U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-SB
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
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(Name of Small Business Issuer in its charter)
INDIANA 35-1887991
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(State of incorporation) I.R.S. Employer
Identification Number
107 N. PENNSYLVANIA STREET, SUITE 700, INDIANAPOLIS, INDIANA 46204
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(Address of principal executive offices and zip code)
Issuer's telephone number: (317) 261-9000
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Securities to be registered under Section 12(b) of the Act: NONE
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Securities to be registered under Section 12(g) of the Act: COMMON STOCK
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(Title of class)
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PART 1 (Alternative 3)
ITEM 1. DESCRIPTION OF BUSINESS
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The Company. The National Bank of Indianapolis Corporation
(the "Company") was formed on January 29, 1993, for the purpose of
forming a banking institution in the Indianapolis, Indiana metropolitan
area and holding all of the shares of common stock of such banking
institution. The Company formed a national banking association entitled
"The National Bank of Indianapolis" (the "Bank") as a wholly-owned
subsidiary.
The Bank was officially chartered by the Office of the
Comptroller of the Currency ("OCC") on December 8, 1993 and opened for
business to the public on December 21, 1993. The Bank's deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank
currently conducts its business through its downtown headquarters
located at 107 North Pennsylvania Street in Indianapolis and one other
bank office located at 84th Street and Ditch Road in northwestern Marion
County. The Bank opened another bank office in the fourth quarter of
1995 at 82nd Street and Bash Road in northeastern Marion County.
The Bank provides a full range of deposit, credit, and money
management services to its targeted market, which is small to medium
size businesses, affluent executive and professional individuals, and
not-for-profit organizations. In February of 1994, the Bank received
full trust powers and offers full trust services.
Management has sought to position the Bank to capitalize on the
customer disruption, dissatisfaction, and turn-over which it believes
has resulted from the acquisition of the three largest commercial banks
located in Indianapolis by out-of-state holding companies. As such, The
National Bank of Indianapolis enjoys a unique position as the only
locally-owned and operated national bank in Marion County. On June 30,
1996, the Company had consolidated total assets of $167 million and
total deposits of $143 million.
The key ingredients in the initial growth of the Bank have been
an aggressive business plan, an experienced Board of Directors and
management team, a seasoned group of bank employees, and a very
attractive local economy. The basic strategy of the Bank continues to
emphasize the delivery of highly personalized services to the target
client base with an emphasis on quick response and financial expertise.
Business Plan Overview. The business plan of the Bank is based
on being a strong, locally owned bank providing superior service to a
small group of customers, which are primarily corporations with annual
sales under $30 million, executives, professionals, and not-for-profit
organizations. The Bank provides highly personalized banking services
with an emphasis on knowledge of the particular financial needs and
objectives of its clients and quick response to customer requests.
Because the management of the Bank is located in Indianapolis, all
credit and related decisions are made locally, thereby facilitating
prompt response. The Bank emphasizes both highly personalized service
at the customer's convenience and non-traditional delivery services that
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do not require customers to frequent the Bank. This personal contact
has become a trademark of the Bank and a key means of differentiating
the Bank from other financial service providers.
The Bank offers a broad range of deposit services typically
available from most banks and savings associations, including checking
accounts, NOW accounts, savings and other kinds of deposits of various
types (ranging from daily money market accounts to longer term
certificates of deposit). The Bank also offers a full range of credit
services, including commercial loans (such as lines of credit, term
loans, refinancings, etc.), personal lines of credit, direct installment
consumer loans, credit card loans, residential mortgage loans,
construction loans, and letters of credit. In addition, the Bank offers
full trust services. The Bank also has formed arrangements with outside
providers of tax, and financial planning services to better accommodate
its customers.
The Bank's growth in deposits is attributable in part to the
efforts of its staff who provide personal banking services to the Bank's
customers. In addition, the Bank has emphasized paying competitive
interest rates on deposit products. Finally, the Bank has offered
savings and certificate of deposit products with competitive rates to
larger depositors in an effort to minimize the operating costs of
obtaining these deposits. Lending strategies focus primarily on
commercial loans to small and medium size businesses as well as personal
loans to executives and professionals. In addition, residential
mortgage lending is focused predominantly on the executive and
professional marketplace. In the future, the Bank intends to develop a
secondary market for its residential mortgage loans. Consumer lending
is directed to executive and professional clients through residential
mortgages, credit cards, and personal lines of credit to include home
equity loans.
The Market. The Bank plans to derive a substantial proportion
of its business from the Indianapolis/Marion County, Indiana area.
Indianapolis has been ranked by a number of national publications as a
"top" Midwestern city. A 1991 study ranked Indianapolis as the 10th
best city in the United States in which to do business. Another 1991
study called Indianapolis the best Midwestern city for growing a
business. In addition, Indianapolis is the most centrally located city
in the United States to the top 100 markets. As such, the city is a
major distribution center where more highways converge than any other
city in the entire United States. The city is home to such large
employers as Eli Lilly and Company, Methodist Hospital, St. Vincent
Hospital, Community Hospital, Anthem, Thomson Consumer Electronics, and
Marsh Supermarkets.
Marion County is the largest county in the Indianapolis
Metropolitan Statistical Area ("MSA"), and comprises 65% of the
Indianapolis MSA population. According to the 1990 census, Marion
County had a total population of 797,159. This represents an increase
of almost 32,000 people or 4.2% over the 1980 census. The population of
Marion County is projected to grow by another 42,071 to 839,230, or
approximately 5.3%, by the year 2000.
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Competition. The Bank's service area is highly competitive.
There are currently approximately 65 financial institutions operating in
the Marion County marketplace. In addition to competition from
commercial banks, significant competition also comes from savings and
loans associations, credit unions, finance companies, insurance
companies, mortgage companies, securities and brokerage firms, money
market mutual funds, loan production offices, and other providers of
financial services in the area. The Bank competes in this marketplace
primarily on the basis of highly personalized service, responsive
decision making, and competitive pricing.
Employees. The Bank has 61 employees, of which 58 are
full-time employees. The Bank has employed persons with substantial
experience in the Indianapolis banking market. The average experience
level for all Bank employees is in excess of 9 years.
Lending Activity. The Bank's lending strategy emphasizes the
development of a high quality, well- diversified loan portfolio. The
Bank's principal lending categories are commercial, residential
mortgage, private banking/personal, and home equity. Commercial loans
include loans for working capital, machinery and equipment purchases,
premises and equipment acquisitions and other corporate needs.
Residential mortgage lending includes loans on first mortgage
residential properties. Private banking loans include secured and
unsecured personal lines of credit as well as home equity loans.
Commercial loans typically entail a thorough analysis of the
borrower, its industry, current and projected economic conditions and
other factors. Credit analysis involves collateral, the type of loan,
loan maturity, terms and conditions, and various loan to value ratios as
they relate to loan policy. The Bank typically requires commercial
borrowers to have annual financial statements prepared by independent
accountants and often requires such financial statements to be audited
or reviewed by accountants. The Bank requires appraisals or evaluations
in connection with loans secured by real estate. Such appraisals or
evaluations are usually obtained prior to the time funds are advanced.
The Bank also often requires personal guarantees from principals
involved with closely-held corporate borrowers.
The Bank requires loan applications and personal financial
statements from its personal borrowers on loans that the Bank
originates. Loan officers complete a debt to income analysis that
should meet established standards of lending policy.
The Bank maintains a comprehensive loan policy that establishes
guidelines with respect to all categories of lending. In addition, loan
policy sets forth lending authority for each loan officer. The Loan
Committee of the Bank reviews all loans made under $200,000. Any loan
in excess of $200,000 must receive the approval of the Loan Committee
prior to the Bank making such loan. The Board of Directors does not
generally approve loans unless they are above $1,800,000 or are loans to
directors or executive officers. All loans are assigned a numerical
rating based on creditworthiness and are monitored for improvement or
deterioration.
Loans are made primarily in the Bank's designated market area.
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Bank Holding Company Regulation. The Company is registered as
a bank holding company and is subject to the regulations of the Board of
Governors of the Federal Reserve System ("Federal Reserve") under the
Bank Holding Company Act of 1956, as amended ("BHCA"). Bank holding
companies are required to file periodic reports with and are subject to
periodic examination by the Federal Reserve. The Federal Reserve has
the authority to issue cease-and-desist orders against a bank holding
company and nonbank subsidiaries if it determines that activities of
such entities represent an unsafe and unsound practice or a violation of
law.
The Company is prohibited by the BHCA from acquiring direct or
indirect control of more than 5% of the outstanding shares of any class
of voting stock or substantially all of the assets of any bank or
merging or consolidating with another bank holding company without prior
approval of the Federal Reserve. In addition, the Company may not
acquire direct or indirect control of a savings association without the
prior approval of the Federal Reserve and the Office of Thrift
Supervision. Additionally, the Company is prohibited by the BHCA from
engaging in or from acquiring ownership or control of more than 5% of
the outstanding shares of any class of voting stock of any company
engaged in a nonbanking business unless such business is determined by
the Federal Reserve to be so closely related to banking as to be a
proper incident thereto. The BHCA does not place territorial
restrictions on the activities of such nonbanking-related activities.
The Federal Reserve has issued regulations under the BHCA
requiring a bank holding company to serve as a source of financial and
managerial strength to its subsidiary banks. It is the policy of the
Federal Reserve that, pursuant to this requirement, a bank holding
company should stand ready to use its resources to provide adequate
capital funds to its subsidiary banks during periods of financial stress
or adversity. Additionally, under the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), a bank holding company
is required to guarantee the compliance of any insured depository
institution subsidiary that may become "undercapitalized" (as defined in
the statute) with the terms of any capital restoration plan filed by
such subsidiary with its appropriate federal banking agency, up to the
lesser of (i) an amount equal to 5% of the institution's total assets at
the time the institution became undercapitalized, or (ii) the amount
that is necessary (or would have been necessary) to bring the
institution into compliance with all applicable capital standards as of
the time the institution fails to comply with such capital restoration
plan. As a result of these policies, the Company may be required to
commit resources to its subsidiary bank in circumstances where it might
not otherwise do so.
A bank holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with the extension
of credit or the provision of any property or service. With certain
exceptions, a bank holding company, a bank, and a subsidiary or
affiliate thereof, may not extend credit, lease or sell property or
furnish any services or fix or vary the consideration for the foregoing
on the condition that (i) the customer must obtain or provide some
additional credit, property or services from, or to, any of them, or
(ii) the customer may not obtain some other credit, property or service
from a competitor, except to the extent reasonable conditions are
imposed to assure the soundness of credit extended.
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Capital Adequacy Guidelines for Bank Holding Companies. The
Federal Reserve, as the regulatory authority for bank holding companies,
has adopted capital adequacy guidelines for bank holding companies. Bank
holding companies with assets in excess of $150 million must comply with
the Federal Reserve's risk- based capital guidelines which require a
minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities such as standby letters of credit)
of 8%. At least half of the total required capital must be "Tier 1
capital," consisting principally of common stockholders' equity,
noncumulative perpetual preferred stock, a limited amount of cumulative
perpetual preferred stock and minority interest in the equity accounts
of consolidated subsidiaries, less certain goodwill items. The
remainder ("Tier 2 capital") may consist of a limited amount of
subordinated debt and intermediate-term preferred stock, certain hybrid
capital instruments and other debt securities, cumulative perpetual
preferred stock, and a limited amount of the general loan loss
allowance. In addition to the risk-based capital guidelines, the
Federal Reserve has adopted a Tier 1 (leverage) capital ratio under
which the bank holding company must maintain a minimum level of Tier 1
capital to average total consolidated assets of 3% in the case of bank
holding companies which have the highest regulatory examination ratings
and are not contemplating significant growth or expansion. All other
bank holding companies are expected to maintain a ratio of at least 1%
to 2% above the stated minimum.
Certain regulatory capital ratios for the Company as of June
30, 1996 are shown below:
Tier 1 Capital to Risk-Weighted Assets 14.18%
Total Risk Based Capital to Risk-Weighted Assets 15.33%
Tier 1 Leverage Ratio 9.23%
Bank Regulation. The Bank is organized under the laws of the
United States of America and is subject to the supervision of the Office
of the Comptroller of the Currency ("OCC"), whose examiners conduct
periodic examinations of national banks. The deposits of the Bank are
insured by the Bank Insurance Fund ("BIF") administered by the FDIC and
are subject to the FDIC's rules and regulations respecting the insurance
of deposits. See "--Deposit Insurance."
Both federal and state law extensively regulate various aspects
of the banking business such as reserve requirements, truth-in-lending
and truth-in-savings disclosure, equal credit opportunity, fair credit
reporting, trading in securities and other aspects of banking
operations. Current federal law also requires banks, among other things
to make deposited funds available within specified time periods.
Under federal and Indiana law, the Bank may establish an
additional banking location anywhere in Indiana. See -- "Recent
Legislation."
Dividend Limitations. Under Federal Reserve supervisory
policy, a bank holding company generally should not maintain its
existing rate of cash dividends on common shares unless (i) the
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organization's net income available to common shareholders over the past
year has been sufficient to fully fund the dividends, and (ii) the
prospective rate of earnings retention appears consistent with the
organization's capital needs, asset quality, and overall financial
condition. The FDIC also has authority under the Financial Institutions
Supervisory Act to prohibit a bank from paying dividends if, in its
opinion, the payment of dividends would constitute an unsafe or unsound
practice in light of the financial condition of the bank. The Company's
Board of Directors has not yet declared any dividends and does not
anticipate that it will do so in the immediate future. In addition,
there can be no assurance as to when, if ever, the Company will declare
and pay any cash dividends.
Under federal law, the Bank must comply with various
restrictions applicable to its ability to pay dividends. In addition,
the Bank is subject to certain restrictions imposed by the Federal
Reserve on extensions of credit to the Company, on investments in the
stock or other securities of the Company, and in taking such stock or
securities as collateral for loans.
The most stringent capital requirement affecting the Bank,
however, are those established by the prompt corrective action
provisions of FDICIA, which are discussed below. At June 30, 1996, the
Bank's total risk-based capital, Tier 1 risk-based capital and leverage
capital exceeded the amounts required to be designated "well
capitalized."
Lending Limits. Under federal law, the total loans and
extension of credit by a national bank to a borrower outstanding at one
time and not fully secured may not exceed 15% of such bank's capital and
unimpaired surplus. An additional amount up to 10% of the bank's
capital and unimpaired surplus may be loaned to the same borrower if
such loan is fully secured by readily marketable collateral having a
market value, as determined by reliable and continuously available price
quotations, at least equal to the amount of such additional loans
outstanding.
Affiliates. The Bank is subject to Sections 22(h), 23A and 23B
of the Federal Reserve Act, which restrict financial transactions
between banks and affiliated companies. The statute limits credit
transactions between a bank and its executive officers and its
affiliates, prescribes terms and conditions for bank affiliate
transactions deemed to be consistent with safe and sound banking
practices, and restricts the types of collateral security permitted in
connection with a bank's extension of credit to an affiliate.
FDICIA. FDICIA requires, among other things, federal bank
regulatory authorities to take "prompt corrective action" with respect
to banks which do not meet minimum capital requirements. For these
purposes, FDICIA establishes five capital tiers: well capitalized,
adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized.
The FDIC has adopted regulations to implement the prompt
corrective action provisions of FDICIA, effective as of December 19,
1992. Among other things, the regulations define the relevant capital
measures for the five capital categories. An institution is deemed to
be "well capitalized" if it has a total risk- based capital ratio of 10%
or greater, a Tier 1 risk-based capital ratio of 6% or greater, and a
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leverage ratio of 5% or greater, and is not subject to a regulatory
order, agreement or directive to meet and maintain a specific capital
level for any capital measure. An institution is deemed to be
"adequately capitalized" if it has a total risk-based capital ratio of
8% or greater, a Tier 1 risk-based capital ratio of 4% or greater, and
generally a leverage ratio 4% or greater. An institution is deemed to
be "undercapitalized" if it has a total risk-based capital ratio of less
than 8%, a Tier 1 risk-based capital ratio of less than 4%, or generally
a leverage ratio of less than 4%. An institution is deemed to be
"significantly undercapitalized" if it has a total risk-based capital
ratio of less than 6%, a Tier 1 risk-based capital ratio of less than
3%, or a leverage ratio of less than 3%. An institution is deemed to be
"critically undercapitalized" if it has a ratio of tangible equity (as
defined in the regulations) to total assets that is equal to or less
than 2%.
"Undercapitalized" banks are subject to growth limitations and
are required to submit a capital restoration plan. A bank's compliance
with such plan is required to be guaranteed by any company that controls
the undercapitalized institution as described above. If an
"undercapitalized" bank fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized. "Significantly
undercapitalized" banks are subject to one or more of a number of
requirements and restrictions, including an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements
to reduce total assets and case receipt of deposits from correspondent
banks, and restrictions on compensation of executive officers.
"Critically undercapitalized" institutions may not, beginning 60 days
after becoming "critically undercapitalized", make any payment of
principal or interest on certain subordinated debt or extend credit for
a highly leveraged transaction or enter into any transaction outside the
ordinary course of business. In addition, "critically undercapitalized"
institutions are subject to appointment of a receiver or conservator.
The federal banking agencies have established guidelines,
effective August 9, 1995, which prescribe standards for depository
institutions relating to internal controls, information systems,
internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, and management compensation. The
agencies may require an institution which fails to meet the standards
set forth in the guidelines to submit a compliance plan. The agencies
are also currently proposing standards for asset quality and earnings.
The Company cannot predict what effect such guidelines will have on the
Bank.
Deposit Insurance. The Bank's deposits are insured up to
$100,000 per insured account by the BIF. As an institution whose
deposits are insured by BIF, the Bank is currently required to pay
deposit insurance premiums to BIF in the amount of $500 semi-annually.
The Bank's deposit insurance assessments may increase depending upon the
risk category and subcategory, if any, to which the Bank is assigned by
the FDIC. Any increase in insurance assessments could have an adverse
effect on the Bank's earnings.
Bank Capital Requirements. The OCC has adopted risk-based
capital ratio guidelines to which the Bank is subject. The guidelines
establish a systematic analytical framework that makes regulatory
capital requirements more sensitive to differences in risk profiles
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among banking organizations. Risk-based capital ratios are determined
by allocating assets and specified off-balance sheet commitments to four
risk weighted categories, with higher levels of capital being required
for the categories perceived as representing greater risk.
These guidelines divide a bank's capital into two tiers. The
first tier (Tier 1) includes common equity, certain non-cumulative
perpetual preferred stock (excluding auction rate issues) and minority
interests in equity accounts of consolidated subsidiaries, less goodwill
and certain other intangible assets (except mortgage servicing rights
and purchased credit card relationships, subject to certain
limitations). Supplementary (Tier 2) capital includes, among other
items, cumulative perpetual and long-term limited-life preferred stock,
mandatory convertible securities, certain hybrid capital instruments,
term subordinated debt and the allowance for loan and lease losses,
subject to certain limitations, less required deductions. Banks are
required to maintain a total risk-based capital ratio of 8%, of which 4%
must be Tier 1 capital. The OCC may, however, set higher capital
requirements when a bank's particular circumstances warrant. Banks
experiencing or anticipating significant growth are expected to maintain
capital ratios, including tangible capital positions, well above the
minimum levels.
In addition, the OCC established guidelines prescribing a
minimum Tier 1 leverage ratio (Tier 1 capital to adjusted total assets
as specified in the guidelines). These guidelines provide for a minimum
Tier 1 leverage ratio of 3% for banks that meet certain specified
criteria, including that they have the highest regulatory rating and are
not experiencing or anticipating significant growth. All other banks
are required to maintain a Tier 1 leverage ratio of 3% plus an
additional cushion of at least 100 to 200 basis points.
Certain regulatory capital ratios under the OCC's risk-based
capital guidelines for the Bank at June 30, 1996 are shown below:
Tier 1 Capital to Risk-Weighted Assets....................... 14.18%
Total Risk-Based Capital to Risk-Weighted Assets............. 15.33%
Tier 1 Leverage Ratio........................................ 9.23%
Recent Legislation. President Clinton signed into law the
Riegle Community Development and Regulatory Improvement Act of 1994
("Riegle Act"). The Riegle Act contains seven titles pertaining to
community development and home ownership protection, small business
capital formation, paperwork reduction and regulatory improvement, money
laundering and flood insurance. The Riegle Act grants the authority to
several agencies to promulgate regulations under the Riegle Act. No
regulations have yet been promulgated. The Company cannot predict with
certainty the impact of the Riegle Act on the banking industry.
The Riegle-Neal Insurance Banking and Branching Efficiency Act
of 1994 allows for interstate banking and interstate branching without
regard to whether such activity is permissible under state law.
Beginning on September 29, 1995, bank holding companies may acquire
banks anywhere in the United States subject to certain state
restrictions. Beginning on June 1, 1997, an insured bank may merge with
an insured bank in another state without regard to whether such merger
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is prohibited by state law. Additionally, an out-of-state bank may
acquire the branches of an insured bank in another state without
acquiring the entire bank; provided, however, that the law of the state
where the branch is located permits such an acquisition. States may
permit interstate branching earlier than June 1, 1997, whether both
states involved with the bank merger expressly permit it by statute.
Further, bank holding companies may merge existing bank subsidiaries
located in different states into one bank.
Beginning on September 29, 1995, an insured bank subsidiary may
act as an agent for an affiliated bank or thrift in offering limited
banking services (receive deposits, renew time deposits, close loans,
service loans and receive payments on loan obligations) both within the
same state and across state lines.
The Company cannot predict with certainty the impact of this
legislation on the banking industry.
Additional Matters. In addition to the matters discussed
above, the Company and the Bank are subject to additional regulation of
their activities, including a variety of consumer protection regulations
affecting their lending, deposit and collection activities and
regulations affecting secondary mortgage market activities.
The earnings of financial institutions, including the Company
and the Bank, are also affected by general economic conditions and
prevailing interest rates, both domestic and foreign and by the monetary
and fiscal policies of the U.S. Government and its various agencies,
particularly the Federal Reserve.
Additional legislation and administrative actions affecting the
banking industry may be considered by the United States Congress, the
Indiana General Assembly and various regulatory agencies, including
those referred to above. It cannot be predicted with certainty whether
such legislation of administrative action will be enacted or the extent
to which the banking industry in general or the Company and the Bank in
particular would be affected thereby.
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS.
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THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY RELATES TO THE
YEARS ENDED DECEMBER 31, 1995 AND 1994 AND SHOULD BE READ IN CONJUNCTION
WITH THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE HEREIN.
RESULTS OF OPERATIONS
Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994
The Company's results of operations depends primarily on the level of
its net interest income, its non- interest income and its operating
expenses. Net interest income depends on the volume of and rates
associated with interest earning assets and interest bearing liabilities
which results in the net interest spread. Net loss decreased $423,468
or 32.8% to $866,686 for the year ended December 31, 1995 from
$1,290,154 for the year ended December 31, 1994. This decrease is
primarily due to the growth of the Bank allowing for more interest
earning assets and net interest income compared to the same period
during 1994, thereby offsetting more of the operating expenses.
