefit plans,
which are generally available to employees of GAB, for their years and, if
applicable, months of service with Holland Bank; provided, however, that German
American or GAB may, in lieu of providing such employees with benefits under
German American's and GAB's defined contribution retirement and other employee
benefit plans, elect to continue providing all or any portion of the employee
benefits to such employees under the terms and conditions of the current Holland
or Holland Bank Plans identified on the Disclosure Schedule pursuant to Section
2.13 of this Agreement. Such employees shall not be subject to any additional
waiting periods or pre-existing condition limitations under the medical, dental
and health plans of German American or GAB other than those limitations
applicable to GAB or Holland employees generally. Such employees will be
cashed-out at the Effective Time for all hours of unused personal time off,
accrued during 2000 and prior to the Effective Time. Such employees will retain
credit for unused vacation time accrued during 2000.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGERS
Section 6.01. Conditions of German American's Obligations. The
obligations of German American and GAB to effect the Mergers shall be subject to
the satisfaction (or waiver by German American and GAB) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by Holland and
Holland Bank in this Agreement shall be true in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the
Closing Date.
(b) Holland and Holland Bank shall have performed and complied in
all material respects with all of its obligations and agreements
required to be performed on or prior to the Closing Date under this
Agreement.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers shall be in effect, nor shall any
proceeding by any bank regulatory authority, governmental agency or
other person seeking any of the foregoing be pending. There shall not
be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Mergers which
makes the consummation of the Mergers illegal.
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(d) All necessary regulatory approvals, consents, authorizations
and other approvals required by law or stock market requirements for
consummation of the Mergers shall have been obtained and all waiting
periods required by law shall have expired.
(e) German American shall have received the environmental reports
required by Sections 4.06 and 4.01(a)(xv) hereof and shall not have
elected, pursuant to Section 4.06 hereof, to terminate and cancel this
Agreement.
(f) German American shall have received all documents required to
be received from Holland or Holland Bank on or prior to the Closing
Date, all in form and substance reasonably satisfactory to German
American.
(g) German American shall have received a letter, dated as of the
Effective Time, from Crowe, Chizek and Company LLP, its independent
public accountants, to the effect that the Mergers will qualify for
pooling of interests accounting treatment under Accounting Principles
Board Opinion No. 16 if closed and consummated in accordance with this
Agreement.
(h) The Registration Statement shall be effective under the 1933
Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such
purpose pending before or threatened by the SEC.
(i) German American shall have received from its counsel, Ice
Miller Donadio & Ryan Miller Donadio & Ryan, an opinion to the effect
that if the Mergers are consummated in accordance with the terms set
forth in this Agreement, (i) the Holding Company Merger will
constitute a reorganization within the meaning of Section 368(a) of
the Code; (ii) no gain or loss will be recognized by the holders of
shares of Holland Common upon receipt of the Merger consideration
(except for cash received in lieu of fractional shares); (iii) the
basis of shares of German American Common received by the shareholders
of Holland will be the same as the basis of shares of Holland Common
exchanged therefor; and (iv) the holding period of the shares of
German American Common received by the shareholders of Holland will
include the holding period of the shares of Holland Common exchanged
therefor provided such shares were held as capital assets as of the
Effective Time.
(j) The holders of all stock options shall have exercised such
options in full or such options shall have been forfeited, canceled,
or otherwise terminated to the satisfaction of German American on or
before the Effective Time. Holland may make loans to employees to whom
stock options are outstanding, to enable them to exercise such
options, provided such loans are made on commercially reasonable terms
and conditions satisfactory to German American and such loans are
disclosed to Holland shareholders in the prospectus/proxy statement.
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Section 6.02. Conditions of Holland's and Holland Bank's Obligations.
Holland's and Holland Bank's obligations to effect the Mergers shall be subject
to the satisfaction (or waiver by Holland and Holland Bank) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by German American
and GAB in this Agreement shall be true in all material respects on
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on the Closing
Date.
(b) German American and GAB shall each have performed and
complied in all material respects with all of its obligations and
agreements required to be performed prior to the Closing Date under
this Agreement.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers shall be in effect, nor shall any
proceeding by any bank regulatory authority, other governmental agency
or other person seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order
enacted, enforced or deemed applicable to the Mergers which makes the
consummation of the Mergers illegal.
(d) All necessary regulatory approvals, consents, authorizations
and other approvals required by law for consummation of the Mergers,
including the requisite approval of the Mergers by the shareholders of
Holland, shall have been obtained and all waiting periods required by
law shall have expired.
(e) Holland shall have received all documents required to be
received from German American and GAB on or prior to the Closing Date,
all in form and substance reasonably satisfactory to Holland.
(f) The Registration Statement shall be effective under the 1933
Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such
purpose pending before or threatened by the SEC.
