UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended September 30, 1997
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 0-23134
PEOPLES BANK CORPORATION OF INDIANAPOLIS
(Exact name of registrant as specified in its charter)
Indiana 35-1681096
- --------------------------------------------------------------------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) identification no.)
130 East Market Street Indianapolis, Indiana 46204
- --------------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
(317) 237-8121
(Registrant's telephone number, including area code)
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 such 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. X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Shares, without par value
Nonvoting - 2,812,634 shares as of November 13, 1997
Voting - 264,456 shares as of November 13, 1997
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1997
and December 31, 1996 ..............................................2
Consolidated Statements of Income for three
and nine months ended
September 30, 1997 and 1996 ........................................3
Consolidated Statements of Changes in Shareholders'
Equity .............................................................4
Consolidated Statements of Cash Flows for three
and nine months ended
September 30, 1997 and 1996 ........................................5
Notes to Consolidated Financial Statements .........................6
Item 2. Management's Discussion and Analysis
of Results of Operations
and Financial Condition .........................................7-15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders................16
Item 6. Exhibits and Reports on Form 8-K ..................................16
Signatures ................................................................17
<PAGE>
Peoples Bank Corporation of Indianapolis
Notes to Consolidated Financial Statements
September 30, 1997
1. Accounting Policies
Except as noted in Note 3, the significant accounting policies followed
by Peoples Bank Corporation of Indianapolis (the "Corporation") for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. The consolidated interim financial statements have
been prepared in accordance with instructions to Form 10-Q and may not include
all information and footnotes normally shown for full annual financial
statements. All adjustments which are, in the opinion of management, necessary
for a fair presentation of the results for the periods reported have been
included in the accompanying unaudited consolidated financial statements and all
such adjustments are of a normal recurring nature.
2. Earnings Per Share
Earnings per share are computed based upon the weighted average number
of shares outstanding during the period which were 3,100,239 and 3,124,222 for
the three and nine months ending September 30, 1997, and 3,167,852 and 3,175,910
for the three and nine months ending September 30, 1996.
3. Accounting Changes
Financial Accounting Standard No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, was issued by
the Financial Accounting Standards Board in 1996. It revises the accounting for
transfers of financial assets, such as loans and securities, and for
distinquishing between sales and secured borrowings. It is effective for some
transactions in 1997 and others in 1998. Management does not expect adoption of
this Standard to have a significant effect on the Company's financial position
or results of operations.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED BALANCE SHEETS
=============================================================================================================
(Dollar amounts in thousands)
September 30, December 31,
1997 1996
------------------ -----------------
<S> <C> <C>
Assets
Cash and due from banks $20,870 $32,252
Federal funds sold 0 0
------------------ -----------------
Total cash and equivalents 20,870 32,252
Available-for-sale securities 147,679 94,589
Loans held for sale 137 421
Total loans 389,427 332,953
Allowance for loan losses (5,119) (3,900)
------------------ -----------------
Loans, net 384,308 329,053
Premises and equipment, net 7,404 7,923
Accrued income and other assets 10,426 7,240
------------------ -----------------
Total assets $570,824 $471,478
================== =================
Liabilities
Non interest-bearing deposits $83,919 $83,911
Interest-bearing deposits 423,049 327,894
------------------ -----------------
Total deposits 506,968 411,805
Short-term borrowings 10,271 10,266
Accrued expenses and other liabilities 6,190 4,058
------------------ -----------------
Total liabilities 523,429 426,129
Shareholders' equity Common shares, no par value:
Authorized:
Voting - 300,000 shares
Nonvoting - 4,000,000 shares
Issued:
Voting - 264,456 shares 950 950
Nonvoting - 2,812,634 shares (1997)
- 2,866,424 shares (1996) 13,041 14,775
Retained earnings 32,941 29,338
Net unrealized gain/(loss) on available-for-sale securities 463 286
------------------ -----------------
Total shareholders' equity 47,395 45,349
------------------ -----------------
Total liabilities and shareholders' equity $570,824 $471,478
================== =================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF INCOME
========================================================================================================================
(Dollar amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
---------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $8,264 $6,737 $23,107 $19,248
Interest on federal funds sold 132 291 650 689
Interest on investments 2,096 1,234 4,969 3,867
---------------------------------------------------------
Total interest income 10,492 8,262 28,726 23,804
Interest expense
Interest on deposits 4,783 3,507 12,471 9,921
Interest on short-term borrowings 136 124 388 453
---------------------------------------------------------
Total interest expense 4,919 3,631 12,859 10,374
---------------------------------------------------------
Net interest income 5,573 4,631 15,867 13,430
Provision for loan losses 500 300 1,400 750
---------------------------------------------------------
Net interest income after
provision for loan losses 5,073 4,331 14,467 12,680
Other operating income
Trust fees 371 281 1,112 988
Service charge income 791 674 2,245 1,767
Mortgage banking revenue 89 149 325 515
Net gain (loss) on
investments (7) 0 (46) (28)
Other operating income 291 214 745 710
---------------------------------------------------------
Total other operating income 1,535 1,318 4,381 3,952
Other operating expenses
Salaries and employee benefits 2,294 2,080 6,608 6,024
Occupancy expense (net) 380 395 1,215 1,161
Equipment expense 253 250 778 766
Advertising Expense 124 78 397 347
Other operating expense 1,054 941 3,018 2,656
---------------------------------------------------------
Total other operating expenses 4,105 3,744 12,016 10,954
Income before income taxes 2,503 1,905 6,832 5,678
Income Taxes 845 544 2,203 1,670
Net income $1,658 $1,361 $4,629 $4,008
=========================================================
Net income per share (Note 3) $0.53 $0.43 $1.48 $1.26
=========================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
=========================================================================================
(Dollar amounts in thousands)
1997 1996
------------- ------------
<S> <C> <C>
Balance at January 1 $45,349 $41,636
Net Income 4,629 4,008
Cash dividends (1,026) (871)
Repurchase of common stock (1,734) (556)
Change in net unrealized loss on
available-for-sale securities 177 (75)
------------- ------------
Balance at September 30 $47,395 $44,142
============= ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CASH FLOWS
==========================================================================================================
(Dollar amounts in thousands)
Nine months ended
September 30,
1997 1996
------------ -------------
<S> <C> <C>
Cash flows from operating activities
Net Income $4,629 $4,008
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 820 785
Provision for loan losses 1,400 750
Net loss on investment securities 46 27
Net amortization/(accretion) on investments 177 294
Net gain on the sale of loans (152) (361)
Change in interest payable and other liabilities 2,133 186
Change in interest receivable and other assets (3,302) (937)
Loans originated for sale, net of sales proceeds 436 1,840
------------ -------------
Net cash from operating activities 6,187 6,592
------------ -------------
Cash flows from investing activities
Proceeds from sales of available-for-sale securities 16,707 2,972
Proceeds from maturities of available-for-sale securities 17,645 43,746
Purchase of available-for-sale securities (87,373) (28,585)
Loans made to customers, net of principal
collection thereon (56,655) (48,153)
Property and equipment expenditures (301) (57)
------------ -------------
Net cash from investing activities (109,977) (30,077)
------------ -------------
Cash flows from financing activities
Net change in deposits 95,163 44,720
Net change in short-term borrowings 5 (10,274)
Dividends paid (1,026) (871)
Purchase of common stock (1,734) (556)
------------ -------------
Net cash from financing activities 92,408 33,019
------------ -------------
Net change in cash and cash equivalents (11,382) 9,534
Cash and cash equivalents at beginning of year 32,252 23,377
------------ -------------
Cash and cash equivalents at September 30 $20,870 $32,911
============ =============
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
(Dollar amounts in thousands, except per share data)
General
The business of Peoples Bank Corporation of Indianapolis (the "Company")
consists of holding and administering its interest in Peoples Bank & Trust
Company ("Peoples"). The principal business of Peoples consists of attracting
deposits from consumer and commercial customers and making loans to individuals
and businesses. Peoples offers various products for depositors including
checking and savings accounts, certificates of deposit and safe deposit boxes.
Loans consist principally of loans to individuals secured by mortgage liens on
residential properties, consumer loans generally secured by personal property
and loans to businesses generally secured by liens on business assets. Peoples
also offers trust services to individuals, businesses and institutions.
The Company operates 11 branch locations, a twelve story office in downtown
Indianapolis, and an operations center. Peoples occupies five floors of the
downtown office building and leases six floors to tenants. The top floor houses
the board room and a training area. Leased tenant space at the downtown office
remains at near capacity.
The Board of Directors of the Company approved on July 18, 1996, the repurchase,
from time to time, of 200,000 nonvoting common shares on the open market. The
Board believed that the shares had been at times undervalued in the market and
that it was in the best interest of the shareholders and the Company to effect
such share repurchases. At September 30, 1997, a total of 102,894 shares had
been repurchased at an average price of $22.32.
The book value per share of Peoples nonvoting common shares at September 30,
1997, was $ 15.40. For the third quarter, the low trading price per share was
$25.50, and the high trading price per share was $35.25.
On September 18,1997, Peoples declared a cash dividend in the amount of $.115
per share, payable October 17, 1997, to shareholders of record September 30,
1997. This dividend represents a 4.5% increase over the second quarter 1997
dividend and is the fifth consecutive quarter in which Peoples has declared an
increase in dividends.
<PAGE>
Selected ratios and summary data.
At or for the Nine Months Ended
September 30,
1997 1996
---- ----
Assets $570,824 $454,206
Loans (includes loans held for sale) 389,564 320,153
Deposits 506,968 396,482
Shareholders Equity 47,395 44,142
Book value per share 15.40 14.03
Earnings per share $1.48 $1.26
Dividends per share $0.33 $0.275
Net Interest Margin (FTE) 4.53% 4.60%
Return on Average Assets 1.20% 1.23%
Return on Average Equity 13.29% 12.40%
Average Shares Outstanding 3,124,222 3,175,910
Total Shares Outstanding 3,077,090 3,146,584
Net Income
Net income for the third quarter of 1997 was $1,658 compared to $1,361 for the
third quarter of 1996, an increase of 21.82% or $297. Net income for the nine
months ended September 30, 1997, was $4,629 which represents an increase of
15.49% or $621 from net income of $4,008 for the nine months ended September 30,
1996. Net income per share for the third quarter 1997 increased $0.10 or 23.25%
to $0.53 from $0.43 for the third quarter of 1996. Net income per share for the
first nine months of 1997 was $1.48 compared to $1.26 for the first nine months
of 1996, an increase of $0.22 or 17.46%. The increase in net income is
attributable to increases in net interest income and non-interest income which
exceeded increases in non-interest expense.
Net Interest Income
Net interest income is the principal component of net income for the Company and
represents the difference between interest earned on loans and investments and
the interest cost of deposits and other borrowed funds. For the nine months
ended September 30, net interest income was $15,867 and $13,430 for 1997 and
1996, respectively. This reflects an increase of $2,437 or 18.15%. For the third
quarter of 1997 and 1996, respectively, net interest income was $5,573 and
$4,631 an increase of $942 or 20.34%.
<PAGE>
Interest income for the nine months ended September 30, was $28,726 and $23,804
for 1997 and 1996, respectively. Interest income for the third quarter of 1997
and 1996, respectfully, was $10,492 and $8,262 an increase of $2,230 or 26.99%
due primarily to increases in earning assets. Total interest expense was $12,859
and $10,374 for the nine months ended September 30, 1997, and 1996,
respectively. For the third quarter of 1997 and 1996, respectively, total
interest expense was $4,919 and $3,631 an increase of $1,288 or 35.47%.
Interest and fees on loans increased from $19,248 for the first nine months of
1996 to $23,107 for that period in 1997, an increase of $3,859 or 20.05%. For
the third quarter of 1997 and 1996, respectively, interest and fees on loans
were $8,264 and $6,737 an increase of $1,527 or 22.67%. These increases are
attributable primarily to an increase in loans outstanding. Total loans were
$320,153 at September 30, 1996, compared to $389,564 at September 30, 1997, an
increase of $69,411 or 21.68%.
The Company's net interest margin, or margin on earning assets, decreased 0.02%
from 4.38% for the first nine months of 1996 to 4.36% for the first nine months
of 1997. On a tax equivalent basis, the Company's net interest margin was 4.60%
and 4.53%, respectively, for those periods. For the third quarter, the net
interest margin decreased 2.78% from 4.32% in 1996 to 4.20% in 1997 due to a
significant increase in lower-yielding investment securities. On tax equivalent
basis, the Company's net interest margin was 4.53% and 4.35% for the third
quarters of 1996 and 1997, respectively.