Net Interest Income
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Net interest income increased $1,595,011 or 129.4% to $2,827,172 for the
year ended December 31, 1995, from $1,232,161 for the year ended
December 31, 1994. Total interest income increased $4,209,170 for the
year ended December 31, 1995 to $6,252,625 from $2,043,455 for the year
ended December 31, 1994. This increase is primarily a result of average
total loans for the year ended December 31, 1995 being approximately
$50,600,000 compared to average total loans of approximately $13,300,000
for the year ended December 31, 1994. The loan portfolio produces the
highest yield of all earning assets. Investment portfolio income
increased $478,164 or 68.3% to $1,177,810 for the year ended December
31, 1995, as compared to $699,646 for the year ended December 31, 1994.
This increase is primarily a result of the increase in the average
investment securities portfolio from approximately $13,800,000 for the
year ended December 31, 1994, to approximately $18,200,000 for the year
ended December 31, 1995. Interest on federal funds sold also increased
due to an increase in average federal funds sold of approximately
$8,700,000 for the year ended December 31, 1995 over the same period the
previous year.
Total interest expense increased $2,614,159 or 322.2% to $3,425,453 for
the year ended December 31, 1995, from $811,294 for the year ended
December 31, 1994. This increase is due to an increase in interest
bearing deposits. Total interest bearing liabilities averaged
approximately $63,200,000 for the year ended December 31, 1995 as
compared to approximately $20,000,000 for the year ended December 31,
1994. The average cost of interest bearing liabilities at December 31,
1995, was approximately 5.42% as compared to average cost of interest
bearing liabilities of approximately 4.07% at December 31, 1994.
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The following table details average balances, interest income/expense
and average rates/yields for the Bank's earning assets and interest
bearing liabilities for the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
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Interest Average Interest Average
Average Income/ Rate/ Average Income/ Rate/
Balance Expense Yield Balance Expense Yield
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
Assets:
Federal Funds $15,240 $ 976 6.40% $ 6,560 $ 318 4.84%
Investments 18,233 1,178 6.46 13,779 700 5.08
Loans (gross) 50,663 4,098 8.09 13,279 1,026 7.73
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Total earning assets 84,136 $ 6,252 7.43% 33,618 $ 2,044 6.08%
Non-earning assets 4,433 3,334
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Total assets $88,569 $36,952
======= =======
Liabilities:
Interest bearing DDA $ 6,449 $ 188 2.92% $ 2,611 $ 65 2.49%
Savings 28,447 1,461 5.14 10,785 416 3.86
CD's under $100,000 14,297 919 6.43 3,394 179 5.27
CD's over $100,000 9,943 609 6.12 2,867 137 4.78
Individual
Retirement Accounts 1,661 107 6.44 281 14 4.98
Repurchase Agreements 2,383 141 5.91 16 1 6.25
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Total Interest
-bearing Liabilities $63,180 $ 3,425 5.42% $19,954 $ 812 4.07%
Non-Interest-bearing
Liabilities 13,580 4,971
Other Liabilities 344 161
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Total Liabilities 77,104 25,086
Equity 11,465 11,866
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Total Liabilities & Equity $88,569 $36,952
======= =======
Recap:
Interest Income $ 6,252 7.43% $ 2,044 6.08%
Interest Expense 3,425 5.42% 812 4.07%
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Net Interest
Income/ Spread $ 2,827 2.01% $ 1,232 2.01%
===================== ======================
Contribution of
Non-Interest-bearing
funds 1.35 1.55
Net Interest Margin 3.36% 3.56%
======= =======
</TABLE>
Average balances computed using month end actual balances
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The following table sets forth an analysis of volume and rate changes in
interest income and interest expense of the Company's average earning
assets and average interest-bearing liabilities. The table
distinguishes between the changes related to average outstanding
balances of assets and liabilities (changes in volume holding the
initial average interest rate constant) and the changes related to
average interest rates (changes in average rate holding the initial
average outstanding balance constant). The change in interest due to
both volume and rate has been allocated to volume and rate changes in
proportion to the relationship of the absolute dollar amounts of the
change in each.
Year ended December 31, 1995 compared to year ended December 31, 1994
<TABLE>
<CAPTION>
Increase in Net Interest Income
-------------------------------
Net Due to Due to
Change Rate Volume
<S> <C> <C> <C>
-----------------------------------
Interest earning assets:
Federal funds sold $ 624 $ 122 $ 502
Investment securities 478 218 260
Loans 3,107 51 3,056
------------------------------------
Total 4,209 391 3,818
Interest bearing liabilities:
Demand deposits 131 14 117
Savings deposits 1,004 165 839
Certificates of deposit under $100,000 750 48 702
Certificates of deposit over $100,000 459 46 413
Individual Retirement Accounts 89 5 84
Repurchase agreements 181 - 181
------------------------------------
Total 2,614 278 2,336
------------------------------------
Net Change in Net Interest Income $ 1,595 $ 113 $ 1,482
====================================
</TABLE>
NOTE: Due to Rate Increase was calculated by taking the change in
the rate times prior year average balance.
Due to Volume Increase was calculated by taking the change in
average balance times the prior year rate.
13
<PAGE>
Provision for Loan Losses
- -------------------------
The amount charged to the provision for loan losses by the Bank is based
on management's evaluation as to the amounts required to maintain an
allowance adequate to provide for potential losses inherent in the loan
portfolio. The level of this allowance is dependent upon the total
amount of past due and non- performing loans, general economic
conditions and management's assessment of potential losses based upon
internal credit evaluations of loan portfolios and particular loans.
Loans are entirely to borrowers in central Indiana.
During the year ended December 31, 1995, $600,000 was charged to the
provision for loan losses compared to $360,000 for the year ended
December 31, 1994. At December 31, 1995, the allowance was $985,000 or
1.40% of total loans. This compares to an allowance of $385,000 or
1.19% as of December 31, 1994. There were no charge-offs for the years
ended December 31, 1995 and 1994. There were no loans past due over 30
days at December 31, 1995.
Other Operating Income
- ----------------------
Other operating income for the year ended December 31, 1995, increased
$292,146 or 193.7% to $443,002 from $150,856 for the year ended December
31, 1994. The increase is primarily due to an increase in trust fees
and commissions of $164,899 or 205.1% from $80,403 for the year ended
December 31, 1994 to $245,302 for the year ended December 31, 1995. The
increase in trust income is attributable to the increase in total assets
under trust management of approximately $40,000,000 from approximately
$60,000,000 at December 31, 1994 to approximately $100,000,000 at
December 31, 1995.
Other Operating Expenses
- ------------------------
Other operating expenses for the year ended December 31, 1995 increased
$1,223,689 or 52.9% to $3,536,860 from $2,313,171 for the year ended
December 31, 1994. Salaries, wages and employee benefits increased
$689,648 or 59.8% to $1,843,872 for the year ended December 31, 1995
from $1,154,224 for the year ended December 31, 1994. This increase is
primarily due to the increased in the number of employees from 28 full
time equivalents at December 31, 1994 to 47 full time equivalents at
December 31, 1995 to staff the expanded trust department and two new
branch locations. Net occupancy expense increased $112,923 for the year
ended December 31, 1995 over the same period the previous year primarily
due to the additional expense for the new branch locations. Furniture
and equipment expense increased $113,745 for the year ended December 31,
1995 over the same period the previous year primarily due to the
depreciation for the Ditch Road branch which opened in February 1995.
Data processing expenses increased $38,915 for the year ended December
31, 1995 over the same period the previous year primarily due to
increased service bureau fees relating to increased transaction activity
by the Bank and trust department.
14
<PAGE>
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY RELATES TO THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1995 AND SHOULD BE READ IN CONJUNCTION
WITH THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE HEREIN. THE UNAUDITED RESULTS FOR THE SIX MONTHS
ENDED JUNE 30, 1996 ARE NOT NECESSARILY INDICATIVE OF RESULTS TO BE
EXPECTED FOR THE ENTIRE FISCAL YEAR.
RESULTS OF OPERATIONS
Six months Ended June 30, 1996 Compared to the Six months Ended June 30, 1995
The Company's results of operations depends primarily on the level of
its net interest income, its non-interest income and its operating
expenses. Net loss decreased $351,135 or 62.8% to $208,121 for the six
months ended June 30, 1996 from $559,256 for the six months ended June
30, 1995. This decrease is primarily due to the growth of the Bank
allowing for more interest earning assets and net interest income
compared to the same period during 1995, thereby offsetting more of the
operating expenses.
Net Interest Income
- -------------------
Net interest income increased $898,681 or 75.6% to $2,088,685 for the
six months ended June 30, 1996, from $1,190,004 for the six months ended
June 30, 1995. This increase was due to an increase in interest income
of $2,163,257 as compared to only a $1,264,576 increase in interest
expense.
Total interest income increased $2,163,257 for the six months ended
June 30, 1996 to $4,693,581 from $2,530,324 for the six months ended
June 30, 1995. This increase is primarily a result of average total
loans for the six months ended June 30, 1996 being approximately
$80,000,000 compared to average total loans of approximately $40,000,000
for the six months ended June 30, 1995. The loan portfolio produces the
highest yield of all earning assets. Investment portfolio income
increased $341,048 or 71.0% to $821,248 for the period ended June 30,
1996, as compared to $480,200 for the period ended June 30, 1995. This
increase is primarily a result of the increase in the average
investment securities portfolio from approximately $15,000,000 for the
period ended June 30, 1995, to approximately $28,000,000 for the period
ended June 30, 1996. Interest on federal funds sold also increased due
to an increase in average federal funds sold of approximately $9,000,000
for the period ended June 30, 1996 over the same period the previous
year.
Total interest expense increased $1,264,576 or 94.3% to $2,604,896 for
the six months ended June 30, 1996, from $1,340,320 for the six months
ended June 30, 1996. This increase is due to an increase in interest
bearing deposits. Total interest bearing deposits averaged
approximately $100,000,000 for the six months ended June 30, 1996 as
compared to approximately $50,000,000 for the six months ended June 30,
1995. The average cost of interest bearing liabilities for the six
months ended June 30, 1996, was approximately 5.6% as compared to
average cost of interest bearing liabilities of approximately 4.9% for
the six months ended June 30, 1995.
15
<PAGE>
Provision for Loan Losses
- -------------------------
The amount charged to the provision for loan losses by the Bank is based
on management's evaluation as to the amounts required to maintain an
allowance adequate to provide for potential losses inherent in the loan
portfolio. The level of this allowance is dependent upon the total
amount of past due and non-performing loans, general economic
conditions and management's assessment of potential losses based upon
internal credit evaluations of loan portfolios and particular loans.
Loans are entirely to borrowers in central Indiana.
During the six months ended June 30, 1996, $198,000 was charged to the
provision for loan losses compared to $300,000 for the six months ended
June 30, 1995. At June 30, 1996, the allowance was $1,183,000 or 1.32%
of total loans. This compares to an allowance of $685,000 or 1.46% as
of June 30, 1995. There were no charge-offs for the six month periods
ended June 30, 1996 and 1995. There were no loans past due over 30 days
at June 30, 1996 or 1995.
Other Operating Income
- ----------------------
Other operating income for the six months ended June 30, 1996, increased
$287,049 or 170.3% to $455,614 from $168,565 for the six months ended
June 30, 1995. The increase is primarily due to an increase in trust
fees and commissions of $195,541 or 218.9% from $89,456 for the six
months ended June 30, 1995 to $284,997 for the six months ended June 30,
1996. The increase in trust income is attributable to the increase in
average total assets under trust management of approximately $98,600,000
for the six months ended June 30, 1996 over the same period the previous
year.
Other Operating Expenses
- ------------------------
Other operating expenses for the six months ended June 30, 1996
increased $936,595 or 57.9% to $2,554,420 from $1,617,825 for the six
months ended June 30, 1995. Salaries, wages and employee benefits
increased $525,700 or 65.7% to $1,326,242 for the period ended June 30,
1996 from $800,542 for the period ended June 30, 1995. This increase is
primarily due to the increased in the number of employees from 39 full
time equivalents at June 30, 1995 to 58 full time equivalents at June
30, 1996 to staff the expanded trust department and two new branch
locations. Net occupancy expense increased $83,279 for the period ended
June 30, 1996 over the same period the previous year primarily due to
the additional rent expense for the trust department expansion.
Furniture and equipment expense increased $102,553 for the period ended
June 30, 1996 over the same period the previous year primarily due to
the increased depreciation for the Bash Road branch. Data processing
expenses increased $68,873 for the period ended June 30, 1996 over the
same period the previous year primarily due to increased service bureau
fees relating to increased transaction activity by the Bank and trust
department.
16
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Company must maintain an adequate liquidity position in order to
respond to the short-term demand for funds caused by withdrawals from
deposit accounts, extensions of credit and for the payment of operating
expenses. Maintaining this position of adequate liquidity is
accomplished through the management of a combination of liquid assets;
those which can be converted into cash and access to additional sources
of funds. Primary liquid assets of the Company are cash and due from
banks, federal funds sold, investments held as "available for sale" and
maturing loans. Federal funds sold represent the Company's primary
source of immediate liquidity and were maintained at a level adequate to
meet immediate needs. Federal funds averaged approximately $25,100,000
and $12,600,000 for the six months ended June 30, 1996 and 1995,
respectively. Maturities in the Company's loan and investment
portfolios are monitored regularly to avoid matching short-term deposits
with long-term loans and investments. Other assets and liabilities are
also monitored to provide the proper balance between liquidity, safety,
and profitability. This monitoring process must be continuous due to
the constant flow of cash which is inherent in a financial institution.
The Company actively manages its interest rate sensitive assets and
liabilities to reduce the impact of interest rate fluctuations. At June
30, 1996, the Company's rate sensitive liabilities exceeded rate
sensitive assets due within one year by $9,772,000.
As part of managing liquidity, the Company monitors its loan to deposit
ratio on a daily basis. At June 30, 1996 the ratio was 69.3 percent
which is within the Company's acceptable range.
The following table shows the composition of the Bank's loan portfolio
as of the dates indicated (in 000's):
<TABLE>
<CAPTION>
June 30 December 31
------- -----------
1996 1995 1994
---- ---- ----
% of % of % of
Amount Total Amount Total Amount Total
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------
TYPES OF LOANS
Commercial $40,496 45.04% $34,881 49.45% $18,581 57.30%
Construction 1,227 1.37 2,375 3.37 574 1.77
Commercial Mortgage 3,719 4.14 3,403 4.82 400 1.23
Residential Mortgage 43,021 47.85 28,403 40.27 11,966 36.90
Installment 763 .85 679 .96 382 1.18
Credit Card 559 .62 541 .77 355 1.09
Other 126 .13 256 .36 169 .53
-----------------------------------------------------------------------
Total-Gross 89,911 100.00% 70,538 100.00% 32,427 100.00%
======= ======= =======
Allowance (1,183) (985) (385)
-------- -------- --------
Total-Net $88,728 $69,553 $32,042
======== ======== ========
</TABLE>
17
<PAGE>
The following table shows the composition of the Bank's deposit
portfolio as of the dates indicated (in 000's):
<TABLE>
<CAPTION>
June 30 December 31
1996 1995 1994
------------------------------------------------------------------------------
% of % of % of
Amount Total Amount Total Amount Total
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
TYPES
OF DEPOSITS
Demand Deposits 25,028 27.28% $17,144 26.55% $ 9,636 29.48%
MMDA/Savings 65,584 72.51 47,328 73.30 22,913 70.11
Individual Retirement
Accounts 188 .21 95 .15 133 .41
------------------------------------------------------------------------------
Total Demand
Deposits 90,800 100.00% 64,567 100.00% 32,682 100.00%
======= ======= =======
Certificates of Deposit
Under $100,000 27,631 52.99 17,333 51.37 8,244 59.11
Over $100,000 21,898 42.00 14,570 43.18 5,087 36.47
Individual Retirement
Accounts 2,611 5.01 1,839 5.45 617 4.42
------------------------------------------------------------------------------
Total Certificates of
Deposit 52,140 100.00% 33,742 100.00% 13,948 100.00%
-------- ======= ------- ======= ------- =======
Total Deposits $142,940 $98,309 $46,630
======== ======= =======
</TABLE>
The Company experienced an increase in cash and cash equivalents, its
primary source of liquidity, of $4,840,388 during 1995. The primary
financing activity for 1995 was deposit growth which provided net cash
of $51,678,655. Lending used $38,110,858 and increasing federal funds
sold used $6,425,000. The Company's management believes its liquidity
sources are adequate to meet its operating needs and does not know of
any trends, events or uncertainties that may result in a significant
adverse effect on the Company's liquidity position.
18
<PAGE>
The following table illustrates the projected maturities and the
repricing mechanisms of the major asset/liabilities categories of the
Company as of June 30, 1996, based on certain assumptions. No
prepayment rate assumptions have been made for the loan portfolio.
Maturity and repricing dates for investments have been projected by
applying the assumptions set forth below to contractual maturity and
repricing dates.
<TABLE>
<CAPTION>
Non-Interest
Earning/
0-180 Days 181-365 Days 1-2 Years 2-3 Years 3-5 Years 5+ Years Bearing Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Interest-Earning Assets:
Fed Funds $34,650,00 - - - - - - $ 34,650,000
Investment Securities 13,268,067 6,186,899 5,310,712 2,791,228 1,149,513 1,248,321 - 29,954,740
Loans 37,369,996 5,123,071 5,398,248 7,924,976 10,672,860 23,342,729 - 89,831,880
----------------------------------------------------------------------------------------------------------
Total Interest-Earning
Assets 85,288,063 11,309,970 10,708,960 10,716,204 11,822,373 24,591,050 - 154,436,620
Non-Interest Earning
Assets - - - - - - 12,456,072 12,456,072
----------------------------------------------------------------------------------------------------------
Total Assets $166,892,692
==========================================================================================================
Interest-Bearing
Liabilities:
Demand Deposits 256,331 - - - - 24,794,221 - 25,050,552
Interest-Bearing
Demand 12,607,144 - - - - - - 12,607,144
Savings Deposits - - - - - 632,382 - 632,383
Money Market Accounts 53,308,392 - - - - - - 53,308,392
Certificate of
Deposits 7,945,369 8,211,110 6,590,461 5,418,594 1,716,984 429,018 - 30,311,536
Jumbo CD's 10,219,337 6,222,182 2,555,212 2,065,183 816,309 212,879 - 22,091,102
Repurchase Agreements 7,599,797 - - - - - - 7,599,797
----------------------------------------------------------------------------------------------------------
Total Interest-Bearing
Liabilities 91,936,370 14,433,292 9,145,673 7,483,777 2,533,293 26,068,500 - 151,600,905
Non-Interest Bearing
Liabilities - - - - - - 679,318 679,318
Equity - - - - - - 14,612,469 14,612,469
----------------------------------------------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity $166,892,692
==========================================================================================================
19
<PAGE>
Non-Interest
Earning/
0-180 Days 181-365 Days 1-2 Years 2-3 Years 3-5 Years 5+ Years Bearing Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Interest Sensitivity
Gap per Period (6,648,307) (3,123,322) 1,563,287 3,232,427 9,289,080 (1,477,450) (2,835,715) -
==========================================================================================================
Cumulative Interest
Sensitivity Gap (6,648,307) (9,771,629) (8,208,342) (4,975,915) 4,313,165 2,835,715 - -
==========================================================================================================
Interest Sensitivity
Gap as a Percentage
of Earnings Assets -4.30% -2.03% 1.01% 2.10% 6.01% -0.95% -1.84% -
==========================================================================================================
Cumulative Sensitivity
Gap as a Percentage
of Earning Assets -4.30% -6.33% -5.32% -3.22% 2.79% 1.84% - -
==========================================================================================================
</TABLE>
20
<PAGE>
The Company experienced an increase in cash and cash equivalents, its
primary source of liquidity, of $993,051 during the first six months of
1996. The primary financing activity of deposit growth provided net
cash of $44,631,272. Investing activities used $45,697,658 of which
increased lending used $19,373,262 and increased federal funds sold used
$22,100,000.
The Company's management believes its liquidity sources are adequate to
meet its operating needs and does not know of any trends, events of
uncertainties that may result in a significant adverse effect on the
Company's liquidity position.
CAPITAL RESOURCES
The Company's only source of capital since commencing operations has
been from issuance of common stock and results of operations. It has
not issued long term debt nor does it have any long term debt facility
arrangements. In late 1995, the Company increased its common stock by
approximately $5,000,000 with the sale of 400,000 shares. Capital for
the Company is above regulatory requirements at June 30, 1996. Pertinent
capital ratios for the Company as of June 30, 1996 are as follows:
Minimum
Actual Requirements
------ ------------
Tier 1 risk-based capital ratio 14.18% 4.0%
Total risk-based capital ratio 15.33% 8.0%
Leverage ratio 9.23% 4.0%
Dividends from the Bank to the Company may not exceed the undivided
profits of the Bank (included in consolidated retained earnings) without
prior approval of a federal regulatory agency. In addition, Federal
banking laws limit the amount of loans the Bank may make to the Company,
subject to certain collateral requirements. No dividends were declared,
or loans made, during 1996 or 1995 by the Bank to the Company.
21
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY.
- ---------------------------------
The Company and the Bank have their main office in downtown
Indianapolis at 107 North Pennsylvania Street. The Company has executed
three leases for this location, one for space on the seventh floor which
is used for the Company's and Bank's executive offices, and one for
space on the ground floor which is used for retail branch transactions,
and one on the sixth floor which is used for the Bank's trust
operations. The leases expire in 2001 and 2003. The Company also has an
option to lease additional space in the building under certain
circumstances. This space has been leased from an affiliate of one of
the directors of the Company and the Bank. See "MANAGEMENT - Certain
Other Transactions."
The Bank opened its first neighborhood bank office on February
21, 1995 at 84th and Ditch Road. The Bank also has opened a neighborhood
bank office 82nd and Bash Road on the northeast side of Indianapolis in
December, 1995. The Bank owns the land and the premises for both of
these offices. In 1996 the Bank opened an office in the Chamber of
Commerce building at 320 N. Meridian Street in the downtown Indianapolis
area. The Bank leases the premises at this neighborhood office.
The Bank has installed a remote ATM at its main office, the
Indianapolis City Market and at the University of Indianapolis. These
remote ATMs provide additional banking convenience for the customers of
the Bank, and generate an additional source of fee income for the Bank.
22
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
The following table contains information concerning individuals or
entities who, to the knowledge of the Corporation, beneficially owned on
June 30, 1996, more than 5% of the common stock of the Corporation:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
<S> <C> <C>
- -------------------------------------------------------------------
Michael S. Maurer 656,250 (1) 29.8%
Eugene and Marilyn Glick 125,000 6.9%
Morris L. and Janis Maurer 99,985 (2) 5.3%
</TABLE>
(1) Includes 384,375 shares which Mr. Maurer may acquire pursuant
to stock warrants. See "Employee Benefit Plans -- Warrants."
(2) Includes 14,000 shares which Mr. Maurer has the right to
acquire pursuant to the exercise of stock options and 38,000
shares which Mr. Maurer has the right to acquire pursuant to
stock warrants, and 485 shares in the 401(k) Plan allocated to
the account of Mr. Maurer. See "Employee Benefit Plans -- 1993
Employees' Stock Option Plan, and -- Warrants."