(g) Holland shall have received from counsel for German American,
Ice Miller Donadio & Ryan Miller Donadio & Ryan, an opinion reasonably
satisfactory to Holland to the effect that if the Mergers are
consummated in accordance with the terms set forth in this Agreement,
(i) the Holding Company Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code; (ii) no gain or loss will
be recognized by the holders of shares of Holland Common upon receipt
of the Merger Consideration (except for cash received in lieu of
fractional shares); (iii) the basis of German American Common received
by the shareholders of Holland will be the same as the basis of
Holland Common exchanged therefor; and (iv) the holding period of the
shares of German American Common received by the shareholders of
Holland will include the holding period of the shares of Holland
Common exchanged therefor, provided such shares were held as capital
assets as of the Effective Time.
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(h) Holland shall have received from Olive Corporate Finance, LLC
or another reputable financial advisor a written fairness opinion
stating that the terms of the Holding Company Merger are fair to the
shareholders of Holland from a financial point of view. Such written
fairness opinion shall (i) be in form and substance reasonably
satisfactory to Holland, (ii) be dated as of the date not later than
the mailing date of the proxy statement - prospectus relating to the
Mergers to be mailed to the shareholders of Holland, and (iii) be
included as an exhibit to such proxy statement - prospectus.
ARTICLE VII
TERMINATION OR ABANDONMENT
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties approved by their respective Boards of
Directors at any time prior to the Effective Time, regardless of whether
shareholder approval of this Agreement and the Mergers by the shareholders of
Holland or German American shall have been previously obtained.
Section 7.02. Breach of Representations, Warranties or Covenants.
(a) In the event that there is a material breach in any of the
representations and warranties or covenants of the parties, which
breach is not cured within thirty (30) days after notice to cure such
breach is given by the non-breaching party, then the Board of
Directors of the non-breaching party, regardless of whether approval
by the shareholders of this Agreement and the Mergers shall have been
previously obtained, and in addition to any other remedies to which
the non-breaching party may be entitled, may terminate and cancel this
Agreement effective immediately by providing written notice thereof to
the other party hereto.
(b) In the event that this Agreement is terminated due to the
failure of the Holding Company Merger to be approved by the requisite
vote of shareholders of Holland or the failure of Holland to cause the
Holding Company Merger to be submitted to a vote of shareholders of
Holland, following the making by any other person or entity not a
party to this Agreement of a proposal to Holland or Holland Bank
contemplating a merger, consolidation, plan of stock exchange, sale of
all or substantially all assets, or other business combination with
Holland or Holland Bank, if, but only if, Holland shall publicly
announce within twelve months following a termination described by
this clause (b) that Holland has accepted a proposal for a business
combination with any third party, then, in lieu of specific
performance but in addition to whatever other legal rights or remedies
to which German American may be entitled against any third party,
Holland shall, upon German American's demand and not later than the
second business day after the making of such demand, (i) pay to German
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American a termination fee of $300,000 and (ii) reimburse German
American for all its out-of-pocket costs and expenses in connection
with the Mergers incurred from and after March 1, 2000 (but not more
than $100,0000), including its legal, accounting, environmental and
other consulting fees and expenses. If Holland should fail or refuse
to pay any amount demanded by German American pursuant to the
preceding sentence and German American recovers such disputed amount
pursuant to a legal proceeding, Holland shall, in addition thereto,
pay to German American all costs, charges, expenses (including without
limitation the fees and expenses of counsel) and other amounts
expended by German American in connection with or arising out of such
legal proceeding. The parties agree that the actual damages and loss
that would be caused to German American by reason of any such
termination cannot be determined with certainty due to German
American's "opportunity cost" in proceeding with the Mergers compared
to proceeding with other opportunities that are available to German
American and other factors. The parties therefore agree that the
amounts payable pursuant to this Section 7.02 represent a reasonable
estimate of German American's opportunity cost and other damages and
loss that may be awarded as either a termination fee or as liquidated
damages to German American if it chooses not to seek specific
performance of this Agreement, and that such amounts represent the
sole damages from Holland and Holland Bank to which German American
would be entitled.
Section 7.03. Adverse Environmental Reports. German American may
terminate this Agreement as provided by Section 4.06 by giving written notice
thereof to Holland.
Section 7.04. Failure of Conditions. In the event any of the conditions
to the obligations of either party are not satisfied or waived on or prior to
the Closing Date, and if any applicable cure period provided in Section 7.02 (a)
hereof has lapsed, then the Board of Directors of such party may, regardless of
whether approval by its shareholders of this Agreement and the Mergers shall
have been previously obtained, terminate and cancel this Agreement on the
Closing Date by delivery of written notice thereof to the other party on such
date.
