<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 0-13585
NATIONAL CITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1632155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 868, EVANSVILLE, INDIANA 47705-0868
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 464-9800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 12, 1996
(Common stock,
$1.00 Stated value) 9,067,207
<PAGE>
NATIONAL CITY BANCSHARES, INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Condensed consolidated statements of
financial position-
June 30, 1996, December 31, 1995,
and June 30, 1995 1
Condensed consolidated statements of income-
three months and six months ended
June 30, 1996 and 1995 2
Condensed consolidated statements of cash flows-
six months ended June 30, 1996 and 1995 3
Notes to condensed consolidated financial statements 6
Management's discussion and analysis of financial
condition and results of operations 8
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 14
SIGNATURES 14
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Financial Position
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
June December June
30 31 30
1996 1995 1995
---------- -------- --------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 35,241 $ 38,944 $ 31,584
Time deposits in banks 1,877 5,023 7,750
Securities held to maturity 113,027 89,918 115,613
Securities available for sale 121,366 147,414 118,177
Nonmarketable equity securities 4,717 3,955 2,986
Federal funds sold 1,000 1,420 19,775
Loans 700,127 664,285 627,217
Less: Allowance for loan losses 5,281 5,323 5,180
---------- -------- --------
Loans-net 694,846 658,962 622,037
Premises and equipment 16,417 14,739 13,690
Other real estate owned 264 383 493
Other assets 19,777 18,682 18,155
---------- -------- --------
TOTAL ASSETS $1,008,532 $979,440 $950,260
---------- -------- --------
---------- -------- --------
LIABILITIES
Deposits:
Noninterest-bearing demand $ 94,643 $101,409 $ 93,063
Interest-bearing savings and time 691,364 673,311 692,864
---------- -------- --------
Total deposits 786,007 774,720 785,927
Federal funds purchased and securities
sold under agreements to repurchase 46,746 52,829 18,893
Notes issued to the U.S. Treasury 2,681 2,769 6,575
Other borrowings 47,884 20,409 16,104
Dividends payable 1,453 1,175 806
Other liabilities 8,638 8,227 7,787
---------- -------- --------
Total liabilities 893,409 860,129 836,092
---------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C>
Common stock-$1.00 stated value: 9,072 9,394 4,469
6/30/96 12/31/95 6/30/95
---------- ---------- ----------
Authorized 20,000,000 10,000,000 10,000,000
Outstanding 9,072,409 9,394,396 4,468,955
Capital surplus 46,746 54,794 49,884
Retained earnings 59,962 54,818 59,940
Unrealized gain(loss) on securities
available for sale (657) 305 (125)
---------- -------- --------
Total shareholders' equity 115,123 119,311 114,168
---------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,008,532 $979,440 $950,260
---------- -------- --------
---------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Income
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30 June 30
----------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $15,488 $13,659 $30,827 $26,324
Interest and dividends on securities 3,620 3,525 7,238 7,143
Interest on federal funds sold 54 87 163 284
Interest on other investments 38 140 99 294
------- ------- ------- -------
Total interest income 19,200 17,411 38,327 34,045
------- ------- ------- -------
INTEREST EXPENSE
Interest on deposits 7,308 7,117 14,766 13,806
Interest on funds borrowed 1,150 445 2,083 756
------- ------- ------- -------
Total interest expense 8,458 7,562 16,849 14,562
------- ------- ------- -------
NET INTEREST INCOME 10,742 9,849 21,478 19,483
Provision for loan losses 205 23 521 47
------- ------- ------- -------
Net interest income after
provision for loan losses 10,537 9,826 20,957 19,436
------- ------- ------- -------
NONINTEREST INCOME
Trust income 486 458 859 760
Service charges on deposit accounts 817 657 1,580 1,254
Securities gains (losses) 9 (4) 23 2
Other 597 660 1,198 1,234
------- ------- ------- -------
Total noninterest income 1,909 1,771 3,660 3,250
------- ------- ------- -------
NONINTEREST EXPENSE
Salaries and employee benefits 3,725 3,606 7,466 7,176
Premises and equipment 925 912 1,896 1,843
Assessments of the FDIC 55 434 109 865
Other 1,757 1,757 3,377 3,479
------- ------- ------- -------
Total noninterest expense 6,462 6,709 12,848 13,363
------- ------- ------- -------
Income before income taxes 5,984 4,888 11,769 9,323
Income taxes 2,015 1,723 4,030 3,242
------- ------- ------- -------
NET INCOME $ 3,969 $ 3,165 $ 7,739 $ 6,081
------- ------- ------- -------
------- ------- ------- -------
Earnings per common share $0.43 $0.34 $0.84 $0.65
Weighted average shares outstanding 9,104,545 9,287,722 9,187,571 9,284,726
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
-------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 7,739 $ 6,081
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization 310 747
Depreciation 853 787
Provision for loan losses 521 47
Writedown of other real estate owned 31 4
Securities (gains) losses (23) (2)
(Gain) on sale of premises and equipment (8) (6)
(Gain) loss on sale of other real estate owned 1 41
Increase (decrease) in deferred taxes 191 91
Changes in assets and liabilities:
(Increase) decrease in income earned
but not collected 113 890
(Increase) decrease in other assets (1,334) (441)
Increase (decrease) in accrued interest payable 334 536
Increase (decrease) in other liabilities 510 448
-------- --------
Net cash flows provided by operating activities 9,238 9,223
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing time
deposits in banks 3,146 5,542
Proceeds from matured securities held to maturity 3,909 11,020
Proceeds from matured securities available for sale 37,194 21,596
Purchases of securities held to maturity (27,023) (11,486)
Purchases of securities available for sale (12,875) (1,419)
Purchases of nonmarketable equity securities (762) (692)
(Increase) decrease in federal funds sold 420 (14,750)
(Increase) decrease in loans made to customers (36,427) (41,101)
Capital expenditures (2,543) (1,698)
Proceeds from sale of other real estate owned 109 337
Proceeds from sale of premises and equipment 7 16
Purchase of subsidiary, net of cash and due from banks - (309)
-------- --------
Net cash flows provided by (used in)
investing activities (34,845) (32,944)
-------- --------
</TABLE>
(Continued on next page)
The accompanying notes are an integral part of these statements.
3
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
-------------------
1996 1995
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
<S> <C> <C>
Net increase (decrease) in deposits $ 11,287 $ 4,734
Net increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase (6,083) (6,235)
Net proceeds (payments) in notes issued to
the U.S. Treasury (88) 3,900
Proceeds from other borrowings 29,023 13,104
Payments on other borrowings (1,548) -
Dividends paid (2,317) (1,773)
Repurchase of common stock (9,094) (210)
Sale of common stock 724 518
-------- --------
Net cash flows provided by (used in)
financing activities 21,904 14,038
-------- --------
Net increase (decrease) in cash and cash equivalents (3,703) (9,683)
Cash and cash equivalents at beginning of period 38,944 41,267
-------- --------
Cash and cash equivalents at end of period $ 35,241 $ 31,584
-------- --------
-------- --------
</TABLE>
(Continued on next page)
The accompanying notes are an integral part of these statements.
4
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
-------------------
1996 1995
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<S> <C> <C>
Cash paid during the year for:
Interest $16,516 $14,026
Income taxes 4,467 2,890
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCIAL ACTIVITIES
Change in allowance for unrealized gain
(loss) on securities available for sale $1,586 $(4,001)
Increase (decrease) in deferred taxes
attributable to securities available for sale (624) 1,531
Other real estate acquired in settlement of loans 22 205
Transfer from fixed assets to other real estate owned - 41
Transfer from other real estate owned to other assets - 7
Purchase of subsidiary:
Purchase price $ 886
--------
--------
Assets acquired:
Cash and due from banks $ 577
Interest-bearing deposits in banks 399
Securities 3,753
Federal funds sold 1,975
Loans 11,069
Premises and equipment 355
Income earned but not collected 146
Other assets 1,962
Liabilities assumed:
Deposits (16,742)
Accrued interest payable (92)
Deferred taxes payable (25)
Other liabilities (49)
--------
Common stock issued (2,442)
--------
Accounts payable $ 886
--------
--------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
While the interim amounts are unaudited, they do reflect all
adjustments which, in the opinion of management, are necessary for a
fair statement of the results of operations for the interim periods.
All such adjustments are of a normal recurring nature. Year-end
balance sheet amounts are condensed from audited financial statements.
Because the results from commercial banking operations are so closely
related and responsive to changes in economic conditions, the results
for any interim period are not necessarily indicative of the results
that can be expected for the entire year.
NOTE 2
In the normal course of business, there are outstanding various other
commitments and contingent liabilities which are not reflected in the
accompanying financial statements. The Corporation uses the same
credit policies in making commitments and conditional obligations as
it does for other instruments.
<TABLE>
<CAPTION>
6/30/96 12/31/95
----------- -----------
<S> <C> <C>
Standby letters of credit $15,866,000 $17,825,000
Commitments to extend credit $90,590,000 $77,663,000
</TABLE>
NOTE 3
A five percent stock dividend was paid December 15, 1995, to
shareholders of record December 1, 1995. A two-for-one stock split
was issued April 19, 1996, to shareholders of record April 8, 1996.
All weighted average shares and per share data presented herein have
been restated for the effects of this stock dividend and stock split.
NOTE 4
During 1995, the Corporation issued common stock in exchange for all
of the outstanding common stock of United Financial Bancorp, Inc.
This acquisition was accounted for using the pooling-of-interests
method. Accordingly, the Corporation's financial statements and
financial data have been retroactively restated to include the
accounts and operations of United Financial Bancorp, Inc. for all
periods presented. Certain reclassifications have been made to United
Financial Bancorp, Inc.'s historical financial statements to conform
to the Corporation's presentation.
6
<PAGE>
NOTE 5
Other borrowings increased $27,475,000 since December 31, 1995. The
significant borrowings obtained during 1996 include $15,000,000
borrowed to finance construction to enlarge the building complex
housing the Corporation's offices and the main office of its lead bank
in Evansville, Indiana and $10,000,000 to fund loan growth.
7
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET INCOME
Net income for the quarter ended June 30, 1996, was $3,969,000, or
$0.43 per share, compared to $3,165,000, or $0.34 per share, for the
second quarter of 1995. This is an increase of $804,000, or 25.4
percent, in net income. For the first six months of 1996, net income
was $7,739,000, or $0.84 per share, compared to $6,081,000, or $0.65
per share, for the first six months of 1995, an increase of
$1,658,000, or 27.3 percent, in net income. The weighted average
number of shares outstanding was 9,104,545 and 9,187,571 for the three
and six months, respectively, ended June 30, 1996, compared to
9,287,722 and 9,284,726 during the like periods last year. Stock has
been repurchased by the Corporation for the dividend reinvestment
program and during 1996 for the stock repurchase program announced
January 3, 1996.
NET INTEREST INCOME
For the first six months of 1996, net interest income increased
$2,324,000, or 11.5 percent, on a tax equivalent basis, from the same
period last year. Net interest income in the second quarter of 1996
increased $1,087,000, or 10.7 percent, on a tax equivalent basis, from
the year-ago quarter. For the first six months of 1996 and 1995,
average earning assets were $928 million and $851 million,
respectively. Average earning assets were $934 million and $856
million, an increase of $78 million, or 9.1 percent, during the second
quarters of 1996 and 1995, respectively. Loans increased an average
of $83 million, or 13.8 percent, and average securities increased $5
million, or 1.9 percent, for the quarter. Average interest-bearing
deposits in banks decreased $8 million, or 74.8 percent, and average
federal funds sold decreased $2 million, or 25.4 percent for the
second quarter of both years.
The increased net interest income was due to a change in the mix of
average earning assets. Total interest income increased $4,611,000,
or 13.3 percent, on a tax equivalent basis, during the first six
months of 1996 from the same period of 1995, compared to a $2,287,000,
or 15.7 percent increase in total interest expense. The increase in
interest income resulted from increased loan volume and a change in
the mix of average earning assets.
The net interest margin increased to 4.86 percent for the second
quarter of 1996, compared to 4.78 percent during the year-ago quarter
and to 4.89 percent for the first six months of 1996 from 4.79 percent
during the same period last year.
8
<PAGE>
UNDERPERFORMING ASSETS
Listed below is a two-year comparison of the underperforming assets.