23
<PAGE>
The following table sets forth as of June 30, 1996 the total
number of shares of common stock of the Corporation beneficially owned
by each director and executive officer of the Corporation and by all
directors and executive officers as a group. The number of shares shown
as being beneficially owned by each director and executive officer are
those over which he or she has sole or shared voting or investment
power.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS
<S> <C> <C>
- -------------------------------------------------------------------
Kathryn G. Betley 4,375 (1) 0.2%
James M. Cornelius 21,000 (2) 1.1%
David R. Frick 14,750 (2) 0.8%
Andre B. Lacy 36,500 (2) 2.0%
G. Benjamin Lantz, Jr. 12,250 (2) 0.7%
William J. Loveday 2,900 (1) 0.2%
Michael S. Maurer 656,250 (3) 29.8%
Morris L. Maurer 99,985 (4) 5.3%
Philip B. Roby 22,955 (5) 1.2%
Todd H. Stuart 11,625 (2) 0.6%
Directors and executive
officers as a group (consisting
of 10 individuals) 882,589 38.1%
</TABLE>
(1) Includes 2,500 shares which such individual has the right to
acquire pursuant to the exercise of options. See "Employee
Benefit Plans -- 1993 Directors' Stock Option Plan."
(2) Includes 8,500 shares which such individual has the right to
acquire pursuant to the exercise of options. See "Employee
Benefit Plans -- 1993 Directors' Stock Option Plan."
(3) Includes 384,375 shares which Mr. Maurer may acquire pursuant
to stock warrants. See "Employee Benefit Plans -- Warrants."
(4) Includes 14,000 shares which Mr. Maurer has the right to
acquire pursuant to the exercise of stock options, 38,000
shares which Mr. Maurer has the right to acquire pursuant to
24
<PAGE>
stock warrants, and 485 shares in the 401(k) Plan allocated to
the account of Mr. Maurer. See "Employee Benefit Plans -- 1993
Employee Stock Option Plan, and -- Warrants."
(5) Includes 10,000 shares which Mr. Roby has the right to acquire
pursuant to the exercise of stock options and 455 shares in the
401(k) Plan allocated to the account of Mr. Roby. See
"Employee Benefit Plans -- 1993 Employee Stock Option Plan."
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- ----------------------------------------------------------------------
The following sets forth information as to each director and
each executive officer of the Corporation and the Bank as of June 30,
1996, including their ages, present principal occupations, other
business experience during the last five years and directorships in
other publicly held companies. Each individual's service with the
Corporation and the Bank began at the formation of the Corporation in
1993, unless otherwise noted. In addition, all current directors of the
Corporation are also current directors of the Bank. Certain family
relationships exist among the directors of the Corporation. Michael S.
Maurer and Morris L. Maurer are cousins. There are no arrangements or
understandings between any of the directors pursuant to which any of
them have been selected for their respective positions.
MICHAEL S. MAURER - Age 53, Term Expires 1998. Mr. Maurer, the
chairman of the board of the Corporation and the Bank, was self-employed
as an attorney from 1969 through 1988. In 1987 Mr. Maurer became chief
executive officer and fifty percent owner of MYSTAR Corp., a
broadcasting company which owns Indianapolis radio stations WTPI,
WZPL-FM and WMyS-AM. In 1990 Mr. Maurer became chief executive officer
and fifty percent owner of IBJ Corp., a publishing company which owns
The Indianapolis Business Journal, The Court and Commercial Record, and
the Indiana Lawyer. From April 1991 through December 1992, Mr. Maurer
served as a director and member of the Executive Committee of Merchants
National Bank/National City Bank, Indianapolis, Indiana. Mr. Maurer is
currently a director of IPALCO Enterprises, Inc. and Indianapolis Power
and Light Company.
MORRIS L. MAURER - Age 45, Term Expires 1999. Mr. Maurer is
the president, chief executive officer and a director of the Corporation
and the Bank. He was employed by Indiana National Bank/INB Financial
Corporation from 1975 through 1992. In Mr. Maurer's capacity as senior
vice president, he was responsible for corporate-wide strategic
planning, venture capital, chairman of corporate and lead bank ALCO
committees, mergers and acquisitions, and economic research. As chief
financial officer, Mr. Maurer was responsible for general accounting,
controller, investment, funds desk, security sales and brokerage
functions. In addition, Mr. Maurer was a member of the executive
management committee, and chairman of the state-wide bank integration
committee.
25
<PAGE>
PHILIP B. ROBY - Age 53, Term Expires 1997. Mr. Roby is the
executive vice president, chief operating officer and a director of the
Corporation and the Bank and is also the chief lending officer of the
Bank. He began his career at Indiana National Bank in 1965 in its
Management Training Program. During the years between 1967 to 1973, Mr.
Roby worked as a Commercial Lending Officer and Correspondent Banking
Officer at Indiana National Bank. In 1973, he was named manager of the
Commercial Credit Department with responsibility for the Commercial
Credit Training Program in Commercial Loan Analysis. In 1975, he became
president of two real estate subsidiaries of the parent holding company,
Indiana National Financial Corporation.
From 1978 to 1990, he held the position of senior vice
president and division head of the Metropolitan Division. Mr. Roby
served as a member of the Commercial Loan Committee during this period.
In 1990, Mr. Roby became president of INB Banking Company, Northeast, an
affiliate bank of INB Financial Corporation, located in Fort Wayne,
Indiana. Subsequent to the INB merger with NBD Bancorp, he was elected
executive vice president and senior commercial lending officer for the
Northeast Region of the merged bank and was also named one of the eight
members of the Senior Indiana Loan Committee of NBD Indiana, Inc.
JAMES M. CORNELIUS - Age 52, Term Expires 1998. Mr. Cornelius,
a director, is chairman of the board of directors of Guidant
Corporation, a global medical device company traded on the New York and
Pacific Stock Exchanges. He was elected to this position in September
1994 and joined Guidant full time following his retirement from Eli
Lilly and Company in October 1995. He served as vice president of
finance and chief financial officer at Lilly from January 1983 until his
retirement and served on its Board and Executive Committee from December
1986. Mr. Cornelius serves on the Board of Directors for American
United Life Insurance Company and Lilly Industries, Inc. He served as a
director of Indiana National Bank from 1982 through 1992.
TODD H. STUART - Age 31, Term Expires 1999. Mr. Stuart, a
director, has been employed by Stuart's Household Furniture Moving &
Storage, Inc., a household and commercial moving, packing and
warehousing business since 1983. As vice president of the company, Mr.
Stuart's responsibilities include sales, daily operations and
supervision of more than 40 employees. Mr. Stuart is also a director of
Bankers Life Holding Corporation, Chicago, Illinois.
G. BENJAMIN LANTZ - Age 60, Term Expires 1998. Dr. Lantz, a
director, has been employed as president of the University of
Indianapolis from 1988 through the present. He served approximately 18
years in the administration of various colleges before he became vice
president, administration and development at NESCO, Inc., a privately
held manufacturing, real estate and engineering company located in
Mayfield Heights, Ohio. Dr. Lantz's responsibilities included
supervision of legal counsel and corporate recruitment. Dr. Lantz was
also involved in acquisitions and divestitures and locating, analyzing
26
<PAGE>
and negotiating and conducting due diligence activities for the purchase
of companies. Dr. Lantz also monitored corporate activities for four
companies.
ANDRE B. LACY - Age 56, Term Expires 1999. Mr. Lacy, a
director, began his career in 1961 with the predecessor of Lacy
Diversified Industries, Inc. as an analyst. Mr. Lacy held various
positions with the company before becoming chairman and chief executive
officer of LDI, Ltd. (Limited Partnership) and its subsidiaries. Its
various entities include: Lacy Diversified Industries; Jessup Door
Company; Major Video Concepts; Tucker-Rocky Distributing; and Answer
Products, Inc.
Mr. Lacy was a director of Merchants National Bank & Trust
Company and Merchants National Corporation/National City Corporation
from 1979 through 1992. He also served as chairman of the Finance
Committee and as a member of the Executive Committee. Mr. Lacy is
currently a director of Albemarle Corporation, Richmond, Virginia;
IPALCO Enterprises, Indianapolis; Tredegar Industries, Richmond,
Virginia; and Patterson Dental Company, St. Paul, Minnesota.
DAVID R. FRICK - Age 51, Term Expires 1997. Mr. Frick, a
director, is the executive vice president and chief administrative
officer of Associated Insurance Company, Inc. (an insurance and
financial services company). He served as managing partner of Baker &
Daniels, one of Indiana's largest law firms, from 1987 through 1992. Mr.
Frick was engaged in the private practice of law from 1969 to 1976, when
he became Corporation Counsel and Deputy Mayor of the City of
Indianapolis. Mr. Frick returned to the private practice of law in 1982
in Indianapolis. Mr. Frick is also a director of Broadcasting
Management, Inc., a venture capital fund which owns radio stations.
KATHRYN G. BETLEY - Age 53, Term Expires 1997. Ms. Betley, a
director, has been chairman of the board, secretary and co-owner of
Romancing the Seasons, a retail store located in Indianapolis, from 1989
through the present. Ms. Betley is an extremely active community
volunteer in the Indianapolis area and is involved with and serves on
the boards of many civic organizations.
WILLIAM J. LOVEDAY - Age 52, Term Expires 1997. Mr. Loveday, a
director, is currently the president and chief executive officer of
Methodist Hospital of Indiana, Inc. Mr. Loveday has served in that
capacity from 1988 through the present. Mr. Loveday is also a director
of Indianapolis Life Insurance Company. From 1983 to 1988, Mr. Loveday
was executive vice president and chief operating officer of Memorial
Medical Center of Long Beach, California.
27
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
- --------------------------------
Compensation Committee
- ----------------------
Decisions on compensation of the Corporation's executives are
made by the Compensation Committee of the Board, which also serves as
the Compensation Committee of the Bank. Each member of the Compensation
Committee is a non-employee director. All decisions of the Compensation
Committee relating to the compensation of the Corporation and the Bank's
executive officers are reviewed by the full Board.
Compensation of Directors
- -------------------------
Directors of the Corporation and the Bank have never received a
fee for serving in such capacity and neither the Corporation nor the
Bank are currently paying any director fees. In June 1996 the Board of
Directors has adopted a resolution providing that Directors be
compensated with stock options each June having a net present value
between approximately $17,500 to $20,000 until such time as the
Directors are compensated with cash compensation. In June 1996, Messrs.
Cornelius, Frick, Lacy, Lantz and Stuart were each granted options for
2,000 shares, exercisable at $12.50 per share, during a ten year period.
Ms. Betley and Mr. Loveday, who became directors in October 1995, were
each granted options in March 1996 for 2,500 shares, exercisable at
$12.50 per share, during a ten year period.
Compensation Policies Toward Executive Officers
- -----------------------------------------------
The Compensation Committee's executive compensation policies
are designed to provide competitive levels of compensation to the
executive officers and to reward officers for individual performance and
for performance of the Corporation as a whole. Although there are
established goals and standards relating to performance of the
Corporation, these goals and standards have not been established solely
for utilization in setting compensation of individual employees. The
Compensation Committee does, however, consider the Corporation and the
Bank's performance compared to the Annual Plan and compared to certain
established non-financial goals in setting compensation levels.
Base Salary
- -----------
Each executive officer is reviewed individually by the
Compensation Committee, which review includes an analysis of the
performance of the Corporation and the Bank. In addition, the review
includes, among other things, an analysis of the individual's
performance during the past fiscal year, focusing primarily upon the
following aspects of the individual's job or characteristics of the
individual exhibited during the most recent fiscal year: quality and
quantity of work; supervisory skills; dependability; initiative;
attendance; overall skill level; and overall value to the Corporation.
28
<PAGE>
Bonus Amounts
- -------------
During 1995, the Board of Directors approved a bonus plan
("Bonus Plan") for Morris L. Maurer and Philip B. Roby which was only
applicable in 1995. Under the terms of the Bonus Plan, Mr. Maurer
received a bonus of $30,000 and Mr. Roby a bonus of $20,000, payable in
1996.
Other Compensation Plans
- ------------------------
At various times in the past, the Corporation has adopted
certain broad-based employee benefit plans for all employees. Senior
executives are permitted to participate in these plans on the same terms
as non-executive employees who meet applicable eligibility criteria,
subject to any legal limitations on the amount that may be contributed
or the benefits that may be payable under the plans. These plans
include such customary employee benefit plans as medical insurance, life
insurance, and a 401(k) plan.
Summary Compensation Table
- --------------------------
The following table sets forth for the fiscal year ending
December 31, 1995 the cash compensation paid by the Corporation or the
Bank, as well as certain other compensation paid or awarded during those
years, to the chief executive officer and any other executive officer
whose total annual salary and bonus equaled or exceeded $100,000.
Michael S. Maurer receives no salary from either the Corporation or the
Bank; however, Mr. Maurer did receive warrants to purchase 76,875 shares
at $12.50 per share during 1995. See "Employee Benefit Plans --
Warrants."
29
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation (1) Long Term Compensation
----------------------- ----------------------
Restricted Stock Securities
Name and Principal Year Salary ($)(2) Bonus ($) Awards Underlying
Position (#)(3) Options/SARS
(#)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Morris L. Maurer, 1995 $114,615 $30,000 -0- -0-
President and Chief
Executive Officer
1994 $110,000 -0- 25,000 35,000
1993 $63,485 -0- -0- -0-
(began salary
payments in
June, 1993)
- ------------------------------------------------------------------------------------------------------------
Philip B. Roby, 1995 $107,154 $20,000 -0- -0-
Executive Vice
President and Chief
Operating Officer
1994 $100,000 -0- 15,000 25,000
1993 $58,894 -0- -0- -0-
(began salary
payments in
June, 1993)
</TABLE>
(1) While executive officers enjoy certain perquisites, such
perquisites are less than 5% of such officer's salary and bonus
and are not required to be reported.
(2) Effective July 1, 1996 the salary of Morris L. Maurer was
increased from $120,000 to $126,000 and the salary of Philip B.
Roby was increased from $110,000 to $115,500. Effective July
1, 1995, the salary of Morris L. Maurer was increased from
$110,000 to $120,000 and the salary of Philip B. Roby was
increased from $100,000 to $110,000.
(3) No shares of restricted stock will begin to vest until the
Company has achieved pre-tax net income exceeding $500,000 in a
fiscal year, after which 50% of such shares will vest on
December 31 of such fiscal year with an additional 25% vesting
on each subsequent December 31. The restricted stock awards
will be forfeited if not vested within 7 years. No dividends
will be paid on shares of restricted stock until such stock
vests.
30
<PAGE>
Employee Benefit Plans
- ----------------------
Warrants
In consideration of their efforts in organizing the Corporation
and the Bank and for services to be rendered after the Bank began
operations, Michael S. Maurer and Morris L. Maurer were issued warrants
to purchase 307,500 and 38,000 shares, respectively, in connection with
the formation of the Corporation and the Bank in 1993. Such warrants
are exercisable and will remain exercisable until 2003 at a purchase
price of $10.00 per share. The warrants will immediately become null
and void, without any action required by the Corporation or the Bank,
the Federal Deposit Insurance Corporation ("FDIC"), the Office of the
Comptroller of the Currency ("OCC"), or the Board of Governors of the
Federal Reserve System ("Federal Reserve") if either the Federal
Reserve, the FDIC, or the OCC issues a directive or final order to the
Corporation or the Bank requiring a contribution of capital.
In addition, in 1995 Michael S. Maurer received warrants for
76,875 shares, exercisable at a price of $12.50 per share, exercisable
until 2005. Such warrants were granted to Mr. Maurer in recognition of
the fact that he had not received any cash compensation from either the
Bank or the Corporation since its inception, and that the initial
directors of the Corporation and the Bank who are still directors had
received at that time options individually for 6,500 shares since the
Corporation and the Bank were organized.
Stock Plans
The Corporation has adopted a stock option program for
directors of the Corporation and the Bank, and a separate stock option
program for officers and key employees of the Corporation and the Bank.
The Corporation has also adopted a restricted stock plan for officers
and employees of the Corporation and the Bank. Under the option
programs, options for an aggregate of 220,000 shares may be granted. A
total of 70,000 shares have been reserved for issuance under the
restricted stock plan. The Board of Directors of the Corporation
believes these programs provide an important incentive to those who will
be instrumental to the success of the Corporation and of the Bank. A
more detailed description of each of the programs is set forth below.
1993 Employees Stock Option Plan. This plan provides for the
grant of "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code and the grant of nonqualified stock options
(the "Plan"). The Plan provides for the award of stock options to
elected officers and key employees of the Corporation and its
subsidiaries, including the Bank, which currently is the Corporation's
only subsidiary. The exercise price for all options granted under the
Plan will not be less than the greater of $10.00 or the fair market
value of the Shares on the date of grant. The Plan will expire on May
31, 2003.
31
<PAGE>
Options may be granted under the Plan only to officers and
other key employees who are in positions to make significant
contributions to the success of the Corporation. The Compensation
Committee, consisting of outside directors of the Corporation who are
ineligible under the Plan to receive options themselves, administers the
Plan.
Options are exercisable in whole or in part upon such terms and
conditions as may be determined by the Compensation Committee, but in no
event will any incentive stock options be exercisable later than ten
years after date of grant.
A total of 120,000 shares has been reserved for issuance under
the Employee Stock Option Plan. Options for 84,000 shares have been
granted under the Plan. Morris L. Maurer received options for 35,000
shares and Philip B. Roby received options for 25,000 shares,
representing 41.7% and 29.8% of the total options granted under the Plan
in 1994. No options were granted under the Plan in 1995. All of the
options which have been granted are exercisable at $10.00 per share.
Twenty percent of the options which have been granted vested on December
31, 1994, an additional 20% vested on December 31, 1995, with an
additional 20% vesting every December 31 thereafter until the options
will be fully vested on December 31, 1998.
1993 Directors' Stock Option Plan. As previously stated,
Directors have not received any fees for their services as a director.
However in 1993, the Board of Directors of the Corporation adopted a
nonqualified stock option plan (the "Directors' Plan") which provides
for the grant of nonqualified stock options to those individuals who are
not officers or employees of the Corporation or the Bank and who serve
as directors (the "Outside Directors") of the Corporation or any of its
subsidiaries, including the Bank. The Chairman of the Board of
Directors of the Corporation, Michael S. Maurer, is not eligible to
receive grants of options under the Directors' Plan. The Plan will
expire on May 31, 2003.
The Directors' Plan provides for the grant of nonqualified
stock options to acquire shares of the Corporation at a price equal to
the greater of $10.00 or the fair market value of the shares on the
date of grant. A total of 100,000 shares has been reserved for issuance
under the Directors' Plan. There are currently 52,500 shares available
for issuance under the Directors' Plan.
The options under this program are exercisable for ten years
from the date of grant. In addition, the options will immediately
become null and void, without any action required by the Corporation or
the Bank, the FDIC, the OCC, or the Federal Reserve if either the
Federal Reserve, the FDIC, or the OCC issues a directive or final order
to the Corporation or the Bank requiring a contribution of capital.
Messrs. Cornelius, Frick, Lacy, Lantz, and Stuart have each received
options to acquire a total of 6,500 shares at an exercise price of
$10.00 per share. Included in the 6,500 figure are options for 2,500
shares granted during 1995. In June 1996 each of these individuals
received options for 2,000 shares at an exercise price of $12.50 per
share. Ms. Betley and Mr. Loveday were not appointed as directors until
October 1995. They were each granted options for 2,500 shares at an
exercise price of $12.50 per share under the Directors' Plan in March
32
<PAGE>
1996. Individuals become eligible to receive grants of options under
the Directors' Plan upon their election to a qualifying board of
directors but do not receive additional options because they are a
member of more than one such board.
1993 Restricted Stock Plan. On June 1, 1993, the Board of
Directors of the Corporation adopted a Restricted Stock Plan (the
"Restricted Stock Plan"), which provides for the grant of shares to
officers and key employees of the Corporation and the Bank.
The Restricted Stock Plan provides for the outright grant of
shares, subject to the vesting schedule set forth in the agreement
between the recipient and the Administrative Committee of the Restricted
Stock Plan, to officers and employees of the Corporation and the Bank.
Grants under the Restricted Stock Plan may be made only to officers and
other employees who are in position to make significant contributions to
the success of the Corporation. The Compensation Committee, consisting
of outside directors of the Corporation who are ineligible under the
Plan to receive grants of restricted stock, administers the Restricted
Stock Plan. Such committee has the authority to determine the number of
grants to issue and to whom such grants are made, what price, if any,
will be required to purchase shares of stock issued under the Restricted
Stock Plan and the vesting schedule of the restricted stock.
The Restricted Stock Plan provides for the issuance of up to
50,000 Shares. The plan expires on May 31, 2006. Grants for 48,000
shares have been made under the Restricted Stock Plan. Morris L. Maurer
received grants for 25,000 shares and Philip B. Roby received grants for
15,000 shares during 1994. As set forth in their respective agreements,
these shares of restricted stock will not begin to vest until the
Corporation has achieved pre-tax net income exceeding $500,000 in a
fiscal year. No grants were made during 1995.
401(k) Savings Plan
The Corporation sponsors The National Bank of Indianapolis
Corporation 401(k) Savings Plan ("401(k) Plan") for the benefit of
substantially all of the employees of the Corporation and its
subsidiaries. All employees of the Corporation and its subsidiaries
become participants in the 401(k) Plan after completing one year of
service for the Corporation or its subsidiaries and attaining age 21.
Each participant may enter into a salary redirection agreement
with the Corporation or the Bank whereby the Corporation or the Bank
redirects to the participant's account in the 401(k) Plan an amount, on
a pre-tax basis, equal to not less than one percent (1%) or more than
(10%) of the participant's compensation, as defined in the 401(k) Plan.
If a participant makes salary redirection contributions to the 401(k)
Plan, the Corporation will make a matching contribution in the amount
necessary to match 60% of the participant's salary redirection
contribution up to two percent (2%) of the participant's compensation,
as defined in the 401(k) Plan. The Board of Directors of the
Corporation may, in its discretion, make an additional matching
contribution to the 401(k) Plan in such amount as the Board may
33
<PAGE>
determine. In addition, the Corporation may fund all or any part of its
matching contributions with shares of its stock. The Corporation also
may, in its discretion, make a profit sharing contribution to the 401(k)
Plan.
An employee who has an interest in a qualified retirement plan
with a former employee may transfer the eligible portion of that benefit
into a rollover account in the 401(k) Plan. The participant may request
that the trustee invest up to 25% of the fair market value of the
participant's rollover contribution (valued as of the effective date of
the contribution to the 401(k) Plan) in whole and fractional shares of
the common stock to the Corporation.
Benefits under the 401(k) Plan are distributable to
participants or their beneficiaries in a single lump sum payment.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
The offices of the Corporation and the Bank at 107 North
Pennsylvania Street, Indianapolis, Indiana are leased from a company in
which Andre B. Lacy, a director of the Corporation and a director of the
Bank, has an ownership interest. The Corporation has received a report
from an independent property consultant that the terms and conditions of
the leases fall within a reasonable range of market terms and do not
involve more than normal risk or present unfavorable features to the
Corporation.