Section 7.05. Termination Upon Adverse Regulatory Determination. In
connection with the filings that the German American, Holland and/or Holland
Bank may be required to make in connection with the Merger and the Bank Merger
with banking, securities, and antitrust regulatory agencies ("Agencies"), each
party shall use their best efforts to obtain all necessary approvals of, or
clearances from, the Agencies, and shall cause their respective agents and
advisors to cooperate and use their best efforts in connection therewith. German
American (or its subsidiaries) shall be responsible for making the required
Merger filings (except to the limited extent that the applicable law,
regulations, or forms specify that Holland (or Holland Bank) is the appropriate
filing party) with the Agencies, and for discussing such filings with the
Agencies and responding to comments thereon. If any required filing is
disapproved by any of the Agencies, or any determination is made by any of the
Agencies that either of the Mergers cannot be consummated except on terms and
conditions that are materially adverse from a financial point of view to German
American (an "Adverse Determination"), then German American shall promptly
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advise Holland of such Adverse Determination and German American's intended
course of action with respect thereto. In the event that German American in its
sole discretion determines to seek a judicial or regulatory appeal or review
(formal or informal) of the Adverse Determination, Holland and Holland Bank (and
their agents and advisors) shall continue to cooperate with such appeal and
review procedure and use its best efforts to assist in connection with obtaining
reversal or modification of such Adverse Determination. In the event that (a)
German American in its sole discretion elects not to seek an appeal or review of
the Adverse Determination or elects in its sole discretion at any time after
seeking such an appeal or review to discontinue that effort, or (b) German
American seeks such an appeal or review but all avenues for such appeal or
review are exhausted without the Adverse Determination having been vacated or
overruled or modified in such a manner that the Adverse Determination is no
longer materially adverse ("Relief Determination"), then either German American
or Holland may terminate this Agreement without obligation to the other on
account of the Adverse Determination.
Section 7.06. Shareholder Approval Denial. If this Agreement and
consummation of the Holding Company Merger is not approved by the shareholders
of Holland, then either party may terminate this Agreement by giving written
notice thereof to the other party, subject to Section 7.02(b).
Section 7.07. Regulatory Enforcement Matters. In the event that Holland
or Holland Bank, on the one hand, or German American or GAB, on the other hand,
should become a party or subject to any memorandum of understanding, cease and
desist order, or civil money penalties imposed by any federal or state agency
charged with the supervision or regulation of banks or bank holding companies
after the date of this Agreement, then the party that is not (and whose
affiliate is not) subject to such regulatory enforcement may terminate this
Agreement by giving written notice thereof to the other party.
Section 7.08. Lapse of Time. If the Closing Date does not occur on or
prior to December 31, 2000, then this Agreement may be terminated by the Board
of Directors of either Holland or German American by giving written notice
thereof to the other party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Liabilities. In the event that this Agreement is
terminated or the Mergers are abandoned pursuant to the provisions of Article
Seven hereof, no party and no officer, director or employee of any party hereto
shall have any liability to any other party for costs, expenses, damages,
termination fees, or otherwise except to the extent specifically set forth in
Section 7.02(b).
Section 8.02. Notices. Any notice or other communication hereunder
shall be in writing and shall be deemed to have been given or made (a) on the
date of delivery, in the case of hand delivery, or (b) three (3) business days
after deposit in the United States Registered or Certified Mail, with mailing
receipt postmarked by the Postal Service to show date of mailing, postage
prepaid, or (c) upon actual receipt if transmitted during business hours by
facsimile (but only if receipt of a legible copy of such transmission is
confirmed by the recipient); addressed (in any case) as follows:
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(a) If to German American:
German American Bancorp
711 Main Street
Box 810
Jasper, Indiana 47546
Attn: Mark A. Schroeder, President
with a copy to:
Ice Miller Donadio & Ryan Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attn: Mark B. Barnes
and
(b) If to Holland or Holland Bank:
Holland Bancorp, Inc.
P.O. Box 8
Holland, Indiana 47541
Attn: Gene Thewes, President
with a copy to:
Bose McKinney & Evans LLP
135 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
Attn: David A. Butcher
or to such other address as any party may from time to time designate by notice
to the other.
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Section 8.03. Non-survival of Representations and Agreements. No
representation, warranty or covenant contained in this Agreement shall survive
(and no claims for the breach or nonperformance thereof may be brought after)
the Effective Time except the covenants of German American in Sections 5.04,
5.06(b), 5.07, 5.08, 5.09 and 5.10, which shall survive the Effective Time. No
representation, warranty or covenant contained in this Agreement shall survive
(and no claims for the breach or nonperformance thereof may be brought after)
the termination of this Agreement pursuant to Article Seven hereof. The
reliability and binding effect of any representation or warranty made by any
party in this Agreement shall not be diminished or limited in any way by any
review, or by the opportunity to conduct any review, by or on behalf of the
intended beneficiary of the subject matter of the representation or warranty,
whether before or after the date of this Agreement, unless and to the extent
that the reviewing party and the other party expressly agree otherwise in
writing.
Section 8.04. Entire Agreement. Except for that certain confidentiality
agreement previously executed among the parties hereto, this Agreement
constitutes the entire agreement between the parties and supersedes and cancels
any and all prior discussions, negotiations, undertakings and agreements between
the parties relating to the subject matter hereof.