<TABLE>
<CAPTION>
6/30/96 6/30/95
---------- ----------
<S> <C> <C>
Nonaccrual loans $2,260,000 $ 827,000
Restructured loans 136,000 150,000
90 days past due loans 1,238,000 802,000
---------- ----------
Total underperforming loans 3,634,000 1,779,000
Nonaccrual securities:
Agency-issued CMO 37,000 -
Other real estate held 264,000 493,000
---------- ----------
Total underperforming assets $3,935,000 $2,272,000
---------- ----------
---------- ----------
</TABLE>
Past due 90 days or more, nonaccrual, and renegotiated loans have
increased from 0.3 percent of total loans at June 30, 1995, to 0.5
percent as of June 30, 1996. Of the loans in this category, 35.1 and
48.3 percent were secured by real estate at June 30, 1996 and 1995,
respectively. Potential problem loans, other than underperforming
loans, amounted to $31,620,000 at June 30, 1996 and $20,190,000 at
June 30, 1995.
PROVISION FOR LOAN LOSSES
Net charge-offs amounted to $403,000 during the second quarter of 1996
and $563,000 during the first six months of 1996, compared to net
recoveries of $136,000 during the second quarter of 1995 and $94,000
during the first six months of 1995.
The provision for loan losses during the first six months of 1996 was
$521,000 compared to $47,000 from the comparable year-ago period. The
provision is based on the quarterly review of the allowance for
possible loan losses. Some of the factors used in this review include
current economic conditions and forecasts, risk by type of loan,
previous loan loss experience, and evaluation of specific borrowers
and collateral. As of June 30, 1996, management considered the
reserve for loan losses adequate to provide for potential losses.
NONINTEREST INCOME
Noninterest income for the second quarter of 1996 increased $138,000,
or 7.8 percent, and for the first six months of 1996 increased
$410,000, or 12.6 percent, from the year-ago periods. Trust income
increased $99,000, or 13.0 percent, for the first six months of 1996,
and service charges on deposit accounts increased $326,000 or 26.0
percent, from the year ago period due to changes in fee schedules.
Net securities gains were $23,000 for the first six months of 1996,
compared to $2,000 for the same period 1995. Other noninterest income
decreased $36,000, or 2.9 percent, during 1996.
9
<PAGE>
NONINTEREST EXPENSE
Noninterest expense decreased $247,000, or 3.7 percent, and $515,000,
or 3.9 percent, in the second quarter and the first six months of
1996, respectively. Salaries and employee benefits increased
$119,000, or 3.3 percent, for the second quarter and $290,000 or 4.0
percent, for the first six months of 1996. Expenses of premises and
equipment increased $13,000, or 1.4 percent, in the second quarter and
$53,000, or 2.9 percent, for the first six months of 1996. The cost
of Federal Deposit Insurance decreased $379,000, or 87.3 percent, for
the second quarter and $756,000, or 87.4 percent, for the first six
months of 1996, respectively, due to a lower premium rate. Other
items in this category decreased $102,000, or 2.9 percent for the
first six months of 1996. This decrease was partially due to a
$129,000 one-time contract settlement paid in 1995.
FINANCIAL POSITION ANALYSIS
Cash and cash equivalents increased $3,657,000, or 11.6 percent, and
interest-bearing time deposits in banks decreased $5,873,000, or 75.8
percent, during the past year. Federal funds sold decreased
$18,775,000, or 94.9 percent.
Securities increased $2,334,000, or 1.0 percent, during the past year.
The largest increase was in nontaxable municipals which increased
$41,664,000, or 100.9 percent. Nonmarketable equity securities
increased $1,731,000, or 58.0 percent, due to the purchase of
additional stock in the Federal Home Loan Bank. Marketable equity
securities increased $240,000, or 17.3 percent, and taxable municipals
increased $5,000, or 0.2 percent. Decreases were noted in U. S.
Treasury securities which decreased $26,867,000, or 62.5 percent, U.S.
Government agencies which decreased $9,825,000, or 8.1 percent,
and other debt securities which decreased $3,729,000, or 15.5 percent.
The market value adjustment on securities available for sale decreased
$885,000, or 429.6 percent. Amortized cost and fair values of
securities at June 30, 1996, with dollar amounts in thousands are on
the following page:
10
<PAGE>
Securities held to maturity:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. Government and
agency securities $ 5,381 $ 82 $ - $ 5,463
State and municipal
securities:
Taxable 3,021 26 53 2,994
Nontaxable 82,958 1,154 1,660 82,452
Corporate securities 16,075 93 66 16,102
Mortgage-backed securities 5,592 111 9 5,694
-------- ------ ------ --------
$113,027 $1,466 $1,788 $112,705
-------- ------ ------ --------
-------- ------ ------ --------
</TABLE>
Securities available for sale:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. Government and
agency securities $ 55,414 $ 331 $ 288 $ 55,457
Corporate securities 4,036 1 2 4,035
Mortgage-backed securities 61,382 116 994 60,504
Marketable equity
securities 1,625 - 255 1,370
-------- ------ ------ --------
$122,457 $ 448 $1,539 $121,366
-------- ------ ------ --------
-------- ------ ------ --------
</TABLE>
At June 30, 1996, the security portfolio included $4,984,000 in
structured notes, which were comprised of $610,000 in multi-coupon
step-up notes that have a price volatility comparable to a callable
U.S. Government agency of like maturity; $2,001,000 in capped floating
rate notes; $800,000 in ratchet capped floating rate notes; $973,000
in an indexed amortizing note; and $600,000 in delevered floating
notes. These securities have risk characteristics which are well
within the constraints of the non-structured securities held in the
security portfolio.
During the second quarter of 1995, the Corporation transferred
$635,000 of securities classified as held to maturity to the available
for sale category. These securities were rated as high-risk; and in
accordance with the Federal Financial Institutions Examination
Council, were redesignated as available for sale. The unrealized loss
on these securities at the time of transfer was $42,000. In
accordance with the requirements of Statement of Financial Accounting
Standards No. 115, these securities will now be accounted for at fair
value, and any unrealized gain or loss net of deferred tax effect will
be reflected as a separate component of shareholders' equity.
11
<PAGE>
As part of its strategic plan, the Corporation successfully increased
total loans while maintaining competitive rates. Loans increased
$72,910,000, or 11.6 percent, during the past year. The largest
increases were in commercial loans, which increased $26,156,000, or
18.8 percent, and consumer loans, which increased $21,499,000, or 18.9
percent. Loans secured by real estate increased $13,697,000, or 4.1
percent, and direct lease financing increased $10,983,000, or 474.2
percent. All other loans increased $1,118,000, or 11.0 percent,
except agricultural loans which decreased $543,000, or 1.9 percent.
Other real estate owned decreased $229,000, or 46.5 percent, from June
30, 1995.
Total deposits have increased $80,000, since June 30, 1995.
Noninterest-bearing deposits increased $1,580,000, or 1.7 percent,
during the past year, while interest-bearing deposits decreased
$1,500,000, or 0.2 percent, during this period.
SHAREHOLDERS' EQUITY
The Corporation and each subsidiary have capital ratios which
substantially exceed all regulatory requirements. The Corporation's
capital ratios are shown below.
<TABLE>
<CAPTION>
Minimum
Requirements 6/30/96 6/30/95
------------ ------- -------
<S> <C> <C> <C>
Tier I capital to
risk-based assets 4.00% 15.96% 16.58%
Total capital to
risk-based assets 8.00% 16.71% 17.34%
Tangible equity to
tangible assets 3.00% 11.18% 11.73%
</TABLE>
12
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
DATE OF MEETING
The Annual Meeting of Shareholders was held April 16, 1996.
MATTERS VOTED UPON
(1) Three directors, each to serve a term of three years or until
their successors shall have been duly elected and qualified, were
elected during the Annual Meeting of Shareholders. The results of the
vote were:
Janice L. Beesley
FOR 3,300,822 WITHHELD AUTHORITY 29,795
Michael F. Elliott
FOR 3,319,163 WITHHELD AUTHORITY 11,454
Donald G. Harris
FOR 3,301,582 WITHHELD AUTHORITY 29,035
(2) The Board of Directors of the Corporation proposed for the
approval of an Incentive Stock Option Plan. Under the Plan, officers
and other executive, supervisory, and management employees of the
Corporation may, from time to time, be granted options to purchase a
given amount of shares of the Corporation's Stock. The results of the
vote were:
FOR 2,746,439 AGAINST 200,694 ABSTAIN 382,234
(3) The Board of Directors proposed for the approval by the
shareholders the appointment of McGladrey & Pullen, LLP, Certified
Public Accountants and Consultants as the independent certified public
accountants for Registrant and subsidiaries for the fiscal year ending
December 31, 1996. The results of the vote ratifying the appointment
were:
FOR 3,266,737 AGAINST 27,435 ABSTAIN 36,340
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The following exhibits are submitted herewith or incorporated by
reference:
3(i) Articles of Incorporation, as amended
10(a) Term Loan Agreement
10(b) Incentive Stock Option Plan
REPORTS ON FORM 8-K
CURRENT REPORT dated June 7, 1996, for event of May 31, 1996,
regarding the purchase agreement between the Registrant and
Marine Bancorp, Inc. to purchase their ownership in the First
National Bank of Wayne City
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NATIONAL CITY BANCSHARES, INC
(Registrant)
By /s/ HAROLD A. MANN
Harold A. Mann
Secretary and Treasurer
(On behalf of the registrant
and in his capacity as Chief
Accounting Officer.)
August 14, 1996
14
<PAGE>
<PAGE>
EXHIBIT 3(i)
ARTICLES OF INCORPORATION
OF
NATIONAL CITY BANCSHARES, INC.
The undersigned incorporator or incorporators, desiring to form
a corporation (hereinafter referred to as the "Corporation") pursuant
to the provisions of the Indiana General Corporation Act as amended
(hereinafter referred to as the "Act"), execute the following
Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is National City Bancshares, Inc.
ARTICLE II
Purposes
The purposes for which the Corporation is formed are:
To engage in any lawful act or activity for which corporations
may be formed under the Indiana General Corporation Act and The Bank
Holding Company Act of 1956, as amended, and to possess all other
rights and powers authorized by the laws of the State of Indiana, and
the laws of the United States of America applicable to bank holding
companies and the regulations of the Board of Governors of the
Federal Reserve System.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is
perpetual.
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ARTICLE IV
Resident Agent and Principal Office
Section 1. Resident Agent.
The name and address of the Corporation's Resident Agent for
service of process is Mr. Harold A. Mann, 227 Main Street,
Evansville, Indiana 47708.
Section 2. Principal Office.
The post office address of the principal office of the
Corporation is 227 Main Street, Evansville, Indiana 47708.
ARTICLE V
Authorized Shares
Section 1. Number of Shares:
The total number of shares which the Corporation is to have
authority to issue is 20,000,000, all of which the Corporation
designates as without par value.
Section 2. Terms of Shares:
Shares of the corporation may be redeemed by the corporation at
the direction of a vote of a majority of the Board of Directors
meeting at a regularly or specially called meeting for said purpose.
Furthermore, the corporation, through its Board of Directors,
shall have the power to purchase, hold, sell, and transfer the shares
of its own capital stock provided that it does not use its funds or
property for the purchase of its own shares of capital stock when
such use will cause any impairment of its capital, except when
otherwise permitted by law, and provided further that shares of its
own capital stock belonging to it are not voted upon directly, or
indirectly.
ARTICLE VI
Requirements Prior To Doing Business
The Corporation will not commence business until consideration
of the value of at least $1,000 (one thousand dollars) has been
received for the issuance of shares.
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ARTICLE VII
Directors
Section 1. Number of Directors:
The initial Board of Directors is composed of 14 members. The
number of directors may be from time to time fixed by the By-Laws of
the Corporation at any number. In the absence of a By-Law fixing the
number of directors, the number shall be fourteen (14).