Provision & Allowance for Loan Losses
The provision for loan losses was $1,400 for the first nine months of 1997 as
compared to $750 for the first nine months of 1996, an increase of $650 or
86.67%. The allowance for loan losses at September 30, 1997, was $5,119 or 1.31%
of total loans compared to $3,900 or 1.17% of total loans at December 31, 1996.
Gross charge-offs during the first nine months of 1997 were $447 and recoveries
were $266.
The adequacy of the allowance for loan loss is evaluated at least quarterly by a
credit review officer and management based upon the review of identified loans
with more than a normal degree of risk, historical loan loss percentages, and
present and forecasted economic conditions. Management's analysis indicated that
the allowance for loan losses at September 30, 1997, was adequate to cover
potential losses on identified loans with credit problems and potential losses
on the remaining loan portfolio based on historical percentages. Peoples has
made an effort to increase the allowance through increases in the provision for
loan losses in order to target the ratio of the allowance to total loans rather
than due to any specific decrease in credit quality.
<PAGE>
Other Operating Income
Non-interest income totaled $4,381 for the first nine months of 1997, compared
to $3,952 for that period of 1996, an increase of $429 or 10.86%. Non-interest
income was $1,535 and $1,318 for the third quarters of 1997 and 1996,
respectively, an increase of $217 or 16.46%. Trust fees were $1,112 and $988 for
the first nine months of 1997 and 1996, respectively, an increase of $124 or
12.55%.
Service charges on deposit accounts, which comprise the largest component of
non-interest income, were up for the first nine months of 1997 compared with the
same periods of 1996. Service charge income was $2,245 for the nine months ended
September 30, 1997, an increase of $478 or 27.05%, from $1,767 for the same
period in 1996. For the three month periods ending September 30, 1997, and 1996,
service charge income was $791 and $674 respectively, an increase of $117 or
17.36%. The increase in service charge income can be traced to a review of local
market fees during late 1996 which resulted in increases in many service charges
to market levels.
Mortgage banking revenue includes net gains and losses realized when mortgage
loans are sold into the secondary market and service fee revenue earned from
servicing those loans after they are sold. Mortgage banking revenue for the
first nine months of 1997 was $325, reflecting a decrease of $190 or 36.89%,
compared to $515 for the same period in 1996. Mortgage banking revenue for the
third quarter of 1997 and 1996, respectively, was $89 and $149, a decrease of
$60 or 40.27%. The decrease in mortgage banking revenue is associated with a
change in the bank's mortgage origination strategy. During 1996, the bank
reduced staff in this area by more than fifty percent and focused its
origination efforts on adjustable rate mortgage loans which would not be sold
into the secondary market. During the third quarter of 1996, the bank originated
$ 4.7 million in loans sold into the secondary market and $8.7 million in
adjustable rate mortgages retained by the bank. During the third quarter of
1997, the bank originated $2.0 million in loans sold into the secondary market
and $11.0 million in adjustable rate mortgages retained by the bank.
Other operating income increased during the first nine months of 1997 to $745
from $710 for the same period in 1996, an increase of $35 or 4.93%.
Other Operating Expenses
Total other operating expenses were $12,016 for the nine months ended September
30, 1997, compared with $10,954 for that period in 1996. This represents an
increase of $1,062, or 9.70%. Total other operating expenses for the third
quarter of 1997 and 1996, respectively, were $4,105 and $3,744 an increase of
$361 or 9.64%. Salary and employee benefit expense was $6,608 for the first nine
months of 1997, an increase of $584 or 9.69% from 6,024 for the first nine
<PAGE>
months of 1996. Salary and employee benefit expense for the third quarter of
1997 and 1996, respectively, were $2,294 and $2,080, an increase of $214 or
10.29%. The increase was primarily associated with an increase in headcount and
in salary and wage rate increases.
Occupancy expense was $1,215 for the first nine months of 1997, an increase of
$54, or 4.65% from $1,161 for the first nine months of 1996. Occupancy expense
was $380 for the third quarter of 1997, a decrease of $15 or 3.80% from $395 for
the third quarter of 1996. Equipment expenses were $778 and $766, respectively,
for the first nine months of 1997 and 1996, an increase of $12 or 1.57%.
Equipment expense was $253 for the third quarter of 1997, an increase of $3 or
1.20% from $250 for the same period in 1996.
Advertising expenses were $397 and $347, for the first nine months of 1997 and
1996, respectively, an increase of $50 or 14.41%. For the third quarter of 1997
and 1996, advertising expenses were $124 and $78, an increase of $46, or 58.97%
over the same period in 1996. Other operating expenses were $2,980 and $2,654
for the first nine months of 1997 and 1996, respectively, an increase of $326 or
12.28%. For the third quarter of 1997 and 1996, respectively, other operating
expenses were $1,045 and $940, an increase of $105 or 11.17%.
Income Taxes
Income taxes were $2,203 for the first nine months of 1997 and $1,670 for the
first nine months of 1996. On a quarterly comparison, income taxes were $845 for
the third quarter of 1997 and $544 for the third quarter of 1996. The increase
in taxes can be primarily attributed to increased profitability.
Balance sheet
Total assets were $570,824 at September 30, 1997, and $471,478 at December 31,
1996, an increase of $99,346. The portfolio of available-for-sale securities
increased from $94,589 at December 31, 1996, to $147,679 at September 30, 1997,
an increase of $53,090 or 56.13%. The increase in the portfolio resulted from
growth in deposits exceeding loan growth. Total loans, excluding loans held for
sale, increased during the first nine months of 1997 from $332,953 at December
31, 1996, to $389,427 at September 30, 1997. This reflects an increase of
$56,474 or 16.96%. Commercial loans increased $8,282 or 5.28% from $156,755 at
<PAGE>
December 31, 1996, to $165,037 at September 30, 1997. Real estate loans, which
consist of construction loans and permanent residential and commercial
mortgages, increased $27,376 or 27.68% from $98,891 at December 31, 1996, to
$126,267 at September 30, 1997. Consumer loans increased $20,877 or 27.77% from
$75,187 at December 31, 1996, to $96,064 at September 30, 1997, on strong growth
in home equity lending. Loans held for sale consist of conforming fixed rate
mortgage loans that Peoples sells in the secondary market (having retained
servicing rights with respect to such loans) and that are pending funding. Loans
held for sale were $421 at December 31, 1996, compared to $137 at September 30,
1997. The amount of loans outstanding (excluding loans held for sale) are
reflected in the following table.
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
Real Estate $126,267 $ 98,891 $ 95,077
Commercial 165,037 156,755 135,952
Consumer 96,064 75,187 70,892
Tax exempt 2,059 2,120
2,154
Loans to Depository Institutions 0 0 15,000
-------- -------- --------
Total Loans 389,427 332,953 319,075
Less: Allowance for Loan Losses 5,119 3,900 4,010
-------- -------- --------
Net Loans $384,308 $329,053 $315,065
======== ======== ========
Deposits represent the primary source of funds for the Company. Total deposits
increased $95,163 or 23.11%, from $411,805 at December 31,1996, to $506,968 at
September 30, 1997 due to the Company's competitive position on CD rates.
Non-interest-bearing deposits decreased $8, or 0.00%, from $83,911 at December
31, 1996, to $83,919 at September 30, 1997. The Company's deposit balances are
reflected in the following table.
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
Deposits:
Non-interest-bearing $ 83,919 $ 83,911 $ 76,839
Interest-bearing 423,049 327,894 319,643
-------- -------- --------
Total deposits $506,968 $411,805 $396,482
======== ======== ========
Total deposits/total assets 88.81% 87.34% 87.29%
Short-term borrowings in the form of Federal funds, Federal Home Loan advances,
and repurchase agreements are acquired, as needed, to satisfy temporary
liquidity needs. Many of the funds are from businesses with large cash balances.
<PAGE>
Though short-term in nature, repurchase agreements have been and continue to be
a stable source of funds for Peoples. Short-term borrowings were $10,271 at
September 30, 1997, as compared to $10,266 at December 31, 1996. This represents
an increase of $5 or 0.05%. At September 30, 1997, the bank had no federal funds
purchased, and $1,000 in Federal Home Loan Bank advances. All other short-term
borrowings were in the form of customer repurchase agreements.
Total shareholders' equity increased $2,046 or 4.51% for the nine months ended
September 30, 1997, to $47,395, from $45,349 at December 31, 1996. The increase
in shareholders' equity was the result of net income of $4,629, less dividends
paid of $1,026, plus the adoption of FAS No. 115 resulted in a $177 increase in
equity, less the repurchase of $ 1,734 of common stock. The Company issued a
2-for-1 share split effective July 18, 1997.
Credit Quality
Nonaccrual loans are loans on which the Company no longer accrues interest.
Management places a loan on nonaccrual status when the collection of additional
interest is unlikely and the loan is not considered to be well secured and in
the process of collection. Nonperforming loans consist of loans that are on
nonaccrual status, that are 90 days or more past due as to principal or
interest, or that are restructured. If a loan is designated as a nonperforming
loan, management, as a result of delinquent status or significant concern about
the ultimate collectibility of the loan, typically ceases to recognize interest
income with respect to such loan and places it on nonaccrual status.
At September 30, 1997, Management designated $3,098 in loans as "impaired" for
the purpose of FAS No. 114. Management has further determined that all
commercial non-accrual loans will be considered as impaired.
The following table shows the composition of nonperforming loans.
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
Nonperforming loans:
Total nonaccrual loans $2,006 $ 234 $ 384
Loans past due more than 17 49 92
90 days and still accruing -- -- --
Total $2,023 $ 283 $ 476
====== ====== ======
<PAGE>
At September 30, 1997, nonperforming loans were comprised of $1,855 of
commercial loans, $151 of real estate loans and $17 of consumer loans.
Nonperforming loans were comprised of $143 of commercial loans, $140 of real
estate loans and $0 of consumer loans at December 31, 1996. At September 30,
1996, nonperforming loans consisted of $121 of commercial loans, $307 of real
estate loans and $48 of consumer loans. Asset quality continues to be an
important area of focus for the Company. Nonperforming loans as a percent of
assets were 0.35% at September 30, 1997, and 0.06% at December 31, 1996. The
Company maintains asset quality through the use of well-defined policies,
underwriting criteria, and review processes.
Capital
The Company and Peoples are required to comply with capital requirements
promulgated by their primary regulators that affect their ability to pay
dividends and that can affect their operations. Those regulations require the
maintenance of specified levels of capital to total assets (leverage ratio) and
to risk weighted assets (the risk-based capital ratios). These regulations
require the maintenance of a leverage ratio of at least 3.00% and a total
risk-based capital ratio of at least 8.00%. A financial institution's deposit
insurance assessment and, in certain circumstances, operations will be affected
by its capital level. Institutions with leverage ratios of 5.00% or more and
total risk-based capital ratios of 10.00% or more are deemed to be "well
capitalized," and accordingly, pay the lowest deposit insurance assessment and
are not subject to operational restrictions as outlined within the regulation.
As of September 30, 1997, the Company's Tier I and total risk-based capital
ratios were 11.46% and 12.71%, respectively. The Company's leverage ratio was
8.48% at September 30, 1997. As of September 30, 1997, Peoples was in excess of
the minimum capital and leverage requirements necessary to be considered a "well
capitalized" banking company as defined by Federal regulators. The Company and
Peoples were in full compliance with all regulatory capital requirements at
September 30, 1997.
<PAGE>
The following table provides the capital ratios for the entities.
At September 30, 1997
Consolidated
Bank Only Company
Total assets $566,768 $570,824
Risked-based assets 407,386 409,446
Tier I capital 41,251 46,909
Total risk-based capital 46,344 52,027
Leverage ratio 7.51% 8.48%
Tier I risk-based capital ratio 10.13% 11.46%
Total risk-based capital 11.38% 12.71%
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits -
Exhibit List appears following the Signature Page
B. Form 8-K - No reports on Form 8-K were filed during the quarter
ended September 30, 1997.
<PAGE>
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.