Section 8.05. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.06. Waiver, Amendment or Modification. The conditions of this
Agreement that may be waived may only be waived by written notice specifically
waiving such condition addressed to the party claiming the benefit of the
waiver. The failure of any party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. This Agreement may not be amended or modified
except by a written document duly executed by the parties hereto.
Section 8.07. Rules of Construction. Unless the context otherwise
requires (a) a term used herein has the meaning assigned to it, and (b) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles.
Section 8.08. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument.
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Section 8.09. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors.
Except for Sections 5.04, 5.06(b), 5.07, 5.08, 5.09 and 5.10 of this Agreement
(which are intended to be for the specific benefit of present and former
officers and directors and their respective spouses and beneficiaries with
respect to certain specified contracts, arrangements and understandings, to the
extent contemplated thereby, and may accordingly be enforced by such persons),
there shall be no third party beneficiaries hereof. Without limitation of the
generality of the foregoing, Holland and Holland Bank expressly acknowledge and
agree that the terms and provisions of Sections 1.04(b) and of Section 5.10 are
intended only to memorialize certain assumptions and understandings that exist
between the parties regarding German American's good faith intent with respect
to certain matters relating to post-closing business relationships with the
public at large and with employees of Holland and Holland Bank in general, and
are not intended to benefit any particular person associated with Holland or
Holland Bank (including without limitation any particular customer, employee,
officer, director or agent, or group or class of such persons), and that none of
such persons shall have any private right of action with respect to any alleged
breach by German American at or after the Effective Time of the provisions of
Sections 1.04(a) or 5.10.
Section 8.10. Governing Law; Assignment. This Agreement shall be
governed by the laws of the State of Indiana. This Agreement may not be assigned
by any of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written, with the approval of their
respective Boards of Directors.
GERMAN AMERICAN BANCORP
By: /s/ George W. Astrike
------------------------------------------
George W. Astrike
Chairman of the Board
and
By: /s/ Mark A. Schroeder
------------------------------------------
Mark A. Schroeder
President and Chief Executive Officer
THE GERMAN AMERICAN BANK
By: /s/ Kenneth L. Sendelweck
------------------------------------------
Kenneth L. Sendelweck
President and Chief Executive Officer
HOLLAND BANCORP, INC.
By: /s/ Jerome W. Blesch
------------------------------------------
Jerome W. Blesch
Chairman of the Board
and
By: /s/ Eugene Thewes
------------------------------------------
Eugene Thewes
President and Chief Executive Officer
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THE HOLLAND NATIONAL BANK
By: /s/ Eugene Thewes
------------------------------------------
Eugene Thewes
President and Chief Executive Officer
APPROVED BY THE MEMBERS OF THE BOARD OF DIRECTORS OF HOLLAND BANCORP, INC.:
The undersigned Directors of Holland Bancorp, Inc., hereby (a) evidence their
approval of this Agreement and the Mergers contemplated thereby, and (b) agree
to vote their shares of Holland Common that are registered in their personal
names (and agree to use their best efforts to cause all additional shares of
Holland Common over which they have voting influence or control to be voted) in
favor of the Holding Company Merger at the Holland Shareholders' Meeting, all as
of the date and year first above written.
/s/ Marlin Gray, M.D. /s/ Alan Nass
----------------------------------- ------------------------------------------
Marlin Gray, M.D. Alan Nass
/s/ James Siebert /s/ Lloyd Prusz
----------------------------------- ------------------------------------------
James Siebert Lloyd Prusz
/s/ Lynn Kahle /s/ Philip Schneider
----------------------------------- ------------------------------------------
Lynn Kahle Philip Schneider
/s/ Ray Lindsey /s/ Eugene Thewes
----------------------------------- ------------------------------------------
Ray Lindsey Eugene Thewes
/s/ Jerome Blesch
-----------------------------------
Jerome Blesch
A-41
<PAGE>
APPENDIX A
PLAN OF MERGER
of
HOLLAND BANCORP, INC.
into
GERMAN AMERICAN BANCORP
1. The names of each corporation planning to merge are:
German American Bancorp, an Indiana corporation (the "Surviving
Corporation")
Holland Bancorp, Inc., a Delaware corporation (the "Merging
Corporation")
2. The corporation surviving the merger is German American Bancorp, the name
of which is not changed pursuant to this Plan of Merger.
3. Under the terms of the merger as set forth in the Agreement and Plan of
Merger dated as of June 27, 2000 (the "Merger Agreement"), each of the
outstanding common shares of the Merging Corporation shall be converted
into 3.5 Common Shares of the Surviving Corporation at the effective time
of the Merger and the separate corporate existence of the Merging
Corporation shall cease.
4. The Articles of Incorporation and the Bylaws of the Surviving Corporation
(each as amended immediately prior to the effective time of the merger)
shall not change as a result of the merger.