Section 2. Names and Post Office Addresses of the Directors:
The names and post office addresses of the initial Board of
Directors of the Corporation are:
<TABLE>
<CAPTION>
Number and
Name Street or Building City State Zip Code
- --------------------- ------------------------ ---------- ----- --------
<S> <C> <C> <C> <C>
Gilbert E. Betulius Denzer Road, R.R. 13 Evansville IN 47712
Donald B. Cox 4029 Fairfax Road Evansville IN 47710
Wilfred O. Doerner 960 St. Michael Court Evansville IN 47715
Victor R. Gallagher 431 S. Rotherwood Avenue Evansville IN 47714
C. Mark Hubbard 3400 Robin Place Evansville IN 47712
Edgar P. Hughes Riverside 1, Apt. 505,
101 Court Street Evansville IN 47708
R. Eugene Johnson 6840 Arcadian Highway Evansville IN 47715
Edwin F. Karges, Jr. 1106 Harrelton Court Evansville IN 47715
John D. Lippert 3636 Elmridge Drive Evansville IN 47711
John Lee Newman 717 S. Boeke Road Evansville IN 47714
Laurence R. Steenberg 5688 Cliftmore Drive Newburgh IN 47630
C. Wayne Worthington 3023 Oak Hill Road Evansville IN 47711
George A. Wright 6001 Lincoln Avenue Evansville IN 47715
Mrs. N. Keith Emge 7108 E. Chestnut Street Evansville IN 47715
</TABLE>
Section 3. Qualification of Directors:
Directors of this corporation who serve as directors of any
subsidiary banking corporation may hold shares in this corporation as
qualifying shares entitling such directors to serve in the capacity
as a director of such subsidiary banking corporation.
ARTICLE VIII
Incorporator
The name and post office address of the incorporator of the
Corporation is Mr. Harold A. Mann, 227 Main Street, Evansville,
Indiana 47708.
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ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 1. Capital Structure.
The Board of Directors of the corporation is hereby authorized
to fix and determine and to vary the amount of working capital of the
corporation, to determine whether any and, if any, what part of its
surplus, however created or arising, shall be used or disposed of or
declared in dividends or paid to shareholders, and, without action by
the Shareholders, to use and apply such surplus or any part thereof
at any time or from time to time in the purchase or acquisition of
shares of any class, voting trust certificates for shares, bonds,
debentures, notes script, warrants, obligations, evidences of
indebtedness of the corporation or other securities of the
corporation, to such extent or amount and in such manner and upon
such terms as the Board of Directors of the corporation shall deem
expedient to the extent not prohibited by law.
Section 2. Reliance on Books of the Corporation.
Each officer, director or member of any committee designated by
the Board of Directors of the corporation shall, in the performance
of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the corporation by any of its
officers or employees or by an independent public accountant or by an
appraiser selected with reasonable care by the Board of Directors of
the corporation or by any such committee or in relying in good faith
upon other records of the corporation.
Section 3. Indemnification.
The corporation shall have the power to indemnify its present
and past directors, officers, employees, or agents, and such other
persons as it shall have the powers to indemnify, to the full extent
permitted under, and subject to the limitations of, Title 23 of the
Indiana General Corporation Act.
The corporation may upon the affirmative vote of a majority of
its Board of Directors, purchase insurance for the purpose of
indemnifying its directors, officers, employees and agents to the
extent that such indemnification is allowed in the statute mentioned
above.
Any indemnification as above provided (unless ordered by a
court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification is proper in
the circumstances because it meets the standard set out in the
statute above mentioned. Such determination shall be made (a) by the
Board of Directors, by a majority vote of a quorum consisting of
directors who are not parties to such action, suit or proceeding; or
(b) if such a quorum is not obtainable, or even if obtainable, if
majority vote of disinterested directors so directs,
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by independent legal counsel in a written opinion stating that such
director, officer, employee or agent has met such standards of
conduct, or (c) by a majority vote of a quorum of the shareholders of
the corporation consisting of shareholders who are not parties to
such action, suit or proceeding.
Section 4. Voting Rights.
Each shareholder shall be entitled to one vote for each share of
stock standing in his name of the books of the corporation.
Each shareholder shall have the right to cumulate such voting
power as he possesses when electing directors, and to give one
candidate as many votes as the number of directors to be elected
multiplied by the number of his votes equals, or to distribute his
votes on the same principle among two or more candidates, as he sees
fit.
Section 5. Classes of Directors.
The Bylaws of the Corporation may provide, that the Directors
shall be divided into two (2) or more classes whose terms of office
shall expire at different times, but no term shall continue longer
than three (3) years.
Section 6. Voting Rights on Business Combinations.
Any merger, consolidation, or acquisition of this Corporation by
another corporation without this Corporation's Board of Directors'
approval, shall require the affirmative approval of the holders of
eighty percent (80%) of the issued and outstanding common shares of
stock of the Corporation and eighty percent (80%) of the issued and
outstanding preferred shares or other class of shares, regardless of
limitations or restrictions on the voting power thereof, entitled to
vote at a meeting duly called for such purpose. Irrespective of any
other provisions of these Articles, this Section 6 may be amended at
any regular meeting or at a Special Meeting called for that purpose
by the affirmative vote of the holders of receipt of shares entitling
them to exercise eighty percent (80%) of the voting power on such
proposal.
ARTICLE X
Except as otherwise restricted in Article IX, these Articles may
be amended at any regular meeting or at a special meeting called for
that purpose by the affirmative vote of the holders of record of
shares entitling them to exercise a majority of the voting power on
such proposal.
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EXHIBIT 10(a)
TERM LOAN AGREEMENT
Dated as of June 26, 1996
This Agreement is among TWENTY-ONE SOUTHEAST THIRD CORPORATION, a
corporation formed under the laws of the State of Indiana (the "Borrower"),
NATIONAL CITY BANCSHARES, INC., a corporation formed under the laws of the
State of Indiana (the "Guarantor" and, together with the Borrower,
collectively the "Obligors" and individually an "Obligor"), and THE
NORTHERN TRUST COMPANY, an Illinois banking corporation (the "Lender"),
with a banking office at 50 South LaSalle Street, Chicago, Illinois 60675.
SECTION 1. THE TERM LOAN
SECTION 1.1. THE COMMITMENT. Subject to the terms and conditions of
this Agreement, the Lender agrees to make a single loan (the "Term Loan")
to the Borrower on or before June 26, 1996 (on which date the Commitment,
as hereinafter defined, shall terminate) in the amount of $15,000,000 (the
"Commitment").
SECTION 1.2. NOTICE AND DISBURSEMENT. The Borrower shall give the
Lender written or telephonic notice of the borrowing of the Term Loan
hereunder, which notice shall be delivered or communicated by telephone to
the Lender by 10:00 a.m., Chicago time, at least two Banking Days before
the date of the Term Loan and shall be effective only on receipt by the
Lender.
SECTION 1.3. TERM NOTE; AMORTIZATION. The Term Loan shall be
evidenced by a promissory note (the "Term Note") substantially in the form
of Exhibit A, with appropriate insertions, dated the date of the Term Loan,
payable to the order of Lender, and in the original principal amount of the
Term Loan; the Borrower shall execute and deliver the Term Note as a
condition precedent to Lender's obligation to make the Term Loan. The Term
Loan shall be payable in 72 consecutive, monthly principal installments,
the first 71 installments being in the amount of $83,333.33 each and the
72nd installment being in the amount of $9,083,333.57, one installment
being payable on the last Banking Day of each month commencing in June,
1997.
SECTION 1.4. INTEREST. The Borrower agrees to pay interest on the
unpaid principal amount of the Term Loan from time to time outstanding at
8.10% per annum, subject to the penultimate sentence of this Section 1.4.
Accrued interest shall be payable on the last Banking Day of each month
except as provided in the last sentence of this Section 1.4. Interest
shall be computed for the actual number of days elapsed on the basis of a
year consisting of 360 days, including the date the Term Loan is made and
excluding the date any principal thereof is paid or prepaid with respect to
such principal. Any amount which is not paid when due under this Agreement
or the Term Note shall bear interest for each day at the rate per annum
which is the higher of (i) 8.10% or (ii) the sum of the Prime Rate for such
day plus 2%. Interest accrued as provided in the preceding sentence shall
be due on demand of the Lender from time to time.
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SECTION 2. PAYMENTS AND PREPAYMENTS
SECTION 2.1. PREPAYMENTS. The Borrower may prepay principal of the
Term Loan in whole or in part from time to time on five Banking Days'
notice to the Lender; provided, the Borrower shall indemnify the Lender for
all losses (including but not limited to interest rate margin and any other
losses of anticipated profits) and expenses incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by the
Lender to make or maintain the Term Loan or any portion thereof which may
be prepaid. Upon Lender's demand in writing specifying such losses and
expenses the Borrower shall promptly pay them; the Lender's specification
shall be deemed correct in the absence of manifest error. Any partial
repayment or prepayment shall be in an amount of at least $1,000,000, and
shall be applied to the unpaid installments of the Term Loan in the inverse
order of maturity.
SECTION 2.2. FUNDS. All payments of principal and interest shall be
made in immediately available funds to the Lender at its banking office
indicated above or as otherwise directed by the Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to make the Term Loan, each Obligor jointly and
severally with the other Obligor represents and warrants to the Lender
that:
SECTION 3.1. ORGANIZATION. Such Obligor is existing and in good
standing as a duly qualified and organized corporation under the laws of
the State of Indiana. The Guarantor is a "bank holding company" as defined
in the Bank Holding Company Act of 1956, as amended, and the Borrower is a
wholly-owned subsidiary of the Guarantor. Each Subsidiary (as defined
below) is existing and in good standing under the laws of its state or
jurisdiction of formation, and each Obligor and each Subsidiary are duly
qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse effect on
the consolidated assets, condition or prospects of the Guarantor. Each
Obligor and each Subsidiary have the power and authority to own their
properties and to carry on their businesses as now being conducted.
SECTION 3.2. AUTHORIZATION; NO CONFLICT; BINDING EFFECT. The
execution, delivery and performance of this Agreement and all related
documents and instruments: (a) are within such Obligor's powers; (b) have
been authorized by all necessary corporate action; (c) have received any
and all necessary governmental approval; and (d) do not and will not
contravene or conflict with any provision of law or charter or by-laws of
such Obligor or any agreement affecting such Obligor or its property. This
Agreement is, and (in the case of the Borrower) the Term Note when executed
and delivered will be, a legal, valid and binding obligation of such
Obligor, enforceable against such Obligor in accordance with their
respective terms.
SECTION 3.3. FINANCIAL STATEMENTS. The Guarantor has supplied copies
of the following financial or other statements to the Lender:
(a) The Guarantor's unaudited consolidated financial statements
as at March 31, 1996;
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(b) The Guarantor's audited consolidated and consolidating
financial statements as at December 31, 1995; and
(c) A copy of the Guarantor's reports on forms FRY-9C and
FRY-9LP for the quarter ending March 31, 1996.
Such statements have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with that of the
preceding fiscal year, and fairly present the consolidated financial
condition of the Guarantor and its Subsidiaries as at such dates and the
results of their operations for the respective periods then ended. Since
the date of those financial statements, no material, adverse change in the
business, condition, properties, assets, operations, or prospects of either
Obligor or any Subsidiary has occurred of which the Lender has not been
advised in writing before this Agreement was signed. There is no known
contingent liability of either Obligor or any Subsidiary (excluding loan
commitments, letters of credit, and other contingent liabilities incurred
in the ordinary course of the banking business) which is material in amount
and which is not reflected in such financial statements or of which the
Lender has not been advised in writing before this Agreement was signed.
SECTION 3.4. TAXES. Each Obligor and each Subsidiary have filed or
caused to be filed all federal, state and local tax returns which, to the
knowledge of such Obligor or Subsidiary, are required to be filed, and have
paid or have caused to be paid all taxes as shown on such returns or on any
assessment received by them, to the extent that such taxes have become due
(except for current taxes not delinquent and taxes being contested in good
faith and by appropriate proceedings for which adequate reserves have been
provided on the books of such Obligor or Subsidiary, and as to which no
foreclosure, sale or similar proceedings have been commenced). Each
Obligor and each Subsidiary have set up reserves which are adequate for the
payment of additional taxes for years which have not been audited by the
respective tax authorities.
SECTION 3.5. LIENS. None of the assets of either Obligor or any
Subsidiary is subject to any mortgage, pledge, title retention lien, or
other lien, encumbrance or security interest except: (a) for current taxes
not delinquent or taxes being contested in good faith and by appropriate
proceedings; (b) for liens arising in the ordinary course of business for
sums not due or sums being contested in good faith and by appropriate
proceedings, but not involving any deposits or loan or borrowed money or
the deferred purchase price of property or services; (c) to the extent
specifically shown in the financial statements referred to above; (d) for
liens in favor of Lender; and (e) liens and security interests securing
deposits of public funds, repurchase agreements, Federal funds purchased,
trust assets, and other similar liens granted in the ordinary course of the
banking business.