PEOPLES BANK CORPORATION
OF INDIANAPOLIS
By: /s/ William. E. McWhirter
---------------------------------------
William E. McWhirter
Chairman and Chief Executive Officer
By: /s/ Charles R. Hageboeck
---------------------------------------
Charles R. Hageboeck
Senior Vice President and Chief
Financial Officer
DATE: November 13, 1997
<PAGE>
EXHIBIT INDEX
10.1 Employment Agreement between Registrant and Gerald R. Francis,
dated April 17, 1997
10.2 Guaranty Agreement between Registrant and Gerald R. Francis,
dated April 17, 1997
10.3 Incentive Stock Option Agreement between Registrant and
Gerald R. Francis, dated April 17, 1997
10.4 Stock Appreciation Award for Gerald R. Francis
10.5 Second amendment and complete restatement of the Registrant's
Unfunded Supplemental Executive Retirement Plan
10.6 Split Dollar Insurance Agreement between Registrant and
Gerald R. Francis
10.7 Split Dollar Insurance Agreement between Registrant and
William E. McWhirter
10.8 Split Dollar Insurance Agreement between Registrant and
Charles R. Farber
EMPLOYMENT AGREEMENT
This Agreement, is made and dated as of April 17, 1997, by and between
PEOPLES BANK & TRUST COMPANY, an Indiana bank and trust company ("Employer"),
and GERALD R. FRANCIS, a resident of Indiana ("Employee").
W I T N E S S E T H
WHEREAS, Employee has been employed by Employer as an executive officer
and has made valuable contributions to the profitability and financial strength
of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure minimum
compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt by any person to
obtain control of Employer;
WHEREAS, Employer recognizes that when faced with a proposal for a
change of control of Employer, Employee will have a significant role in helping
the Board of Directors assess the options and advising the Board of Directors on
what is in the best interests of Employer and its shareholders, and it is
necessary for Employee to be able to provide this advice and counsel without
being influenced by the uncertainties of his own situation;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer as its President and Chief Operating Officer, Employer and
Employee, each intending to be legally bound, covenant and agree as follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's President and Chief Operating
Officer, and Employee accepts such employment.
2. Employee agrees to serve as Employer's President and Chief Operating
Officer and to perform such duties in that office as may be prescribed by the
Employer's Bylaws and as may
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reasonably be assigned to him by Employer's Chief Executive Officer and those
generally associated with the office held by Employee as determined by the Chief
Executive Officer from time to time. Employer shall not, without the written
consent of Employee, relocate or transfer Employee to a location more than 30
miles from his current employment location. While employed by Employer, Employee
shall devote substantially all his business time and efforts to Employer's
business and the business of its parent and subsidiaries.
3. The term of this Agreement shall be for an initial term of three
(3) years commencing on the April 17, 1997 (the "Effective Date"), and
terminating April 17, 2000; provided, however, that such term shall be extended
for an additional year on each annual anniversary of the Effective Date, unless
either party thereto gives written notice to the other party not to so extend
within the period of ninety (90) days prior to an anniversary, in which case no
further extension shall occur and the term of this Agreement shall end two years
subsequent to the annual anniversary immediately following the date on which the
notice not to extend for an additional year is given (such term, including any
extension thereof shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $185,000 ("Base
Compensation"), payable at regular intervals in accordance with Employer's
normal payroll practices now or hereafter in effect. Employer may consider and
declare from time to time increases in the salary it pays Employee and thereby
increase his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all present and future
employee benefit, retirement, and compensation plans generally available to
employees of Employer, consistent with his Base Compensation and his position as
President and Chief Operating Officer of Employer, including, without
limitation, any 401(k) plan, stock incentive plan, employee stock purchase plan,
executive bonus plan, and group life insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement from Employer for all reasonable
business expenses incurred in the course of his employment by Employer, upon
submission to Employer of written vouchers and statements for reimbursement. So
long as Employee is employed by Employer pursuant to the terms of this
Agreement, Employer shall continue in effect vacation policies applicable to
Employee no less favorable from his point of view than those written vacation
policies in effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be entitled to office space
and working conditions no less favorable than were in effect for him on the date
hereof.
7. Employee's employment with Employer may be terminated prior to the
expiration of the Term as follows:
(A) The Employer may immediately upon written notice terminate
Employee for cause. "Cause" shall be defined as (i) personal
dishonesty, (ii) willful misconduct, (iii) breach of fiduciary
duty involving personal profit, (iv) intentional failure to
perform stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
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violations or similar offenses) or cease-and-desist order,
(vi) moral turpitude reflecting adversely on the reputation of
the Employer, or (vii) any material breach of any term,
condition or covenant of this Agreement. The Employer shall
have no further liability to Employee under this Agreement for
any period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the Term
without Cause, upon sixty (60) days prior written notice to
the other party. If the Employer terminates the Employee
without Cause (as defined above), or if Employee terminates
his employment for Good Reason (as defined below), except as
provided in Section 7(C) below:
(i) Compensation provided for herein (including Base
Compensation) shall continue to be paid, and Employee
shall continue to participate in the employee
benefit, retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6 hereof,
through the date of termination specified in the
notice of termination; and any benefits payable under
insurance, health, retirement and bonus plans as a
result of Employee's participation in such plans
through such date shall be paid when due under those
plans;
(ii) In addition, the Employer shall pay the Employee a
lump sum severance payment equal to Employee's Base
Compensation for the immediately preceding calendar
year; and
(iii) In addition, for one (1) year following termination,
Employer will maintain in full force and effect for
the continued benefit of Employee and his dependents
each employee medical and life benefit plan (as such
term is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which Employee
was entitled to participate immediately prior to the
date of his termination, unless an essentially
equivalent benefit is provided by another source. If
the terms of any employee medical and life benefit
plan of Employer or applicable laws do not permit
continued participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less favorable than,
the benefit he was entitled to receive under such
plan at the end of the period of coverage. The right
of Employee to continued coverage under the health
and medical insurance plans of Employer pursuant to
Section 4980B of the Internal Revenue Code of 1986,
as amended (the "Code") shall commence upon the
expiration of such period. Notwithstanding the
foregoing, Employer shall not be obligated to
continue life insurance benefits if the insurer does
not consent to such continuation and no disability
insurance benefit shall continue past Employee's date
of termination of employment.
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For purposes of this Agreement, "Good Reason" for Employee to terminate his
employment with Employer means: (i) a substantial reduction in Employee's
responsibility and authority over the management and affairs of Employer without
Employee's consent or; (ii) any material breach of any term, condition or
covenant of Employer under this Agreement; or (iii) the requirement that the
Employee move his personal residence, or perform his principal executive
functions, more than 30 miles from his primary office as of the later of the
Effective Date and the most recent voluntary relocation by the Employee.
(C) If, following a Change of Control, Employer terminates
Employee without Cause (as defined above) or Employee
terminates his employment with Employer for Good Reason (as
defined above) in lieu of any payments or coverage provided
under Section 7(B) above,
(i) Compensation provided for herein (including Base
Compensation) shall continue to be paid, and Employee
shall continue to participate in the employee
benefit, retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6 hereof,
through the date of termination specified in the
notice of termination; and any benefits payable under
insurance, health, retirement and bonus plans as a
result of Employee's participation in such plans
through such date shall be paid when due under those
plans;
(ii) In addition, the Employer shall pay the Employee a
severance payment equal to 299% of the Employee's
Average Annual Compensation. Such severance payment
shall be due and payable on the date fifteen calendar
days following the date on which Employee's
employment terminates under this Section 7(C),
unless, prior to the date 90 days before the date on
which a Change of Control occurs, Employee files with
the Secretary of Employer a duly executed irrevocable
written election to defer such payment, specifying
the date or dates on which such payment (or
installments in the aggregate equal to such payment)
shall be made; provided, that no such deferral
election shall provide for any payment later than 10
years after termination of employment. Such deferred
payment obligation shall bear interest from the date
on which it would otherwise be payable until the date
paid at 6% per year. For purposes of figuring the
severance payment, Employee's "Average Annual
Compensation" shall equal the average annual
compensation, including bonuses and taxable fringe
benefits, which was paid by the Employer and
includible in the gross income of the Employee for
the five most recent taxable years ending, or such
portion of the five year period during which Employee
performed services for the Employer, before the
Change of Control. Anything in this Agreement to the
contrary notwithstanding, in the event that the
Employer's independent public accountants determine
that any payment by the Employer to or for the
benefit of the Employee,
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whether paid or payable pursuant to the terms of this
Agreement, would be non-deductible by the Employer
for federal income tax purposes because of Section
280G of the Code, then the amount payable to or for
the benefit of the Employee pursuant to this
Agreement shall be reduced (but not below zero) to
the Reduced Amount. For purposes of this Section
7(C), the "Reduced Amount" shall be the amount which
maximizes the amount payable without causing any
portion of the payment to be non-deductible by the
Employer because of Section 280G of the Code; and
(iii) In addition, for one (1) year following termination,
Employer will maintain in full force and effect for
the continued benefit of Employee and his dependents
each employee medical and life benefit plan (as such
term is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which Employee
was entitled to participate immediately prior to the
date of his termination, unless an essentially
equivalent benefit is provided by another source. If
the terms of any employee medical and life benefit
plan of Employer or applicable laws do not permit
continued participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less favorable than,
the benefit he was entitled to receive under such
plan at the end of the period of coverage. The right
of Employee to continued coverage under the health
and medical insurance plans of Employer pursuant to
Section 4980B of the Code shall commence upon the
expiration of such period. Notwithstanding the
foregoing, Employer shall not be obligated to
continue life insurance benefits if the insurer does
not consent to such continuation and no disability
insurance benefit shall continue past Employee's date
of termination of employment.
For purposes of this Agreement, a "Change of Control" shall mean the
occurrence of any of the following: (i) the sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act) (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than William E. "Mac" McWhirter, or his spouse or lineal descendants,
becomes the beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
voting stock of the Company or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Continuing Directors" means, as of any date of determination, any member of the
Board of Directors of the Company who (i) was a member of such Board of
Directors January 24, 1996 or (ii) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination.
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(D) Employee's employment with Employer shall terminate in the
event of Employee's death or disability. For purposes hereof,
"disability" shall be defined as Employee's inability by
reason of illness or other physical or mental incapacity to
perform the duties required by his employment for any
consecutive sixty (60) day period, provided that notice of any
termination by Employer because of Employee's "disability"
shall have been given to Employee prior to the full resumption
by him of the performance of such duties.
8. In order to induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including the order
of a court or governmental agency, Employee shall not divulge
or furnish any trade secrets (as defined in IND. CODEss.
24-2-3-2) of Employer or any confidential information acquired
by him while employed by Employer concerning the policies,
plans, procedures or customers of Employer to any person, firm
or corporation, other than Employer or upon its written
request, or use any such trade secrets or confidential
information directly or indirectly for Employee's own benefit
or for the benefit of any person, firm or corporation other
than Employer, since such trade secrets and confidential
information are confidential and shall at all times remain the
property of Employer.
(B) For a period of one (1) year after termination of Employee's
employment with Employer for any reason, Employee shall not
(a) compete, directly or indirectly, with the business of
Employer as conducted during the term of this Agreement (which
business shall include the financial services industry), or
have any interest (including any interest or association,
including but not limited to, that of owner, part owner,
partner, shareholder, director, officer, employee, agent,
consultant, lender or advisor) in any person, firm or entity
which competes with Employer and has offices physically
located in the Indianapolis metropolitan statistical area
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or on behalf
of any Competitor; or (c) solicit, induce or persuade, or
attempt to solicit, induce or persuade, any person to work for
or provide services to or provide financial assistance to, any
Competitor. Nothing contained in this Section 8(B) shall be
deemed to prevent or limit the Employee's right either to be a
mere customer of any Competitor, or to invest in the capital
stock or other securities of any business solely as a passive
or minority investor, provided that his holdings do not exceed
five percent (5%) of the issued and outstanding capital stock
of such business.
(C) If Employee's employment by Employer is terminated for any
reason, Employee will turn over immediately thereafter to
Employer all business correspondence, letters, papers,
reports, customers' lists, financial statements, records,
drawings, credit reports or other confidential information or
documents of Employer or its affiliates in the possession or
control of Employee, all of which writings are and will
continue to be the sole and exclusive property of Employer or
its affiliates.
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(D) Employee acknowledges that the covenants of this Section 8 are
reasonable in scope and duration and reasonably necessary and
appropriate to protect the goodwill and other appropriate
interests of Employer following Employee's termination and
that any violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy at law
would be inadequate. In addition to any other remedy to which
it may be entitled, Employer shall be entitled to equitable
relief, including specific performance, for any violation of
Section 8.