It is anticipated that the Corporation's officers and
directors, as well as firms and companies with which they are
associated, will have banking transactions with the Bank. It is the
policy of the Bank that any credit extended to such persons, firms and
companies will be extended only in the ordinary course of business and
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and will not involve more than the normal risk of
collectability or present other unfavorable features.
ITEM 8. DESCRIPTION OF SECURITIES.
- -----------------------------------
General. The Company is authorized by its Articles of
Incorporation to issue an aggregate of 3,000,000 Shares. No other class
of capital stock is authorized. At June 30, 1996 approximately
1,821,775 Shares were issued and outstanding. The following is a
summary of certain of the rights and privileges pertaining to the
Shares.
Voting Rights. The holders of the Shares are entitled to one
vote per share on all matters submitted to a vote of the stockholders.
There is no provision for cumulative voting with respect to the election
of directors. Accordingly, the holders of more than 50% of the
outstanding Shares, if they choose to do so, can elect all of the
directors.
Dividend Rights. All Shares are entitled to share equally in
such dividends as the Board of Directors may declare. The Company will
be largely dependent upon dividends from the Bank for funds to pay
34
<PAGE>
dividends on the Shares, and dividends payable by the Bank are limited
by law and by the need to maintain adequate capital in the Bank.
Liquidation Rights. Upon liquidation or dissolution of the
Company, whether voluntary or involuntary, all Shares are entitled to
share equally in the assets available for distribution to common
stockholders after payment of all prior obligations of the Company.
Other Matters. The holders of the Shares have no preemptive or
redemption rights or any preferred right to purchase or subscribe for
any authorized but unissued capital stock or any securities of the
Company convertible into Common Stock. The outstanding Shares are, and
the Shares offered hereby will be when issued, fully paid and
non-assessable.
The Company may be required to fund the Bank in the future in
the event that the regulating body for the Bank determines such capital
infusion is necessary. In such event, if the Company does not have
significant unencumbered assets to provide such infusion of capital, the
Company may be forced to seek additional funds from existing
shareholders, to borrow such funds or to have an additional equity
offering of shares of the Company.
Dividend Policy. All Shares are entitled to share equally in
such dividends as the Board of Directors may declare. The Company will
be largely dependent upon dividends from the Bank for funds to pay
dividends on the Shares, and dividends payable by the Bank are limited
by law and by the need to maintain adequate capital in the Bank. The
Company expects that all Company and Bank earnings, if any, will be
retained to finance the Bank's growth and that no dividends will be paid
for the foreseeable future. Under applicable law, the Bank will be
restricted as to the maximum amount of dividends it may pay on its
common stock. Payment of dividends by the Bank will be subject to
regulation by the OCC, which is authorized to determine whether the
payment of dividends by a bank would constitute an unsafe and unsound
banking practice. In such an instance, the OCC could prohibit payment
of the dividend. In the case of the Company, further restrictions on
dividends may be imposed by the Federal Reserve.
Transfer of Shares. The Shares of the Company sold in the
initial offering in 1993 and in the subsequent offering in 1995-1996 are
subject to restrictions upon resale as set forth below. Generally, the
Shares cannot be resold for a period of two years (and then only in
compliance with the strict requirements of Rule 144) or three years
(with the most demanding provisions of Rule 144 being avoided).
The Shares have not been registered under the Securities Act of
1933 ("Act") and were offered and sold in reliance on the exemption
provided under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated by the SEC. The Company has no obligations to register such
Shares under the Act, and is under no obligation to attempt to secure an
exemption for any subsequent sale of such Shares. As such, the shares
must be sold in reliance upon an exemption from the registration
requirements of the Act, such as Rule 144.
35
<PAGE>
Rule 144 specifically provides a minimum two-year holding
period for all purchasers of the Shares sold in the initial offering and
subsequent offering. In addition, under Rule 144 such shares may only
be sold when "current public information" concerning the Company exists,
which is considered to exist if, among other things, the Company has
been subject to the reporting obligations under Section 13 of the
Securities Exchange Act of 1934 ("1934 Act") for at least 90 days
immediately preceding the sale of securities in reliance upon Rule 144.
Further, the manner of resale is restricted such that only 1%
of the outstanding shares of such class of the Company's stock or the
average weekly trading volume for the four weeks preceding such sale may
be sold within any three month period. Rule 144 also requires a filing
with the SEC of a notice concerning such resale except in cases
involving less than 500 shares or $10,000.
Subsection (k) of Rule 144 provides an exception to certain
provisions of Rule 144 for securities held for greater than three years
by persons who are not "Affiliates" of the Company and have not been
"Affiliates" for the preceding three month period. Such subsection
eliminates: (i) the requirement for current public information; (ii) the
limit upon the quantity of the securities which may be sold; (iii) the
limitation upon the manner of resale of the securities; and (iv) the
need to file a notice with the SEC.
PART II
- -------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
- ------------------------------------------------------------------------
AND OTHER SHAREHOLDER MATTERS.
- ------------------------------
There has been no active public trading market for the Common
Stock. The Shares currently issued and outstanding bear restrictions
upon transfer which restrict the ability of an Investor to shift his
investment in any Shares to an alternative investment in the future.
Beginning in November, 1996, shareholders of the Company who purchased
Shares in 1993 may, depending upon the circumstances of the individual
shareholder, be able to transfer the Shares purchased in 1993 without
complying with many existing provisions currently applicable to any
proposed transfer. Shareholders of the Company who purchased Shares in
1995 may, depending upon the circumstances of the individual
shareholder, be able to transfer such Shares without complying with many
existing provisions currently applicable to any proposed transfer in
1998.
The Company sold 400,000 Shares in a private placement in
1995-1996 at a price of $12.50 per share. However, because there is not
an established public trading market for any Shares, the offering price
of $12.50 may not reflect the price which would be paid for the Shares
on an active market and should not necessarily be relied upon when
determining the value of a shareholder's investment.
At June 30, 1996, there were approximately 537 holders of
record of the Common Stock.
36
<PAGE>
The Company has not declared or paid any cash dividends on its
Shares of Common Stock since its organization in 1993. The Company and
the Bank continue to expect that earnings will be retained to finance
the Bank's growth. Future dividend payments by the Company, if any,
will be largely dependent upon dividends paid by the Bank, which are
subject to regulatory limitations.
ITEM 2. LEGAL PROCEEDINGS.
- ---------------------------
Neither the Company nor the Bank are involved in any pending
legal proceedings at this time.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- -------------------------------------------------------
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
- -------------------------------------------------
(a) The Company has sold the following securities since its
organization in 1993:
1993 -- 1,379,300 shares at $10.00 per share;
1994 -- 30,700 shares at $10.00 per share and 4,786.9423 shares
(sold to the Company's 401 (k) Plan) at $9.00 per share;
1995 -- 376,735 shares at $12.50 per share and 4,141.5791 shares
(sold to the Company's 401 (k) Plan) at $9.53 per share;
1996 -- 23,265 shares at $12.50 per share and 2,846.9144 shares
(sold to the Company's 401 (k) Plan) at $10.50 per share.
(b) The Company utilized the services of Raffensperger, Hughes
& Co., Inc. and McDonald & Company Securities, Inc. as placement agents
pursuant to a "best efforts" underwriting to sell 750,000 shares of the
shares sold in 1993. All shares sold by the Company have been sold only
to "accredited investors" as defined in Rule 501 of Regulation D of the
Securities and Exchange Commission and the 401(k) Plan of the Company.
(c) All shares of the Company have all been sold for cash as
set forth above. Of the 1,379,300 shares sold in 1993, 750,000 were
sold in a best efforts offering through the underwriters listed in
response to (b) above. On these shares sold, the placement agents
received a commission of 5.5%. The Company paid a commission of
approximately $4,800 to McDonald & Company Securities, Inc. with respect
to the 376,735 shares sold in 1995.
37
<PAGE>
(d) All shares have been sold in reliance upon the exemption
provided by Section 4(2) of the Securities Act of 1933 and Regulation D
promulgated thereunder. As stated above, all shares have been sold only
to accredited investors.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ---------------------------------------------------
The Company's Articles of Incorporation provide that the
Company will indemnify any person who is or was a director or officer of
the Company or of any other corporation for which such director or
officer is or was serving in any capacity at the request of the Company
against all liability and expense that may be incurred in connection
with any claim, action, suit or proceeding as set forth in summary
herein. A director or officer of the Company is entitled to be
indemnified as a matter of right with respect to those claims, actions,
suits or proceedings in which such director or officer has been wholly
successful. In all other cases, such director or officer shall be
entitled to indemnification as a matter of right unless (i) the director
or officer has breached or failed to perform the person's duties in good
faith in a manner such director or officer reasonably believed to be in,
or not opposed to, the best interests of the Company or such other
corporation and, with respect to any criminal action or proceeding, in a
manner in which the director or officer had no reasonable cause to
believe was unlawful, and (ii) such breach of failure to perform
constituted willful misconduct or recklessness as determined by the
Board of Directors of the Company, a committee of the Board of
Directors, independent legal counsel, or a committee of disinterested
persons selected by the Board of Directors. The foregoing is a summary
of detailed provisions for indemnification found at Article VI, Section
2 of the Articles of Incorporation of the Company which are incorporated
by reference into this Registration Statement as Exhibit 3.1.
38
<PAGE>
PART F/S
The National Bank of Indianapolis
Corporation
Consolidated Financial Statements
Years ended December 31, 1995 and 1994
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . 40
Audited Consolidated Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . 41
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . 42
Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . 43
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . 44
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . 45
39
<PAGE>
Report of Independent Auditors
Board of Directors
The National Bank of Indianapolis Corporation
We have audited the accompanying consolidated balance sheets of The
National Bank of Indianapolis Corporation as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholders'
equity and cash flows for the years then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
The National Bank of Indianapolis Corporation at December 31, 1995 and
1994, and the consolidated results of its operations and its cash flows
for the years then ended in conformity with generally accepted
accounting principles.
Ernst & Young LLP
January 31, 1996
Indianapolis, Indiana
40
<PAGE>
The National Bank of Indianapolis Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
<S> <C> <C>
------------------------------------
ASSETS
Cash and due from banks (Note 3) $ 7,832,817 $ 2,992,429
Federal funds sold 12,550,000 6,125,000
Investment securities (Note 4):
U.S. Treasuries 5,533,805 8,526,929
U.S. Government agencies 4,949,355 986,880
Collateralized mortgage obligations 9,536,829 4,524,270
Other securities 6,349,731 421,000
------------------------------------
Total investment securities 26,369,720 14,459,079
Loans (Note 5) 70,538,097 32,427,239
Less: Allowance for loan losses (985,000) (385,000)
------------------------------------
Net loans 69,553,097 32,042,239
Premises and equipment (Note 6) 3,487,107 2,249,933
Accrued interest 599,593 258,896
Other assets 139,094 259,037
------------------------------------
Total assets $120,531,428 $ 58,386,613
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits $ 17,144,277 $ 9,634,585
Money market and saving deposits 47,422,437 23,046,795
Certificates of deposit over $100,000 14,569,622 5,588,048
Other time deposits 19,172,344 8,360,597
------------------------------------
Total deposits 98,308,680 46,630,025
Security repurchase agreements (Note 4) 5,964,512 79,678
Other liabilities 553,231 243,952
------------------------------------
Total liabilities 104,826,423 46,953,655
Shareholders' equity (Notes 7 and 8):
Common stock, no par value:
Authorized shares; 1995-3,000,000;
1994-2,000,000
Issued and outstanding shares; 1995-1,795,663;
1994-1,414,786 18,324,671 13,631,225
Retained earnings-deficit (2,819,104) (1,952,418)
Net unrealized gains (losses) (Note 4) 199,438 (245,849)
------------------------------------
Total shareholders' equity 15,705,005 11,432,958
------------------------------------
Total liabilities and shareholders' equity $120,531,428 $ 58,386,613
====================================
</TABLE>
See accompanying notes.
41
<PAGE>
The National Bank of Indianapolis
Corporation
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1995 1994
<S> <C> <C>
------------------------------------
Interest income:
Interest and fees on loans $ 4,144,440 $ 1,037,929
Interest on investment securities 1,177,810 699,646
Interest on federal funds sold 930,375 305,880
------------------------------------
Total interest income 6,252,625 2,043,455
Interest expense 3,425,453 811,294
------------------------------------
Net interest income 2,827,172 1,232,161
Provision for loan losses 600,000 360,000
------------------------------------
Net interest income after provision for loan losses 2,227,172 872,161
Other operating income:
Trust fees and commissions 245,302 80,403
Service charges and fees on deposit accounts 113,203 36,304
Net securities losses (2,394) -
Other 86,891 34,149
------------------------------------
Total other operating income 443,002 150,856
Other operating expenses:
Salaries, wages and employee benefits 1,843,872 1,154,224
Net occupancy expense 335,564 222,641
Furniture and equipment expense 269,989 156,244
Data processing 138,722 99,807
Other expenses 948,713 680,255
------------------------------------
Total other operating expenses 3,536,860 2,313,171
------------------------------------
Net loss $ (866,686) $(1,290,154)
====================================
Net loss per common share (based on average number
of common shares outstanding) $ (.58) $ (.92)
====================================
Average number of shares of common stock 1,498,204 1,403,268
====================================
</TABLE>
See accompanying notes.
42
<PAGE>
The National Bank of Indianapolis
Corporation
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
UNREALIZED
RETAINED GAIN (LOSS)
COMMON EARNINGS- ON
STOCK DEFICIT INVESTMENTS TOTAL
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
Balance at December 31, 1993 $13,281,644 $ (662,264) $ - $12,619,380
Issuance of stock (35,486
shares) 349,581 - - 349,581
Initial adjustment for change in
accounting method - - (3,628) (3,628)
Net loss - (1,290,154) - (1,290,154)
Unrealized loss on
investments - - (242,221) (242,221)
-----------------------------------------------------------------
Balance at December 31, 1994 13,631,225 (1,952,418) (245,849) 11,432,958
Issuance of stock (380,877
shares) 4,693,446 - - 4,693,446
Net loss (866,686) - (866,686)
Unrealized gain on
investments - - 445,287 445,287
-----------------------------------------------------------------
Balance at December 31, 1995 $18,324,671 $(2,819,104) $ 199,438 $15,705,005
=================================================================
</TABLE>
See accompanying notes.
43
<PAGE>
The National Bank of Indianapolis
Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1995 1994
<S> <C> <C>
------------------------------------
OPERATING ACTIVITIES
Net loss $ (866,686) $(1,290,154)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Provision for loan losses 600,000 360,000
Depreciation and amortization 313,861 190,636
Amortization of intangibles 41,974 41,974
Net accretion of investments (110,693) (79,196)
Increase (decrease) in:
Interest receivable (340,697) (247,433)
Other assets 77,969 (94,997)
Other liabilities 309,278 86,352
------------------------------------
Net cash provided (used) by operating activities 25,006 (1,032,818)
INVESTING ACTIVITIES
Net change in federal funds sold (6,425,000) (3,925,000)
Proceeds from maturities of investment securities held to
maturity - 9,691,599
Proceeds from maturities of investment securities
available for sale 3,597,891 60,823,398
Proceeds from sales of investment securities available for
sale 3,470,141 -
Purchases of investment securities held to maturity (5,048,059) (4,549,270)
Purchases of investment securities available for sale (13,374,634) (70,503,860)
Net increase in loans (38,110,858) (32,148,769)
Purchases of premises and equipment (1,551,034) (1,492,250)
------------------------------------
Net cash used by investing activities (57,441,553) (42,104,152)
FINANCING ACTIVITIES
Net increase in deposits 51,678,655 45,252,135
Increase in security repurchase agreements 5,884,834 -
Proceeds from issuance of stock 4,693,446 349,581
------------------------------------
Net cash provided by financing activities 62,256,935 45,601,716
------------------------------------
Increase in cash and cash equivalents 4,840,388 2,464,746
Cash and cash equivalents at beginning of year 2,992,429 527,683
------------------------------------
Cash and cash equivalents at end of year $ 7,832,817 $ 2,992,429
====================================
Interest paid $ 3,207,157 $ 726,902
====================================
</TABLE>
See accompanying notes.
44
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements
December 31, 1995
1. ORGANIZATION AND ACCOUNTING POLICIES
ORGANIZATION
The National Bank of Indianapolis Corporation (the Corporation) was
incorporated in the State of Indiana on January 29, 1993. From that
date through December 8, 1993 the Corporation was in the development
stage with its principal activities directed towards organization,
raising capital and formation of a de novo national bank, The National
Bank of Indianapolis (the Bank). The Bank is a wholly owned subsidiary
and commenced operations in December, 1993. The Corporation and the
Bank engage in a wide range of commercial, personal banking and trust
activities primarily in Central Indiana.
The consolidated financial statements include the accounts of the
Corporation and the Bank with intercompany balances and transactions
eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and interest-bearing deposits.
Interest-bearing deposits are available on demand.
INVESTMENT SECURITIES
Investments in debt securities are classified as held-to-maturity or
available-for-sale (see Note 4). Management determines the appropriate
classification of the securities at the time of purchase and reevaluates
such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the Bank has the
positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost.
Debt securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are stated at fair
value, with the unrealized gains and losses, net of tax, reported in a
separate component of shareholders' equity.
The amortization cost of debt securities classified as held-to-maturity
or available-for-sale is adjusted for amortization of premiums and
accretion of discounts to maturity, or in the case of mortgage-backed
securities, over the estimated life of the security. Such amortization
is included in interest income from investments. Interest and dividends
are included in interest income from investments. Realized gains and
losses, and declines in value judged to be other-than-temporary are
included in net securities losses. The cost of securities sold is based
on the specific identification method.
45
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
1. ORGANIZATION AND ACCOUNTING POLICIES (CONTINUED)
LOANS
Interest income on commercial, mortgage and certain installment loans is
accrued on the principal amount of such loans outstanding. Loans are
placed in a nonaccrual status when significant doubt exists as to the
collectibility of principal or interest.
ALLOWANCE FOR LOAN LOSSES
The allowance for credit losses is established through provisions for
credit losses charged against income. Loans deemed to be uncollectible
are charged against the allowance for credit losses, and subsequent
recoveries, if any, are credited to the allowance. Beginning in 1995,
the Bank adopted Financial Accounting Standards Board Statement No. 114,
"Accounting by Creditors for Impairment of a Loan." Under the new
standard, the 1995 allowance for credit losses related to loans that are
identified for evaluation in accordance with Statement 114 is based on
discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateral dependent
loans.
The allowance for loan losses is maintained at a level believed adequate
by management to absorb potential losses in the loan portfolio. The
determination of the allowance is based on factors which, in
management's judgment, deserve recognition under existing economic
conditions in estimating possible loan losses. The allowance is
increased by provisions for loan losses charged against income and
reduced by net charge-offs.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation
computed by the straight-line method over their useful lives or, for
leasehold improvements, the remaining lease term.
The Bank recognizes impairment losses on long-lived assets used in
operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount.
46
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
1. ORGANIZATION AND ACCOUNTING POLICIES (CONTINUED)
STOCK BASED COMPENSATION
The Corporation grants stock options for a fixed number of shares to
employees with an exercise price which approximate the fair value of
shares at the date of grant. It accounts for stock option grants in
accordance with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," (APB 25) and, accordingly, recognizes no
compensation for the stock option grants.
RECLASSIFICATIONS
Certain amounts in the 1994 financial statements have been reclassified
to conform with the 1995 presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
2. NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
The Financial Accounting Standards Board issued Statement 122,
"Accounting for Mortgage Servicing Rights," to be applied prospectively
in fiscal years beginning after December 15, 1995. The Statement
requires the Bank to account for mortgage servicing rights, obtained
through either the purchase or origination of mortgage loans, at their
relative fair value and separately from the loan asset, for any mortgage
loan to be sold or securitized with servicing rights retained. The
Bank's application of this statement in 1996 is not anticipated to have
a material effect on operations or the financial statements.
47
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
2. NEW ACCOUNTING PRONOUNCEMENT (CONTINUED)
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Financial Accounting Standards Board issued Statement 123,
"Accounting for Stock-Based Compensation," to be effective for financial
statements for fiscal years beginning after December 15, 1995. This
Statement establishes financial accounting and reporting standards for
stock-based employee compensation plans. Those plans include all
arrangements by which employees receive shares of Corporation stock,
including stock options and restricted stock plans. The Corporation
continues to evaluate the provisions of the Statement and has not
determined whether it will adopt the Statement for expense recognition
purposes.
3. RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS
The Bank is required to maintain average reserve balances with the
Federal Reserve Bank or as cash on hand or on deposit with a
correspondent bank. The required amount of reserve was approximately
$535,000 and $25,000 at December 31, 1995 and 1994, respectively.
4. INVESTMENT SECURITIES
The following is a summary of available-for-sale securities and
held-to-maturity securities:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
-------------------------------------------------
GROSS
UNREALIZED ESTIMATED
AMORTIZED GAINS FAIR
COST (LOSSES) VALUE
<S> <C> <C> <C>
-------------------------------------------------
DECEMBER 31, 1995
U.S. Treasury securities $ 5,376,070 $ 157,735 $ 5,533,805
U.S. Government agencies 4,924,376 24,979 4,949,355
Asset-backed securities 5,876,507 16,724 5,893,231
-------------------------------------------------
$ 16,176,953 $ 199,438 $ 16,376,391
=================================================
DECEMBER 31, 1994
U.S. Treasury securities $ 8,771,158 $ (244,229) $ 8,526,929
U.S. Government agencies 988,500 (1,620) 986,880
-------------------------------------------------
$ 9,759,658 $ (245,849) $ 9,513,809
=================================================
</TABLE>
48
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
4. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
-------------------------------------------------
GROSS
UNREALIZED ESTIMATED
AMORTIZED GAINS FAIR
COST (LOSSES) VALUE
<S> <C> <C> <C>
-------------------------------------------------
DECEMBER 31, 1995
Collateralized mortgage
obligations $ 9,536,829 $ 156,845 $ 9,693,674
Other securities 456,500 2,662 459,162
-------------------------------------------------
$ 9,993,329 $ 159,507 $ 10,152,836
DECEMBER 31, 1994
Collateralized mortgage
obligations $ 4,524,270 $(138,347) $ 4,385,923
Other securities 421,000 - 421,000
-------------------------------------------------
$ 4,945,270 $(138,347) $ 4,806,923
=================================================
</TABLE>
Sales of available-for-sale securities during 1995 resulted in gross
realized gains of $949 and gross realized losses of $3,343. No
investment sales occurred in 1994.
Investment securities with a carrying value of approximately $6,943,877
at December 31, 1995 were pledged as collateral for public and trust
deposits, securities sold under agreements to repurchase, and for other
purposes as required by law or contract. There were no investment
securities pledged as of December 31, 1994.