SECTION 3.6. ADVERSE CONTRACTS. Neither of the Obligors nor any
Subsidiary is a party to any agreement or instrument or subject to any
charter or other corporate restriction, nor is it subject to any judgment,
decree or order of any court or governmental body, which may have a
material and adverse effect on the consolidated business, assets,
liabilities, financial condition, operations or business prospects of the
Guarantor and its Subsidiaries taken as a whole or on the ability of such
Obligor to perform its obligations under this Agreement or the Note.
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Neither of the Obligors nor any Subsidiary has, nor with reasonable
diligence should have had, knowledge of or notice that it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any such agreement, instrument,
restriction, judgment, decree or order.
SECTION 3.7. REGULATION U. Neither Obligor is engaged principally
in, nor is one of such Obligor's important activities, the business of
extending credit for the purpose of purchasing or carrying "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereinafter in effect.
SECTION 3.8. LITIGATION AND CONTINGENT LIABILITIES. No litigation
(including derivative actions), arbitration proceedings or governmental
proceedings are pending or threatened against either Obligor which would
(singly or in the aggregate), if adversely determined, have a material and
adverse effect on the financial condition, continued operations or
prospects of such Obligor or any Subsidiary, except as and if set forth
(including estimates of the dollar amounts involved) in a schedule
furnished by such Obligor to Lender before this Agreement was signed.
SECTION 3.9. FDIC INSURANCE. The deposits of each Subsidiary Bank
are insured by the FDIC and no act has occurred which would adversely
affect the status of such Subsidiary Bank as an FDIC insured bank.
SECTION 3.10. INVESTIGATIONS. Neither of the Obligors nor any
Subsidiary Bank is under investigation by, or is operating under the
restrictions imposed by or agreed to in connection with, any regulatory
authority.
SECTION 3.11. SUBSIDIARIES. Attached hereto as Exhibit B is a
correct and complete list of all Subsidiaries of the Guarantor.
SECTION 4. COVENANTS.
Until all obligations of the Obligors hereunder and under the Term
Note are paid and fulfilled in full, each Obligor jointly and severally
with each other Obligor agrees that it shall, and shall cause any
Subsidiary to, comply with the following covenants, unless the Lender
consents otherwise in writing:
SECTION 4.1. EXISTENCE, MERGERS, ETC. Each Obligor and any
Subsidiary shall preserve and maintain their corporate, partnership or
joint venture (as applicable) existence, and will not liquidate, dissolve,
or merge or consolidate with or into any other entity, or sell, lease,
transfer or otherwise dispose of all or a substantial part of their assets
other than in the ordinary course of business as now conducted, except
that:
(a) Any Subsidiary (other than the Borrower) may merge or
consolidate with or into the Guarantor or any one or more
wholly-owned Subsidiaries;
(b) Any Subsidiary (other than the Borrower) may sell, lease,
transfer or otherwise dispose of any of its assets to the Guarantor
or one or more wholly-owned Subsidiaries;
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(c) The Borrower may merge or consolidate with or into the Guarantor
or sell, lease, transfer or otherwise dispose of any of its assets to
the Guarantor; and
(d) The Guarantor or any Subsidiary (other than the Borrower) may
merge with any other person, firm or coproration if (i) the Guarantor
or such Subsidiary shall be the survivor of suchmerger, (ii)
immediately prior to such merger and after giving effect thereto, no
Event of Default or Unmatured Event of Default shall have occurred and
be continuing, and (iii) at least 50% of the consolidated assets of
the surviving entity shall have been assets of the Guarantor or such
Subsidiary immediately prior to such merger.
Each Obligor and any Subsidiary shall take all steps to become and remain
duly qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on
the consolidated assets, condition or prospects of either Obligor.
SECTION 4.2. REPORTS, CERTIFICATES AND OTHER INFORMATION. The
Guarantor shall furnish (or cause to be furnished) to the Lender:
(a) Interim Reports. Within 60 days after the end of each quarter of
each fiscal year of the Guarantor, a copy of an unaudited financial
statement of the Guarantor and its Subsidiaries prepared on a
consolidated basis consistent with the consolidated financial
statements of the Guarantor and its Subsidiaries referred to in
Section 3.3(a), signed by an authorized officer of Borrower and
consisting of at least: (i) a balance sheet as at the close of such
quarter; and (ii) a statement of earnings and source and application
of funds for such quarter and for the period from the beginning of
such fiscal year to the close of such quarter.
(b) Audit Report. Within 90 days after the end of each fiscal year
of the Guarantor, a copy of an annual report of the Guarantor and its
Subsidiaries prepared on a consolidating and consolidated basis and in
conformity with generally accepted accounting principles applied on a
basis consistent with the consolidating and consolidated financial
statements of the Guarantor and its Subsidiaries referred to in
Section 3.3(b), duly certified by independent certified public
accountants of recognized standing satisfactory to Lender, accompanied
by an opinion without significant qualification.
(c) Certain Reports. Within 60 days after the end of each quarter of
each fiscal year of the Guarantor, a copy of the Guarantor's reports
on forms FRY-9C and FRY-9LP with respect to such quarter. If the
foregoing reports do not state the amount of all loans made by such
Subsidiary Bank that are 90 days or more past due (either principal or
interest), in non-accrual status, or listed as "other restructured" or
"other real-estate owned" in any reports to regulatory authorities,
then the Guarantor shall furnish or cause such Subsidiary Bank to
furnish Lender with a schedule of all such loans.
(d) Certificates. Contemporaneously with the furnishing of a copy of
each annual report and of each quarterly statement provided for in
this Section, a certificate dated the date of such annual report or
such quarterly statement and signed by either the President, the Chief
Financial Officer or the Treasurer of the Guarantor, to the effect
that no Event of Default or Unmatured Event of Default has occurred
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and is continuing, or, if there is any such event, describing it and
the steps, if any, being taken to cure it, and containing (except in
the case of the certificate dated the date of the annual report) a
computation of, and showing compliance with, any financial ratio or
restriction contained in this Agreement.
(e) Reports to SEC and to Shareholders. Copies of each filing and
report made by the Guarantor or any Subsidiary with or to any
securities exchange or the Securities and Exchange Commission, except
in respect of any single shareholder, and of each communication from
the Guarantor or any Subsidiary to shareholders generally, promptly
upon the filing or making thereof.
(f) Notice of Default, Litigation and ERISA Matters. Immediately
upon learning of the occurrence of any of the following, written
notice describing the same and the steps being taken by Borrower or
any Subsidiary affected in respect thereof: (i) the occurrence of an
Event of Default or an Unmatured Event of Default; (ii) the
institution of, or any adverse determination in, any litigation,
arbitration or governmental proceeding which is material to the
Guarantor or any Subsidiary on a consolidated basis; (iii) the
occurrence of a reportable event under, or the institution of steps by
the Guarantor or any Subsidiary to withdraw from, or the institution
of any steps to terminate, any employee benefit plans as to which
Guarantor or any of its Subsidiaries may have any liability and which
may have a material adverse impact on the ability of the Guarantor to
repay the Term Loan in full on a timely basis; or (iv) the issuance of
any cease and desist order, memorandum of understanding, cancellation
of insurance, or proposed disciplinary action from the FDIC or other
regulatory entity.
(g) Other Information. From time to time such other information,
financial or otherwise, concerning either Obligor or any Subsidiary as
Lender may reasonably request.
SECTION 4.3. INSPECTION. Each Obligor and any Subsidiary shall
permit the Lender and its agents at any time during normal business hours
to inspect their properties and to inspect and make copies of their books
and records.
SECTION 4.4. FINANCIAL REQUIREMENTS.
(a) Net Worth. The Guarantor shall maintain at all times a minimum
consolidated Tangible Net Worth equal to at least $100,000,000.
(b) Total Debt and Guarantees to Net Worth. The sum of (i) the
Guarantor's total indebtedness for borrowed money (specifically
excluding the indebtedness for borrowed money of the Guarantor's
Subsidiaries other than the Borrower) and (ii) the total amount of
indebtedness and other obligations supported by the Guarantor in a
manner referred to in Section 4.5(d) (including the guarantee of the
Guarantor under this Agreement) shall not at any time exceed 50% of
its Tangible Net Worth.
(c) Return on Average Assets. The Guarantor's consolidated net
income shall be at least 1% of its average assets, calculated on an
annualized basis as at the last day of each fiscal quarter of the
Guarantor.
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(d) Nonperforming Assets. All assets of all Subsidiary Banks and
other Subsidiaries classified as "non-performing" (which shall include
all loans in non-accrual status, more than 90 days past due in
principal or interest, restructured or renegotiated, or listed as
"other restructured" or "other real estate owned") on the FDIC or
other regulatory agency call report shall not exceed at any time 3% of
the loans of the Guarantor and its Subsidiaries on a consolidated
basis.
(e) Loan Loss Reserves Ratio. Each Subsidiary Bank shall maintain at
all times a ratio of loan loss reserves to non-performing loans of not
less than 100%.
(f) Tier 1 Capital. The Guarantor shall maintain on a consolidated
basis at all times a ratio of Tier 1 Capital to average quarterly
assets less non-qualified intangible assets of at least 8%. "Tier 1
Capital" shall be determined as provided under applicable regulations
of the Board of Governors of the Federal Reserve System as in effect
from time to time.
(g) Total Debt to Net Worth. The Guarantor's total indebtedness for
borrowed money (specifically excluding the indebtedness for borrowed
money of the Guarantor's Subsidiaries other than the Borrower) shall
not at any time exceed 35% of its Tangible Net Worth.
SECTION 4.5. INDEBTEDNESS, LIENS, TAXES AND GUARANTEES. Each Obligor
and any Subsidiary shall:
(a) Indebtedness. Not incur, permit to remain outstanding, assume or
in any way become committed for indebtedness in respect of borrowed
money (specifically including but not limited to indebtedness in
respect of money borrowed from financial institutions but excluding
deposits), except: (i) indebtedness incurred by the Guarantor; (ii)
indebtedness existing on the date of this Agreement shown on the
financial statements referred to in Section 3.3(b); (iii) indebtedness
of the Subsidiary Banks arising in the ordinary course of the banking
business of the Subsidiary Banks, including borrowings of Fed funds
and borrowings from Federal Home Loan Banks; and (iv) indebtedness of
any Subsidiary arising in the ordinary course of its business.
(b) Liens. Not create, suffer or permit to exist any lien or
encumbrance of any kind or nature upon any of their assets now or
hereafter owned or acquired (specifically including but not limited to
the capital stock of any of the Subsidiary Banks), or acquire or agree
to acquire any property or assets of any character under any
conditional sale agreement or other title retention agreement, but
this Section 4.5(a) shall not be deemed to prohibit: (i) liens
existing on the date of this Agreement of which the Lender has been
advised in writing before this Agreement was signed; (ii) liens of
landlords, contractors, laborers or supplymen, tax liens, or liens
securing performance or appeal bonds, or other similar liens or
charges arising out of such Obligor's or Subsidiary's business,
provided that tax liens are removed before related taxes become
delinquent and other liens are promptly removed, in either case unless
contested in good faith and by appropriate proceedings, and as to
which adequate reserves shall have been established and no
foreclosure, sale or similar proceedings have commenced; (iii) liens
in favor of the Lender or its affiliates; (iv) liens on the assets of
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any Subsidiary Bank arising in the ordinary course of the banking
business of such Subsidiary Bank; and (v) liens securing obligations
in an aggregate amount not exceeding $10,000,000 under leases of
equipment (including leases with the Lender or any affiliate),
determined by adding all monetary obligations under such leases during
the entire term thereof.
(c) Taxes. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon such Obligor or Subsidiary, upon its
income or profits or upon any properties belonging to it, prior to the
date on which penalties attach thereto, and all lawful claims for
labor, materials and supplies when due, except that no such tax,
assessment, charge, levy or claim need be paid which is being
contested in good faith by appropriate proceedings as to which
adequate reserves shall have been established, and no foreclosure,
sale or similar proceedings have commenced.