9. Any termination of Employee's employment with Employer as
contemplated by section 7 hereof, except in the circumstances of Employee's
death, shall be communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of Termination"
pursuant to section 7 based on Cause, Good Reason on following a Change of
Control shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination.
10. If a dispute arises regarding the termination of Employee pursuant
to Section 7 hereof or as to the interpretation or enforcement of this
Agreement, said dispute shall be resolved by binding arbitration in
Indianapolis, Indiana determined in accordance with the rules of the American
Arbitration Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in equity in any court
having jurisdiction for any breach of Section 8. If said dispute arises, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to defend against any action taken by the Employer, the
Employee shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Employee obtains either a written settlement or a final judgment by a
court of competent jurisdiction substantially in his favor. Such reimbursement
shall be paid within ten days of Employee's furnishing to the Employer written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Employee.
11. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this Agreement shall
inure to the benefit of and be enforceable by Employee's executors,
administrators, heirs, distributees, devisees and legatees and all amounts
payable hereunder shall be paid in accordance with the terms of this Agreement
to Employee's devisee, legatee or other designee or, if there is no such
designee, to his estate.
12. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Employee: Gerald R. Francis
======================
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If to Employer: Chairman of the Board of Directors
Peoples Bank & Trust Company
130 East Market Street
Indianapolis, Indiana 46204
or to such address as either party hereto may have furnished to the other party
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
13. The validity, interpretation, and performance of this Agreement
shall be governed by the laws of the State of Indiana.
14. Employer shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of Employer, by agreement in form and substance
reasonably satisfactory to Employee to expressly assume and agree to perform
this Agreement in the same manner and same extent that Employer would be
required to perform it if no such succession had taken place. Failure of
Employer to obtain such agreement prior to the effectiveness of any such
succession shall be deemed a termination pursuant to Section 7(C). As used in
this Agreement, "Employer" shall mean Employer as hereinbefore defined and any
successor to its business or assets as aforesaid.
15. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Employee and Employer. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of dissimilar provisions or conditions at the same or any prior
subsequent time. No agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
16. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect. This
is the entire agreement between Employer and Employee concerning the subject
matter hereof and all prior agreements, written or oral, are superseded.
17. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.
18. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder except as provided in section 11 and section 14
above. Without limiting the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution as set forth in section 11 hereof, and in the
event of any attempted assignment or transfer contrary to this paragraph,
Employer shall have no liability to pay any amounts so attempted to be assigned
or transferred.
[signature page follows]
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IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
PEOPLES BANK & TRUST COMPANY
By: /s/ William E. McWhirter
-------------------------------
William E. McWhirter
Chief Executive Officer
"Employee"
/s/ Gerald R. Francis
-------------------------------
Gerald R. Francis
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PEOPLES BANK CORPORATION OF INDIANAPOLIS
GUARANTY AGREEMENT
THIS AGREEMENT is entered into as of this 17th day of April, 1997 (the
"Effective Date"), by and between Peoples Bank Corporation of Indianapolis (the
"Company") and Gerald R. Francis (the "Employee").
WHEREAS, the Employee has heretofore been employed by Peoples Bank &
Trust Company (the "Bank") as its President is experienced in all phases of the
business of the Bank, and has become the President of the Company; and
WHEREAS, the Board of Directors (the "Board") of the Company believes
it is in the best interests of the Company to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and the
Company, and to reinforce and encourage the continued attention and dedication
of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship between the Company and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the President of the
Company. The Employee shall render such administrative and management services
for the Company as are currently rendered and as are customarily performed by
persons situated in a similar executive capacity. The Employee shall also
promote, by entertainment or otherwise, as and to the extent permitted by law,
the business of the Company. The Employee's other duties shall be such as the
Company's Chief Executive Officer may from time to time reasonably direct.
2. Consideration from Company: Joint and Several Liability.
(a) In lieu of paying the Employee a base salary during the
term of this Agreement, the Company hereby agrees that to the extent permitted
by law, it shall be jointly and severally liable with the Bank for the payment
of all amounts due under the employment agreement (the "Bank Agreement") dated
as of April 17, 1997 between the Bank and the Employee.
(b) The Board may in its discretion at any time during the
term of this Agreement agree to pay the Employee a base salary for any portion
of the term of this Agreement. If the Board agrees to pay such salary, the Board
may thereafter review the rate of the Employee's salary, and in its sole
discretion may decide to increase or decrease or eliminate his salary.
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3. Discretionary Bonuses: Participation in Retirement, Medical and
Other Plans. The Employee shall participate in an equitable manner with all
other senior management employees of the Company in discretionary bonuses, if
any, that the Board may award from time to time to the Company's senior
management employees, as well as in (i) any of the following plans or programs
that the Company may now or in the future maintain: group hospitalization,
disability, health, dental, sick leave, life insurance, travel and/or accident
insurance, auto allowance/auto lease, retirement, pension, and/or other present
or future qualified plans provided by the Company; and (ii) any fringe benefits
which are or may become available to the Company's senior management employees,
including, for example, any stock option or incentive compensation plans.
4. Indemnification. The Company agrees that its Articles of
Incorporation or Bylaws shall continue to provide for indemnification of
directors, officers, employees and agents of the Company, including the
Employee, during the full term of this Agreement, and to at all times provide
appropriate insurance for such purposes.
5. Term. This Agreement shall continue in effect so long as the Bank
Agreement remains in effect.
6. Successors and Assigns.
(a) Company. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.
(b) Employee. Since the Company is contracting for the unique
and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Company; provided, however, that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators, or other legal representatives of the Employee or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
7. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
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8. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Indiana shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
9. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
10. Entire Agreement. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
PEOPLES BANK CORPORATION
OF INDIANAPOLIS
By: /s/ William E. McWhirter
-------------------------------
Its Chief Executive Officer
Employee
/s/ Gerald R. Francis
-----------------------------
Gerald R. Francis
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April 17, 1997
INCENTIVE STOCK OPTION AGREEMENT
UNDER PEOPLES BANK CORPORATION OF INDIANAPOLIS
STOCK OPTION PLAN
Gerald R. Francis
You are hereby granted the option to purchase a total of 33,000
Nonvoting Common Shares, without par value ("Nonvoting Common Shares"), of
Peoples Bank Corporation of Indianapolis ("Peoples") over the next ten (10)
years pursuant to the Peoples Bank Corporation of Indianapolis Stock Option Plan
(the "Plan"), on the following terms and conditions:
1. This option shall become exercisable in three installments. This
option may be exercised for up to 10,000 shares at any time after the closing
price of each Nonvoting Common Share on the Nasdaq National Market (or other
exchange on which such shares are then traded) (the "Closing Market Price") is
equal to or greater than $60 per share for a period of at least 20 consecutive
trading days ("Option Installment I"). This option award may be exercised for an
additional 11,000 shares at any time after the Closing Market Price is equal to
or greater than $70 per share for a period of at least 20 consecutive trading
days ("Option Installment II"). This option award may be exercised for the
remaining 12,000 shares at any time after the Closing Market Price is equal to
or greater than $80 per share for a period of at least 20 consecutive trading
days ("Option Installment III").
If a Change of Control (as defined in the Plan) occurs at any time, this option
award shall become immediately exercisable in its entirety. If your employment
by Peoples Bank and Trust Company is terminated without cause or by you with
Good Reason pursuant to Section 7(B) of your Employment Agreement with Peoples
Bank & Trust Company dated as of April 17, 1997, Option Installment I shall
become immediately exercisable in its entirety. The purchase price of the
Nonvoting Common Shares subject to this option is $45.25 per share. You must pay
this purchase price in cash at the time this option (or any vested portion
thereof) is exercised; provided, however that, with the approval of the Board
Related Affairs Committee (the "Committee"), you may exercise your option by
tendering to Peoples Nonvoting Common Shares owned by you, or any combination of
whole Nonvoting Common Shares owned by you and cash, having a fair market value
equal to the cash exercise price of the shares with respect to which the option
is exercised by you. For this purpose, any shares so tendered shall be deemed to
have a fair market value equal to the mean between the highest and lowest quoted
selling prices for the shares on the date of exercise of the option (or if there
were no sales on such date the weighted average of the means between the highest
and lowest quoted selling prices on the nearest date before and the nearest date
after the date of exercise of the option), as reported in The Wall Street
Journal or a similar publication selected by the Committee. To exercise this
option (or any vested portion thereof), you must send written notice to Peoples'
Secretary at the address noted in Section 13 hereof. Such notice shall state the
number of shares in
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respect of which the option is being exercised, shall state what portion of the
option exercised is an incentive stock option or a non-qualified stock option
(in accordance with Section 11 hereof) and shall be signed by the person or
persons so exercising the option. Such notice shall be accompanied by payment of
the full cash option price for such shares or, if the Committee has authorized
the use of the stock swap feature provided for above, such notice shall be
followed as soon as practicable by the delivery of the option price for such
shares. Certificates evidencing Nonvoting Common Shares will not be delivered to
you until payment has been made. Under certain circumstances, subject at all
times to compliance with applicable securities laws, the Plan permits you to
deliver a notice to your broker to deliver the cash to Peoples upon the receipt
of such cash from the sale of Nonvoting Common Shares.
2. In addition to any adjustments required by Section 7 of the Plan, in
the event issuance of a share split or other share dividend consisting of shares
of Voting or Nonvoting Common Shares, the number of Nonvoting Common Shares to
be purchased pursuant to this Agreement, the purchase price of each share, and
the Closing Market Prices per share triggering exerciseability of the options
under paragraph 1, above, will be adjusted as follows: (a) the total number of
shares to be purchased pursuant to the option will be equal to the product of
(i) the total number of shares subject to the option before such issuance; (ii)
a fraction, the numerator of which is the total number of common shares
outstanding immediately after such issuance and the denominator of which is the
total number of common shares outstanding immediately prior to such issuance;
and (b) the purchase price of the shares subject to the option and Closing
Market Prices triggering exerciseability will be equal to the (i) price
immediately before such issuance; times (ii) a fraction, the numerator of which
is the total number of common shares outstanding immediately prior to such
issuance and the denominator of which is the total number of common shares
outstanding immediately after such issue.
3. The term of this option (the "Option Term") shall be for a period
of ten (10) years from the date of this letter, subject to earlier termination
as provided in paragraphs 4 and 5 hereof. Except as otherwise provided below,
the option may be exercised at any time, or from time to time, in whole or in
part, until the Option Term expires, but in no case may fewer than 100 such
shares be purchased at any one time, except to purchase a residue of fewer than
100 shares.
4. Thirty (30) days after you cease to be an employee of Peoples or any
of its subsidiaries for any reason other than retirement, permanent and total
disability, or death, this option shall forthwith terminate. If your employment
by Peoples or any of its subsidiaries is terminated by reason of retirement
(which means such termination of employment as shall entitle you to early or
normal retirement benefits under any then existing pension plan of Peoples or
one of its subsidiaries), Option Installment II and Option Installment III (if
such installments have not yet become exercisable) shall each terminate and
expire immediately prior to such termination. You may, however, exercise Option
Installment I (and, if they have not expired pursuant to the foregoing sentence,
Option Installment II and Option Installment III) in whole or in part within the
three (3) month period following your retirement (but not later than the date
upon which this option would otherwise expire), whether or not Option
Installment I was otherwise exercisable on the date of retirement. If you cease
to be an
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employee of Peoples or any of its subsidiaries because of your permanent and
total disability, Option Installment II and Option Installment III (if such
installments have not yet become exercisable) shall each terminate and expire
immediately prior to such termination. You may, however, exercise Option
Installment I (and, if they have not expired pursuant to the foregoing sentence,
Option Installment II and Option Installment III) in whole or in part at any
time within one (1) year after such termination of employment by reason of such
disability (but not later than the date upon which this option would otherwise
expire), whether or not Option Installment I was otherwise exercisable at the
time of termination.
5. If you die while employed by Peoples or any of its subsidiaries,
Option Installment II and Option Installment III (if such installments have not
yet become exercisable) shall each terminate and expire immediately at the time
of your death. However, if you die while employed by Peoples or any of its
subsidiaries, within three (3) months after the termination of your employment
because of retirement, or within one (1) year after the termination of your
employment because of permanent and total disability, Option Installment I (and,
if they have not expired pursuant to the foregoing sentence, Option Installment
II and Option Installment III) may be exercised in whole or in part by your
executor, administrator, or estate beneficiaries at any time within one (1) year
after the date of your death (but not later than the date upon which this option
would otherwise expire), whether or not Option Installment I was otherwise
exercisable at the time of termination.