The amortized cost and estimated fair value of debt and marketable
equity securities at December 31, 1995, by contractual maturity, are
shown below. Expected maturities will differ from contractual
maturities because the issuers of the securities may have the right to
prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
<S> <C> <C>
--------------------------------
AVAILABLE-FOR-SALE
Due in one year or less $ 5,966,556 $ 5,983,305
Due after one year through five years 10,210,397 10,393,086
--------------------------------
$ 16,176,953 $ 16,376,391
================================
HELD-TO-MATURITY
Due after five years through ten years $ 50,000 $ 52,662
No scheduled maturity 406,500 406,500
Collateralized mortgage obligations 9,536,829 9,693,674
--------------------------------
$ 9,993,329 $ 10,152,836
================================
</TABLE>
49
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
5. LOANS AND LOAN COMMITMENTS
Loans consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
-------------------------------
Loans secured by real estate $38,656,887 $15,408,637
Commercial and industrial loans 25,083,665 12,468,303
Loans to individuals for household, family and other
consumer expenditures 6,797,545 4,550,299
-------------------------------
Total loans $70,538,097 $32,427,239
===============================
</TABLE>
Loans are entirely to borrowers in central Indiana. The Bank had no
charge offs during 1995 or 1994. The Bank had no loans on a nonaccrual
basis as of December 31, 1995 or 1994.
In the normal course of business, the Bank has outstanding letters of
credit and loan commitments to meet the financing needs of its
customers. At December 31, 1995 and 1994, unused loan commitments
totaled approximately $31,390,035 and $13,584,874, respectively. Since
some of these commitments are expected to expire without being drawn
upon, the outstanding amounts do not necessarily represent future cash
requirements.
Certain directors and principal shareholders of the Corporation,
including their families and companies in which they are principal
owners, were loan customers of and had other transactions with the
Corporation or its subsidiary in the ordinary course of business during
1995. The aggregate dollar amount of these loans was approximately
$1,820,620 and $2,736,000 on December 31, 1995 and 1994, respectively.
All of the loans were made during 1995 and 1994 on substantially the
same terms, including interest rate and collateral, as those prevailing
at the time for comparable transactions with unrelated parties. The
amounts do not include loans made in the ordinary course of business to
companies in which officers or directors of the Corporation are either
officers or directors, but are not principal owners, of such companies.
50
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
6. PREMISES AND EQUIPMENT
Premises and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
--------------------------------
Land and improvements $1,400,695 $1,075,000
Building and improvements 596,308 -
Construction in progress 8,168 317,103
Leasehold improvements 467,112 463,571
Furniture and equipment 1,534,967 600,542
--------------------------------
4,007,250 2,456,216
Less accumulated depreciation and amortization (520,143) (206,283)
--------------------------------
$3,487,107 $2,249,933
================================
</TABLE>
On June 7, 1993 the Corporation executed two operating leases for office
space in a downtown building. These leases are noncancelable, except
under certain circumstances for which penalties may be imposed, and
expire in 2001 and 2003. On December 1, 1995 the Corporation executed a
third noncancelable lease that expires in 2001 for additional office
space in the same building. The lease which expires in 2003 may be
renewed for two successive five-year periods. Rent expense under these
leases was $163,193 and $157,862 for 1995 and 1994, respectively.
Remaining minimum rental commitments for these leases at December 31,
1995 total approximately $223,000 per year for 1996 and 1997; $240,000
for 1998; $274,000 for 1999; $278,000 for 2000 and aggregate
approximately $339,000 for all years thereafter. They also require
payment of a proportionate share of insurance, real estate taxes and
certain other operating expenses of the building in which the space is
leased.
A director of the Corporation has a minority ownership interest in the
leased premises. The Corporation received a report from an independent
property consultant at the inception of the lease that the rent and
other terms appeared to be customary and fair.
51
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
7. STOCK OPTION AND EMPLOYEE BENEFIT PROGRAMS
During the initial formation in 1993, the Corporation approved a stock
option plan for directors, an employee stock option plan and a
restricted stock plan. The Corporation reserved 40,000 shares of common
stock for the directors' plan, 90,000 shares for the employees' plan and
50,000 shares for the restricted plan. In 1993, the Corporation granted
options to outside directors, under the directors' plan, to purchase
24,000 shares of common stock of the Corporation at the initial offering
price of $10 per share, subject to terms and conditions of the plan.
During 1994, 4,000 of the 24,000 shares were forfeited by a director who
moved out of state. During 1995, the Corporation granted options, under
the director's plan, to outside directors to purchase an additional
12,500 shares, at $10 per share. During 1994 the Corporation granted
options to certain employees to purchase 84,000 shares at $10 per share
subject to the terms and conditions of the employee plan. All of these
options remain exercisable for a period of 10 years from the date of
issuance. In addition, the Corporation granted options under the
restricted stock plan to employees for 48,000 shares subject to the
terms and conditions of the restricted plan. These options remain
outstanding for a period of 7 years from the date of issuance. No
options have been exercised under any of the plans as of December 31,
1995.
In consideration of their efforts in organizing the Corporation and the
Bank, two officers/directors of the Corporation were issued warrants on
October 18, 1993 to purchase an additional 345,500 common shares. The
warrants became exercisable, subject to certain regulatory conditions
and restrictions, on October 18, 1994 and will remain exercisable for a
period of ten years thereafter at a purchase price of $10 per share.
During 1995, the Corporation issued warrants to purchase an additional
76,875 common shares at a purchase price of $12.50 to one
officer/director. The warrants expire on July 20, 2005.
Effective January 1, 1994, the Bank adopted a trusteed 401(k) retirement
savings plan covering substantially all employees and encouraging
employee contributions. Annual employer contributions are determined by
the Board of Directors within the guidelines of the plan. The Bank
expensed approximately $28,000 and $20,000 for employer contributions to
the plan during 1995 and 1994, respectively.
52
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
8. DIVIDEND AND LOAN LIMITATION AND REGULATORY CAPITAL RATIOS
Dividends from the Bank to the Corporation may not exceed the undivided
profits of the Bank (included in consolidated retained earnings) without
prior approval of a federal regulatory agency. In addition, Federal
banking laws limit the amount of loans the Bank may make to the
Corporation, subject to certain collateral requirements. No dividends
were declared, or loans made, during 1995 by the Bank to the Corporation
The Federal Reserve Board has established standards for measuring
capital adequacy based on "risk- weighting" assets according to
potential credit risk and classifying capital into two tiers. At
December 31, 1995, the Corporation's Tier 1 capital, consisting of
shareholders' equity, was $15,705,005. Tier 2 capital, which consists
of a portion of the allowance for loan losses, amounted to $985,000.
Total qualifying capital, combining Tier 1 and Tier 2 capital,
therefore, amounted to $16,690,005 and risk-weighted assets (including
off-balance sheet exposures) totaled $86,700,035 against which Tier 1
and Tier 1 plus Tier 2 capital are compared to determine risk-based
capital ratios. The capital adequacy standards also require a minimum
leverage ratio which represents the ratio of total qualifying capital to
total adjusted assets.
As shown in the following table, the Corporation's regulatory capital
ratios are above minimum levels as of December 31, 1995.
<TABLE>
<CAPTION>
MINIMUM
ACTUAL REQUIREMENTS
<S> <C> <C>
--------------------------
Tier 1 risk-based capital ratio 18.1% 4.0%
Total risk-based capital ratio 19.3% 8.0%
Leverage ratio 13.1% 4.0%
</TABLE>
9. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Deferred tax assets are recognized for the estimated tax
effects attributable to deductible temporary differences and operating
loss carryforwards, net of any valuation allowances for amounts which
may not be realized by the Corporation. At December 31, 1995, the
Corporation has net operating loss carryforwards of approximately
$640,000, $840,000 and $120,000 that expire in the year 2008, 2009 and
2010, respectively. For financial reporting purposes, a valuation
allowance has been recognized to offset the deferred tax assets related
to those carryforwards and part of the Corporation's deductible
temporary differences.
53
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
9. INCOME TAXES (CONTINUED)
The components of the Corporation's net deferred tax asset (liability)
in the consolidated statement of condition as of December 31 are as
follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
---------------------------------
Deferred tax assets:
Tax operating loss carryforwards:
Federal $ 502,879 $ 465,562
State 137,399 127,203
---------------------------------
640,278 592,765
Allowance for loan losses 334,900 130,900
Other 58,494 24,841
---------------------------------
Total deferred tax assets 1,033,672 748,506
Valuation allowance for deferred tax assets (1,033,672) (745,253)
---------------------------------
Net deferred tax assets - 3,253
Deferred tax liability:
Depreciation - (3,253)
---------------------------------
Net deferred tax asset (liability) $ - $ -
=================================
</TABLE>
10. COMMITMENTS
In August 1995, the Board of Directors approved a resolution to sell
400,000 shares of the Corporation's common stock. At December 31, 1995,
376,735 shares had been sold to investors. The 23,265 remaining shares
had been committed to interested investors, but have not been included
in the Corporation's consolidated financial statements.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement No. 107, "Disclosures About Fair Value of Financial
Instruments," requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate that value. In cases where
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Statement No. 107 excludes
certain financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Corporation.
54
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported in
the balance sheet for cash and short-term investments approximate
those assets fair values.
Investment securities (including collateral mortgage obligations):
Fair values for investment securities are based on quoted market
prices, where available. If quoted market prices are not available,
fair values are based on quoted market prices of comparable
instruments.
Loans receivable: For variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based
on carrying values. The fair values for all other loans are
estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of
similar credit quality. The carrying amount of accrued interest
approximates its fair value.
Deposit liabilities: The fair values disclosed for demand
deposits, including interest- bearing and noninterest-bearing
accounts, passbook savings, and certain types of money market
accounts are, by definition, equal to the amount payable on demand
at the reporting date (i.e., their carrying amounts). Fair values
for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated
expected monthly maturities on time deposits.
Short-term borrowings: The carrying amounts of borrowings under
repurchase agreements, and other short-term borrowings approximate
their fair values.
Off-balances-sheet instruments: Fair values of the Corporation's
off-balance-sheet instruments (loan commitments) are based on quoted
fees currently charged to enter into similar agreements, taking into
account the counterparties' credit standing.
55
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements (continued)
11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Corporation's financial instruments at
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
<S> <C> <C>
--------------------------------
ASSETS:
Cash and due from banks $ 7,832,817 $ 7,832,817
Federal funds sold 12,550,000 12,550,000
Investment securities 26,170,282 26,529,227
Net loans 69,553,097 70,968,374
LIABILITIES:
Deposits 98,308,680 98,717,597
OFF-BALANCE-SHEET INSTRUMENTS:
Loan commitments - 117,138
Standby and commercial letters of credit - 11,490
</TABLE>
56
<PAGE>
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
CONTENTS
Consolidated Balance Sheets - June 30, 1996 (unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 58
Consolidated Statements of Income for the Six months
ended June 30, 1996 and June 30, 1995 (unaudited) . . . . . . . . 59
Consolidated Statements of Cash Flows for the Six months
ended June 30, 1996 and June 30, 1995 (unaudited) . . . . . . . . 60
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 61
57
<PAGE>
The National Bank of Indianapolis Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
(UNAUDITED) (AUDITED)
<S> <C> <C>
----------------------------------
ASSETS
Cash and due from banks $ 8,825,868 $ 7,832,817
Federal funds sold 34,650,000 12,550,000
Investment securities:
U.S. Treasuries 4,440,405 5,533,805
U.S. Government agencies 9,161,490 4,949,355
Collateralized mortgage obligations 9,546,882 9,536,829
Other securities 6,805,963 6,349,731
----------------------------------
Total investment securities 29,954,740 26,369,720
Loans 89,911,360 70,538,097
Less: Allowance for loan losses (1,183,000) (985,000)
----------------------------------
Net loans 88,728,360 69,553,097
Premises and equipment 3,772,104 3,487,107
Accrued interest 844,271 599,593
Other assets 117,351 139,094
----------------------------------
Total assets $166,892,692 $120,531,428
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits $ 25,050,552 $ 17,144,277
Money market and saving deposits 65,676,428 47,422,437
Certificates of deposit over $100,000 21,898,192 14,569,622
Other time deposits 30,314,780 19,172,344
----------------------------------
Total deposits 142,939,953 98,308,680
Security repurchase agreements 7,599,797 5,964,512
Other liabilities 702,127 553,231
----------------------------------
Total liabilities 151,241,876 104,826,423
Shareholders' equity:
Common stock, no par value:
Authorized shares- 3,000,000
Issued and outstanding shares; 1996-1,821,775;
1995-1,795,663 18,645,376 18,324,671
Retained earnings-deficit (3,027,225) (2,819,104)
Net unrealized gains 32,665 199,438
----------------------------------
Total shareholders' equity 15,650,816 15,705,005
----------------------------------
Total liabilities and shareholders' equity $166,892,692 $120,531,428
==================================
</TABLE>
See accompanying notes
58
<PAGE>
The National Bank of Indianapolis
Corporation
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
<S> <C> <C>
----------------------------------
Interest income:
Interest and fees on loans $ 3,209,257 $ 1,668,196
Interest on investment securities 821,248 480,200
Interest on federal funds sold 663,077 381,927
----------------------------------
Total interest income 4,693,581 2,530,324
Interest expense 2,604,896 1,340,320
----------------------------------
Net interest income 2,088,685 1,190,004
Provision for loan losses 198,000 300,000
----------------------------------
Net interest income after provision for loan losses 1,890,685 890,004
Other operating income:
Trust fees and commissions 284,997 89,456
Service charges and fees on deposit accounts 76,542 46,908
Net securities gains (losses) 22,180 (2,394)
Other 71,894 34,595
----------------------------------
Total other operating income 455,614 168,565
Other operating expenses:
Salaries, wages and employee benefits 1,326,242 800,542
Net occupancy expense 224,764 141,485
Furniture and equipment expense 232,205 129,652
Data processing 133,251 64,378
Other expenses 637,958 481,767
----------------------------------
Total other operating expenses 2,554,420 1,617,825
----------------------------------
Net loss $ (208,121) $ (559,256)
==================================
Net loss per common share (based on average number
of common shares outstanding) $ (.11) $ (.39)
==================================
Average number of shares of common stock 1,818,289 1,415,862
==================================
</TABLE>
See accompanying notes.
59
<PAGE>
The National Bank of Indianapolis
Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
<S> <C> <C>
---------------------------------
OPERATING ACTIVITIES
Net loss $ (208,121) $ (559,256)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Provision for loan losses 198,000 300,000
Depreciation and amortization 259,197 148,026
Amortization of intangibles - 20,987
Net accretion of investments (71,592) (69,930)
Increase (decrease) in:
Interest receivable (244,677) (122,047)
Other assets 147,261 8,711
Other liabilities 21,744 101,080
---------------------------------
Net cash provided (used) by operating activities 101,812 (172,429)
INVESTING ACTIVITIES
Net change in federal funds sold (22,100,000) (12,860,000)
Proceeds from maturities of investment securities held to
maturity 1,243,861 403,133
Proceeds from maturities of investment securities
available for sale 2,166,773 663,707
Proceeds from sales of investment securities available for
sale 2,003,438 3,470,140
Purchases of investment securities held to maturity (7,196,211) (980,625)
Purchases of investment securities available for sale (1,898,063) (4,136,110)
Net increase in loans (19,373,262) (14,485,622)
Purchases of premises and equipment (544,194) (806,564)
---------------------------------
Net cash used by investing activities (45,697,658) (28,731,941)
FINANCING ACTIVITIES
Net increase in deposits 44,631,272 27,436,203
Increase in security repurchase agreements 1,636,920 1,938,142
Proceeds from issuance of stock 320,705 39,469
---------------------------------
Net cash provided by financing activities 46,588,897 29,413,814
---------------------------------
Increase in cash and cash equivalents 993,051 509,445
Cash and cash equivalents at beginning of period 7,832,817 2,992,429
---------------------------------
Cash and cash equivalents at end of period $ 8,825,868 $ 3,501,874
=================================
Interest paid $ 2,582,734 $ 1,301,114
=================================
</TABLE>
See accompanying notes.
60
<PAGE>
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements
June 30, 1996
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only
of normal recurring adjustments, necessary for a fair statement of the
results for the interim periods. Results for interim periods are not
necessarily indicative of the results for a full year. The consolidated
financial statements of The National Bank of Indianapolis Corporation
(the Corporation), have been prepared in accordance with the
requirements of Regulation S-B and supplementary financial information
included therein, if any, has been prepared in accordance with Item 310
(b) of Regulation S-B and, therefore, omit or condense certain footnotes
and other information normally included in financial statements prepared
in accordance with generally accepted accounting principles. These
financial statements should be read in conjunction with the audited
financial statements of the Company and the notes thereto as of December
31, 1995, included in the Corporation's Form 10-SB.
The Financial Accounting Standards Board issued Statement 122,
"Accounting for Mortgage Servicing Rights," to be applied prospectively
in fiscal years beginning after December 15, 1995. The Statement
requires the Bank to account for mortgage servicing rights, obtained
through either the purchase or origination of mortgage loans, at their
relative fair value and separately from the loan asset, for any mortgage
loan to be sold or securitized with servicing rights retained. The
Bank's application of this statement in 1996 has not had a material
effect on operations or the financial statements as no loans have been
sold since operations of the Corporation commenced.
61
<PAGE>
PART III
Item 1 and 2. Index to Exhibits and Description of Exhibits
- ------------------------------------------------------------
Exhibits
3(i) Articles of Incorporation of The National Bank of Indianapolis
Corporation
3(ii) By-laws of The National Bank of Indianapolis Corporation
10(i) 1993 Key Employees' Stock Option Plan
10(ii) 1993 Directors' Stock Option Plan
10(iii) 1993 Restricted Stock Plan
21 Subsidiaries of The National Bank of Indianapolis Corporation
27 Financial Data Schedules
62
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE NATIONAL BANK OF INDIANAPOLIS
CORPORATION
Date: October 23, 1996 By: /s/ Morris L. Maurer
-----------------------------
Morris L. Maurer, President
63
<PAGE>
EXHIBIT INDEX
- -------------
3(i) Articles of Incorporation of The National Bank of Indianapolis
Corporation
3(ii) By-laws of The National Bank of Indianapolis Corporation
10(i) 1993 Key Employees' Stock Option Plan
10(ii) 1993 Directors' Stock Option Plan
10(iii) 1993 Restricted Stock Plan
21 Subsidiaries of The National Bank of Indianapolis Corporation
27 Financial Data Schedules
64
Exhibit 3(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
The undersigned officer of The National Bank of Indianapolis
Corporation (hereinafter referred to as the "Corporation") pursuant to
the provisions of the Indiana Business Corporation Law, as amended,
executes the following Amended and Restated Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is The National Bank of
Indianapolis Corporation.
ARTICLE II
Registered Office and Agent
The street address of the Registered Office of the Corporation
is One Indiana Square, Suite 2800, Indianapolis, Indiana 46204 and the
name of the Corporation's initial Registered Agent at that office is
John W. Tanselle.
ARTICLE III
Authorized Shares
Section 1. Number of Shares. The total number of shares
of capital stock which the Corporation has authority to issue is
2,000,000 shares.
Section 2. Terms of Shares. All the authorized shares
shall be designated as "Common Stock", and each share of Common Stock
shall be equal to every other share of Common Stock. Except as
otherwise provided in these Articles of Incorporation, each share of
Common Stock shall participate equally in all earnings and profits of
the Corporation and on distribution of assets, either on dissolution,
liquidation or otherwise. The Common Stock is entitled to distributions
and dividends as and when declared by the Board of Directors out of the
funds of the Corporation legally available for the payment of dividends.
Section 3. Voting Rights. Except as otherwise provided
by these Articles of Incorporation, each holder of the Common Stock is
entitled to vote on all matters presented to shareholders and shall be
entitled on all matters, including election of directors, to one vote
for each share of Common Stock registered in his or her name on the
books of the Corporation.
<PAGE>
ARTICLE IV
Directors
Section 1. Number of Directors. The Board of Directors
is composed of one (1) member. The number of directors may be changed
from time to time by the By-Laws of the Corporation to any number. In
the absence of a By-Law fixing the number of directors, the number shall
be one (1).
Section 2. Qualifications of Directors. Directors shall
be residents of the State of Indiana. This Section 2 of Article IV
shall not be altered, amended, or repealed except by the affirmative
vote of the holders of outstanding shares of capital stock of the
Corporation representing 80% or more of the votes entitled to be cast on
such matter.
Section 3. Powers of Directors. In addition to the powers and
the authority granted by these Articles or by statute expressly
conferred, the Board of Directors of the Corporation is hereby
authorized to exercise all powers and to do all acts and things as may
be exercised or done under the laws of the State of Indiana by a
corporation organized and existing under the provisions of the Indiana
Business Corporation Law and not specifically prohibited or limited by
these Articles.
Section 4. Terms of Directors. The Board of Directors shall
be divided into three classes, designated as Class 1, Class 2 and Class
3, having as nearly an equal number of Directors in each class as
possible, with the term of office of one class expiring each year.
Additional directorships resulting from an increase in the number of
Directors shall be apportioned among the classes as equally as possible.
The initial term of office of Directors of Class 1 shall expire
at the Annual Meeting of Shareholders in 1994, but not until their
successors shall be elected and qualified; that of Class 2 shall expire
at the Annual Meeting of Shareholders in 1995, but not until their
successors shall be elected and qualified; and that of Class 3 shall
expire at the Annual Meeting of Shareholders in 1996, but not until
their successors shall be elected and qualified. Subject to the
foregoing, at each annual meeting of shareholders the successors to the
class of Directors whose term shall then expire shall be elected to hold
office for a term expiring at the third succeeding annual meeting and
until their successors shall be elected and qualified.
This Section 4 of Article IV shall not be altered, amended or
repealed except by an affirmative vote of the holders of outstanding
shares of capital stock of the Corporation representing 80% or more of
the votes entitled to be cast on such matter.
Section 5. Removal of Directors. Any Director may be removed
from office at any time without cause by the affirmative vote of the
holders of outstanding shares of capital stock of the Corporation
representing 80% or more of the votes entitled to be cast on the
election of Directors at a meeting of shareholders called for that
purpose.
2
<PAGE>
Any Director may be removed from office with cause by the
affirmative vote of the holders of capital stock of the Corporation
representing a majority of the votes entitled to be cast on the election
of Directors at a meeting of shareholders called for that purpose.
Cause for such removal shall be construed to exist only if:
(a) The Director whose removal is proposed has been
convicted, or where a Director has been granted immunity to testify
where another has been convicted, of a felony by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal;
or
(b) The Director has been adjudicated by a court of
competent jurisdiction to be liable for reckless or willful misconduct
in the performance of his duties to the Corporation in a matter of
substantial importance to the Corporation and such adjudication is no
longer subject to direct appeal.
Such removal must be brought within one (1) year of the date
that such conviction or adjudication is no longer subject to direct
appeal.
This Section 5 of Article IV shall not be altered, amended or
repealed except by an affirmative vote of the holders of outstanding
shares of capital stock of the Corporation representing 80% or more of
the votes entitled to be cast on such matter.
ARTICLE V
Incorporator
The name and post office address of the Incorporator of the
Corporation is John W. Tanselle, One Indiana Square, Suite 2800,
Indianapolis, Indiana 46204.
ARTICLE VI
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 1. By-Laws of the Corporation. The Board of
Directors by a majority vote of the actual number of directors elected
and qualified from time to time shall have the power, without the assent
or vote of the shareholders, to make, alter, amend or repeal the By-Laws
of the Corporation.
Section 2. Indemnification of Directors and Officers.