A-42
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF BANK MERGER
between
THE GERMAN AMERICAN BANK
and
THE HOLLAND NATIONAL BANK
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<PAGE>
THIS AGREEMENT AND PLAN OF BANK MERGER (this "Agreement"), made between THE
GERMAN AMERICAN BANK (hereinafter referred to as "GAB"), a banking corporation
organized under the laws of the State of Indiana, being located at 711 Main
Street, Jasper, County of Dubois, in the State of Indiana, and THE HOLLAND
NATIONAL BANK (hereinafter referred to as "Holland Bank"), a banking association
organized under the laws of the United States, being located at 405 N. Meridian,
Holland, County of Dubois, in the State of Indiana, each acting pursuant to a
resolution of its board of directors adopted by the vote of at least a majority
of its directors, witnesses as follows:
SECTION 1.
Holland Bank shall be merged with and into GAB under the charter of the latter
(the "Merger"), subject to and effective in accordance with the terms and
conditions of this Agreement. The Articles of Incorporation and Bylaws of GAB,
as in effect immediately prior to the effective time of the Merger, shall
continue, unchanged, as the Articles of Incorporation and Bylaws of the
surviving bank from and after the effective time of the Merger.
SECTION 2.
The name of the surviving bank shall be "The German American Bank."
SECTION 3.
The business of the surviving bank shall be that business that is authorized to
be conducted by a banking corporation organized under the laws of the State of
Indiana. The business of banking of the surviving bank shall be conducted by the
surviving bank at its main office which shall be located at 711 Main Street,
Jasper, Indiana, and at its legally-established branches.
SECTION 4.
The Merger shall have all of the effects provided by the Indiana Financial
Institutions Act. All assets of Holland Bank as they exist at the effective time
of the Merger shall pass to and vest in the surviving bank without any
conveyance or other transfer. The surviving bank shall be responsible for all of
the liabilities of every kind and description of Holland Bank existing as of the
effective time of the Merger.
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<PAGE>
SECTION 5.
At the effective time of the Merger, the shares of capital stock of GAB that
were issued and outstanding immediately prior to the Merger shall continue to be
issued and outstanding, and the shares of capital stock of Holland Bank that
were issued and outstanding immediately prior to the Merger shall be canceled.
SECTION 6.
The members of the board of directors of GAB immediately prior to the effective
time of the Merger shall continue to serve as members of the Board of Directors
of the surviving bank at and after the effective time of the Merger until the
next annual meeting or until such time as their successors have been elected and
have qualified. In addition, as of the effective time of the Merger, Jerome W.
Blesch (or another member of the Holland Bank Board of Directors designated by
the Board of Directors of Holland Bank prior to the effective time and
acceptable to GAB) shall become a member of the Board of Directors of GAB, to
serve until the next annual meeting or until such time as his successor has been
elected and has qualified. GAB waives any mandatory retirement provision in its
Bylaws that would otherwise prevent Jerome W. Blesch from continuing to serve as
a member of the Board of Directors of GAB through a period ending not later than
the second annual meeting of the sole shareholder of GAB following the effective
time of the Merger.
SECTION 7.
This Agreement may be terminated by the mutual consent of the boards of
directors of GAB and Holland Bank at any time prior to the effective time of the
Merger. Notwithstanding the foregoing, in the event that that certain Agreement
and Plan of Reorganization dated June 27, 2000, by and among German American
Bancorp, Holland Bancorp, Inc., GAB and Holland Bank ("Master Agreement") is
terminated without the transactions contemplated thereby being consummated as
provided therein, then this Agreement shall also be terminated and shall be of
no further force and effect.
SECTION 8.
This Agreement shall be approved by the sole shareholder of each of the merging
banks as required by law; and, subject to Section 9 of this Agreement, the
Merger shall become effective at the time specified in the Articles of Merger
that will be filed with respect to the Merger with the Department of Financial
Institutions of the State of Indiana and the Secretary of State of the State of
Indiana.
A-45
<PAGE>
SECTION 9.
Anything herein to the contrary notwithstanding, the obligations of the merging
banks under this Agreement are subject to and expressly conditioned upon the
consummation of the merger of German American Bancorp and Holland Bancorp, Inc.,
as described in the Master Agreement.
WITNESS, the signatures of said merging banks this ____ day of June, 2000, each
set by its President and attested to by its Cashier or Secretary, pursuant to a
resolution of its board of directors, acting by a majority of its members, and
the signatures of at least a majority of the members of each bank's board of
directors.