6. This option is non-transferable otherwise than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order.
It may be exercised only by you or your guardian, if any, or, if you die, by
your executor, administrator, or beneficiaries of your estate who are entitled
to your option.
7. All rights to exercise this option will expire, in any event, ten
(10) years from the date of this letter.
8. Certificates evidencing shares issued upon exercise of this option
may bear a legend setting forth among other things such restrictions on the
disposition or transfer of the shares of Peoples as Peoples may deem consistent
with applicable federal and state laws.
9. Nothing in this option shall restrict the right of Peoples or its
shareholders to terminate your employment or service at any time with or without
cause.
10. This option is subject to all the terms, provisions and conditions
of the Plan, which is incorporated herein by reference, and to such regulations
as may from time to time be adopted by the Committee. A copy of the Plan may be
obtained from the Secretary of Peoples. In the event of any conflict between the
provisions of the Plan and the provisions of this letter, the terms, conditions
and provisions of the Plan shall control, and this letter shall be deemed to be
modified accordingly.
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11. To the extent possible, this Stock Option Agreement is intended to
grant an option which meets all of the requirements of incentive stock options
as defined in Section 422 of the Internal Revenue Code. To the extent possible,
and subject to and upon the terms, conditions and provisions of the Plan, each
and every provision of this Agreement shall be administered, construed and
interpreted so that the option granted herein shall so qualify as an incentive
stock option. To the extent the option cannot meet the requirements of incentive
stock options, the stock option shall be treated as a non-qualified stock
option. Without limiting the foregoing, if options for shares having an exercise
price in excess of $100,000 (taking into account options held by you under your
agreement dated January 24, 1996) become exercisable in any calendar year, then
options first becoming exercisable for the number of whole shares with an
aggregate exercise price of not more than $100,000 shall be deemed incentive
stock options and the remainder of such options shall be non-qualified options.
To the extent the option is deemed a non-qualified stock option, you are hereby
granted the right to receive, upon exercise of such non-qualified option, a cash
amount (cash award) in the amount necessary to reimburse you for federal, state
and local income taxes imposed on you as a consequence of the exercise of the
non-qualified stock option and the receipt of this cash award.
12. You agree to advise Peoples immediately upon any sale or transfer
of any Nonvoting Common Shares received upon exercise of this option (or any
vested portion thereof) to the extent such sale or transfer takes place prior to
one year from the date of any exercise of this option or within two years from
the date hereof.
13. All notices by you to Peoples and your exercise of the option
herein granted, shall be addressed to Peoples Bank Corporation of Indianapolis,
130 East Market Street, Indianapolis, Indiana 46204, Attention: Secretary, or
such other address as Peoples may, from time to time, specify.
Very truly yours,
PEOPLES BANK CORPORATION OF
INDIANAPOLIS
By: /s/ William E. McWhirter
-----------------------------------
William E. McWhirter, President
and Chief Executive Officer
Accepted on the date above written:
/s/ Gerald R. Francis
Gerald R. Francis
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STOCK APPRECIATION AWARD
PURSUANT TO THE
PEOPLES BANK CORPORATION OF INDIANAPOLIS
STOCK OPTION PLAN
A stock appreciation award (the "Award") is hereby granted by Peoples
Bank Corporation of Indianapolis (the"Company") to Gerald R. Francis (the
"Francis") on the terms set forth herein. This Award is subject to all terms and
definitions set forth in the Peoples Bank Corporation of Indianapolis Stock
Option Plan (the "Plan") which has been adopted by the Company and which is
incorporated by reference herein.
1. Grant and Value of Award. This Award is granted in three separate
installments ("Installment") which shall vest at different times. Each
Installment represents the right to receive payment from the Company at the time
of exercise of the following value in cash:
Installment Dollar Value x No. of Share
Class Equivalents
I (.6)[V - $22.625] x 20,000-A
II (.6)[V - $22.625] x 22,000-B
III (.6)[V - $22.625] x 24,000-C
The value of V is equal to the fair market value of one Non-voting
Common Share of the Company on the date of exercise.
The values of A, B and C in the above formula are to be determined by
the following tables, based on the calendar years in which the Installments of
the Award first become exercisable under Sections 2, 3 and 4 (for each
Installment, its "Vesting Date.") "Vesting Date I," for example, refers to the
Vesting Date for Award Installment I.
Year of Vesting
Date I A
1997 516
1998 514
1999
and after 4,419
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Year of Vesting Year of Vesting
Date II Date I B=
1997 N/A 0
1998 1997 514
1998 0
1999 or after any prior year 4,419
same year 0
Year of Vesting Year of Vesting Year of Vesting
Date III Date II Date I C=
1997 N/A N/A 0
1998 1997 1997 514
1998 1997 or 1998 0
1999 or after any prior year any prior year 4,419
same year as III any prior year 0
same year as III same year as III 0
2. Exercise of Award. Each Award Installment shall become exercisable
based on the closing market price of the Company's Nonvoting Common Shares,
without par value ("Common Shares") as follows:
Closing
Installment Market
Class Price*
I $30
II $35
III $40
* An installment becomes exercisable when the closing price for the
Common Shares reported on Nasdaq-NMS (or other exchange on which the Common
Shares are then traded) is equal to or greater than the price set forth in the
table for at least 20 consecutive trading days.
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3. Acceleration of Vesting. Upon a Change of Control, as defined in the
Plan, this Award shall become immediately exercisable in its entirety. In
addition, Installment I shall become immediately exercisable in its entirety if
Francis' employment with Peoples Bank & Trust Company ("Bank") is terminated
either without Cause or with Good Reason, as defined in the Bank's employment
agreement with Francis dated as of April 17, 1997.
4. Period of Exercisability.
(a) Installment I shall expire and terminate on the date 30
days following Francis' termination of employment for any reason other
than retirement, disability or death. In the event of Francis'
termination of employment due to retirement, disability or death,
Installment I shall become exercisable but shall expire as indicated in
the following table.
Circumstance of
Termination Expiration Date
Retirement 3 months after termination of employment
Disability or
Death while employed 1 year after termination of employment
Death within 3 months after
Retirement OR Within One
Year after Termination due
to Disability 1 year after date of death
(b) Installments II and III shall expire immediately upon the
Francis' termination of employment for any reason or cause if such
installments are not then exercisable (based on the conditions set
forth in Sections 2 or 3 of this Agreement). If Installment II or III
is exercisable upon Francis' termination of employment (based on the
conditions set forth in Sections 2 or 3) for any reason other than
retirement, disability or death, then such installment shall expire on
the date 30 days following Francis' termination of employment. If
Installment II or III is exercisable (based on the conditions set forth
in Sections 2 or 3) upon Francis' termination of employment due to
retirement, disability or death, then such installment shall remain
exercisable and expire in accordance with the table in Section 4(a)
above.
(c) In no circumstances shall the Award be exercisable later
than the date on which it would otherwise expire.
5. Method of Exercise. This Award may be exercised by a written notice
which shall:
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(a) state the election to exercise a portion of the Award, the
number of share equivalents and the Installment with respect to which
it is being exercised, and the address and Social Security Number of
the person exercising the Award.
(b) be signed by the person or persons entitled to exercise
the Award and, if the Award is being exercised by any person or persons
other than Francis, be accompanied by proof, satisfactory to counsel
for the Company, of the right of such person or persons to exercise the
Award; and
(c) be in writing and delivered in person or by certified mail
to the Secretary of the Company.
6. Withholding. Francis hereby agrees that, upon exercise of the Award
or any portion of any Installment, the Company shall be entitled to withhold all
or any portion of the payment due Francis for such tax withholding as may be
required of the Company under federal, state, or local law on account of such
exercise and on account of any other compensation received by Francis from the
Company or its subsidiaries.
7. Limited Transferability. Only to the extent expressly permitted by
the Plan at the time, this Award may be transferred to Francis' spouse, lineal
ascendants, lineal descendants, or to a duly established trust for their benefit
or the benefit of Francis, provided that such transferee shall be permitted to
exercise this Award subject to all the same terms and conditions applicable to
Francis. Otherwise, this Award is not transferable other than by will, the laws
of descent and distribution or pursuant to a qualified domestic relations order.
8. Adjustments. In the event of a stock split or stock dividend, the
number of share equivalents and the base price used to determine the value of
the Award under Section 1 shall be adjusted proportionately.
9. Term. This Award shall expire on April 17, 2007, subject to early
termination as set forth herein and may be exercised during such term only in
accordance with the Plan and the terms of this Award. In no case may the Award
be exercised for the value determined on the basis of fewer than 100 share
equivalents at any one time, except to purchase a residue of an Installment.
October 21, 1997 PEOPLES BANK CORPORATION
OF INDIANAPOLIS
By /s/ William E. McWhirter
Its Chairman and Chief
Executive Officer
AGREED: /s/ Gerald R. Francis
- ---------------------------------
Gerald R. Francis
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THE PEOPLES BANK CORPORATION OF INDIANAPOLIS
---------------------------
STOCK APPRECIATION AWARD EXERCISE FORM
---------------------------
-----------
Date
Secretary
Peoples Bank Corporation of Indianapolis
130 East Market Street
Indianapolis, Indiana 46204
Re: Peoples Bank Corporation of Indianapolis Stock Appreciation Award
Dear Sir:
The undersigned elects to exercise his Stock Appreciation Award for its
cash value related to ____ share equivalents from Award Installment ___ under
and pursuant to the Stock Appreciation Award dated October __, 1997 ("Award").
After making allowance for tax withholding permitted by the Award,
please remit a check for the remaining cash value for which the Award is hereby
exercised to the undersigned.
Very truly yours,
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SECOND AMENDMENT
AND COMPLETE RESTATEMENT OF THE
PEOPLES BANK & TRUST COMPANY
UNFUNDED SUPPLEMENTAL RETIREMENT PLAN
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(EFFECTIVE DECEMBER 1, 1988)
Pursuant to rights referred under Section 6.01 of the Peoples Bank &
Trust Company Unfunded Supplemental Retirement Plan For a Select Group of
Management Employees (the "Plan"), Peoples Bank & Trust Company (the "Company")
hereby amends and restates the Plan, effective as of December 1, 1988, unless a
later date is specified herein, to provide, in its entirety, as follows:
PREAMBLE
This Plan is an unfunded supplemental retirement plan for a select
group of management employees of Peoples Bank & Trust Company and is designed to
meet applicable exemptions under Sections 201(2), 301(a)(3), 401(a)(1) and
4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended,
and under Department of Labor Regulation Section 2520.104-23.
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator" means the
Company, which shall have the sole authority to manage and to control the
operation and administration of this Plan.
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Section 1.02. Board. The term "Board" means the Board of Directors of
the Company. Whenever the provisions of this Plan require action by the Board,
it may be taken by the Board Related Affairs Committee of the Board with the
same force and effect as though taken by the entire Board.
Section 1.03. Company. The term "Company" means Peoples Bank & Trust
Company, and any successor thereto.
Section 1.04. Company Retirement Plan. The term "Company Retirement
Plan" means the Peoples Bank & Trust Company Employees' Pension as now in effect
or hereafter amended. The Company Retirement Plan is not amended or modified in
any manner by this Plan, and any benefits payable to Participants or to their
surviving spouses under this Plan shall have no effect on the benefits payable
to Participants or to their surviving spouses under the Company Retirement Plan.
Section 1.05. Compensation. The term "Compensation" means the annual
remuneration received by a Participant from the Company for services rendered to
the Company (inclusive of bonus payments); provided, however, that the term
"Compensation" shall also include any current compensation deferred by a
Participant under any qualified or non-qualified plan sponsored or maintained by
the Company or under any agreement entered into by a Participant and the
Company.
Section 1.06. Effective Date. The term "Effective Date" means December
1, 1988.
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Section 1.07. Participant. The term "Participant" means any individual
designated in Article II of this Plan who is eligible for benefits under this
Plan.
Section 1.08. Plan. The term "Plan" means this Peoples Bank & Trust
Company Unfunded Supplemental Retirement Plan for a Select Group of Management
Employees.
Section 1.09. Plan Year. The term "Plan Year" means the calendar year.