(a) Definitions. For purposes of this Section, the
following terms shall have the following meanings:
(1) "Liabilities" and "Expenses" shall mean
monetary obligations incurred by or on behalf of a director or
officer in connection with the investigation, defense or appeal
of a Proceeding or in satisfying a claim thereunder and shall
include, but shall not be limited to, attorneys' fees and
3
<PAGE>
disbursements, amounts of judgments, fines or penalties, excise
taxes assessed with respect to an employee benefit plan, and
amounts paid in settlement by or on behalf of a director or
officer.
(2) "Other Enterprise" shall mean any corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, whether for profit or not, for which a
director or officer is or was serving, at the request of the
Corporation, as a director, officer, partner, trustee, employee
or agent.
(3) "Proceeding" shall mean any claim, action,
suit or proceeding (whether brought by or in the right of the
Corporation or Other Enterprise or otherwise), civil, criminal,
administrative or investigative, whether formal or informal,
and whether actual or threatened or in connection with an
appeal relating thereto, in which a director or officer may
become involved, as a party or otherwise, (i) by reason of his
being or having been a director or officer of the Corporation
(and, if applicable, an officer, employee or agent of the
Corporation) or a director, officer, partner, trustee, employee
or agent of an Other Enterprise or arising out of his status as
such, or (ii) by reason of any past or future action taken or
not taken by a director or officer in any such capacity,
whether or not he continues to be such at the time he incurs
Liabilities and Expenses under the Proceeding.
(4) "Standard of Conduct" shall mean that a
director or officer, based on facts then known to the director
or officer, discharged the duties as a director or officer,
including duties as a member of a committee, in good faith in
what he reasonably believed to be in or not opposed to the best
interests of the Corporation or Other Enterprise, as the case
may be, and, in addition, in any criminal Proceeding had no
reasonable cause to believe that his conduct was unlawful. The
termination of any Proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction or upon
a plea of guilty, shall not create a presumption that the
director or officer did not meet the Standard of Conduct. The
termination of any Proceeding by a consent decree or upon a
plea of nolo contendere, or its equivalent, shall create the
presumption that the director or officer met the Standard of
Conduct.
(b) Indemnification. If a director or officer is made a
party to or threatened to be made a party to any Proceeding, the
Corporation shall indemnify the director or officer against Liabilities
and Expenses incurred by him in connection with such Proceeding in the
following circumstances:
(1) If a director or officer has been wholly
successful on the merits or otherwise with respect to any such
Proceeding, he shall be entitled to indemnification for
Liabilities and Expenses as a matter of right. If a Proceeding
is terminated against the director or officer by consent decree
or upon a plea of nolo contendere, or its equivalent, the
director or officer shall not be deemed to have been "wholly
successful" with respect to such Proceeding.
4
<PAGE>
(2) In all other situations, a director or officer
shall be entitled to indemnification for Liabilities and
Expenses as a matter of right unless (i) the director or
officer has breached or failed to perform his duties as a
director or officer in compliance with the Standard of Conduct
and (ii) with respect to any action or failure to act by the
director or officer which is at issue in such Proceeding, such
action or failure to act constituted willful misconduct or
recklessness. To be entitled to indemnification pursuant to
this Subparagraph b(2), the director or officer must notify the
Corporation of the commencement of the Proceeding in accordance
with Paragraph (e) and request indemnification. A review of the
request for indemnification and the facts and circumstances
underlying the Proceeding shall be made in accordance with one
of the procedures described below; and the director or officer
shall be entitled to indemnification as a matter of right
unless, in accordance with such procedure, it is determined
beyond a reasonable doubt that (i) the director or officer
breached or failed to perform the duties of the office in
compliance with the Standard of Conduct, and (ii) the breach or
failure to perform constituted willful misconduct or
recklessness. Any one of the following procedures may be used
to make the review and determination of a director's or
officer's request for indemnification under this Subparagraph
b(2):
(A) by the Board of Directors by a majority
vote of a quorum consisting of directors who are not
parties to, or who have been wholly successful with
respect to, such Proceeding;
(B) if a quorum cannot be obtained under (A)
above, by a majority vote of a committee duly
designated by the Board of Directors (in the
designation of which, directors who are parties to such
Proceeding may participate), consisting solely of two
or more directors who are not parties to, or who have
been wholly successful with respect to, such
Proceeding; or
(C) by independent legal counsel selected by
a majority vote of the full Board of Directors (in
which selection, directors who are parties to such
Proceeding may participate).
(D) by a committee consisting of three (3) or
more disinterested persons selected by a majority vote
of the full Board of Directors (in which selection,
directors who are parties to such Proceeding may
participate).
Any determination made in accordance with the above
procedures shall be binding on the Corporation and the
director or officer.
(3) If several claims, issues or matters of action
are involved, a director or officer may be entitled to
indemnification as to some matters even though he is not
entitled to indemnification as to other matters.
5
<PAGE>
(4) The indemnification herein provided shall be
applicable to Proceedings made or commenced after the adoption
of this Section, whether arising from acts or omissions to act
which occurred before or after the adoption of this Section.
(c) Prepaid Liabilities and Expenses. The Liabilities and
Expenses which are incurred or are payable by a director or officer in
connection with any Proceeding shall be paid by the Corporation in
advance, with the understanding and agreement between such director or
officer and the Corporation, that, in the event it shall ultimately be
determined as provided herein that the director or officer was not
entitled to be indemnified, or was not entitled to be fully indemnified,
the director or officer shall repay to the Corporation such amount, or
the appropriate portion thereof, so paid or advanced.
(d) Exceptions to Indemnification. Notwithstanding any
other provisions of this Section to the contrary, the Corporation shall
not indemnify a director or officer:
(1) for any Liabilities or Expenses incurred in a
suit against a director or officer for an accounting of profits
allegedly made from the purchase or sale of securities of the
Corporation brought pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 and any amendments
thereto or the provisions of any similar federal, state or
local statutory law; or
(2) for any Liabilities and Expenses for which
payment is actually made to or on behalf of a director or
officer under a valid and collectible insurance policy, except
in respect of any excess beyond the amount of payment under
such insurance.
(3) for any Liabilities or Expenses incurred in a
suit or claim against the director or officer arising out of or
based upon actions attributable to the director or officer in
which the director or officer gained any personal profit or
advantage to which he was not legally entitled.
(e) Notification and Defense of Proceeding. Promptly after
receipt by a director or officer of notice of the commencement of any
Proceeding, the director or officer will, if a request for
indemnification in respect thereof is to be made against the Corporation
under this Section, notify the Corporation of the commencement thereof;
but the failure to so notify the Corporation will not relieve it from
any obligation which it may have to the director or officer otherwise
than under this Section. With respect to any such Proceeding as to
which the director or officer notifies the Corporation of the
commencement thereof:
(1) the Corporation will be entitled to
participate therein at its own expense; and
(2) except as otherwise provided below, to the
extent that it may so desire, the Corporation, jointly with any
other indemnifying party similarly notified, will be entitled
to assume the defense thereof, with counsel reasonably
satisfactory to the director or officer. After notice from the
Corporation to the director or officer of its election to
6
<PAGE>
assume the defense of the director or officer in the
Proceeding, the Corporation will not be liable to the director
or officer under this Section for any legal or other Expenses
subsequently incurred by the director or officer in connection
with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The director or
officer shall have the right to employ counsel in such
Proceeding, but the Expenses of such counsel incurred after
notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the director or officer
unless:
(A) the employment of counsel by the director
or officer has been authorized by the Corporation;
(B) the director or officer shall have
reasonably concluded that there may be a conflict of
interest between the Corporation and the director or
officer in the conduct of the defense of such
Proceeding; or
(C) the Corporation shall not in fact have
employed counsel to assume the defense of such
Proceeding;
in each of which cases the Expenses of counsel employed by the
director or officer shall be paid by the Corporation. The
Corporation shall not be entitled to assume the defense of any
Proceeding brought by or in the right of the Corporation or as
to which the director or officer shall have made the conclusion
provided for in (B) above.
(3) The Corporation shall not be liable to
indemnify a director or officer under this Section for any
amounts paid in settlement of any Proceeding without the
Corporation's prior written consent. The Corporation shall not
settle any action or claim in any manner which would impose any
penalty or limitation on a director or officer without the
director or officer's prior written consent. Neither the
Corporation nor a director or officer will unreasonably
withhold its or his consent to any proposed settlement.
(f) Other Rights and Remedies. The rights of
indemnification provided under this Section are not exhaustive and shall
be in addition to any rights to which a director or officer may
otherwise be entitled by contract or as a matter of law. Irrespective
of the provisions of this Section, the Corporation may, at any time and
from time to time, indemnify directors, officers, employees and other
persons to the full extent permitted by the provisions of the Indiana
Business Corporation Law, or any successor law, as then in effect,
whether with regard to past or future matters.
(g) Continuation of Indemnity. All obligations of the
Corporation under this Section shall survive the termination of a
director's or officer's service in any capacity covered by this Section.
(h) Insurance. The Corporation may purchase and maintain
insurance on behalf of any director, officer or other person or any
person who is or was serving at the request of the Corporation as a
director, officer, partner, trustee or agent of an Other Enterprise
against any liability asserted against such person and incurred by such
7
<PAGE>
person in any capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify such person
against such liability under the provisions of applicable statutes, this
Section or otherwise.
(i) Benefit. The provisions of this Section shall inure to
the benefit of each director or officer and his respective heirs,
personal representatives and assigns and the Corporation, its successors
and assigns.
(j) Severability. In case any one or more of the
provisions contained in this Section shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of
this Section, but this Section shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been
contained herein.
Section 3. Voting Rights on Certain Business Combinations.
The affirmative vote of the holders of outstanding shares of capital
stock of the Corporation representing 80% or more of the votes entitled
to be cast shall be required to approve any business combination (as
hereinafter defined) which is not approved and recommended by the vote
of at least eighty percent (80%) of the entire Board of Directors of the
Corporation. All other business combinations shall require the
affirmative vote of the holders of outstanding shares of capital stock
of the Corporation representing a majority of the votes entitled to be
cast. This Section 3 of Article VI shall not be altered, amended or
repealed except by the affirmative vote of the holders of outstanding
shares of capital stock of the Corporation representing 80% or more of
the votes entitled to be cast on such matter, given at a shareholders
meeting duly called for that purpose, on a proposal adopted and
recommended by a vote of at least eighty percent (80%) of the entire
Board of Directors of the Corporation.
A "business combination" as utilized herein of this Article V
shall include:
(a) Any merger or consolidation of the Corporation with or
into any other corporation;
(b) Any sale, lease, exchange, pledge, transfer or other
disposition, in one transaction or a series of transactions, of any
material portion of the assets of the Corporation or any subsidiary
thereof to or with any other corporation, person or entity; or
(c) Any liquidation or dissolution of the Corporation or
any material subsidiary thereof or adoption of any plan with respect
thereto.
Section 4. Consideration of Non-Financial Factors. In
connection with the exercise of its judgment in determining what is in
the best interest of the Corporation and shareholders when evaluating a
business combination (as defined in Article VI, Section 3 above) or a
tender or exchange offer, the Board of Directors of the Corporation
shall, in addition to considering the adequacy of the amount to be paid
in connection with any such transaction, consider all the following
factors and any other factors which it deems relevant:
8
<PAGE>
(i) The social and economic effects of the
transaction on the Corporation and its
subsidiaries, employees, depositors, loan and
other customers, creditors and other elements
of the communities in which the Corporation
and its subsidiaries operate or are located;
(ii) The business and financial condition and
earnings prospects of the acquiring person or
persons, including, but not limited to, debt
service and other existing or likely financial
obligations of the acquiring person or
persons, and the possible effect of such
conditions upon the Corporation and its
subsidiaries and the other elements of the
communities in which the Corporation and its
subsidiaries operate or are located; and
(iii) The competence, experience and integrity of
the acquiring person or persons and its or
their management.
This Section 4 of Article VI shall not be altered, amended or
repealed except by the affirmative vote of the holders of outstanding
shares of capital stock of the Corporation representing 80% or more of
the votes entitled to be cast on such matter.
Section 5. Business Combination Act. The Corporation shall be
subject to and be governed by the provisions of the Business
Combinations Act, codified at Indiana Code Section 23-1-43, as amended
from time to time.
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Exhibit 3(i)
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
The National Bank of Indianapolis Corporation (hereinafter
referred to as the "Corporation"), existing pursuant to the Indiana
Business Corporation Law, as amended ("IBCL"), desiring to give notice
of corporate action effectuating the amendment of its Articles of
Incorporation, hereby sets forth the following facts:
ARTICLE I
AMENDMENT
SECTION 1: The date of incorporation of the Corporation is
January 29, 1993.
SECTION 2: The name of the Corporation following this
amendment to the Articles of Incorporation is The National Bank of
Indianapolis Corporation.
SECTION 3: The exact text of Article III, Section 1 of the
Corporation's Articles of Incorporation is now as follows:
ARTICLE III
AUTHORIZED SHARES
Section 1. Number of Shares:
The total number of shares of capital stock which the
Corporation has authority to issue is 3,000,000 shares.
SECTION 4: The date of adoption of the amendment set forth in
Section 3 above is May 18, 1995.
ARTICLE II
MANNER OF ADOPTION AND VOTE
SECTION 1: At a meeting held on April 20, 1995, the Board of
Directors of the Corporation unanimously adopted resolutions approving
and submitting to a vote of the shareholders of the Corporation a
proposed amendment to the Corporation's Articles of Incorporation.
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SECTION 2: The designation of stock held, number of
outstanding shares, number of votes entitled to be cast by each voting
group entitled to vote separately on the Amendment and the number of
votes of each voting group represented at the meeting or by unanimous
consent are set forth as follows:
Common
DESIGNATION OF EACH VOTING GROUP TOTAL Stock
---------------------------
Number of Outstanding Shares . . . . . . . . . . 1,414,787 1,414,787
Number of Votes Entitled to be Cast. . . . . . . 1,414,787 1,414,787
Number of Votes Represented at
Meeting or Resolutions Adopted
by Unanimous Written Consent
Without a Meeting . . . . . . . . . . . . . . . 856,939 856,939
Shares Voted in Favor . . . . . . . . . . . . . 829,269 829,269
Shares Voted Against . . . . . . . . . . . . . 16,000 16,000
ARTICLE III
COMPLIANCE WITH LEGAL REQUIREMENTS
The manner of the adoption of the Articles of Amendment and the
vote by which they were adopted constitute full legal compliance with
the provisions of the IBCL, the Articles of Incorporation, and the
By-Laws of the Corporation.
2
Exhibit 3(ii)
BY-LAWS
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
ARTICLE I
Section 1. Name. The name of the corporation is The
National Bank of Indianapolis Corporation ("Corporation").
Section 2. Registered Office and Registered Agent. The
street address of the Registered Office of the Corporation is One
Indiana Square, Suite 2800, Indianapolis, Indiana 46204, and the name of
its Registered Agent at that office is John W. Tanselle.
Section 3. Seal. Unless otherwise required by law, the
Corporation shall not be required to use a seal. If the Board of
Directors of the Corporation determines that the Corporation shall use a
seal, the seal shall be circular in form and mounted upon a metal die,
suitable for impressing the same upon paper. About the upper periphery
of the seal shall appear the words "The National Bank of Indianapolis
Corporation" and about the lower periphery thereof the word "Indiana".
In the center of the seal shall appear the word "Seal".
ARTICLE II
The fiscal year of the Corporation shall begin each year on the
first day of January and end on the last day of December of the same
year.
ARTICLE III
Capital Stock
Section 1. Number of Shares and Classes of Capital Stock.
The total number of shares of capital stock which the Corporation shall
have authority to issue shall be as set forth in the Corporation's
Articles of Incorporation from time to time. The capital stock shall
have unlimited voting rights and shall be entitled to receive the net
assets of the Corporation upon dissolution.
Consideration for Shares. The shares of stock of the
Corporation shall be issued or sold in such manner and for such amount
of consideration, received or to be received, as may be fixed from time
to time by the Board of Directors. Upon payment of the consideration
fixed by the Board of Directors, such shares of stock shall be fully
paid and nonassessable
Payment for Shares. The consideration determined by the Board
of Directors to be required for the issuance of shares of capital stock
of the Corporation may consist of any tangible or intangible property or
<PAGE>
benefit to the Corporation, including cash, promissory notes, services
performed, contracts for services to be performed, or other securities
of the Corporation.
If the Board of Directors authorizes the issuance of shares for
promissory notes or for promises to render services in the future, the
Corporation shall report in writing to the shareholders the number of
shares authorized to be so issued with or before the notice of the next
shareholders' meeting.
The Corporation may place in escrow shares issued for a
contract for future services or benefits or a promissory note, or make
other arrangements to restrict the transfer of the shares, and may
credit distributions in respect of the shares against their purchase
price, until the services are performed, the note is paid, or the
benefits received. If the services are not performed, the note is not
paid, or the benefits are not received, the shares escrowed or
restricted and the distributions credited may be cancelled in whole or
in part.
When payment of the consideration for which a share was
authorized to be issued shall have been received by the Corporation,
such share shall be declared and taken to be fully paid and not liable
to any further call or assessment, and the holder thereof shall not be
liable for any further payments thereon. In the absence of actual fraud
in the transaction, the judgment of the Board of Directors as to the
value of such property, labor or services received as consideration, or
the value placed by the Board of Directors upon the corporate assets in
the event of a share dividend, shall be conclusive.
Section 4 Certificate for Shares. Each holder of capital
stock of the Corporation shall be entitled to a stock certificate,
signed by the President or a Vice President and the Secretary or any
Assistant Secretary of the Corporation, stating the name of the
registered holder, the number of shares represented by such certificate,
and that such shares are fully paid and nonassessable, provided, that if
such shares are not fully paid, the certificates shall be legibly
stamped to indicate the percent which has been paid, and as further
payments are made, the certificate shall be stamped accordingly.
If the Corporation is authorized to issue shares of more than
one class, every certificate shall state the kind and class of shares
represented thereby, and the relative rights, interests, preferences and
restrictions of such class, or a summary thereof; provided, that such
statement may be omitted from the certificate if it shall be
conspicuously set forth upon the face or back of the certificate that
such statement, in full, will be furnished by the Corporation to any
shareholder upon written request and without charge.
Section 5. Facsimile Signatures. If a certificate is
countersigned by the written signature of a transfer agent other than
the Corporation or its employee, the signatures of the officers of the
Corporation may be facsimiles. If a certificate is countersigned by the
written signature of a registrar other than the Corporation or its
employee, the signatures of the transfer agent and the officers of the
Corporation may be facsimiles. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent,
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or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of its issue.
Section 6. Transfer of Shares. The shares of capital
stock of the Corporation shall be transferable only on the books of the
Corporation upon surrender of the certificate or certificates
representing the same, properly endorsed by the registered holder or by
his duly authorized attorney or accompanied by proper evidence of
succession, assignment or authority to transfer.
The Corporation may impose restrictions on the transfer or
registration of transfer of capital stock of the Corporation by means of
these By-laws, the Articles of Incorporation, or by an agreement with
shareholders. Shareholders may agree between themselves to impose a
restriction on the transfer or registration of transfer of shares. A
restriction which is authorized by the Indiana Business Corporation Law
and which has its existence noted conspicuously on the front or back of
the Corporation's stock certificate is valid and enforceable against the
holder or a transferee of the holder of the Corporation's stock
certificate. If noted on the certificate the restriction is enforceable
against a person without knowledge of the restriction.
Section 7. Cancellation. Every certificate surrendered
to the Corporation for exchange or transfer shall be cancelled, and no
new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 9 of this Article
III.
Section 8. Transfer Agent and Registrar. The Board of
Directors may appoint a transfer agent and a registrar for each class of
capital stock of the Corporation and may require all certificates
representing such shares to bear the signature of such transfer agent
and registrar. Shareholders shall be responsible for notifying the
transfer agent and registrar for the class of stock held by such
shareholder in writing of any changes in their addresses from time to
time, and failure so to do shall relieve the Corporation, its
shareholders, directors, officers, transfer agent and registrar of
liability for failure to direct notices, dividends, or other documents
or property to an address other than the one appearing upon the records
of the transfer agent and registrar of the Corporation.
Section 9. Lost, Stolen or Destroyed Certificates. The
Corporation may cause a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the Corporation may, in
its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Corporation a
bond in such sum and in such form as it may direct to indemnify against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed or the
issuance of such new certificate. The Corporation, in its discretion,
may authorize the issuance of such new certificates without any bond
when, in its judgment, it is proper to do so.
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Section 10. Registered Shareholders. The Corporation
shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of such shares to receive
dividends, to vote as such owner, to hold liable for calls and
assessments, and to treat as owner in all other respects, and shall not
be bound to recognize any equitable or other claims to or interest in
such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided
by the laws of Indiana.
ARTICLE IV
Meetings of Shareholders
Section 1. Place of Meeting; Conference Telephone
Meetings. Meetings of shareholders of the Corporation shall be held at
such place, within or without the State of Indiana, as may from time to
time be designated by the Board of Directors, or as may be specified in
the notices or waivers of notice of such meetings. A shareholder may
participate in a shareholders' meeting by means of a conference
telephone or similar communications equipment by which all persons
participating in the meeting can communicate with each other, and
participating by these means constitutes presence in person at the
meeting.
Section 2. Annual Meeting. The annual meeting of
shareholders for the election of directors, and for the transaction of
such other business as may properly come before the meeting, shall be
held on such day and at such time within six (6) months following the
close of the Corporation's fiscal year as the Board of Directors may set
by resolution. Failure to hold the annual meeting within such time
period shall not work any forfeiture or a dissolution of the
Corporation, and shall not affect otherwise valid corporate acts.
Section 3. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed
by statute or by the Articles of Incorporation, may be called by the
Board of Directors or the President and shall be called by the President
or Secretary at the request in writing of a majority of the Board of
Directors, or at the request of shareholders holding of record not less
than one-fourth of all the shares outstanding and entitled by the
Articles of Incorporation to vote on the business for which the meeting
is being called. Such request by the shareholders shall be in writing,
signed by all of such shareholders (or their duly authorized proxies),
dated and delivered to the Corporation's secretary.
Section 4. Notice of Meetings. A written or printed
notice, stating the place, day and hour of the meeting, and in case of a
special meeting, or when required by any other provision of the Indiana
Business Corporation Law, or of the Articles of Incorporation, as now or
hereafter amended, or these By-Laws, the purpose or purposes for which
the meeting is called, shall be delivered or mailed by the Secretary, or
by the officers or persons calling the meeting, to each shareholder of
record entitled by the Articles of Incorporation, as now or hereafter
amended, and by the Indiana Business Corporation Law to vote at such
meeting, at such address as appears upon the records of the Corporation,
at least ten (10) days and no more than sixty (60) days before the date
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<PAGE>
of the meeting. Notice of any such meeting may be waived in writing by
any shareholder, if the waiver sets forth in reasonable detail the
purpose or purposes for which the meeting is called, and the time and
place thereof. Attendance at any such meeting in person, or by proxy,
shall constitute a waiver of notice of such meeting. Each shareholder,
who has in the manner above provided waived notice of the shareholders'
meeting, or who personally attends a shareholders' meeting, or is
represented thereat by a proxy authorized to appear by an instrument of
proxy, shall be conclusively presumed to have been given due notice of
such meeting. Notice of any adjourned meeting of shareholders shall not
be required to be given if the time and place thereof are announced at
the meeting at which the adjournment is taken, except as may be
expressly required by law.