(d) Guarantees. Not assume, guarantee, endorse or otherwise become
or be responsible in any manner (whether by agreement to purchase any
obligations, stock, assets, goods or services, or to supply or loan or
any portion thereof any funds, assets, goods or services, or
otherwise) with respect to the obligations of any other person or
entity, except: (i) by the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, issuance of
letters of credit or similar instruments or documents in the ordinary
course of business; (ii) the guarantee of the Guarantor in this
Agreement; and (iii) other guarantees by the Guarantor of indebtedness
or other obligations of Subsidiaries in an aggrgate amount not
exceeding at any time 15% of Tangible Net Worth.
SECTION 4.6. INVESTMENTS AND LOANS. Neither of the Obligors nor any
Subsidiary shall make any loan, advance, extension of credit or capital
contribution to, or purchase or otherwise acquire for a consideration,
evidences of indebtedness, capital stock or other securities of any legal
entity, except that the Guarantor and any Subsidiary (other than the
Borrower) may:
(a) Purchase or otherwise acquire and own short-term money market
items (specifically including but not limited to preferred stock
mutual funds);
(b) Invest, by way of purchase of securities or capital
contributions, in the Subsidiary Banks or any other bank or banks, and
upon the Guarantor's purchase or other acquisition of twenty-five
percent (25%) or more of the stock of any bank, such bank shall
thereupon become a "Subsidiary Bank" for all purposes under this
Agreement;
(c) Invest, by way of loan, advance, extension of credit (whether in
the form of lease, conditional sales agreement, or otherwise),
purchase of securities, capital contributions, or otherwise, in
Subsidiaries other than banks or Subsidiary Banks; and
(d) Make any investment permitted by Section 4.1 and applicable
governmental laws and regulations.
Nothing in this Section 4.6 shall prohibit the Guarantor or any Subsidiary
from making loans, advances, or other extensions of credit in the ordinary
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course of banking upon substantially the same terms as heretofore extended
by them in such business or upon such terms as may at the time be customary
in the banking business.
SECTION 4.7. MAINTAIN OWNERSHIP. The Guarantor shall continue to
own, directly or indirectly, the same (or greater) percentage of the stock
and partnership, joint venture, or other equity interest in each Subsidiary
that it held on the date of this Agreement, and no Subsidiary shall issue
any additional stock or partnership, joint venture or other equity
interests, options or warrants in respect thereof, or securities
convertible into such securities or interests, other than to the Guarantor.
SECTION 4.8. MAINTENANCE OF PROPERTIES. Each Obligor and any
Subsidiary shall maintain, or cause to be maintained, in good repair,
working order and condition, all their properties (whether owned or held
under lease), and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, and improvements
thereto, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 4.9. INSURANCE. Each Obligor and any Subsidiary shall
maintain insurance in responsible companies in such amounts and against
such risks as is required by law and such other insurance, in such amount
and against such hazards and liabilities, as is customarily maintained by
bank holding companies and banks similarly situated. Each Subsidiary Bank
shall have deposits insured by FDIC.
SECTION 4.10. USE OF PROCEEDS.
(a) General. Neither of the Obligors nor any Subsidiary shall use or
permit any proceeds of the Term Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulations U or X of the Board of Governors of the Federal
Reserve System, as amended from time to time. If requested by the
Lender, the Borrower and any Subsidiary will furnish to the Lender a
statement in conformity with the requirements of Federal Reserve Form
U-1. No part of the proceeds of the Term Loan will be used for any
purpose which violates or is inconsistent with the provisions of
Regulation U or X of the Board of Governors.
(b) Construction and Other Financing. The Borrower shall use the
proceeds of the Term Loan solely to (i) finance or refinance the
construction of an office building which will contain offices of the
Guarantor and/or one or more Subsidiaries of the Guarantor and which
shall be located at 21 SE Third Street, Evansville, Indiana 47708, and
(ii) for general corporate purposes or for loans or payment of
dividends to the Guarantor.
SECTION 4.11. CONTINUE TO BE WELL CAPITALIZED. The Guarantor and
each Subsidiary shall at all times be at least "well capitalized" on a
consolidated basis as defined by the Federal Deposit Insurance Corporation
Improvement Act of 1991 and any regulations issued thereunder, as such
statute or regulation may be amended or supplemented from time to time.
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SECTION 4.12. COMPLIANCE WITH LAW. Each Obligor and each Subsidiary
shall comply with all laws and regulations (whether federal, state or local
and whether statutory, administrative, judicial or otherwise) and with
every lawful governmental order or similar actions (whether administrative
or judicial), specifically including but not limited to all requirements of
the Bank Holding Company Act of 1956, as amended, and with the existing
regulations of the Board of Governors of the Federal Reserve System
relating to bank holding companies.
SECTION 5. CONDITIONS OF LENDING
SECTION 5.1. DOCUMENTATION; NO DEFAULT. The obligation of the Lender
to make the Term Loan is subject to the following conditions precedent:
(a) Initial Documentation. The Lender shall have received all of the
following promptly upon the execution and delivery hereof, each duly
executed and dated the date hereof or such other date as the Lender
shall specify, in form and substance satisfactory to the Lender and
its counsel, at the expense of the Borrower, and in such number of
signed counterparts as the Lender may request (except for the Term
Note, of which only the original shall be signed):
(i) Term Note. The Term Note in the form of Exhibit A, with
appropriate insertions;
(ii) Resolutions; Certificates of Incumbency. A copy of a
resolution of the Board of Directors of each Obligor authorizing
or ratifying the execution, delivery and performance,
respectively, of this Agreement, (in the case of the Borrower)
the Term Note and the other documents provided for in this
Agreement certified by an appropriate officer of such Obligor ,
together with a certificate of an appropriate officer of such
Obligor, certifying the names of the officer(s) of such Obligor
authorized to sign this Agreement, (in the case of the Borrower)
the Term Note and the other documents provided for in this
Agreement, together with a sample of the true signature of each
such person (the Lender may conclusively rely on such certificate
until formally advised by a like certificate of any changes
therein);
(iii) Governing Documents. A copy of the articles of
incorporation and by-laws of each Obligor, certified by an
appropriate officer of such Obligor;
(iv) Certificate of No Default. A certificate signed by an
appropriate officer of each Obligor to the effect that: (A) no
Event of Default or Unmatured Event of Default has occurred and
is continuing or will result from the making of the first Loan;
and (B) the representations and warranties of such Obligor
contained herein are true and correct as at the date of the Term
Loan as though made on that date;
(v) Opinion of Counsel to Obligors. An opinion of counsel to
the Obligors to such effect as the Lender may require; and
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(vi) Miscellaneous. Such other documents and certificates as the
Lender may reasonably request.
(b) Representations and Warranties True. At the date of the Term
Loan, the representations and warranties set forth herein shall be
true and correct as of such date as though made on such date.
(c) No Default. At the time of the Term Loan, and immediately after
giving effect to the Term Loan, no Event of Default or Unmatured Event
of Default shall have occurred and be continuing at the time of the
Term Loan, or would result from the making of the Term Loan.
SECTION 6. GUARANTEE
SECTION 6.1. GUARANTEE. The Guarantor hereby guarantees to the
Lender and its successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of all
obligations of the Borrower under this Agreement, the Term Note and any
agreement, document or instrument executed by the Borrower in connection
therewith (collectively, the "Obligations"), in each case strictly in
accordance with the terms thereof. The Guarantor hereby further agrees
that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Obligations, the
Guarantor will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
SECTION 6.2. OBLIGATIONS UNCONDITIONAL. The obligations of the
Guarantor under Section 6.1 hereof are absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or
enforceability of this Agreement, the Term Note or any other agreement or
instrument referred to therein, or any substitution, release or exchange
of, or any other guarantee of or security for, any of the Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the
intent of this Section 6.2 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder: (a) at any time or from time to
time, without notice to the Guarantor, the time for any performance of or
compliance with any of the Obligations shall be extended, or such
performance or compliance shall be waived; (b) any of the acts mentioned in
any of the provisions of this Agreement, the Term Note or any other
agreement or instrument referred to therein shall be done or omitted; (c)
the maturity of any of the Obligations shall be accelerated, or any of the
Obligations shall be modified, supplemented or amended in any respect, or
any right under this Agreement, the Term Note or any other agreement or
instrument referred to herein or therein shall be waived or any other
guarantee of any of the Obligations of the Guarantor or any security
therefor shall be released or exchanged in whole or in part or otherwise
dealt with; or any lien or security interest granted to, or in favor of,
the Lender as security for any of the Obligations shall fail to be
perfected. The Guarantor hereby expressly waives diligence, presentment,
demand
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of payment, protest and all notices whatsoever under this Section 6, and
any requirement that the Lender exhaust any right, power or remedy or
proceed against the Borrower under this Agreement, the Term Note or any
other agreement or instrument referred to therein, or against any other
person, corporation, firm or entity under any other guarantee of, or
security for, any of the Obligations.
SECTION 6.3. REINSTATEMENT. The obligations of the Guarantor under
this Section 6 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of the Borrower in respect of
the Obligations is rescinded or must be otherwise restored by any holder of
any of the Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it
will indemnify the Lender on demand for all reasonable costs and expenses
(including, without limitation, fees of counsel) incurred by the Lender in
connection with such rescission or restoration.
SECTION 6.4. SUBROGATION. The Guarantor hereby agrees that until the
payment and satisfaction in full of the Obligations and the termination of
the Commitment of the Lender under this Agreement, it shall not exercise
any right or remedy arising by reason of any performance by it of its
guarantee in Section 6.1 hereof, whether by subrogation or otherwise,
against the Borrower.
SECTION 6.5. REMEDIES. The Guarantor agrees that, as between it and
the Lender, the obligations of the Borrower under this Agreement may be
declared to be forthwith due and payable as provided in Section 7.2 hereof
(and shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 7.2) for purposes of Section 6.1
hereof notwithstanding any stay, injunction or other prohibition preventing
such declaration (or such obligations from becoming automatically due and
payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and
payable), such obligations (whether or not due and payable by the Borrower)
shall forthwith become due and payable by the Guarantor for the purposes of
said Section 6.1.
SECTION 6.6. CONTINUING GUARANTEE. The guarantee in this Section 6
is a continuing guarantee and shall apply to all Obligations whenever
arising.
SECTION 7. DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an "Event of Default":
(a) Failure to pay, when and as due, any principal amounts payable
hereunder; or failure to pay, when and as due, any interest or other
amounts payable hereunder and such failure shall continue for five (5)
Banking Days; or
(b) Any default, event of default, or similar event shall occur or
continue under any other instrument, document, note, agreement, or
guaranty delivered to the Lender in connection with this Agreement, or
any such instrument, document, note, agreement, or guaranty shall not
be, or shall cease to be, enforceable in accordance with its terms; or
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(c) There shall occur any default or event of default, or any event
or condition that might become such with notice or the passage of time
or both, or any similar event, or any event that requires the
prepayment of borrowed money in the aggregate amount of $50,000 or
more or the acceleration of the maturity thereof, under the terms of
any evidence of indebtedness or other agreement issued or assumed or
entered into by either Obligor or any Subsidiary in the aggregate
amount of $50,000 or more, or under the terms of any indenture,
agreement, or instrument under which any such evidence of indebtedness
in the aggregate amount of $50,000 or more or other agreement is
issued, assumed, secured, or guaranteed, and such event shall continue
beyond any applicable period of grace; or
(d) Any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf
of either Obligor or any Subsidiary to the Lender is false or
misleading in any material respect on the date as of which the facts
therein set forth are stated or certified; or
(e) Any guaranty of or pledge of collateral security for the Term
Loan shall be repudiated or become unenforceable or incapable of
performance; or
(f) Either Obligor shall fail to comply with Section 4.l hereof; or
failure to comply with or perform any agreement or covenant of either
Obligor contained herein, which failure does not otherwise constitute
an Event of Default, and such failure shall continue unremedied for
ten (l0) days after notice thereof to Borrower by Lender; or
(g) Any person or entity, or group of persons or entities or both
acting in concert, presently not in control of the Guarantor shall
obtain control directly or indirectly of the Guarantor, whether by
purchase or gift of stock or assets, by contract, or otherwise; or
(h) Any proceeding (judicial or administrative) shall be commenced
against either Obligor or any Subsidiary, or with respect to any
assets of either Obligor or, any Subsidiary, which shall threaten to
have a material and adverse effect on the assets, condition or
prospects of either Obligor or any Subsidiary; or final judgment(s)
and/or settlement(s) in an aggregate amount in excess of ONE MILLION
UNITED STATES DOLLARS ($1,000,000) in excess of insurance for which
the insurer has confirmed coverage in writing, a copy of which writing
has been furnished to the Lender, shall be entered or agreed to in any
suit or action commenced against either Obligor or any Subsidiary; or
(i) Any notice of a federal tax lien against either Obligor shall be
filed with any public recorder; or
(j) The FDIC or other regulatory entity shall issue or agree to enter
into a letter agreement, memorandum of understanding, or a cease and
desist order with or against either Obligor or any Subsidiary; or the
FDIC or other regulatory entity shall issue or enter into an
agreement, order, or take any similar action with or against either
Obligor or such Subsidiary materially adverse to the business or
operation of the Borrower or any Subsidiary; or
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(k) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation, dissolution, or similar proceeding,
domestic or foreign, is instituted by or against either Obligor, any
Subsidiary; or Borrower, any Subsidiary or the Guarantor shall take
any steps toward, or to authorize, such a proceeding; or
(l) Either Obligor or any Subsidiary shall become insolvent,
generally shall fail or be unable to pay its debts as they mature,
shall admit in writing its inability to pay its debts as they mature,
shall make a general assignment for the benefit of its creditors,
shall enter into any composition or similar agreement, or shall
suspend the transaction of all or a substantial portion of its usual
business.