Section 1.10. Primary Social Security Benefits. The term "Primary
Social Security Benefits" means the monthly amount of old age insurance benefits
available at the later of age 65 or the date on which the Participant's
employment with the Company is terminated under the provisions of Title II of
the Social Security Act in effect at the date on which such a Participant's
employment with the Company is terminated. The Administrator shall adopt rules
governing the computation of Primary Social Security Benefits, and the fact that
a Participant or the surviving spouse of a deceased Participant does not
actually receive such amount because of failure to apply, continuance of work or
for any other reason shall be disregarded.
Section 1.11. Total Disability. The term "Total Disability" means a
physical or mental condition that qualifies a Participant for permanent
disability payments under the Social Security Act.
ARTICLE II
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PARTICIPATION
The individuals eligible to participate in this Plan shall include only
the Executive Officers of the Company who are designated in this Article. The
Executive Officers selected to participate in this Plan are as follows:
Name Current Title
William E. McWhirter Chief Executive Officer
Charles R. Farber Executive Vice President
Gerald R. Francis President and Chief Operating Officer
Additional key executives may be added to the Plan by action of the Company
Board. (Article II amended to be effective as of April 17, 1997.)
ARTICLE III
MONTHLY SUPPLEMENTAL PENSION BENEFITS
The monthly supplemental pension benefits for any Participant shall be
an amount (not less than zero) equal to one-twelfth (1/12) of the product of:
(a) the lesser of (i) two percent (2%) times the years of service
credited to the Participant under the Company Retirement Plan or (ii)
seventy-five percent (75%); times
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(b) the average Compensation paid to that Participant with respect to
the last full thirty-six (36) consecutive months ending on or before the date
his employment with the Company is terminated;
less the sum of his Primary Social Security Benefits (as determined
under Section 1.10) and less the benefits that would be payable to him for the
month he attains age sixty-five (65) or, if later, the first (1st) month
following the date his employment with the Company is terminated under the
Company Retirement Plan on a single-life basis regardless of the form in which
such benefits are actually paid.
ARTICLE IV
ENTITLEMENT TO RETIREMENT BENEFITS
A Participant who retires or otherwise terminates his employment with
the Company for reasons other than his death shall be entitled to receive
monthly supplemental pension benefits under this Plan only if:
(1) his employment with the Company terminates on or after his
attainment of age sixty (60), or
(2) his employment with the Company terminates by reason of
his incurring a Total Disability.
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<PAGE>
The amount of the monthly supplemental pension benefits to which an eligible
Participant is entitled shall be determined in accordance with Article III. The
monthly payments shall begin on the first (1st) calendar day of the month
coinciding with or next following the date on which a Participant's employment
with the Company is terminated and shall continue through the month in which his
death occurs; provided, however, that if payments are to commence to a
Participant before his attainment of age sixty-five (65), the amount of such
Participant's monthly supplemental pension benefits shall be reduced to the
extent and in the same manner that such payments would be reduced if made from
the Company Retirement Plan; provided, further, that if a Participant's
employment terminates because of his incurring a Total Disability, his monthly
payments, based on his average Compensation during the thirty-six (36) months
immediately before such termination, shall not commence until such Participant
has attained age sixty (60). If any Participant whose employment with the
Company is terminated by reason of his incurring a Total Disability recovers
from that Total Disability before his attainment of age sixty-five (65) and does
not resume employment with the Company within sixty (60) calendar days after his
recovery, if requested by the Company, the payment of the monthly supplemental
pension benefits by reason of this Section shall cease upon the conclusion of
such sixty (60) calendar day period; provided, however, that a Participant shall
not be deemed to have recovered from a Total Disability unless such Participant
is deemed to have recovered from the Total Disability for purposes of the
Company Retirement Plan. If a Participant's employment with the Company is
terminated before his attainment of age sixty (60) for reasons other than his
death or Total Disability, such Participant shall not be eligible for any
benefits under this Plan. If a Participant dies after payments have commenced
hereunder but before such Participant has received at least one-hundred and
eighty (180) monthly payments, monthly payments shall continue to be made to the
beneficiary
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<PAGE>
designated in writing to the Committee by such Participant until the aggregate
number of payments to such Participant and following his death to his designated
beneficiary equal one hundred and eighty (180); provided, however, that if a
Participant does not designate a beneficiary, his beneficiary shall be his
surviving spouse, and, if there is no surviving spouse, his beneficiary shall be
his estate. If a Participant's employment with the Company is terminated because
of his death, such participant shall be entitled to a lump sum (not less than
zero) equal to 9.712 times the product of:
(a) twelve (12); times
(b) the monthly supplemental pension benefit determined in accordance
with Article III;
less the benefits payable under the Split Dollar Insurance Agreement
entered into between the Participant and the Company.
ARTICLE V
ADMINISTRATION
Section 5.01. Delegation of Responsibility. The Administrator may
delegate duties involved in the administration of this Plan to such other person
or persons whose services are deemed necessary or convenient, including, without
limitation any committee of the Board with oversight responsibility for any of
its employee benefits. However, the ultimate responsibility for the
administration of this Plan shall remain with the Administrator.
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<PAGE>
Section 5.02. Payment of Monthly Benefits. The monthly supplemental
pension benefits and the death benefits payable under this Plan shall be paid
solely from the general assets of the Company. The Participants shall not have
interest in any specific asset of the Company under the terms of this Plan. This
Plan shall not be considered to create an escrow account, trust fund or other
funding arrangement of any kind or a fiduciary relation between the Company and
any Participant.
Section 5.03. Construction of Plan. The Board shall have the power to
construe this Plan and to determine all questions of fact or law arising under
it. It may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent as it may deem
expedient. All acts and determinations of the Board shall be final and
conclusive on the Participants and shall not be subject to appeal or review.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendment or Termination of Plan. This Plan may be
amended, modified, and supplemented in any respect or terminated by Board action
only if the continued operation of this Plan is deemed imprudent by the Board as
a result of changes in the law or other circumstances outside of the control of
the Company; provided, however, that, without the consent of a Participant, no
amendment, modification, supplement or termination of this Plan shall have the
effect of discontinuing or of reducing (a) the monthly supplemental pension
benefits being paid to a Participant under Article IV of this Plan after he has
met one (1) of the conditions set forth under Article IV of
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<PAGE>
this Plan entitling him to payments under Article IV of this Plan; provided,
further, that unless a Participant otherwise consents, in the event of
termination of this Plan before the commencement of payment of any benefits
under Article IV hereof, such Participant shall continue thereafter to be
entitled to receive supplemental pension benefits upon the terms and conditions
set forth herein, but such benefits shall be based only on the average
Compensation paid to such Participant with respect to the last thirty-six (36)
consecutive months ending on or before the date as of which this Plan is
terminated.
Section 6.02. Successors and Assigns. This Plan shall be binding upon
the successors and assigns of the Company.
Section 6.03. Choice of Law. This Plan shall be construed and
interpreted pursuant to, and in accordance with, the laws of the State of
Indiana.
Section 6.04. No Employment Contract. This Plan shall not be construed
as an agreement, consideration or inducement of employment or as affecting in
any manner the rights or obligations of the Company or of any Participant to
continue or to terminate the employment relationship any time.
Section 6.05. Non-Alienation. Neither a Participant nor his spouse
shall have any right to anticipate, to pledge, to alienate or to assign any
rights under this Plan, and any effort to do so shall be null and void. The
monthly benefits payable under this Plan shall be exempt from the claims of
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creditors or other claimants and from all orders, decrees, levies and executions
and any other legal process to the fullest extent that may be permitted by law.
Section 6.06. Gender and Number. Words in the masculine gender shall be
construed to include the feminine gender in all cases where appropriate; words
in the singular or plural shall be construed as being in the plural or singular
in all cases where appropriate.
Section 6.07. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
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<PAGE>
This Second Amendment and Complete Restatement of the Peoples Bank &
Trust Company Unfunded Supplemental Retirement Plan For a Select Group of
Management Employees was approved by the Board of Directors of the Company at a
meeting on September 18, 1997. Pursuant to such authorization, the following
officer of the Company has executed this Amendment on this 11th day of October,
1997, but this Amendment shall be retroactively effective as of December 1,
1988, unless a later date is specified herein.
PEOPLES BANK & TRUST COMPANY
By: /s/ William E. McWhirter
Its: Chairman & CEO
-11-
SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is effective this ____ day of __________, 1997, by and
between PEOPLES BANK & TRUST COMPANY (the "Bank") and Gerald R. Francis (the
"Employee").
WHEREAS, the Bank highly values the efforts, abilities, and
accomplishments of the Employee;
WHEREAS, the Employee is a member of a select group of management and
one of the highly compensated employees of the Bank; and
WHEREAS, the Bank, as an inducement to the Employee's continued
employment, wishes to assist the Employee with his personal life insurance
needs;
NOW, THEREFORE, the parties named above agree as follows:
1. Life Insurance Policy. The Bank shall contemporaneously purchase a
life insurance policy (the "Policy"), which is described in Exhibit A, attached
hereto, and which is a whole life policy on the life of Employee.
2. Payment of Premiums. On or before the due date of the premiums on
the Policy, or within the grace period allowed by the Policy's issuer (the
"Insurer"), the Bank shall pay the full premium amount due on the Policy. In
addition, the Bank shall annually notify the Employee of any amounts that are
required to be included in his income for federal income tax purposes due to the
Bank's payment of the premiums on the Policy.
3. Ownership of Policy. The Bank shall be the sole and absolute owner
of the Policy, and may exercise all ownership rights granted to the owner of the
Policy by the Insurer, except as otherwise provided herein.
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4. Rights of the Employee in Policy. The Employee may select (or change
any prior selection of) the settlement option of the Policy and may designate
(or change any prior designation of) the beneficiaries entitled to receive that
portion of the death benefits described in Paragraph 7(b) of this Agreement by
specifying the same in a written notice to the Bank. Upon receipt of such
notice, the Bank shall execute and deliver to the Insurer the forms necessary to
elect (or change any prior election of) the requested settlement option and to
designate (or change any prior designation of) the requested persons as
beneficiaries to that portion of the death benefits described in Paragraph 7(b)
of this Agreement.
5. Policy Loans. The Bank shall have the limited right to obtain loans
secured by the Policy. The amount of such loans, together with any unpaid
interest thereon, shall at no time exceed the amount the Bank would be entitled
to as determined under the provisions of Section 7(a) of this Agreement. The
interest due on such loans shall be a debt of the Bank owed to the Insurer. The
Employee shall not have any right to obtain loans secured by the Policy.
6. Use of Dividends. Any dividends declared on the Policy shall be
applied to purchase paid up additional insurance on Employee's life and the
dividend provision of the Policy shall be so structured.
7. Interests in Death Benefits. The death benefits payable under the
terms of the Policy shall be payable to each party to this Agreement as follows:
(a) The Bank shall be entitled to the death benefits, if
any, in excess of $250,000.
(b) The Employee shall be entitled to the lesser of:
(i) $250,000, or
(ii) the total death benefits.
-2-
<PAGE>
8. Termination of Agreement.
(a) This Agreement shall terminate on the first to occur
of the following:
(i) Distribution of death benefits pursuant to
Paragraph 7 of this Agreement.
(ii) Termination of Employee's employment with
the Bank for reasons other than death.
(iii) A change in control of the Bank (as defined
in Paragraph 13 of this Agreement) before
the Employee's attainment of age sixty (60).
(b) In the event of the termination of this Agreement,
the rights of the parties shall be as set forth in
Paragraph 7 in the case of a termination under
Paragraph 8(a)(i); as set forth in Paragraph 9 in the
case of a termination under Paragraph 8(a)(ii); and
as set forth in Paragraph 10 in the case of a
termination under Paragraph 8(a)(iii).
9. Rights of Parties if Employee Ceases Employment. In the case of a
termination under Paragraph 8(a)(ii) of this Agreement, the Bank shall be the
sole owner of the Policy and may dispose of the Policy at its discretion, and
the Employee shall have no further interests in the Policy.
10. Rights of Parties in Case of Change in Control of Bank. In the case
of a termination under Paragraph 8(a)(iii) before the Employee's attainment at
age sixty (60), the Employee shall be entitled during the sixty (60) calendar
day period beginning on the date of the change in control of the Bank (as
defined in Paragraph 13 of this Agreement) to purchase the Bank's interest in
the Policy by paying to the Bank an amount equal to the greater of:
-3-
<PAGE>
(a) the amount which would be payable to the Bank under
Paragraph 7(a) of this Agreement if the Employee had
died at the time of termination; or
(b) the surrender value of the Policy at the time of the
change in control. Upon receipt of the required
amount, the Bank shall transfer all of its title and
ownership interests in the Policy to the Employee.