Section 5. Addresses of Shareholders. The address of any
shareholder appearing on the records of the Corporation or appearing on
the records maintained by the Transfer Agent if the Corporation has
appointed a Transfer Agent shall be deemed to be the latest address of
such shareholder for the class of stock held by such shareholder.
Section 6. Voting at Meetings.
(a)Quorum. The holders of record of a majority of the issued
and outstanding stock of the Corporation entitled to vote at such
meeting, present in person or by proxy, shall constitute a quorum at all
meetings of stockholders for the transaction of business, except where
otherwise provided by law, the Articles of Incorporation or these
By-Laws. In the absence of a quorum, any officer entitled to preside
at, or act as secretary of, such meeting shall have the power to adjourn
the meeting from time to time until a quorum shall be constituted. At
any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
original meeting, but only those stockholders entitled to vote at the
original meeting shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board of
Directors for the adjourned meeting.
(b) Voting Rights. Except as otherwise provided by law or
by the provisions of the Articles of Incorporation, every shareholder
shall have the right at every shareholders' meeting to one vote for each
share of stock having voting power, registered in his name on the books
of the Corporation on the date for the determination of shareholders
entitled to vote, on all matters coming before the meeting including the
election of directors. At any meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote in
person, or by proxy executed in writing by the shareholder or a duly
authorized attorney-in-fact and bearing a date not more than eleven
months prior to its execution, unless a longer time is expressly
provided therein.
(c) Required Vote. When a quorum is present at any
meeting, action on a matter (other than the election of directors) is
approved if the votes cast favoring the action exceed the votes cast
opposing the action unless the Indiana Business Corporation Law or the
Articles of Incorporation require a greater number of affirmative votes.
Unless otherwise provided in the Articles of Incorporation, directors
are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
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(d) Validity of a Vote, Consent, Waiver or Proxy Appointment.
If the name on a vote, consent, waiver, or proxy appointment corresponds
to the name of a shareholder, the Corporation if acting in good faith
may accept the vote, consent, waiver, or proxy appointment and give it
effect as the act of the shareholder. The Corporation may reject a
vote, consent, waiver, or proxy appointment if the authorized tabulation
officer, acting in good faith, has a reasonable basis for doubt about
the validity of the signature, or the signatory's authority. If so
accepted or rejected, the Corporation and its officer are not liable in
damages to the shareholder for any consequences of the rejection. Any
of the Corporation's actions based on an acceptance or rejection of a
vote, consent, waiver or proxy appointment under this Section is valid
unless a court of competent jurisdiction determines otherwise.
Section 7. Voting List. The transfer agent (or, if the
Corporation has no transfer agent, the Secretary) of the Corporation
shall make before each meeting of shareholders, a complete list of the
shareholders entitled by the Articles of Incorporation, as now or
hereafter amended, to vote at such meeting, arranged in alphabetical
order, with the address and number of shares so entitled to vote held by
each shareholder. Such list shall be produced and kept open at the time
and place of the meeting of shareholders and subject to the inspection
of any shareholder during the holding of such meeting.
Section 8. Fixing of Record Date to Determine
Shareholders Entitled to Vote. The Board of Directors may prescribe a
period not exceeding seventy (70) days prior to meetings of the
shareholders, during which no transfer of stock on the books of the
Corporation may be made; or, in lieu of prohibiting the transfer of
stock may fix a day and hour not more than seventy (70) days prior to
the holding of any meeting of shareholders as the time as of which
shareholders entitled to notice of, and to vote at, such meeting shall
be determined, and all persons who are holders of record of voting stock
at such time, and no others, shall be entitled to notice of, and to vote
at, such meeting. In the absence of such a determination, such date and
time shall be the close of business on the tenth (10th) day prior to the
date of such meeting. Any determination of shareholders entitled to
notice of or to vote at a shareholders meeting is effective for any
adjournment of the meeting unless the Board of Directors fixes a new
record date, which is only required if the meeting is adjourned to a
date more than one hundred twenty (120) days after the date fixed for
the original meeting.
Section 9. Consent Action by Shareholders. Any action
required or permitted to be taken at a shareholders' meeting may be
taken without a meeting, if one (1) or more written consents describing
the action taken are signed by all the shareholders entitled to vote on
the action, and delivered to the Corporation for inclusion in the
minutes or filing with the corporate records. Action taken under this
section is effective when the last shareholder entitled to vote on the
action signs the consent, unless the consent specifies a different,
prior or subsequent effective date.
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ARTICLE V
Board of Directors
Section 1. Election, Number and Term of Office.
Directors shall be elected at the annual meeting of shareholders, or, if
not so elected, at a special meeting of shareholders called for that
purpose, by the holders of the shares of stock entitled by the Articles
of Incorporation to elect directors.
The number of directors of the Corporation to be elected by the
holders of the shares of stock entitled by the Articles of Incorporation
to elect directors shall be eight (8) unless changed by amendment of
this section.
All directors elected by the holders of such shares, except in
the case of earlier resignation, removal or death, shall hold office
until their respective successors are chosen and qualified. Directors
need not be shareholders of the Corporation.
Section 2. Vacancies. Any vacancy occurring in the Board
of Directors caused by resignation, death or other incapacity shall be
filled by a majority vote of the remaining members of the Board of
Directors, until the next annual meeting of the shareholders. If the
vote of the remaining members of the Board shall result in a tie, such
vacancy, at the discretion of the Board of Directors, may be filled by
vote of the shareholders at a special meeting called for that purpose.
Any vacancy on the Board of Directors caused by an increase in
the number of directors shall be filled by a majority vote of the
members of the Board of Directors, until the next annual or special
meeting of the shareholders at which directors are elected or, at the
discretion of the Board of Directors, such vacancy may be filled by vote
of the shareholders at a special meeting called for that purpose. No
decrease in the number of directors shall have the effect of shortening
the term of any incumbent director.
Section 3. Annual Meeting of Directors. The Board of
Directors shall meet each year immediately after the annual meeting of
the shareholders, at the place where such meeting of the shareholders
has been held either within or without the State of Indiana, for the
purpose of organization, election of officers, and consideration of any
other business that may properly come before the meeting. No notice of
any kind to either old or new members of the Board of Directors for such
annual meeting shall be necessary.
Section 4. Regular Meetings. Regular meetings of the
Board of Directors, if any, shall be held at such times and places,
either within or without the State of Indiana, as may be fixed by the
directors. Such regular meetings of the Board of Directors may be held
without notice or upon such notice as may be fixed by the directors.
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Section 5. Special Meetings. Special meetings of the
Board of Directors may be called by the President or by not less than a
majority of the members of the Board of Directors. Notice of the time
and place, either within or without the State of Indiana, of a special
meeting shall be served upon or telephoned to each director at least
twenty-four hours, or sent by mail, telegraph, cable, telecopy or
over-night courier to each director at his usual place of business or
residence at least forty-eight hours prior to the time of the meeting.
Directors, in lieu of such notice, may sign a written waiver of notice
either before the time of the meeting, at the meeting or after the
meeting. Attendance by a director in person at any such special meeting
shall constitute a waiver of notice.
Section 6. Conference Telephone Meetings. A member of
the Board of Directors may participate in a meeting of the Board by
means of a conference telephone or similar communications equipment by
which all persons participating in the meeting can communicate with each
other, and participation by these means constitutes presence in person
at the meeting.
Section 7. Quorum. A majority of the actual number of
directors elected and qualified, from time to time, shall be necessary
to constitute a quorum for the transaction of any business except the
filling of vacancies, and the act of a majority of the directors present
at the meeting, at which a quorum is present, shall be the act of the
Board of Directors, unless the act of a greater number is required by
the Indiana Business Corporation Law, by the Articles of Incorporation,
or by these By-Laws. A director, who is present at a meeting of the
Board of Directors or a committee of the Board of Directors, at which
action on any corporate matter is taken, shall be conclusively presumed
to have assented to the action taken, unless (a) he objects at the
beginning of the meeting (or promptly upon his arrival) to holding the
meeting or transacting business at the meeting, (b) his dissent or
abstention from the action taken is entered in the minutes of the
meeting, or (c) he delivers written notice of his dissent or abstention
to the presiding officer of the meeting before its adjournment or to the
Secretary of the Corporation immediately after adjournment of the
meeting. The right of dissent or abstention is not available to a
director who votes in favor of the action taken.
Section 8. Consent Action by Directors. Any action
required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting, if
one (1) or more written consents describing the action taken are signed
by all members of the Board of Directors or such committee, as the case
may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee, or filed with the
corporate records reflecting the action taken. Action taken under this
section is effective when the last director signs the consent, unless
the consent specifies a different, prior or subsequent effective date.
Section 9. Removal of Directors. Unless otherwise
provided in Articles of Incorporation, any or all members of the Board
of Directors may be removed, with or without cause, only by the
affirmative vote of a majority of the total number of shares entitled to
vote for the election of directors at a meeting called for that purpose.
Section 10. Resignations. Any director may resign at any
time by giving written notice to the Board of Directors, to the
President or to the Secretary. Any such resignation shall take effect
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upon receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 11. Distributions. The Board of Directors shall
have power, subject to any restrictions and limitations contained in the
Indiana Business Corporation Law or in the Articles of Incorporation, to
declare and pay distributions upon the outstanding capital stock of the
Corporation to its shareholders as and when they deem expedient.
Section 12. Fixing of Record Date to Determine
Shareholders Entitled to Receive Corporate Benefits. The Board of
Directors may fix a record date, declaration date and payment date with
respect to any share dividend or distribution to the Corporation's
shareholders. If no record date is fixed for the determination of
shareholders entitled to receive payment of a distribution, the end of
the day on which the resolution of the Board of Directors declaring such
dividend is adopted shall be the record date for such determination.
Section 13. Interest of Directors in Contracts. Any
contract or other transaction between the Corporation and any
corporation in which this Corporation owns a majority of the capital
stock or between the Corporation and any corporation which owns a
majority of the capital stock of the Corporation shall be valid and
binding, notwithstanding that the directors or officers of this
Corporation are identical or that some or all of the directors or
officers, or both, are also directors or officers of such other
corporation.
Any contract or other transaction with the Corporation in which
a director of the Corporation has a direct or indirect interest is not
voidable by the Corporation solely because of the director's interest in
the transaction, if any one (1) of the following is true:
(a) The material facts of the transaction and the
director's interest were disclosed or known to the Board of Directors or
a committee of the Board of Directors and the Board of Directors or
committee authorized, approved, or ratified the transaction; or
(b) The material facts of the transaction and the
director's interest were disclosed or known to the shareholders entitled
to vote and they authorized, approved, or ratified the transaction; or
(c) The transaction was fair to the Corporation.
A transaction is authorized, approved, or ratified if it
receives the affirmative vote of a majority of the directors on the
Board of Directors or on the committee who have no direct or indirect
interest in the transaction, but it cannot be authorized, approved or
ratified by a single director. If a majority of the directors who have
no direct or indirect interest in the transaction vote to authorize,
approve or ratify the transaction, a quorum is present for the purposes
of this Section. The presence of, or a vote cast by, a director with a
direct or indirect interest in the transaction does not affect the
validity of any transaction if it is otherwise authorized, approved, or
ratified as provided in this Section.
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Shares owned by or voted under the control of a director who
has a direct or indirect interest in the transaction, and shares owned
by or voted under the control of an entity in which the director has a
direct or indirect interest, may be counted in a vote of shareholders to
determine whether to authorize, approve, or ratify a conflict of
interest transaction under Subsection (b).
For purposes of this Section, a director of the Corporation has
an indirect interest in a transaction if:
(i) Another entity in which the director has a
material financial interest or in which the director is a
general partner is a party to the transaction; or
(ii) Another entity of which the director is a
director, officer or trustee is a party to the transaction and
the transaction is, or is required to be, considered by the
Board of Directors of the Corporation.
This Section shall not be construed to invalidate any contract
or other transaction which would otherwise be valid under the common and
statutory law applicable thereto.
Section 14. Committees. The Board of Directors may, by
resolution adopted by a majority of the actual number of directors
elected and qualified, from time to time, designate from among its
members an executive committee and one or more other committees, each of
which, to the extent provided in the resolution, the Articles of
Incorporation, or these By-Laws, may exercise all of the authority of
the Board of Directors of the Corporation. However, no such committee
has the authority to (a) authorize distributions (except a committee may
authorize or approve a reacquisition of shares if done according to a
formula or method, or within a range, prescribed by the Board of
Directors), (b) approve or propose to shareholders action that the
Indiana Business Corporation Law requires to be approved by
shareholders, (c) fill vacancies on the Board of Directors or any of its
committees, (d) amend the Articles of Incorporation, (e) adopt, amend or
repeal the By-laws, (f) approve a plan of merger not requiring
shareholder approval, or (g) authorize or approve the issuance or sale
or a contract for sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class or series of
shares, except the Board of Directors may authorize a committee to take
the action described in this subsection within limits prescribed by the
Board of Directors. No member of any such committee shall continue to be
a member thereof after he ceases to be a director of the Corporation.
ARTICLE VI
Officers
Section 1. Principal Officers. The principal officers of
the Corporation shall be a Chairman of the Board, a President, a
Treasurer, a Secretary, and such Vice Presidents as may be determined
from time to time by the Board of Directors. The Corporation may also
have, at the discretion of the Board of Directors, such other
subordinate officers as may be appointed in accordance with the
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provisions of these By-Laws. The same individual may hold more than one
office at any time, and a single individual may hold all of the offices
at any time.
Section 2. Election and Term of Office. The principal
officers of the Corporation shall be chosen annually by the Board of
Directors at the annual meeting thereof. Each such officer shall hold
office until his successor shall have been duly chosen and qualified, or
until his death, or until he shall resign, or shall have been removed in
the manner hereinafter provided.
Section 3. Removal. Any principal officer may be
removed, either with or without cause, at any time, by resolution
adopted at any meeting of the Board of Directors by a majority of the
actual number of directors elected and qualified from time to time.
Section 4. Subordinate Officers. In addition to the
principal officers enumerated in Section 1 of this Article VI, the
Corporation may have one or more Assistant Treasurers, one or more
Assistant Secretaries and such other officers, agents and employees as
the Board of Directors may deem necessary, each of whom shall hold
office for such period, may be removed with or without cause, have such
authority, and perform such duties as the President, or the Board of
Directors may from time to time determine. The Board of Directors may
delegate to any principal officer the power to appoint and to remove any
such subordinate officers, agents or employees.
Section 5. Resignations. Any officer may resign at any
time by giving written notice to the Board of Directors, to the
President or to the Secretary. Any such resignation shall take effect
upon receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6. Vacancies. Any vacancy in any office for any
cause may be filled for the unexpired portion of the term in the manner
prescribed in these By-Laws for election or appointment to such office
for such term.
Section 7. Chairman of the Board. The Chairman of the
Board, who shall be chosen from among the directors, shall preside at
all meetings of shareholders and at all meetings of the Board of
Directors. He shall perform such other duties and have such other
powers as, from time to time, may be assigned to him by the Board of
Directors.
Section 8. President. The President shall be the chief
executive officer of the Corporation and as such shall have general
supervision of the affairs of the Corporation, subject to the control of
the Board of Directors. He shall be an ex officio member of all
standing committees. Subject to the control and direction of the Board
of Directors, the President may enter into any contract or execute and
deliver any instrument in the name and on behalf of the Corporation. In
general, he shall perform all duties and have all the powers incident to
the office of President, as herein defined, and all such other duties
and powers as, from time to time, may be assigned to him by the Board of
Directors.
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Section 9. Vice Presidents. The Executive Vice
President, if one has been appointed, and then the Vice Presidents in
the order of their seniority, unless otherwise determined by the Board
of Directors, shall, in the absence or disability of the President and
Executive Vice President, perform the duties and exercise the powers of
the President. They shall perform such other duties and have such other
powers as the President or the Board of Directors may from time to time
assign.
Section 10. Treasurer. The Treasurer shall have charge
and custody of, and be responsible for, all funds and securities of the
Corporation and shall deposit all such funds in the name of the
Corporation in such banks or other depositories as shall be selected by
the Board of Directors. He shall upon request exhibit at all reasonable
times his books of account and records to any of the directors of the
Corporation during business hours at the office of the Corporation where
such books and records shall be kept; shall render upon request by the
Board of Directors a statement of the condition of the finances of the
Corporation at any meeting of the Board of Directors or at the annual
meeting of the shareholders; shall receive, and give receipt for, moneys
due and payable to the Corporation from any source whatsoever; and in
general, shall perform all duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the
President or the Board of Directors. The Treasurer shall give such
bond, if any, for the faithful discharge of his duties as the Board of
Directors may require.
Section 11. Secretary. The Secretary shall keep or cause
to be kept in the books provided for that purpose the minutes of the
meetings of the shareholders and of the Board of Directors; shall duly
give and serve all notices required to be given in accordance with the
provisions of these By-Laws and by the Indiana Business Corporation Law;
shall be custodian of the records and of the seal of the Corporation and
see that the seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these By-Laws; and, in general, shall
perform all duties incident to the office of Secretary and such other
duties as may, from time to time, be assigned to him by the President or
the Board of Directors.
Section 12. Salaries. The salaries of the principal
officers shall be fixed from time to time by the Board of Directors, and
the salaries of any subordinate officers may be fixed by the President.
Section 13. Voting Corporation's Securities. Unless
otherwise ordered by the Board of Directors, the President and
Secretary, and each of them, are appointed attorneys and agents of the
Corporation, and shall have full power and authority in the name and on
behalf of the Corporation, to attend, to act, and to vote all stock or
other securities entitled to be voted at any meetings of security
holders of corporations, or associations in which the Corporation may
hold securities, in person or by proxy, as a stockholder or otherwise,
and at such meetings shall possess and may exercise any and all rights
and powers incident to the ownership of such securities, and which as
the owner thereof the Corporation might have possessed and exercised, if
present, or to consent in writing to any action by any such other
corporation or association. The Board of Directors by resolution from
time to time may confer like powers upon any other person or persons.
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ARTICLE VII
Indemnification of Directors and Officers.
Section 1. Definitions. For purposes of this Article,
the following terms shall have the following meanings:
(a) "Liabilities" and "Expenses" shall mean
monetary obligations incurred by or on behalf of a director or
officer in connection with the investigation, defense or appeal
of a Proceeding or in satisfying a claim thereunder and shall
include, but shall not be limited to, attorneys' fees and
disbursements, amounts of judgments, fines or penalties, excise
taxes assessed with respect to an employee benefit plan, and
amounts paid in settlement by or on behalf of a director or
officer.
(b) "Other Enterprise" shall mean any corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, whether for profit or not, for which a
director or officer is or was serving, at the request of the
Corporation, as a director, officer, partner, trustee, employee
or agent.
(c) "Proceeding" shall mean any claim, action,
suit or proceeding (whether brought by or in the right of the
Corporation or Other Enterprise or otherwise), civil, criminal,
administrative or investigative, whether formal or informal,
and whether actual or threatened or in connection with an
appeal relating thereto, in which a director or officer may
become involved, as a party or otherwise, (i) by reason of his
being or having been a director or officer of the Corporation
(and, if applicable, an officer, employee or agent of the
Corporation) or a director, officer, partner, trustee, employee
or agent of an Other Enterprise or arising out of his status as
such, or (ii) by reason of any past or future action taken or
not taken by a director or officer in any such capacity,
whether or not he continues to be such at the time he incurs
Liabilities and Expenses under the Proceeding.
(d) "Standard of Conduct" shall mean that a
director or officer, based on facts then known to the director
or officer, discharged the duties as a director or officer,
including duties as a member of a committee, in good faith in
what he reasonably believed to be in or not opposed to the best
interests of the Corporation or Other Enterprise, as the case
may be, and, in addition, in any criminal Proceeding had no
reasonable cause to believe that his conduct was unlawful. The
termination of any Proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction or upon
a plea of guilty, shall not create a presumption that the
director or officer did not meet the Standard of Conduct. The
termination of any Proceeding by a consent decree or upon a
plea of nolo contendere, or its equivalent, shall create the
presumption that the director or officer met the Standard of
Conduct.
Section 2. Indemnification. If a director or officer is
made a party to or threatened to be made a party to any Proceeding, the
Corporation shall indemnify the director or officer against Liabilities
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and Expenses incurred by him in connection with such Proceeding in the
following circumstances:
(a) If a director or officer has been wholly
successful on the merits or otherwise with respect to any such
Proceeding, he shall be entitled to indemnification for
Liabilities and Expenses as a matter of right. If a Proceeding
is terminated against the director or officer by consent decree
or upon a plea of nolo contendere, or its equivalent, the
director or officer shall not be deemed to have been "wholly
successful" with respect to such Proceeding; or
(b) In all other situations, a director or officer
shall be entitled to indemnification for Liabilities and
Expenses as a matter of right unless (i) the director or
officer has breached or failed to perform his duties as a
director or officer in compliance with the Standard of Conduct
and (ii) with respect to any action or failure to act by the
director or officer which is at issue in such Proceeding, such
action or failure to act constituted willful misconduct or
recklessness. To be entitled to indemnification pursuant to
this Section 2(b), the director or officer must notify the
Corporation of the commencement of the Proceeding in accordance
with Section 5 and request indemnification. A review of the
request for indemnification and the facts and circumstances
underlying the Proceeding shall be made in accordance with one
of the procedures described below; and the director or officer
shall be entitled to indemnification as a matter of right
unless, in accordance with such procedure, it is determined
beyond a reasonable doubt that (i) the director or officer
breached or failed to perform the duties of the office in
compliance with the Standard of Conduct, and (ii) the breach or
failure to perform constituted willful misconduct or
recklessness. Any one of the following procedures may be used
to make the review and determination of a director's or
officer's request for indemnification under this Section 2(b):
(A) by the Board of Directors by a
majority vote of a quorum consisting of directors who
are not parties to, or who have been wholly successful
with respect to, such Proceeding;
(B) if a quorum cannot be obtained under
(A) above, by a majority vote of a committee duly
designated by the Board of Directors (in the
designation of which, directors who are parties to such
Proceeding may participate), consisting solely of two
or more directors who are not parties to, or who have
been wholly successful with respect to, such
Proceeding;
(C) by independent legal counsel selected
by a majority vote of the full Board of Directors (in
which selection, directors who are parties to such
Proceeding may participate); or
(D) by a committee consisting of three (3)
or more disinterested persons selected by a majority
vote of the full Board of Directors (in which
selection, directors who are parties to such Proceeding
may participate).
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Any determination made in accordance with the above procedures
shall be binding on the Corporation and the director or
officer; or
(c) If several claims, issues or matters of action
are involved, a director or officer may be entitled to
indemnification as to some matters even though he is not
entitled to indemnification as to other matters; or
(d) The indemnification herein provided shall be
applicable to Proceedings made or commenced after the adoption
of this Article, whether arising from acts or omissions to act
which occurred before or after the adoption of this Article.