THE GERMAN AMERICAN BANK
Attest:
By:___________________________
______________________ Kenneth L. Sendelweck
Secretary President and Chief Executive Officer
_______________________________ ___________________________________
George W. Astrike Mark A. Schroeder
_______________________________ ___________________________________
David G. Buehler Kenneth L. Sendelweck
_______________________________ ___________________________________
William R. Hoffman Larry J. Seger
_______________________________ ___________________________________
Gene C. Mehne Joseph F. Steurer
_______________________________
Robert L. Ruckriegel
DIRECTORS OF THE GERMAN AMERICAN BANK
A-46
<PAGE>
THE HOLLAND NATIONAL BANK
Attest:
By:___________________________
______________________ Eugene Thewes
Secretary President and Chief Executive Officer
_______________________________ ___________________________________
Marlin Gray, M.D. Alan Nass
_______________________________ ___________________________________
James Siebert Lloyd Prusz
_______________________________ ___________________________________
Lynn Kahle Philip Schneider
_______________________________ ___________________________________
Ray Lindsey Eugene Thewes
_______________________________
Jerome Blesch
DIRECTORS OF THE HOLLAND NATIONAL BANK
A-47
<PAGE>
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE>
APPENDIX B
Section 262 of the Delaware General Corporation Law
APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to the
effected pursuant to ss.251 (other than a merger effected pursuant to ss.251(g)
of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
ss.ss.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
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<PAGE>
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and case in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identify of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss.228 or
ss.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporations, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
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<PAGE>
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have who have demanded payment for
their shares and with whom agreements as to the value of their shares have not
been reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
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<PAGE>
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charge pro rata against the value of all the
shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distribution payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
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(l) The shares of the surviving or resulted corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
339, L. `98, eff. 7-1-98).
B-5
<PAGE>
APPENDIX C
Board of Directors
Holland Bancorp, Inc.
, 2000
----------------
Board of Directors
Holland Bancorp, Inc.
PO Box 8
Holland, IN 47541
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of Holland Bancorp, Inc. ("Holland") of the merger
("Merger") of Holland Bancorp, Inc. with German American Bancorp ("German
American"), as set forth in the Agreement and Plan of Reorganization
("Agreement") between Holland and German American dated June 27, 2000.
The terms of the Agreement provide, among other things, that subject to the
Merger receiving approvals from the shareholders of Holland and from the Federal
Deposit Insurance Corporation; the Registration Statement being ordered
effective by the Securities and Exchange Commission relating to the shares of
German American common stock to be issued to the shareholders of Holland
pursuant to the Agreement; and subject to the satisfaction of certain other
conditions, each of the 270,794 shares of Holland common stock shall be
converted into 3.5 shares of German American Bancorp common stock having a total
value of $________, or $_____ per Holland common share, subject, however, to
provisions set forth in the Agreement.
In connection with our opinion, we have, among other things:
(i) Reviewed the Agreement, the Proxy Statement relating to the
Special Meeting of Shareholders of Holland to be held in
connection with the merger; and the Registration Statement on Form
S-4 relating to this transaction;
(ii) Reviewed certain publicly available business and financial
information relating to German American that we deemed to be
relevant;
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<PAGE>
(iii) Reviewed Holland's Annual Reports to Shareholders for each of the
five years ended December 31, 1995 through December 31, 1999;
audited financial statements for the years ended December 31, 1995
through December 31, 1999, year to date information through March
31, 2000; Consolidated Reports of Condition and Income filed with
the Federal Deposit Insurance Corporation dated December 31, 1999
and March 31, 2000, Uniform Bank Performance Report Bank dated
March 31, 2000; various internal financial reports regarding the
operations and the financial condition; and certain communications
in the form of press releases from Holland Bancorp to its
shareholders. Olive also reviewed statistical performance data
regarding the loan portfolio, securities portfolio, and other
financial holdings of Holland Bancorp. In review of the
aforementioned information, Olive took into account its assessment
of general market and financial conditions, its experience in
other transactions, and its knowledge of the general banking
industry;
(iv) Reviewed German American's Annual Reports to Shareholders and
Annual Reports on Form 10-K for each of the three years ended
December 31, 1997, 1998 and 1999; Quarterly Report on Form 10-Q
for the period ended March 31, 2000; the most recent Uniform Bank
Performance Report dated March 31, 2000; Consolidated Reports of
Condition and Income filed with the Federal Deposit Insurance
Corporation dated December 31, 1999 and March 31, 2000; various
internal financial reports regarding the operations and the
financial condition; each of the filings on Form 8-K during the
year ended December 31, 1999 and through June 20, 2000; and
certain communications in the form of press releases from German
American to its shareholders. Olive also reviewed investment
security holdings, pending litigation provided by management, the
analysis and calculation of the Allowance for Loan and Lease
Losses as of March 31, 2000, and internally identified special
assets and related reports;
(v) Participated in discussions with members of the senior management
of Holland and German American regarding past and current business
operations, financial condition and future prospects of the
company;
(vi) Compared the financial performance, prices and trading activity of
German American with that of certain other comparable
publicly-traded companies and their securities;
(vii) Reviewed the historical market prices, trading activity and yields
of the common stock of German American for recent years;
(viii) Reviewed the financial terms, to the extent publicly available, of
certain recent business combinations of U. S. and Midwest banks;
and
(ix) Performed such other analyses and considered such other factors as
we have deemed appropriate.
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In conducting our review and arriving at our opinion, we have relied upon the
accuracy and completeness of all financial and other information provided to us
without independent verification. We have not made any independent valuation or
appraisal of the assets or reserves against future liabilities or losses of
Holland or German American. We have also taken into account our assessment of
general economic, market, and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally.