11. Annual Bonus. On or before the January 31 following each calendar
year this Agreement remains in effect, the Bank shall pay to the Employee a
bonus equal to the product of:
(a) the maximum marginal individual composite Federal,
Indiana and Marion County income tax rate (taking
into account the deductibility for Federal income tax
purposes of state and local income taxes, if then
allowable, and without regard to Section 1(g) of the
Internal Revenue Code of 1986, as amended, in effect
for the calendar year during which the amount
described in Paragraph 11(b) below is required to be
recognized as income by the Employee); and
(b) the amount required to be included in the Employee's
gross income for Federal income tax purposes in such
calendar year because of the Bank's payment of
premiums on the Policy.
12. Right of Employee to Assign Rights. Except for the right to the
annual bonus under Paragraph 11 of this Agreement, which right is not assignable
or otherwise transferable and notwithstanding any provision of this Agreement to
the contrary, the Employee shall have the right to absolutely and irrevocably
assign by gift all of his right, title, and interest in and to this Agreement
and to the Policy to an assignee. This right shall be exercisable by the
execution and delivery to the
-4-
<PAGE>
Bank of a written assignment. Upon receipt of such written assignment executed
by the Employee and duly accepted by the assignee, the Bank shall consent
thereto in writing, and shall thereafter treat the Employee's assignee as the
sole owner of all the Employee's right, title and interest in and to this
Agreement and in and to the Policy (other than the bonus provided in Paragraph
11 of this Agreement).
13. Change in Control. If any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934) subsequent
to the effective date of this Agreement becomes the beneficial owner, directly
or indirectly, of securities of the Bank representing fifty-one percent (51%) or
more of the combined voting power of the outstanding securities of the Bank, a
change of control for purposes of Paragraph 8(a)(iii) shall have occurred.
14. Named Fiduciary. The Bank is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives and provisions of this Agreement.
The named fiduciary shall make all determinations concerning rights to
benefits of the Employee under this Agreement. Any decision by the named
fiduciary denying a claim by the Employee for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Employee. Such
decision shall set forth the specific reasons for the denial. In addition, the
named fiduciary shall afford a reasonable opportunity to the Employee for a full
and fair review of the decision denying such claim.
15. Liability of Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy's death benefits to
the beneficiary or beneficiaries named in the
-5-
<PAGE>
Policy, subject to the terms and conditions of the Policy. In no event shall the
Insurer be considered a party to this Agreement, or to any modification or
amendment hereof. No provision in this Agreement shall be construed as
enlarging, changing, varying, or in any other way affecting the obligations of
the Insurer as expressly provided in the Policy, except insofar as the
provisions hereof are made parts of the Policy by the beneficiary designations
executed by the Bank and filed with the Insurer in connection herewith.
16. Notices. Any and all notices, elections, offers, acceptances and
demands permitted or required to be made under this Agreement shall be in
writing, signed by the party giving such notice, election, offer, acceptance or
demand and shall be delivered personally, or sent by registered or certified
mail, to the other party, at the address set forth under each party's signature
at the end of this Agreement, or at such other address as may be supplied in
writing. The date of personal delivery or the date of mailing, as the case may
be, shall be the date of such notice, election, offer, acceptance or demand.
17. No Waiver. The failure of any party to insist upon strict
performance of any covenant or any obligation hereunder shall not be a waiver of
such party's right to demand strict compliance therewith in the future, nor
shall the same be construed as a novation of this Agreement.
18. Integration. This Agreement constitutes the full and complete
agreement of the parties.
19. Captions. Titles or captions of articles and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
references, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
-6-
<PAGE>
20. Number and Gender. Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular
and the gender of any pronoun shall include all the genders.
21. Counterparts. This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an agreement, binding upon the
parties, and each party hereby covenants and agrees to execute all duplicates or
replacement counterparts of this Agreement as may be required.
22. Severability. In the event any provision, clause, sentence, phrase
or word hereof, or the application thereof in any circumstances, is held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder hereof, or of the application of
any such provision, sentence, clause, phrase or word in any other circumstances.
23. Amendment of Agreement. This Agreement may not be amended, altered,
or modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
24. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the Bank and its successors and assigns, and the Employee and
his successors and assigns.
25. Nonexclusivity of Remedies. No provision of this Agreement shall be
construed as limiting any remedies provided to either party by governing law.
26. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Indiana.
-7-
<PAGE>
IN WITNESS WHEREOF; The parties hereto have executed this Agreement, as
of the date first written above.
PEOPLES BANK & TRUST COMPANY
By: /s/ William E. McWhirter
----------------------------------
Its: Chairman of the Board and
Chief Executive Officer
130 East Market Street
Indianapolis, Indiana 46204
/s/ Gerald R. Francis
------------------------------------
Gerald R. Francis
===================================
-8-
<PAGE>
EXHIBIT A
(Policy Description)
SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is effective this 3rd day of February, 1989, by and
between PEOPLES BANK & TRUST COMPANY (the "Bank") and William E. McWhirter (the
"Employee").
WHEREAS, the Bank highly values the efforts, abilities, and
accomplishments of the Employee;
WHEREAS, the Employee is a member of a select group of management and
one of the highly compensated employees of the Bank; and
WHEREAS, the Bank, as an inducement to the Employee's continued
employment, wishes to assist the Employee with his personal life insurance
needs;
NOW, THEREFORE, the parties named above agree as follows:
1. Life Insurance Policy. The Bank shall contemporaneously purchase a
life insurance policy (the "Policy"), which is described in Exhibit A, attached
hereto, and which is a whole life policy on the life of Employee.
2. Payment of Premiums. On or before the due date of the premiums on
the Policy, or within the grace period allowed by the Policy's issuer (the
"Insurer"), the Bank shall pay the full premium amount due on the Policy. In
addition, the Bank shall annually notify the Employee of any amounts that are
required to be included in his income for federal income tax purposes due to the
Bank's payment of the premiums on the Policy.
3. Ownership of Policy. The Bank shall be the sole and absolute owner
of the Policy, and may exercise all ownership rights granted to the owner of the
Policy by the Insurer, except as otherwise provided herein.
-1-
<PAGE>
4. Rights of the Employee in Policy. The Employee may select (or change
any prior selection of) the settlement option of the Policy and may designate
(or change any prior designation of) the beneficiaries entitled to receive that
portion of the death benefits described in Paragraph 7(b) of this Agreement by
specifying the same in a written notice to the Bank. Upon receipt of such
notice, the Bank shall execute and deliver to the Insurer the forms necessary to
elect (or change any prior election of) the requested settlement option and to
designate (or change any prior designation of) the requested persons as
beneficiaries to that portion of the death benefits described in Paragraph 7(b)
of this Agreement.
5. Policy Loans. The Bank shall have the limited right to obtain loans
secured by the Policy. The amount of such loans, together with any unpaid
interest thereon, shall at no time exceed the amount the Bank would be entitled
to as determined under the provisions of Section 7(a) of this Agreement. The
interest due on such loans shall be a debt of the Bank owed to the Insurer. The
Employee shall not have any right to obtain loans secured by the Policy.
6. Use of Dividends. Any dividends declared on the Policy shall be
applied to purchase paid up additional insurance on Employee's life and the
dividend provision of the Policy shall be so structured.
7. Interests in Death Benefits. The death benefits payable under the
terms of the Policy shall be payable to each party to this Agreement as follows:
(a) The Bank shall be entitled to the death benefits, if
any, in excess of $600,000.
(b) The Employee shall be entitled to the lesser of:
(i) $600,000, or
(ii) the total death benefits.
-2-
<PAGE>
8. Termination of Agreement.
(a) This Agreement shall terminate on the first to occur
of the following: (i) Distribution of death benefits
pursuant to Paragraph 7 of this Agreement.
(ii) Termination of Employee's employment with
the Bank for reasons other than death.
(iii) A change in control of the Bank (as defined
in Paragraph 13 of this Agreement) before
the Employee's attainment of age sixty (60).
(b) In the event of the termination of this Agreement,
the rights of the parties shall be as set forth in
Paragraph 7 in the case of a termination under
Paragraph 8(a)(i); as set forth in Paragraph 9 in the
case of a termination under Paragraph 8(a)(ii); and
as set forth in Paragraph 10 in the case of a
termination under Paragraph 8(a)(iii).
9. Rights of Parties if Employee Ceases Employment. In the case of a
termination under Paragraph 8(a)(ii) of this Agreement, the Bank shall be the
sole owner of the Policy and may dispose of the Policy at its discretion, and
the Employee shall have no further interests in the Policy.
10. Rights of Parties in Case of Change in Control of Bank. In the case
of a termination under Paragraph 8(a)(iii) before the Employee's attainment at
age sixty (60), the Employee shall be entitled during the sixty (60) calendar
day period beginning on the date of the change in control of the Bank (as
defined in Paragraph 13 of this Agreement) to purchase the Bank's interest in
the Policy by paying to the Bank an amount equal to the greater of:
-3-
<PAGE>
(a) the amount which would be payable to the Bank under
Paragraph 7(a) of this Agreement if the Employee had
died at the time of termination; or
(b) the surrender value of the Policy at the time of the
change in control. Upon receipt of the required
amount, the Bank shall transfer all of its title and
ownership interests in the Policy to the Employee.
11. Annual Bonus. On or before the January 31 following each calendar
year this Agreement remains in effect, the Bank shall pay to the Employee a
bonus equal to the product of:
(a) the maximum marginal individual composite Federal,
Indiana and Marion County income tax rate (taking
into account the deductibility for Federal income tax
purposes of state and local income taxes, if then
allowable, and without regard to Section 1(g) of the
Internal Revenue Code of 1986, as amended, in effect
for the calendar year during which the amount
described in Paragraph 11(b) below is required to be
recognized as income by the Employee); and
(b) the amount required to be included in the Employee's
gross income for Federal income tax purposes in such
calendar year because of the Bank's payment of
premiums on the Policy.
12. Right of Employee to Assign Rights. Except for the right to the
annual bonus under Paragraph 11 of this Agreement, which right is not assignable
or otherwise transferable and notwithstanding any provision of this Agreement to
the contrary, the Employee shall have the right to absolutely and irrevocably
assign by gift all of his right, title, and interest in and to this Agreement
and to the Policy to an assignee. This right shall be exercisable by the
execution and delivery to the
-4-
<PAGE>
Bank of a written assignment. Upon receipt of such written assignment executed
by the Employee and duly accepted by the assignee, the Bank shall consent
thereto in writing, and shall thereafter treat the Employee's assignee as the
sole owner of all the Employee's right, title and interest in and to this
Agreement and in and to the Policy (other than the bonus provided in Paragraph
11 of this Agreement).
13. Change in Control. If any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934) subsequent
to the effective date of this Agreement becomes the beneficial owner, directly
or indirectly, of securities of the Bank representing fifty-one percent (51%) or
more of the combined voting power of the outstanding securities of the Bank, a
change of control for purposes of Paragraph 8(a)(iii) shall have occurred.
14. Named Fiduciary. The Bank is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives and provisions of this Agreement.
The named fiduciary shall make all determinations concerning rights to
benefits of the Employee under this Agreement. Any decision by the named
fiduciary denying a claim by the Employee for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Employee. Such
decision shall set forth the specific reasons for the denial. In addition, the
named fiduciary shall afford a reasonable opportunity to the Employee for a full
and fair review of the decision denying such claim.
15. Liability of Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy's death benefits to
the beneficiary or beneficiaries named in the
-5-
<PAGE>
Policy, subject to the terms and conditions of the Policy. In no event shall the
Insurer be considered a party to this Agreement, or to any modification or
amendment hereof. No provision in this Agreement shall be construed as
enlarging, changing, varying, or in any other way affecting the obligations of
the Insurer as expressly provided in the Policy, except insofar as the
provisions hereof are made parts of the Policy by the beneficiary designations
executed by the Bank and filed with the Insurer in connection herewith.
16. Notices. Any and all notices, elections, offers, acceptances and
demands permitted or required to be made under this Agreement shall be in
writing, signed by the party giving such notice, election, offer, acceptance or
demand and shall be delivered personally, or sent by registered or certified
mail, to the other party, at the address set forth under each party's signature
at the end of this Agreement, or at such other address as may be supplied in
writing. The date of personal delivery or the date of mailing, as the case may
be, shall be the date of such notice, election, offer, acceptance or demand.