SECTION 7.2. DEFAULT REMEDIES.
(a) Upon the occurrence and during the continuance of any Event of
Default specified in Section 7.l (a)-(j), the Lender at its option may
declare the Term Note (principal, interest and other amounts) and any
other amounts owed to the Lender immediately due and payable without
notice or demand of any kind. Upon the occurrence of any Event of
Default specified in Section 7.l (k)-(l), the Term Note (principal,
interest and other amounts) and any other amounts owed to the Lender
shall be immediately and automatically due and payable without action
of any kind on the part of Lender. Upon the occurrence and during the
continuance of any Event of Default, the Commitment shall immediately
and automatically terminate without action of any kind on the part of
the Lender, and the Lender may exercise any rights and remedies under
this Agreement, the Term Note, any related document or instrument
(including without limitation any pertaining to collateral), and at
law or in equity.
(b) The Lender may, by written notice to the Borrower, at any time
and from time to time, waive any Event of Default or Unmatured Event
of Default, which shall be for such period and subject to such
conditions as shall be specified in any such notice. In the case of
any such waiver, the Lender and the Borrower shall be restored to
their former position and rights hereunder, and any Event of Default
or Unmatured Event of Default so waived shall be deemed to be cured
and not continuing; but no such waiver shall extend to or impair any
subsequent or other Event of Default or Unmatured Event of Default.
No failure to exercise, and no delay in exercising, on the part of the
Lender of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies of the Lender herein
provided are cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8. DEFINITIONS
SECTION 8.1. GENERAL. As used herein:
"Banking Day" means a day on which the Lender is open at its main
office for the purpose of conducting a commercial banking business and is
not authorized to close.
"FDIC" means the Federal Deposit Insurance Corporation and any
successor thereof.
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"Prime Rate" means that rate of interest announced from time to time
by the Lender called its prime rate, which rate may not at any time be the
lowest rate charged by Lender. Changes in the rate of interest resulting
from a change in the Prime Rate shall take effect on the date set forth in
each announcement of a change in the Prime Rate.
"Subsidiary" means any corporation, partnership, joint venture, trust,
or other legal entity of which the Guarantor now or hereafter owns directly
or indirectly twenty-five percent (25%) or more of the outstanding voting
stock or interest, or of which the Guarantor has effective control, by
contract or otherwise. The term Subsidiary includes the Borrower and each
Subsidiary Bank unless stated otherwise explicitly.
"Subsidiary Bank" means each Subsidiary which is a bank.
"Tangible Net Worth" shall mean at any date the total shareholders'
equity (including all classes of capital stock, capital surplus, additional
paid-in capital, retained earnings, contingencies, and capital reserves),
minus the cost of common stock reacquired by the Guarantor and other
capital accounts of the Guarantor at such date, minus goodwill, patents,
trademarks, service marks, trade names, copyrights, and all intangible
assets (including without limitation "core-deposit intangibles" and
unidentifiable intangibles resulting from acquisitions) and all items that
are treated as intangible assets under generally accepted accounting
principles or that otherwise fit within the definition of "intangible
assets" in the instructions for the call report of the FDIC, minus
unrealized gains on "available for sale" securities, and plus unrealized
losses on "available for sale" securities.
"Unmatured Event of Default" means an event or condition which would
become an Event of Default with notice or the passage of time or both.
Except as and unless otherwise specifically provided herein, all
accounting terms shall have the meanings given to them by generally
accepted accounting principles and shall be applied and all reports
required by this Agreement shall be prepared, in a manner consistent with
the financial statements referred to above.
SECTION 8.2. APPLICABILITY OF SUBSIDIARY REFERENCES. Terms hereof
pertaining to any Subsidiary shall apply only during such times as Borrower
has any Subsidiary.
SECTION 9. NO INTEREST OVER LEGAL RATE.
The Borrower does not intend or expect to pay, nor does the Lender
intend or expect to charge, accept or collect any interest which, when
added to any fee or other charge upon the principal which may legally be
treated as interest, shall be in excess of the highest lawful rate. If
acceleration, prepayment or any other charges upon the principal or any
portion thereof, or any other circumstance, result in the computation or
earning of interest in excess of the highest lawful rate, then any and all
such excess is hereby waived and shall be applied against the remaining
principal balance. Without limiting the generality of the foregoing, and
notwithstanding anything to the contrary contained herein or otherwise, no
deposit of funds shall be required in connection
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herewith which will, when deducted from the principal amount outstanding
hereunder, cause the rate of interest hereunder to exceed the highest
lawful rate.
SECTION 10. PAYMENTS, ETC.
All payments hereunder shall be made in immediately available funds,
and shall be applied first to accrued interest and then to principal;
however, if an Event of Default occurs, Lender may, in its sole discretion,
and in such order as it may choose, apply any payment to interest,
principal and/or lawful charges and expenses then accrued. The Borrower
shall receive immediate credit on payments received during the Lender's
normal banking hours if made in cash, immediately available funds, or by
debit to available balances in an account at the Lender; otherwise payments
shall be credited after clearance through normal banking channels. The
Borrower authorizes the Lender to charge any account of the Borrower
maintained with the Lender for any amounts of principal, interest, taxes,
duties, or other charges or amounts due or payable hereunder, with the
amount of such payment subject to availability of collected balances in the
Lender's discretion; unless the Borrower instructs otherwise, the Term Loan
shall be credited to an account(s) of the Borrower with the Lender. All
payments shall be made without deduction for or on account of any present
or future taxes, duties or other charges levied or imposed on this
Agreement, the Term Note, the Term Loan or the proceeds, the Lender or the
Borrower by any government or political subdivision thereof. The Borrower
shall upon request of the Lender pay all such taxes, duties or other
charges in addition to principal and interest, including without limitation
all documentary stamp and intangible taxes, but excluding income taxes
based solely on the Lender's income.
SECTION 11. SETOFF.
At any time and without notice of any kind, any account, deposit or
other indebtedness owing by the Lender to either Obligor, and any
securities or other property of either Obligor delivered to or left in the
possession of the Lender or its nominee or bailee, may be set off against
and applied in payment of any obligation hereunder, whether due or not.
SECTION 12. NOTICES
Except as otherwise provided herein, all notices, requests and demands
to or upon the respective parties hereto shall be deemed to have been given
or made when deposited in the mail, postage prepaid, addressed if to the
Lender to its office indicated above (Attention: Division Head,
Correspondent Services Division), and if to either Obligor to its address
set forth below, or to such other address as may be hereafter designated in
writing by the respective parties hereto or, as to either Obligor, may
appear in Lender's records.
SECTION 13. MISCELLANEOUS.
This Agreement and any document or instrument executed in connection
herewith shall be governed by and construed in accordance with the internal
law of the State of Illinois, and shall be deemed to have been executed in
the State of Illinois. Unless the context requires otherwise, wherever
used herein the singular shall include the plural and vice versa, and the
use of one
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gender shall also denote the other. Captions herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof; references herein to Sections or provisions without reference to
the document in which they are contained are references to this Agreement.
This Agreement shall bind each Obligor and its successors and assigns, and
shall inure to the benefit of the Lender, its successors and assigns,
except that neither Obligor may transfer or assign any of its rights or
interest hereunder without the prior written consent of the Lender. The
Lender may sell participations in this Agreement and the Term Loan and may
provide to any actual or prospective participant any notices, documents,
financial statements and other information concerning the Obligors or any
Subsidiary that may be delivered to or obtained by the Lender from time to
time. The Borrower agrees to pay upon demand all expenses (including
without limitation attorneys' fees, legal costs and expenses, and time
charges of attorneys who may be employees of the Lender, in each case
whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by the Lender or any holder hereof in
connection with the enforcement or preservation of its rights hereunder or
under any document or instrument executed in connection herewith. Except
as otherwise specifically provided herein, each Obligor expressly and
irrevocably waives presentment, protest, demand and notice of any kind in
connection herewith. The Lender may, by written notice to the Borrower, at
any time and from time to time, waive any Event of Default or Unmatured
Event of Default, which shall be for such period and subject to such
conditions as shall be specified in any such notice. In the case of any
such waiver, the Lender and the Obligors shall be restored to their former
position and rights hereunder and under the Term Note, respectively, and
any Event of Default or Unmatured Event of Default so waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to
or impair any subsequent or other Event of Default or Unmatured Event of
Default. No failure to exercise, and no delay in exercising, on the part
of the Lender any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies of the Lender herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 14. WAIVER OF JURY TRIAL, ETC.
EACH OBLIGOR HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO THE LENDER'S
SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH
RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITUS WITHIN OR JURISDICTION OVER COOK COUNTY,
ILLINOIS. EACH OBLIGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR HAVING JURISDICTION OVER
SUCH COUNTY, AND HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO REQUEST
OR DEMAND TRIAL BY JURY, TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT,
ACTION OR OTHER PROCEEDING BROUGHT BY THE LENDER IN
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ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
TWENTY-ONE SOUTHEAST
THIRD CORPORATION
By: /s/ ROBERT A. KEIL
Name: Robert A. Keil
Title: President
Address for notices:
P.O. Box 868
Evansville, Indiana 47705-0868
NATIONAL CITY BANCSHARES, INC.
By: /s/ JOHN D. LIPPERT
Name: John D. Lippert
Title: Chairman and CEO
Address for notices:
P.O. Box 868
Evansville, Indiana 47705-0868
THE NORTHERN TRUST COMPANY
By: /s/ ALISA A. KAPLAN
Name: Alisa A. Kaplan
Title: Vice President
Address for notices:
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Division Head,
Correspondent Banking Services
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EXHIBIT A
TERM NOTE
$15,000,000 Chicago, Illinois
June 26, 1996
FOR VALUE RECEIVED, TWENTY-ONE SOUTHEAST THIRD CORPORATION, a
corporation formed under the laws of the State of Indiana ("Borrower"),
promises to pay to the order of THE NORTHERN TRUST COMPANY, an Illinois
banking corporation (hereafter, together with any subsequent holder hereof,
called the "Lender"), at its main banking office at 50 South LaSalle
Street, Chicago, Illinois 60675, or at such other place as the Lender may
direct, the principal sum of FIFTEEN MILLION UNITED STATES DOLLARS
($15,000,000) (the "Loan"), payable in 72 consecutive, monthly principal
installment(s) consisting of 71 installments of $83,333.33 each and a 72nd
and final installment of all then remaining unpaid principal, one
installment being payable on the last Banking Day (as defined in the Term
Loan Agreement referred to below) of each month commencing in June, 1997;
provided that, notwithstanding the foregoing, any and all remaining
outstanding principal shall be due and payable in full on the last Banking
Day in May, 2003, the scheduled maturity date of this Note.
Borrower agrees to pay interest on the unpaid principal amount from
time to time outstanding hereunder at 8.10% per annum. Interest shall be
payable on the last Banking Day of each month.
Payments of both principal and interest are to be made in immediately
available funds in lawful money of the United States of America.
This Note evidences indebtedness incurred under a Term Loan Agreement
dated as of the date hereof executed by and among the Borrower, National
City Bancshares, Inc., as Guarantor, and the Lender (and, if amended,
restated or replaced, all amendments, restatements and replacements thereto
or therefor, if any) (the "Term Loan Agreement"), to which Term Loan
Agreement reference is hereby made for a statement of its terms and
provisions, including without limitation those under which this Note may be
paid prior to its due date or have its due date accelerated and provisions
concerning the payment of interest on past-due amounts.