Olive, as part of its investment banking business, is engaged in the valuation
of banks and thrifts and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for various purposes. Olive is a Member of the NASD and SIPC.
Olive has never acted as a market maker for the common stock of Holland or
German American. Except for this engagement, Holland has not had any material or
compensable relationship with Olive or its affiliates during the past two years.
Neither Olive nor any of its affiliates has a material financial interest in
Holland or German American.
Based upon and subject to the foregoing and such other matters we considered
relevant, it is our opinion that as of the date hereof, the terms and
consideration of the Merger are fair to Holland's shareholders from a financial
point of view.
Sincerely,
OLIVE CORPORATE FINANCE LLC
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors And Officers
Under the Indiana Business Corporation Law and Article IV of the
Registrant's Bylaws, the Registrant's officers, directors, and employees are
entitled to indemnification against all liability and expense with respect to
any civil or criminal claim, action, suit or proceeding in which they are wholly
successful. If they are not wholly successful and even if they are adjudged
liable or guilty, they are entitled to indemnification if it is determined, with
respect to a civil action, by disinterested directors, a special legal counsel,
or a majority vote of the shares of the Registrant's voting stock held by
disinterested shareholders, that they acted in good faith in what they
reasonably believed to be the best interests of the Registrant. With respect to
any criminal action, it must also be determined that they had no reasonable
cause to believe their conduct unlawful.
Under the Indiana Business Corporation Law, a director of the
Registrant cannot be held liable for actions that do not constitute wilful
misconduct or recklessness. In addition, the Articles of Incorporation of the
Registrant provide that directors of the Registrant shall be immune from
personal liability for any action taken as a Director, or any failure to take
any action, to the fullest extent permitted by the applicable provisions of the
Indiana Business Corporation Law from time to time in effect and by general
principles of corporate law. In addition, a director of the Registrant against
whom a shareholders' derivative suit has been filed cannot be held liable if a
committee of disinterested directors of the Registrant, after a good faith
investigation, determines either that the shareholder has no right or remedy or
that pursuit of that right or remedy will not serve the best interests of the
Registrant.
At present, there are no claims, actions, suits or proceedings pending
where indemnification would be required under the above, and the Registrant does
not know of any threatened claims, actions, suits or proceedings which may
result in a request for such indemnification.
In addition, officers and directors of the Registrant are entitled to
indemnification under an insurance policy of the Registrant for expenditures
incurred by them in connection with certain acts in their capacities as such,
and providing reimbursement to the Registrant for expenditures in indemnifying
such directors and officers for such acts. The maximum aggregate coverage for
the Registrant and insured individuals is $3,000,000 for claims made during each
policy year, with the policies subject to self-retention and deductible
provisions.
Item 21. Exhibits
The list of exhibits is incorporated herein by reference to the Index
to Exhibits on page E-I of this registration statement.
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4,10(b), 11, 13 or 18 of this form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant further hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Jasper,
State of Indiana, on July 18, 2000.
GERMAN AMERICAN BANCORP
By: /s/ Mark A. Schroeder
-----------------------------------
Mark A. Schroeder, President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of German American Bancorp,
hereby severally and individually constitute and appoint Mark A. Schroeder and
Kenneth L. Sendelweck and each of them, the true and lawful attorneys and agents
of each of us to execute in the name, place and stead of each of us
(individually and in any capacity stated below) any and all amendments to this
registration statement and all instruments necessary or advisable in connection
therewith and to file the same with the Securities and Exchange Commission, said
attorneys and agents to have full power and authority to do and perform in the
name and on behalf of each of the undersigned every act whatsoever necessary or
advisable to be done in the premises as fully and to all intents and purposes as
any of the undersigned might or could do in person, and we hereby ratify and
confirm our signatures as they may be signed by our said attorneys and agents to
any and all such amendment and instruments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on July 18, 2000, by the following
persons in the capacities and on the dates indicated.
/s/ Mark A. Schroeder
--------------------------------------------
Mark A. Schroeder, President and Director
(Chief Executive Officer)
/s/ George W. Astrike
--------------------------------------------
George W. Astrike, Director
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<PAGE>
/s/ David G. Buehler
--------------------------------------------
David G. Buehler, Director
--------------------------------------------
David B. Graham, Director
/s/ William R. Hoffman
--------------------------------------------
William R. Hoffman, Director
/s/ Michael B. Lett
--------------------------------------------
Michael B. Lett, Director
--------------------------------------------
C. James McCormick, Director
/s/ Gene C. Mehne
--------------------------------------------
Gene C. Mehne, Director
/s/ Robert L. Ruckriegel
--------------------------------------------
Robert L. Ruckriegel, Director
/s/ Larry J. Seger
--------------------------------------------
Larry J. Seger, Director
--------------------------------------------
Joseph F. Steurer, Director
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<PAGE>
/s/ C.L. Thompson
--------------------------------------------
C.L. Thompson, Director
--------------------------------------------
Michael J. Voyles, Director
/s/ Richard E. Trent
--------------------------------------------
Richard E. Trent, Senior Vice President
(Chief Financial Officer and
Principal Accounting Officer)
II-5
<PAGE>
GERMAN AMERICAN BANCORP
REGISTRATION STATEMENT
ON
FORM S-4
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
2.1 Agreement and Plan of Reorganization dated June 27, 2000 among the
Registrant, Holland Bancorp, Inc., The Holland National Bank, and the
German American Bank, is incorporated by reference from Appendix A to
the prospectus/proxy statement filed as Part I of this Registration
Statement.