17. No Waiver. The failure of any party to insist upon strict
performance of any covenant or any obligation hereunder shall not be a waiver of
such party's right to demand strict compliance therewith in the future, nor
shall the same be construed as a novation of this Agreement.
18. Integration. This Agreement constitutes the full and complete
agreement of the parties.
19. Captions. Titles or captions of articles and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
references, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
-6-
<PAGE>
20. Number and Gender. Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular
and the gender of any pronoun shall include all the genders.
21. Counterparts. This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an agreement, binding upon the
parties, and each party hereby covenants and agrees to execute all duplicates or
replacement counterparts of this Agreement as may be required.
22. Severability. In the event any provision, clause, sentence, phrase
or word hereof, or the application thereof in any circumstances, is held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder hereof, or of the application of
any such provision, sentence, clause, phrase or word in any other circumstances.
23. Amendment of Agreement. This Agreement may not be amended, altered,
or modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
24. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the Bank and its successors and assigns, and the Employee and
his successors and assigns.
25. Nonexclusivity of Remedies. No provision of this Agreement shall be
construed as limiting any remedies provided to either party by governing law.
26. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Indiana.
-7-
<PAGE>
IN WITNESS WHEREOF; The parties hereto have executed this Agreement, as
of the date first written above.
PEOPLES BANK & TRUST COMPANY
By:/s/ Gerald R. Francis
--------------------------------------
Its:President
130 East Market Street
Indianapolis, Indiana 46204
/s/ William E. McWhirter
------------------------------------
William E. McWhirter
1515 E. 77th Street
Indianapolis, IN 46220
-8-
<PAGE>
EXHIBIT A
(Policy Description)
SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is effective this 1st day of February, 1989, by and
between PEOPLES BANK & TRUST COMPANY (the "Bank") and Charles R. Farber (the
"Employee").
WHEREAS, the Bank highly values the efforts, abilities, and
accomplishments of the Employee;
WHEREAS, the Employee is a member of a select group of management and
one of the highly compensated employees of the Bank; and
WHEREAS, the Bank, as an inducement to the Employee's continued
employment, wishes to assist the Employee with his personal life insurance
needs;
NOW, THEREFORE, the parties named above agree as follows:
1. Life Insurance Policy. The Bank shall contemporaneously purchase a
life insurance policy (the "Policy"), which is described in Exhibit A, attached
hereto, and which is a whole life policy on the life of Employee.
2. Payment of Premiums. On or before the due date of the premiums on
the Policy, or within the grace period allowed by the Policy's issuer (the
"Insurer"), the Bank shall pay the full premium amount due on the Policy. In
addition, the Bank shall annually notify the Employee of any amounts that are
required to be included in his income for federal income tax purposes due to the
Bank's payment of the premiums on the Policy.
3. Ownership of Policy. The Bank shall be the sole and absolute owner
of the Policy, and may exercise all ownership rights granted to the owner of the
Policy by the Insurer, except as otherwise provided herein.
-1-
<PAGE>
4. Rights of the Employee in Policy. The Employee may select (or change
any prior selection of) the settlement option of the Policy and may designate
(or change any prior designation of) the beneficiaries entitled to receive that
portion of the death benefits described in Paragraph 7(b) of this Agreement by
specifying the same in a written notice to the Bank. Upon receipt of such
notice, the Bank shall execute and deliver to the Insurer the forms necessary to
elect (or change any prior election of) the requested settlement option and to
designate (or change any prior designation of) the requested persons as
beneficiaries to that portion of the death benefits described in Paragraph 7(b)
of this Agreement.
5. Policy Loans. The Bank shall have the limited right to obtain loans
secured by the Policy. The amount of such loans, together with any unpaid
interest thereon, shall at no time exceed the amount the Bank would be entitled
to as determined under the provisions of Section 7(a) of this Agreement. The
interest due on such loans shall be a debt of the Bank owed to the Isurer. The
Employee shall not have any right to obtain loans secured by the Policy.
6. Use of Dividends. Any dividends declared on the Policy shall be
applied to purchase paid up additional insurance on Employee's life and the
dividend provision of the Policy shall be so structured.
7. Interests in Death Benefits. The death benefits payable under the
terms of the Policy shall be payable to each party to this Agreement as follows:
(a) The Bank shall be entitled to the death benefits, if
any, in excess of $250,000.
(b) The Employee shall be entitled to the lesser of:
(i) $250,000, or
(ii) the total death benefits.
-2-
<PAGE>
8. Termination of Agreement.
(a) This Agreement shall terminate on the first to occur
of the following:
(i) Distribution of death benefits pursuant to
Paragraph 7 of this Agreement.
(ii) Termination of Employee's employment with
the Bank for reasons other than death.
(iii) A change in control of the Bank (as defined
in Paragraph 13 of this Agreement) before
the Employee's attainment of age sixty (60).
(b) In the event of the termination of this Agreement,
the rights of the parties shall be as set forth in
Paragraph 7 in the case of a termination under
Paragraph 8(a)(i); as set forth in Paragraph 9 in the
case of a termination under Paragraph 8(a)(ii); and
as set forth in Paragraph 10 in the case of a
termination under Paragraph 8(a)(iii).
9. Rights of Parties if Employee Ceases Employment. In the case of a
termination under Paragraph 8(a)(ii) of this Agreement, the Bank shall be the
sole owner of the Policy and may dispose of the Policy at its discretion, and
the Employee shall have no further interests in the Policy.
10. Rights of Parties in Case of Change in Control of Bank. In the case
of a termination under Paragraph 8(a)(iii) before the Employee's attainment at
age sixty (60), the Employee shall be entitled during the sixty (60) calendar
day period beginning on the date of the change in control of the Bank (as
defined in Paragraph 13 of this Agreement) to purchase the Bank's interest in
the Policy by paying to the Bank an amount equal to the greater of:
-3-
<PAGE>
(a) the amount which would be payable to the Bank under
Paragraph 7(a) of this Agreement if the Employee had
died at the time of termination; or
(b) the surrender value of the Policy at the time of the
change in control. Upon receipt of the required
amount, the Bank shall transfer all of its title and
ownership interests in the Policy to the Employee.
11. Annual Bonus. On or before the January 31 following each calendar
year this Agreement remains in effect, the Bank shall pay to the Employee a
bonus equal to the product of:
(a) the maximum marginal individual composite Federal,
Indiana and Marion County income tax rate (taking
into account the deductibility for Federal income tax
purposes of state and local income taxes, if then
allowable, and without regard to Section 1(g) of the
Internal Revenue Code of 1986, as amended, in effect
for the calendar year during which the amount
described in Paragraph 11(b) below is required to be
recognized as income by the Employee); and
(b) the amount required to be included in the Employee's
gross income for Federal income tax purposes in such
calendar year because of the Bank's payment of
premiums on the Policy.
12. Right of Employee to Assign Rights. Except for the right to the
annual bonus under Paragraph 11 of this Agreement, which right is not assignable
or otherwise transferable and notwithstanding any provision of this Agreement to
the contrary, the Employee shall have the right to absolutely and irrevocably
assign by gift all of his right, title, and interest in and to this Agreement
and to the Policy to an assignee. This right shall be exercisable by the
execution and delivery to the
-4-
<PAGE>
Bank of a written assignment. Upon receipt of such written assignment executed
by the Employee and duly accepted by the assignee, the Bank shall consent
thereto in writing, and shall thereafter treat the Employee's assignee as the
sole owner of all the Employee's right, title and interest in and to this
Agreement and in and to the Policy (other than the bonus provided in Paragraph
11 of this Agreement).
13. Change in Control. If any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934) subsequent
to the effective date of this Agreement becomes the beneficial owner, directly
or indirectly, of securities of the Bank representing fifty-one percent (51%) or
more of the combined voting power of the outstanding securities of the Bank, a
change of control for purposes of Paragraph 8(a)(iii) shall have occurred.
14. Named Fiduciary. The Bank is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives and provisions of this Agreement.
The named fiduciary shall make all determinations concerning rights to
benefits of the Employee under this Agreement. Any decision by the named
fiduciary denying a claim by the Employee for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Employee. Such
decision shall set forth the specific reasons for the denial. In addition, the
named fiduciary shall afford a reasonable opportunity to the Employee for a full
and fair review of the decision denying such claim.
15. Liability of Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy's death benefits to
the beneficiary or beneficiaries named in the
-5-
<PAGE>
Policy, subject to the terms and conditions of the Policy. In no event shall the
Insurer be considered a party to this Agreement, or to any modification or
amendment hereof. No provision in this Agreement shall be construed as
enlarging, changing, varying, or in any other way affecting the obligations of
the Insurer as expressly provided in the Policy, except insofar as the
provisions hereof are made parts of the Policy by the beneficiary designations
executed by the Bank and filed with the Insurer in connection herewith.
16. Notices. Any and all notices, elections, offers, acceptances and
demands permitted or required to be made under this Agreement shall be in
writing, signed by the party giving such notice, election, offer, acceptance or
demand and shall be delivered personally, or sent by registered or certified
mail, to the other party, at the address set forth under each party's signature
at the end of this Agreement, or at such other address as may be supplied in
writing. The date of personal delivery or the date of mailing, as the case may
be, shall be the date of such notice, election, offer, acceptance or demand.
17. No Waiver. The failure of any party to insist upon strict
performance of any covenant or any obligation hereunder shall not be a waiver of
such party's right to demand strict compliance therewith in the future, nor
shall the same be construed as a novation of this Agreement.
18. Integration. This Agreement constitutes the full and complete
agreement of the parties.
19. Captions. Titles or captions of articles and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
references, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
-6-
<PAGE>
20. Number and Gender. Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular
and the gender of any pronoun shall include all the genders.
21. Counterparts. This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an agreement, binding upon the
parties, and each party hereby covenants and agrees to execute all duplicates or
replacement counterparts of this Agreement as may be required.
22. Severability. In the event any provision, clause, sentence, phrase
or word hereof, or the application thereof in any circumstances, is held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder hereof, or of the application of
any such provision, sentence, clause, phrase or word in any other circumstances.
23. Amendment of Agreement. This Agreement may not be amended, altered,
or modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
24. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the Bank and its successors and assigns, and the Employee and
his successors and assigns.
25. Nonexclusivity of Remedies. No provision of this Agreement shall be
construed as limiting any remedies provided to either party by governing law.
26. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Indiana.
-7-
<PAGE>
IN WITNESS WHEREOF; The parties hereto have executed this Agreement, as
of the date first written above.
PEOPLES BANK & TRUST COMPANY
By:/s/ William E. McWhirter
-------------------------------------
Its:Chairman of the Board and
Chief Executive Officer
130 East Market Street
Indianapolis, Indiana 46204
/s/ Charles R. Farber
-------------------------------------
Charles R. Farber
6838 Balfour Court
Indianapolis, Indiana 46220
-8-
<PAGE>
EXHIBIT A
(Policy Description)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000796322
<NAME> Peoples Bank Corporation of Indianapolis
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 20,870
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 147,679
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 389,564
<ALLOWANCE> 5,119
<TOTAL-ASSETS> 570,824
<DEPOSITS> 506,968
<SHORT-TERM> 10,271
<LIABILITIES-OTHER> 6,190
<LONG-TERM> 0
<COMMON> 13,991
0
0
<OTHER-SE> 33,404
<TOTAL-LIABILITIES-AND-EQUITY> 570,824
<INTEREST-LOAN> 23,107
<INTEREST-INVEST> 4,969
<INTEREST-OTHER> 650
<INTEREST-TOTAL> 28,726
<INTEREST-DEPOSIT> 12,471
<INTEREST-EXPENSE> 12,859
<INTEREST-INCOME-NET> 15,867
<LOAN-LOSSES> 1,400
<SECURITIES-GAINS> (46)
<EXPENSE-OTHER> 12,016
<INCOME-PRETAX> 6,832
<INCOME-PRE-EXTRAORDINARY> 6,832
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,629
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
<YIELD-ACTUAL> 7.94
<LOANS-NON> 2,006
<LOANS-PAST> 17
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 8,725
<ALLOWANCE-OPEN> 3,900
<CHARGE-OFFS> 447
<RECOVERIES> 266
<ALLOWANCE-CLOSE> 5,119
<ALLOWANCE-DOMESTIC> 2,254
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,865
</TABLE>