This Note and any document or instrument executed in connection
herewith shall be governed by and construed in accordance with the internal
law of the State of Illinois, and shall be deemed to have been executed in
the State of Illinois. Unless the context requires otherwise, wherever
used herein the singular shall include the plural and vice versa, and the
use of one gender shall also denote the other. Captions herein are for
convenience of reference only and shall not define or limit any of the
terms or provisions hereof; references herein to Sections or provisions
without reference to the document in which they are contained are
references to this Note. This Note shall bind the Borrower successors and
assigns, and shall inure to the benefit of Lender, its successors and
assigns, except that the Borrower may not transfer or assign any of its
rights or interest hereunder without the prior written consent of the
Lender. The Borrower agrees to pay upon demand all expenses (including
without limitation attorneys' fees, legal costs and expenses, and time
charges of attorneys who may be employees of the Lender, in each case
<PAGE>
whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by the Lender or any holder hereof in
connection with the enforcement or preservation of its rights hereunder or
under any document or instrument executed in connection herewith. The
Borrower expressly and irrevocably waives presentment, protest, demand and
notice of any kind in connection herewith.
TWENTY-ONE SOUTHEAST
THIRD CORPORATION
By: /s/ ROBERT A. KEIL
Name: Robert A.Keil
Title: President
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<PAGE>
EXHIBIT B
NATIONAL CITY BANCSHARES, INC. SUBSIDIARIES
6/19/96
THE BANK OF MITCHELL PIKE COUNTY BANK
602 W. Main Street 8th and Main Streets
P.O. Box 308 P.O. Box 308
Mitchell, IN 47446-0308 Petersburg, IN 47567-0308
(812) 849-4000 (812) 354-8434
Bedford, Mitchell, Paoli Petersburg, Spurgeon, Arthur
Randall Young, President & CEO Max D. Elliott, President & CEO
FAX (M) (812) 849-6061 FAX (812) 354-8440
FAX (B) (812) 275-3426
THE STATE BANK OF WASHINGTON
THE FARMERS AND MERCHANTS BANK 300 E. Main Street
801 E. Mulberry Street P.O. Box 271
P.O. Box D Washington, IN 47501-0271
Fort Branch, IN 47648-0198 (812) 254-2320
(812) 753-3911 Washington, Odon
John N. Clauss, President & CEO Harvey W. Pinney, President & CEO
FAX (812) 753-3404 FAX (812) 254-0209
FIRST KENTUCKY BANK WHITE COUNTY BANK
520 Adams Street 215 E. Main Street
P.O. Box 307 P.O. Box 100
Sturgis, KY 42459-0307 Carmi, IL 62821-0100
(502) 333-4101 (618) 382-4114
Sturgis, Poole, Morganfield R. Keith Hoskins, President & CEO
Garland Certain, President & CEO FAX (618) 382-3116
FAX (502) 333-2036
UNITED FEDERAL SAVINGS BANK
LINCOLNLAND BANK 619 Main Street
5 N. Washington Street P.O. Box 1217
P.O. Box 218 Vincennes, IN 47591
Dale, IN 47523-0218 (812) 882-9310
(812) 937-4453 Janice L. Beesley, President & CEO
Dale, Chrisney, Grandview, FAX (812) 885-2628
Hatfield, Rockport
Wm. Stephen Schroer, President & CEO NCBE LEASING CORP.
FAX (812) 700 937-3529 227 Main Street
P.O. Box 868
THE NATIONAL CITY BANK OF EVANSVILLE Evansville, IN 47705-0868
227 Main Street (812) 464-9800
P.O. Box 868 Charles J. Kelly, Jr., President & CEO
Evansville, IN 47705-0868 FAX (812) 464-9825
(812) 464-9800
Evansville, Newburgh UNIFED, INC.
Thomas L. Austerman, President (Subsidiary of Pike County Bank)
Michael F. Elliott, Chairman & CEO 619 Main Street
FAX (812) 464-9825 P.O. Box 1217
Vincennes, IN 47591
THE PEOPLES NATIONAL BANK OF GRAYVILLE (812) 882-4766
119 S. Middle Street Janice L. Beesley, President
Grayville, IL 62844-1664 FAX (812) 885-2628
(618) 375-2261
Donald Kirkland, President & CEO
FAX (618) 375-7059
<PAGE>
<PAGE>
EXHIBIT 10(b)
NATIONAL CITY BANCSHARES, INC.
INCENTIVE STOCK OPTION PLAN
ARTICLE I. PURPOSE.
The purpose of this Incentive Stock Option Plan (the "Plan") is
to encourage stock ownership by certain executive employees of
NATIONAL CITY BANCSHARES, INC., an Indiana corporation and its
"subsidiary corporations" (collectively the "Corporation"), so that
they may acquire a proprietary interest in the success of the
Corporation. The term "subsidiary corporation" shall be defined in the
same manner as such term is defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code") and shall include
subsidiary corporations which become such after the adoption of the
Plan. The Plan is intended to provide an incentive for maximum effort
in the successful operation of the Corporation and to encourage
certain employees of the Corporation to remain in the employ of the
Corporation. It is further intended that the options granted pursuant
to the Plan shall constitute "Incentive Stock Options" within the
meaning of Section 422 of the Code, except as specifically provided
herein.
ARTICLE II. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee (the
"Committee") which shall consist of three or more members of the Board
of Directors of National City Bancshares, Inc. (the "Board of
Directors") who are not employees of the Corporation and who are
appointed to the Committee from time to time by the Board of
Directors. If any member of the Committee becomes an executive
employee of the Corporation, his or her membership on the Committee
shall automatically terminate. No Director may be appointed to the
Committee who has, during the one year period immediately preceding
his or her prospective appointment date, been granted options under
the Plan. Members of the Committee shall be appointed by and shall
serve at the pleasure of the Board of Directors. A majority of the
Committee shall constitute a quorum and acts of a majority of the
members present at any meeting at which a quorum is present, or acts
approved in writing by all members of the Committee, shall be deemed
to be valid acts of the Committee. No member of the Committee shall be
eligible to receive an option under the Plan.
The Committee shall select one of its members to serve as
Chairman, shall appoint one of its members as Secretary, who shall
maintain a record of its actions and decisions, and shall hold
meetings from time to time as it may determine. The Committee shall
have authority to:
(a) Determine which of the eligible employees of the Corporation
(determined under Article III hereof) shall be granted
options, when such options shall be granted and the number
of shares and terms with respect to each such option;
1
<PAGE>
(b) Prescribe rules and regulations for administering the Plan;
and
(c) Decide any questions arising as to the interpretation or
application of any provision under this Plan.
The determination of the Committee as to any of these matters shall be
final and binding upon all persons whomsoever and shall be reported to
the Board of Directors at its next ensuing meeting.
ARTICLE III. ELIGIBILITY.
The persons who shall be eligible to receive options pursuant to
the Plan shall be such of the key employees of the Corporation,
including but not limited to officers (whether or not they are also
directors of the Corporation), as the Committee shall select from time
to time. A grantee of an option under this Plan (an "Optionee") may
hold more than one option hereunder, but only on the terms and
conditions hereinafter set forth. Notwithstanding any of the other
provisions of this Plan, options shall not be granted hereunder to an
individual who then owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of National
City Bancshares, Inc., or of a parent or a subsidiary corporation (as
those terms are defined in Section 424 of the Code) of National City
Bancshares, Inc., such ownership to be determined by application of
the applicable attribution rules under the Code.
ARTICLE IV. STOCK TO BE ISSUED UNDER THIS PLAN.
The stock to be issued upon the exercise of options granted under
the Plan shall be shares of the common stock without par value of
National City Bancshares, Inc. ("Common Stock") which may either be
authorized and unissued shares or issued shares held in or hereafter
acquired for the treasury of National City Bancshares, Inc. The
aggregate number of shares of Common Stock which may be issued under
options granted hereunder shall not exceed Two Hundred and Ninety
Thousand (290,000) shares. In the event that any outstanding option
under the Plan expires or is terminated, the shares of Common Stock
allocable to the unexercised portion of such option may again be
subject to an option under the Plan.
National City Bancshares, Inc. shall not be required to issue or
deliver any certificate for shares of its Common Stock purchased upon
the exercise of all or any part of an option before completion of any
registration or other qualification of such shares under any state or
federal law or ruling or regulation of any governmental regulatory
body that National City Bancshares, Inc. shall, in its sole
discretion, determine is necessary or advisable.
2
<PAGE>
ARTICLE V. TERMS AND CONDITIONS OF OPTIONS.
Each option granted under the Plan shall be evidenced by an
agreement in writing which shall be subject to such amendment and
modification from time to time as the Committee shall deem necessary
to comply with applicable law or regulation, and which shall contain,
in such form and with such other provisions as the Committee shall
from time to time determine, provisions which comply with the
following terms and conditions:
(a) The Number of Shares. Each option shall state the number of
shares of Common Stock to which it pertains.
(b) Option Price. Each option shall state the option price per
share of Common Stock which shall be equal to the fair
market value of one share of Common Stock on the date of the
granting of the option. The Committee shall have full
authority to determine the fair market value of a share of
Common Stock. If the Common Stock is traded in the over-
the-counter market, such fair market value shall be deemed
to be the arithmetical mean between the asked and the bid
prices between the opening of the market and noon on such
date as reported by NASDAQ. If the Common Stock is traded on
an exchange, such fair market value shall be deemed to be
the arithmetical mean of the high and low prices at which it
is quoted or traded between the opening of the market and
noon on such day on the exchange on which it generally has
the greatest trading volume.
(c) Medium and Time of Payment. The option price shall be
payable in United States dollars, or, if authorized by the
Committee in the option grant, in whole or in part in common
shares of the Corporation valued at fair market value, as
determined by the Committee. The option price shall be
payable in full upon the exercise of the option, and the
exercise of any option and the delivery of the optioned
shares shall be contingent upon receipt by National City
Bancshares, Inc. of the full purchase price paid in cash,
check, or, if authorized, common shares of the Corporation.
(d) Term and Exercise of Options. Each option shall state the
period of time during which the option may be exercised;
provided, however that, anything contained herein to the
contrary notwithstanding, no option granted hereunder shall
be exercisable after the expiration of ten years after the
date of grant of such option. Subject to the terms of the
Plan and the individual agreement granting a particular
option, any option may be exercised, in whole or in part,
from time to time, as to one or more whole shares of Common
Stock covered by the option, during its period of exercise.
(e) Maximum Value of Stock with Respect to Which Options Are
Exercisable for First Time in Any Calendar Year. In the
event the aggregate fair market value (determined at the
time the option is granted) of Common Stock with respect to
3
<PAGE>
which options are exercisable hereunder for the first time
by any eligible employee during any one calendar year (under
the Plan and all other incentive stock option plans of
National City Bancshares, Inc. or any parent or subsidiary
corporation of National City Bancshares, Inc.) shall exceed
One Hundred Thousand Dollars, such options shall, to the
extent of such excess, be treated as options which are not
incentive stock options, taking options into account in the
order in which they were granted. In the case of an option
that is to be treated in part as an incentive stock option
and in part as a nonincentive stock option, National City
Bancshares, Inc. may designate the shares of Common Stock
that are to be treated as stock acquired pursuant to
exercise of an incentive stock option by issuing a separate
certificate for such shares and identifying the certificate
as incentive stock option shares in the stock transfer
records of National City Bancshares. The remaining shares
of Common Stock shall be treated as stock acquired pursuant
to the exercise of a nonincentive stock option and
identified as such in the stock transfer records of
National City Bancshares.
(f) Transfer of Option. Neither the whole nor any part of any
option shall be transferable by an Optionee or by operation
of law during said Optionee's lifetime and at said
Optionee's death an option or any part thereof shall only be
transferable by said Optionee's will or by the laws of
descent and distribution. An option may be exercised during
the lifetime of the Optionee only by the Optionee. Any
option, and any and all rights granted to an Optionee
thereunder, to the extent not theretofore effectively
exercised shall automatically terminate and expire upon any
sale, transfer or hypothecation or any attempted sale,
transfer or hypothecation of such option or rights, or upon
the bankruptcy or insolvency of the Optionee.