3.1 Restatement of Articles of Incorporation of the Registrant is
incorporated by reference to Exhibit 3.01 to Registrant's Current
Report on Form 8-K filed May 5, 2000.
3.2 Restated Bylaws of the Registrant, as amended April 27, 2000
4.1 Rights Agreement dated April 27, 2000 is incorporated by reference to
Exhibit 4.01 to Registrant's Current Report on Form 8-K filed May 5,
2000.
4.2 No long-term debt instrument issued by the Registrant exceeds 10% of
consolidated total assets. In accordance with paragraph 4 (iii) of
Item 601(b) of Regulation S-K, the Registrant will furnish the
Securities and Exchange Commission upon request copes of long-term
debt instruments and related agreements.
4.3 Terms of Common Shares and Preferred Shares of German American Bancorp
found in Restatement of Articles of Incorporation are incorporated by
reference to Exhibit 3.01 to Registrant's Current Report on Form 8-K
filed May 5, 2000.
5 Opinion of Ice Miller Donadio & Ryan as to the legality of the shares
being registered, including consent
8 Opinion of Ice Miller Donadio & Ryan regarding federal income tax
consequences of the merger, including consent.
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<PAGE>
10.1 The Registrant's 1992 Stock Option Plan, as amended, is incorporated
by reference from Exhibit 10.1 to the Registrant's Registration
Statement on Form S-4 filed October 14, 1998.
10.2 Schedule identifying material terms of Incentive Stock Options
(including replacement options) granted to the Registrant's executive
officers under the Registrant's 1992 Stock Option Plan, is
incorporated by reference form Exhibit 10.2 to Registrant's annual
report on Form 10-K for the year ended December 31, 1999.
10.3 Executive Deferred Compensation Agreement dated December 1, 1992,
between The German American Bank and George W. Astrike, is
incorporated herein by reference from Exhibit 10.3 to the Registrant's
Registration Statement on Form S-4 filed January 21, 1993.
10.4 Director Deferred Compensation Agreement between The German American
Bank and certain of its Directors, is incorporated herein by reference
from Exhibit 10.4 to the Registrant's Registration Statement on Form
S-4 filed January 21, 1993 (The Agreement entered into by George W.
Astrike, a copy of which was filed as Exhibit 10.4 to the Registrant's
Registration Statement on Form S-4 filed January 21, 1993, is
substantially identical to the Agreements entered into by the other
Directors.) The schedule following Exhibit 10.4 lists the Agreements
with the other Directors and sets forth the material detail in which
such Agreements differ from the Agreement filed as Exhibit 10.4.
10.5 Stock Option Agreement between the Registrant and George W. Astrike
dated September 2, 1998 is incorporated by reference or from Exhibit
10.9 to the Registrant's Registration Statement on Form S-4 filed
October 14, 1998.
10.6 Non-Qualified Index Executive Supplemental Agreement dated September
1, 1998 between the Registrant and George W. Astrike is incorporated
by reference from Exhibit 10.10 to the Registrant's 1998 Form 10-K
filed March 26, 1999.
10.7 Split Dollar Life Insurance Plan Agreement dated November 5, 1998
between the Registrant and George W. Astrike is incorporated by
reference from Exhibit 10.11 to the Registrant's 1998 Form 10-K filed
March 26, 1999.
E-2
<PAGE>
10.8 Consulting Agreement dated August 21, 1998 between the Registrant and
George W. Astrike is incorporated by reference from Exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1999.
10.9 Agreement and Plan of Reorganization between the Registrant and 1ST
BANCORP dated August 6, 1998, is incorporated by reference from
Exhibit 2 to the Registrant's Registration Statement on Form S-4 filed
October 14, 1998.
21 Subsidiaries of the Registrant. The listing of subsidiaries filed as
Exhibit 21 to the Registrant's annual report on Form 10-K for the year
ended December 31, 1999 is incorporated herein by reference.
23.1 Consent of Crowe, Chizek and Company LLP
23.2 Consent of Ice Miller Donadio & Ryan (included in Exhibits 5 and 8)
23.3 Consent of Olive Corporate Finance LLC
23.4 Consent of Gaither, Rutherford & Co., LLP
23.5 Consent of KPMG LLP
24 Power of Attorney (included on the signature page)
99 Form of Holland Bancorp, Inc. Proxy
E-3