(g) Termination of Employment. No option may be exercised after
the termination of the employment of the Optionee with the
Corporation except as hereinafter provided, specifically
subject, however, to the provisions of paragraph (d) of this
Article V:
(1) Retirement. Options granted under the Plan may be
exercised within three (3) months after the Retirement
(as hereinafter defined) of the Optionee and the
options shall be exercisable for all of the shares
covered thereby. For purposes of the Plan,
"Retirement," shall mean any termination of employment
with the Corporation occurring after the completion of
not less than ten (10) years of service with the
Corporation and the attainment of age sixty (60)years
by the Optionee.
(2) Disability. Options granted under the Plan may be
exercised within one (1) year after the termination of
4
<PAGE>
the employment of the Optionee by reason of the
Disability (as hereinafter defined) of the Optionee and
the option shall be exercisable for all of the shares
covered thereby. For purposes of the Plan, an Optionee
shall be deemed have incurred a "Disability" if a
disinterested duly licensed medical doctor appointed by
the Corporation determines that the Optionee is totally
and permanently prevented, as a result of physical or
mental infirmity, injury, or disease, either
occupational or nonoccupational in cause, from holding
the job or position with the Corporation or engaging in
the employment activity, or a comparable job or
employment activity with the Corporation, which the
Optionee held or customarily engaged in prior to the
occurrence of the disability (provided, however, that
disability hereunder shall not include any disability
incurred or resulting from the Optionee's having
engaged in a criminal act or enterprise, or any
disability consisting of or resulting from the
Optionee's chronic alcoholism, addiction to narcotics
or an intentionally self-inflicted injury).
(3) Death
(i) If an Optionee shall die while employed by
the Corporation or within three (3) months
after termination of employment with the
Corporation by reason of Retirement or
Disability, the options granted under this
Plan to such deceased Optionee shall be
exercisable within one (1) year after the
date of the Optionee's death and the options
shall be exercisable for all of the shares
covered thereby.
(ii) If an Optionee shall die within three (3)
months after termination of employment with
the Corporation for a reason other than
Retirement or Disability, the options granted
under this Plan to such deceased Optionee
shall be exercisable within one (1) year
after the date of the Optionee's death but
the options may not be exercised for more
than the number of shares, if any, as to
which the options were exercisable by the
Optionee immediately prior to his or her
death.
(iii) The legal representative, if any, of the
deceased Optionee's estate, otherwise the
appropriate legatees or distributees of the
deceased Optionee's estate, may exercise the
option on behalf of such a deceased Optionee.
5
<PAGE>
(4) Involuntary Termination of Employment. Options granted
under the Plan may be exercised within three (3) months
after the Involuntary Termination of Employment (as
hereinafter defined) of the Optionee with the
Corporation and the options shall be exercisable for
all of the shares covered thereby. For purposes of the
Plan, "Involuntary Termination of Employment" shall
mean any termination of an Optionee's employment with
the Corporation by reason of the discharge, firing or
other involuntary termination of an Optionee's
employment by action of the Corporation other than an
involuntary termination for cause as described in
subparagraph (6) of this paragraph (g).
(5) Voluntary Termination of Employment. Options granted
under the Plan may be exercised, if otherwise timely,
within three (3) months after the Voluntary Termination
of Employment (as hereinafter defined) of the Optionee
with the Corporation but the options may not be
exercised for more than the number of shares, if any,
as to which the options were exercisable by the
Optionee immediately prior to such termination of
employment. For purposes of the Plan "Voluntary
Termination of Employment" shall mean any voluntary
termination of employment with the Corporation by
reason of the Optionee's quitting or otherwise
voluntarily leaving the Corporation's employ other than
a voluntary termination of employment by reason of
Retirement or a voluntary termination of employment
constituting a termination for cause as described in
subparagraph (6) of this paragraph (g).
(6) Termination for Cause. Anything contained herein to the
contrary notwithstanding, if the termination of an
Optionee's employment with the Corporation is as a
result of or caused by the Optionee's theft or
embezzlement from the Corporation, the violation of a
material term or condition of his or her employment,
the disclosure by the Optionee of confidential
information of the Corporation, conviction of the
Optionee of a crime of moral turpitude, the Optionee's
stealing trade secrets or intellectual property owned
by the Corporation, any act by the Optionee in
competition with the Corporation or any other act,
activity or conduct of the Optionee which in the
opinion of the Board of Directors is adverse to the
best interests of the Corporation, then any options and
any and all rights granted to such Optionee thereunder,
to the extent not yet effectively exercised, shall
become null and void effective as of the date of the
occurrence of the event which results in the Optionee
ceasing to be an employee of the Corporation and any
purported exercise of an option by or on behalf of said
Optionee following such date shall be of no effect.
6
<PAGE>
(7) A transfer of employment between the Corporation and
any subsidiary of the Corporation, or between any
subsidiaries of the Corporation, shall not be deemed to
be a termination of employment under the Plan.
(h) Change of Control. Upon the occurrence of a Change of
Control (as defined below), each option granted hereunder
shall immediately become exercisable in full by the optionee
notwithstanding the option period specified in such option,
but subject to the other terms and provisions of such
option. As used herein, the term "Change of Control" means
the acquisition of direct or indirect beneficial ownership
(within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934 [the "Exchange Act"] of 25% or more of the then
outstanding shares of Common Stock of the Corporation
generally entitled to vote in the election of directors of
the Corporation by any person or persons who constitute a
group (within the meaning of Section 13(d)(3) of the
Exchange Act) or the consummation of any merger,
consolidation, share exchange, or other extraordinary
corporate transaction involving the Corporation and in which
the shareholders of the Corporation immediately prior to
consummation of such transaction do not own, in the
aggregate, immediately after consummation of such
transaction, at least a majority of the voting stock of the
Corporation or the entity which survives or results from
such transaction.
(i) Acceleration. The Committee may, in the case of merger,
consolidation, dissolution or liquidation of National City
Bancshares, Inc., accelerate the expiration date of any
option for any or all of the shares covered thereby (but
still giving Optionees a reasonable period of time to
exercise any outstanding options prior to the accelerated
expiration date) and may, in the case of merger,
consolidation, dissolution or liquidation of National City
Bancshares, Inc., or in any other case in which it feels it
is in the Corporation's best interest, accelerate the date
or dates on which any option or any part of any option shall
be exercisable for any or all of the shares covered thereby.
(j) Rights as a Stockholder. An Optionee shall have no rights as
a stockholder with respect to any shares covered by any of
said Optionee's options until the date that National City
Bancshares, Inc. receives payment in full for the purchase
of said shares pursuant to the effective exercise of said
option. No adjustment shall be made for dividends or
distributions or other rights for which the record date is
prior to the date such payment is received by National City
Bancshares, Inc., except as provided in Article VII hereof.
7
<PAGE>
(k) Compliance with Securities Exchange Act. Notwithstanding
anything herein to the contrary, options shall always be
granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3 or any replacement rule, adopted
pursuant to the provisions of the Securities Exchange Act of
1934 as the same now exists or may, from time to time, be
amended.
(l) Other Provisions. The option agreements authorized under the
Plan shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the option, as
the Committee shall deem advisable and, in any event, all
option agreements shall contain such limitations upon the
exercise of the option (other than the $100,000.00
limitation as to the maximum value of shares with respect to
which options are exercisable for the first time in any
calendar year, which limitation may be exceeded as provided
in Article V (e)) as shall be necessary in order that each
such option will be an "incentive stock option" as defined
in Section 422 of the Code or to conform to any change in
the law.
ARTICLE VI. NOTICE OF INTENT TO EXERCISE OPTIONS.
An Optionee desiring to exercise an option granted hereunder as
to one or more of the shares covered thereby must, in order to so
exercise the option, notify the Corporation in writing to that effect,
specifying the number of shares of the Common Stock to be purchased.
ARTICLE VII. STOCK DIVIDEND-RECAPITALIZATION-CONSOLIDATION.
If any stock dividend shall be declared upon the Common Stock or
if the Common Stock shall hereafter be subdivided, consolidated, or
changed into other securities of National City Bancshares, Inc., or a
successor corporation to National City Bancshares, Inc., then in each
such event, shares of Common Stock which would be delivered pursuant
to exercise of any options shall, for the purpose of adjusting the
number and kind thereof, be treated as though outstanding immediately
prior to the occurrence of such event and the purchase price to be
paid therefor shall be appropriately adjusted to give effect thereto.
The grant of an option pursuant to the Plan shall not affect in
any way the right or power of National City Bancshares, Inc. to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
ARTICLE VIII. EXPIRATION AND TERMINATION OF PLAN.
Options may be granted pursuant to the Plan only within ten (10)
years following the earlier to occur of the date on which the Plan is
originally adopted by the Board of Directors and the date on which the
Plan is originally approved by stockholders of National City
Bancshares, Inc.
8
<PAGE>
Options may be granted under the Plan at any time until the Plan
is terminated by the Board of Directors or until such earlier date
when termination of the Plan shall be required by applicable law. If
not sooner terminated, the Plan shall terminate ten years from the
date on which the Plan is originally approved by the Board of
Directors.
ARTICLE IX. AMENDMENT OF THE PLAN.
The Board of Directors may, insofar as permitted by law, from
time to time, with respect to any shares of Common Stock at the time
not subject to outstanding options, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever except that, without
approval of the holders of a majority of the Common Stock of National
City Bancshares, Inc., no such revision or amendment shall change the
number of shares of Common Stock subject to the Plan (except as may
occur as a result of an occurrence described in Article VII), change
the designation of the class of employees eligible to receive options,
remove the administration of the Plan from the Committee, or render
any member of the Committee eligible to receive an option under the
Plan while serving thereon. Furthermore, the Plan may not, without the
approval of the holders of a majority of the Common Stock of National
City Bancshares, Inc., be amended in any manner that will cause
options issued under it to fail to meet the requirements of "incentive
stock options" as defined in Section 422 of the Code (except as
provided in paragraph (e) of Article V) or which would result in a
failure to comply with Section 16(b)(3) of the Securities Exchange Act
of 1934 or similar statute(s) or rules or regulations adopted
thereunder.
ARTICLE X. GRANTING OF OPTIONS.
The granting of any option pursuant to the Plan shall be entirely
in the discretion of the Committee and nothing herein contained shall
be construed to give any employee any right to participate under the
Plan or to receive any option under it. The granting of an option
shall impose no duty upon the Optionee to exercise such option.
Neither the adoption and maintenance of the Plan nor the granting
of an option pursuant to the Plan shall be deemed to constitute a
contract of employment between the Corporation and any employee or to
be a condition of the employment of any person. Nothing herein
contained shall be deemed to (a) give to any employee the right to be
retained in the employ of the Corporation; (b) interfere with the
right of the Corporation to discharge or retire any employee at any
time; (c) be deemed to give to the Corporation the right to require an
employee to remain in its employ; or (d) interfere with the employee's
right to terminate his or her employment at any time.
9
<PAGE>
ARTICLE XI. GOVERNMENT REGULATIONS.
The Plan and the granting and exercise of any option hereunder
and the obligations of National City Bancshares, Inc. to sell and
deliver shares under any such option shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies as may be required.
ARTICLE XII. PROCEEDS FROM SALE OF STOCK.
Proceeds from the purchase of Common Stock by any Optionee under
the Plan shall be for the general business purposes of National City
Bancshares, Inc.
ARTICLE XIII. REPORTING REQUIREMENTS.
The Committee shall furnish each Optionee hereunder with such
information relating to the exercise of any option granted hereunder
to said Optionee as is required under the Code and applicable State
and Federal Security laws.
ARTICLE XIV. EFFECTIVE DATE; APPROVAL OF STOCKHOLDERS.
The Plan shall become effective as of the date of its adoption by
the Board of Directors, but only if it shall be approved within twelve
months thereafter by the shareholders of National City Bancshares,
Inc. as required by the Code and the regulations issued thereunder and
no option granted hereunder, if any, after such effective date but
prior to such approval may be exercised unless and until such approval
shall have been granted.
ARTICLE XV. INTERPRETATION.
The terms of this Plan are subject to all present and future
regulations and rulings of the Secretary of the Treasury or his or her
delegate relating to the qualification of Incentive Stock Options
under Section 422 of the Code. If any provision of the Plan conflicts
with any such regulation or ruling, that provision of the Plan shall
he void and of no effect.
10
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<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
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