Section 3. Prepaid Liabilities and Expenses. The
Liabilities and Expenses which are incurred or are payable by a director
or officer in connection with any Proceeding shall be paid by the
Corporation in advance, with the understanding and agreement between
such director or officer and the Corporation, that, in the event it
shall ultimately be determined as provided herein that the director or
officer was not entitled to be indemnified, or was not entitled to be
fully indemnified, the director or officer shall repay to the
Corporation such amount, or the appropriate portion thereof, so paid or
advanced.
Section 4. Exceptions to Indemnification. Notwithstanding any
other provisions of this Article to the contrary, the Corporation shall
not indemnify a director or officer:
(a) for any Liabilities or Expenses incurred in a
suit against a director or officer for an accounting of profits
allegedly made from the purchase or sale of securities of the
Corporation brought pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 and any amendments
thereto or the provisions of any similar federal, state or
local statutory law; or
(b) for any Liabilities and Expenses for which
payment is actually made to or on behalf of a director or
officer under a valid and collectible insurance policy, except
in respect of any excess beyond the amount of payment under
such insurance; or
(c) for any Liabilities or Expenses incurred in a
suit or claim against the director or officer arising out of or
based upon actions attributable to the director or officer in
which the director or officer gained any personal profit or
advantage to which he was not legally entitled.
Section 5. Notification and Defense of Proceeding.
Promptly after receipt by a director or officer of notice of the
commencement of any Proceeding, the director or officer will, if a
request for indemnification in respect thereof is to be made against the
Corporation under this Article, notify the Corporation of the
commencement thereof; but the failure to so notify the Corporation will
not relieve it from any obligation which it may have to the director or
officer under this Article or otherwise. With respect to any such
Proceeding as to which the director or officer notifies the Corporation
of the commencement thereof:
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(a) the Corporation will be entitled to
participate therein at its own expense; and
(b) except as otherwise provided below, to the
extent that it may so desire, the Corporation, jointly with any
other indemnifying party similarly notified, will be entitled
to assume the defense thereof, with counsel reasonably
satisfactory to the director or officer. After notice from the
Corporation to the director or officer of its election to
assume the defense of the director or officer in the
Proceeding, the Corporation will not be liable to the director
or officer under this Article for any legal or other Expenses
subsequently incurred by the director or officer in connection
with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The director or
officer shall have the right to employ counsel in such
Proceeding, but the Expenses of such counsel incurred after
notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the director or officer
unless:
(i) the employment of counsel by the
director or officer has been authorized by the
Corporation;
(ii) the director or officer shall have
reasonably concluded that there may be a conflict of
interest between the Corporation and the director or
officer in the conduct of the defense of such
Proceeding; or
(iii) the Corporation shall not in fact have
employed counsel to assume the defense of such
Proceeding;
in each of which cases the Expenses of counsel employed
by the director or officer shall be paid by the
Corporation. The Corporation shall not be entitled to
assume the defense of any Proceeding brought by or in
the right of the Corporation or as to which the
director or officer shall have made the conclusion
provided for in (ii) above.
(c) The Corporation shall not be liable to
indemnify a director or officer under this Article for any
amounts paid in settlement of any Proceeding without the
Corporation's prior written consent. The Corporation shall not
settle any action or claim in any manner which would impose any
penalty or limitation on a director or officer without the
director or officer's prior written consent. Neither the
Corporation nor a director or officer will unreasonably
withhold its or his consent to any proposed settlement.
Section 6. Other Rights and Remedies. The rights of
indemnification provided under this Article are not exhaustive and shall
be in addition to any rights to which a director or officer may
otherwise be entitled by contract or as a matter of law. Irrespective
of the provisions of this Article, the Corporation may, at any time and
from time to time, indemnify directors, officers, employees and other
persons to the full extent permitted by the provisions of the Indiana
Business Corporation Law, or any successor law, as then in effect,
whether with regard to past or future matters.
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Section 7. Continuation of Indemnity. All obligations of
the Corporation under this Article shall survive the termination of a
director's or officer's service in any capacity covered by this Article.
Section 8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any director, officer or other person or
any person who is or was serving at the request of the Corporation as a
director, officer, partner, trustee or agent of an Other Enterprise
against any liability asserted against such person and incurred by such
person in any capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify such person
against such liability under the provisions of applicable statutes, this
Article or otherwise.
Section 9. Benefit. The provisions of this Article shall
inure to the benefit of each director or officer and his respective
heirs, personal representatives and assigns and the Corporation, its
successors and assigns.
Section 10. Severability. In case any one or more of the
provisions contained in this Article shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of
this Article, but this Article shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been
contained herein.
ARTICLE VIII
Amendments
The power to make, alter, amend, or repeal these By-Laws is
vested in the Board of Directors, but the affirmative vote of a majority
of the actual number of directors elected and qualified, from time to
time, shall be necessary to effect any alteration, amendment or repeal
of these By-Laws.
17
Exhibit 10(i)
AMENDED AND RESTATED
1993 KEY EMPLOYEES' STOCK OPTION PLAN
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
1. Purpose. The Plan is designed to promote the interest
of The National Bank of Indianapolis Corporation ("Company") and its
Subsidiaries by encouraging their officers and key employees, upon whose
judgment, initiative and industry the Company and its Subsidiaries are
largely dependent for the successful conduct and growth of their
business, to continue the association with the Company and its
Subsidiaries of such officers and key employees by providing additional
incentive and opportunity for unusual industry and efficiency through
stock ownership, and by increasing their proprietary interest in the
Company and their personal interest in its continued success and
progress. The Plan provides for the granting of (i) incentive stock
options ("ISO's") and (ii) nonqualified stock options ("NSO's").
2. Administration.
(a) The Plan shall be administered by a committee
of not less than three directors of the Company ("Committee") who shall
be designated from time to time by the Board of Directors. No director
who is also an officer or key employee of the Company or any of its
Subsidiaries shall be eligible to serve as a member of the Committee.
No member of the Committee shall be eligible, at any time when he is
such a member, to receive the grant of an option under the Plan. The
decision of a majority of the members of the Committee shall constitute
the decision of the Committee. Subject to the provisions of the Plan,
the Committee is authorized (i) to grant ISO's and NSO's; (ii) to
determine the employees to be granted ISO's and NSO's; (iii) to
determine the option period, the option price and the number of shares
subject to each option; (iv) to determine the time or times at which
options will be granted; (v) to determine the time or times when each
option becomes exercisable and the duration of the exercise period; (vi)
to determine other conditions and limitations, if any, applicable to the
exercise of each option; and (vii) to determine the nature and duration
of the restrictions, if any, to be imposed upon the sale or other
disposition of shares acquired by any optionee upon exercise of an
option, and the nature of the events, if any, and the duration of the
period, in which any optionee's rights in respect of shares acquired
upon exercise of an option may be forfeited. Each option granted under
the Plan shall be evidenced by a written stock option agreement
containing terms and conditions established by the Committee consistent
with the provisions of the Plan, including such terms as the Committee
shall deem advisable in order that each ISO shall constitute an
"incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code").
(b) The Committee is authorized, subject to the
provisions of the Plan, to adopt, amend and rescind such rules and
regulations as it may deem appropriate for the administration of the
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Plan and to make determinations and interpretations which it deems
consistent with the Plan's provisions. The Committee's determinations
and interpretations shall be final and conclusive.
(c) The Committee shall also determine, in its sole
discretion, with respect to each employee, whether such options shall be
ISO's or NSO's, or any combination thereof; and whether any employee
shall be given discretion to determine whether any options granted to
him shall be ISO's or NSO's or any combination thereof.
(d) Neither the Plan nor any stock option agreement
executed hereunder shall constitute a contract of employment.
Participation in the Plan does not give any employee the right to be
retained in the employ of the Company or any Subsidiary and does not
limit in any way the right of the Company or a Subsidiary to change the
duties or responsibilities of any employee or to terminate the
employment of any employee.
3. Shares Covered by the Plan. The stock to be subject to
options under the Plan shall be shares of authorized common stock of the
Company and may be unissued shares or reacquired shares (including
shares purchased in the open market), or a combination thereof, as the
Committee may from time to time determine. Subject to the provisions of
Paragraph 12, the maximum number of shares to be delivered upon exercise
of all options granted under the Plan shall not exceed One Hundred
Twenty Thousand (120,000) shares. Shares covered by an option that
remain unpurchased upon expiration or termination of the option may be
made subject to further options.
4. Eligibility. Officers and key employees of the Company
or of any of its Subsidiaries, as selected by the Committee, shall be
eligible to receive grants of ISO's and NSO's under the Plan. Members of
the Committee shall not be eligible to receive grants of options under
the Plan while serving as members of the Committee.
5. Option Price.
(a) The option price per share of stock under each
ISO shall be not less than the greater of Ten Dollars ($10.00) per share
or one hundred percent (100%) of the fair market value of the share on
the date on which the option is granted; provided, however, as to
officers and key employees who, at the time an ISO is granted, own,
within the meaning of Section 425(d) of the Code, more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company or any Subsidiary ("Shareholder-Employees"), the purchase price
per share of stock under each ISO shall be not less than one hundred ten
percent (110%) of the fair market value of the stock on the date on
which the option is granted.
(b) The option price per share of stock under each
NSO shall be determined by the Committee in its discretion; provided,
however, the option price per share shall not be less than Ten Dollars
($10.00) per share or one hundred percent (100%) of the fair market
value of the share on the date on which the option is granted.
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(c) For all purposes of the Plan, the term "fair
market value" shall be the mean between the reported closing bid and
asked prices for the shares of common stock of the Company as quoted by
the North American Securities Dealers Automated Quotation System
("NASDAQ"). If the common stock of the Company is not quoted by NASDAQ,
the fair market value shall be determined by the Committee based upon
quotations of the entities which make a market in Company stock and such
other factors as the Committee shall deem appropriate. If the common
stock of the Company is not quoted by entities which make a market in
the Company's stock, the fair market value shall be determined by the
Committee based upon such factors as the Committee deems appropriate.
6. Option Period. No option period shall exceed ten (10)
years; provided, however, the option period with respect to ISO's
granted to Shareholder-Employees shall not exceed five (5) years.
7. Special Calendar Year Limitation on Shares Subject to
ISO's. The aggregate fair market value (determined at the time of the
grant of the ISO's) of the stock with respect to which ISO's are
exercisable for the first time by an eligible employee during any
calendar year (under all plans providing for the grant of incentive
stock options of the Company or any of its Subsidiaries) shall not
exceed One Hundred Thousand Dollars ($100,000.00).
8. Sequence of Exercising Incentive Stock Options. Any ISO
granted to an employee pursuant to the Plan shall be exercisable even if
there are outstanding previously granted but unexercised ISO's with
respect to such employee.
9. Early Termination of Option.
(a) Termination of Employment. All rights to exercise
an option shall terminate effective as of the day the optionee's
employment terminates unless such termination is "for cause" as defined
in subparagraph (b) or is on account of the permanent and total
disability or death of the optionee (but not later than the date the
option expires pursuant to its terms). Transfer of employment from the
Company to a corporation which is a Subsidiary of the Company, or vice
versa, or from one Subsidiary to another, shall not be deemed
termination of employment. The Committee shall have the authority to
determine in each case whether a leave of absence on military or
government service shall be deemed a termination of employment for
purposes of this subparagraph.
(b) For Cause Termination. If an optionee's
employment is terminated for cause, no previously unexercised option
granted hereunder may be exercised. Rather, all unexercised options
shall terminate effective on the date the optionee receives notice of
his termination for cause. As used in this Plan, "for cause" shall be
defined as (i) the willful and continued failure of an optionee to
perform his required duties as an officer or employee of the Company or
any Subsidiary, (ii) action by an optionee involving willful misfeasance
or gross negligence, (iii) the requirement or direction of a federal or
state regulatory agency having jurisdiction over the Company or any
Subsidiary to terminate the employment of an optionee, (iv) conviction
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of an optionee of the commission of any criminal offense involving
dishonesty or breach of trust, or (v) any intentional breach by an
optionee of a material term, condition or covenant of any agreement of
employment, termination or severance or any other agreement between the
optionee and the Company or any Subsidiary.
(c) Permanent and Total Disability or Death of
Optionee. If an optionee's employment terminates due to permanent and
total disability or death, his option shall terminate one (1) year after
termination of his employment due to his permanent and total disability
or death (but not later than the date the option expires pursuant to its
terms). During such period, subject to the limitations of the option
grant, the optionee, his guardian, attorney-in-fact or personal
representative, as the case may be, may exercise the option in full. As
used herein, "permanent and total disability" shall have the meaning
ascribed to such term by Section 22(e)(3) of the Code.
(d) Change in Control or Death or Disability of
Optionee. In the event of a Change in Control of the Company or upon
the death or permanent and total disability of the optionee, the options
covered by such agreement may be exercised in full without regard to any
restrictions on the vesting of such options contained in the option
agreement between the Company and the optionee.
10. Payment for Stock. Full payment for shares purchased
shall be made at the time of exercising the option in whole or in part.
Such payment may be made either (a) in cash or (b) at the discretion of
the Committee, by delivering whole shares of common stock of the Company
(the "Delivered Stock") or a combination of cash and Delivered Stock.
Delivered Stock shall be valued by the Committee at its fair market
value determined as of the date of the exercise of the option in
accordance with the provisions of paragraph 5. No shares shall be
issued until full payment for them has been made, and an optionee shall
have none of the rights of a shareholder with respect to such shares
until such shares are issued to him. Upon payment of the full purchase
price, the Company shall issue a certificate or certificates to the
optionee evidencing ownership of the shares purchased pursuant to the
exercise of the option which contain(s) such terms, conditions and
provisions as may be required and as are consistent with the terms,
conditions and provisions of the Plan and the stock option agreement
between the optionee and the Company.
11. Nontransferability. No option shall be transferable,
except by the optionee's will or the laws of descent and distribution.
During the optionee's lifetime, his option shall be exercisable (to the
extent exercisable) only by him. The option and any rights and
privileges pertaining thereto shall not be transferred, assigned,
pledged or hypothecated by him in any way, whether by operation of law
or otherwise and shall not be subject to execution, attachment, or
similar process.
12. Changes in Stock.
(a) Subject to the provisions of paragraph 9(d), in
the event of any change in the common stock of the Company through stock
dividends, split-ups, recapitalizations, reclassifications, conversions,
or otherwise, or in the event that other stock shall be converted into
or substituted for the present common stock of the Company as the result
of any merger, consolidation, reorganization or similar transaction
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which results in a Change in Control of the Company, then the Committee
may make appropriate adjustment or substitution in the aggregate number,
price, and kind of shares available under the Plan and in the number,
price and kind of shares covered under any options granted or to be
granted under the Plan. The Committee's determination in this respect
shall be final and conclusive. Provided, however, that the Company
shall not, and shall not permit its Subsidiaries to, recommend,
facilitate or agree or consent to a transaction or series of
transactions which would result in a Change of Control of the Company
unless and until the person or persons or entity or entities acquiring
or succeeding to the assets or capital stock of the Company or any of
its Subsidiaries as a result of such transaction or transactions agrees
to be bound by the terms of the Plan so far as it pertains to options
theretofore granted but unexercised and agrees to assume and perform the
obligations of the Company hereunder. Notwithstanding the foregoing
provisions of this paragraph 12(a), no adjustment shall be made which
would operate to reduce the option price of any ISO below the fair
market value of the stock (determined at the time the option was
granted) which is subject to an ISO.
(b) Subject to the provisions of paragraph 9(d), in
the event of a Change in Control of the Company pursuant to which
another person or entity acquires control of the Company (such other
person or entity being the "Successor"), the kind of shares of common
stock which shall be subject to the Plan and to each outstanding option,
shall, automatically by virtue of such Change in Control of the Company,
be converted into and replaced by shares of common stock, or such other
class of securities having rights and preferences no less favorable than
common stock of the Successor, and the number of shares subject to the
option and the purchase price per share upon exercise of the option
shall be correspondingly adjusted, so that, by virtue of such Change in
Control of the Company, each optionee shall have the right to purchase
(i) that number of shares of common stock of the Successor which have a
fair market value equal, as of the date of such Change in Control of the
Company, to the fair market value, as of the date of such Change in
Control, of the shares of common stock of the Company theretofore
subject to his option, and (ii) for a purchase price per share which,
when multiplied by the number of shares of common stock of the Successor
subject to the option, shall equal the aggregate exercise price at which
the optionee could have acquired all of the shares of common stock of
the Company theretofore optioned to the optionee.
13. Use of Proceeds. The proceeds received by the Company
from the sale of stock pursuant to the Plan will be used for general
corporate purposes.
14. Investment Representations. Unless the shares subject
to an option are registered under the Securities Act of 1933, each
optionee in the stock option agreement between the Company and the
optionee shall agree for himself and his legal representatives that any
and all shares of common stock purchased upon the exercise of the option
shall be acquired for investment and not with a view to, or for sale in
connection with, any distribution thereof. Any share issued pursuant to
an exercise of an option subject to this investment representation shall
bear a legend evidencing such restriction.
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15. Amendment and Discontinuance. The Board of Directors
may, at any time, without the approval of the stockholders of the
Company, (except as otherwise required by applicable law, rule or
regulations, including without limitation any shareholder approval of
the safe harbor rule promulgated under the Securities Exchange Act of
1934) alter, amend, modify, suspend, or discontinue the Plan, but may
not, without the consent of the holder of an option, make any alteration
which would adversely affect an option previously granted under the Plan
or, without the approval of the stockholders of the Company, make any
alteration which would: (a) increase the aggregate number of shares
subject to options under the Plan, except as provided in paragraphs 9(c)
and 12; (b) decrease the minimum option price, except as provided in
paragraph 12; (c) permit any member of the Committee to become eligible
for options under the Plan; (d) withdraw administration of the Plan from
the Committee or the Board of Directors; (e) extend the term of the Plan
or the maximum period during which any option may be exercised; (f)
change the manner of determining the option price; (g) change the class
of individuals eligible for options under the Plan; or (h) without the
consent of the holder of the option, alter or impair any option
previously granted under the Plan.
16. Liability. No member of the Board of Directors, the
Committee or officers or employees of the Company or its Subsidiaries
shall be personally liable for any action, omission or determination
made in good faith in connection with the Plan.
17. Effective Date and Duration. This Plan shall become
effective upon its approval by a majority of the shares of common stock
of the Company. Options may be granted under the Plan for a period of
ten (10) years commencing June 1, 1993, the date on which the Board of
Directors approved the Plan; provided, however, that no option may be
exercised until the Plan has been approved by the shareholders of the
Company, as provided in the first sentence of this paragraph 17. No
options shall be granted after May 31, 2003. Upon such date, the Plan
shall expire except as to outstanding options and which options and
rights shall remain in effect until they have been exercised or
terminated or have expired. ISO's must be granted within ten (10) years
of the date the Plan is adopted by the Board of Directors of the Company
or approved by the shareholders of the Company, whichever is earlier.
18. Miscellaneous.
(a) The term "Board" or "Board of Directors" used
herein shall mean the Board of Directors of the Company, unless the
context clearly requires otherwise, and to the extent that any powers
and discretion vested in the Board of Directors are delegated to any
committee of the Board, the term "Board of Directors" shall also mean
such committee.
(b) The term "Subsidiary" or "Subsidiaries" used
herein shall mean any banking institution or other corporation more than
fifty percent (50%) of whose total combined voting stock of all classes
is held by the Company or by another corporation qualifying as a
Subsidiary within this definition.
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(c) The term "Change in Control of the Company" used
herein shall mean (i) any merger, consolidation or similar transaction
which involves the Company or any Subsidiary and in which persons who
are the shareholders of the Company immediately prior to such
transaction own, immediately after such transaction, shares of the
surviving or combined entity which possess voting rights equal to or
less than fifty percent (50%) of the voting rights of all shareholders
of such entity, determined on a fully diluted basis; (ii) any sale,
lease, exchange, transfer or other disposition of all or any substantial
part of the assets of the Company or any Subsidiary; (iii) any tender,
exchange, sale or other disposition (other than dispositions of the
stock of the Company or any Subsidiary in connection with bankruptcy,
insolvency, foreclosure, receivership or other similar transactions) or
purchases (other than purchases by the Company or any Company-sponsored
employee benefit plan, or purchases by members of the Board of Directors
of the Company or any Subsidiary) of more than twenty-five percent (25%)
of the common stock of the Company or any Subsidiary; (iv) during any
period of two (2) consecutive years during the term of the Plan
specified in paragraph 17, individuals who at the date of the adoption
of the Plan constitute the Board of Directors of the Company cease for
any reason to constitute at least a majority thereof, unless the
election of each director at the beginning of such period has been
approved by directors representing at least a majority of the directors
then in office who were directors on the date of the adoption of the
Plan; or (v) a majority of the Board of Directors or a majority of the
shareholders of the Company approve, adopt, agree to recommend, or
accept any agreement, contract, offer or other arrangement providing
for, or any series of transactions resulting in, any of the transactions
described above. Notwithstanding the foregoing, a Change in Control of
the Company shall not occur as a result of the issuance of stock by the
Company in connection with any private placement offering of its stock
or any public offering of its stock.
7
Exhibit 10(ii)
AMENDED AND RESTATED
1993 DIRECTORS' STOCK OPTION PLAN
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
1. Purpose. The Plan is designed to promote the interest
of The National Bank of Indianapolis Corporation ("Company") and The
National Bank of Indianapolis (the "Bank"), a Subsidiary of the Company,
through the granting of nonqualified stock options to the members of the
Board of Directors of the Company and the Bank who are serving as
Directors as of the date hereof ("Directors").
2. Administration.
(a) The Plan shall be administered by a committee of
not less than three directors of the Company ("Committee") who shall be
designated from time to time by the Board of Directors. No non-employee
director of the Company eligible to receive to grants of options under
the Plan or who, during the one year period prior to any proposed
service as a member of the Committee under the Plan, was granted or
awarded equity securities pursuant to the Plan or any other plan of the
Company or any of its affiliates shall be eligible to serve as a member
of the Committee, except as may be otherwise provided for "disinterested
administration" in Rule 16b-3(c)(2) of the Rules and Regulations
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934. The Chairman of the Board of Directors
of the Company ("Chairman") shall not be eligible to receive grants of
options hereunder. In administering the Plan, the Committee's actions
and determinations shall be binding on all interested parties.
(b) Notwithstanding any other provisions of the
Plan, the Committee shall have authority (i) to grant options; (ii) to
determine the number of shares to be made the subject of options; (iii)
to determine the option period; (iv) to determine the time or times at
which options will be granted; (v) to determine other conditions and
limitations, if any, applicable to the exercise of options; and (vi) to
determine the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired by any
Director upon exercise of an option and the nature of the events, if
any, and the duration of the period, in which any Director's rights in
respect of shares acquired upon exercise of an option may be forfeited.
Each option granted under the Plan to a Director shall be evidenced by a
written stock option agreement containing terms and conditions
established by the Committee consistent with the provisions of the Plan.
Notwithstanding the foregoing, the Committee shall have no authority to
alter the option price specified in paragraph 5 or the option period
specified in paragraph 6 with respect to any options granted under the
Plan.
(c) The Committee is authorized, subject to the
provisions of the Plan, to adopt, amend and rescind such rules and
regulations as it may deem appropriate for the administration of the
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Plan and to make determinations and interpretations which it deems
consistent with the Plan's provisions. The Committee's determination
and interpretations shall be final and conclusive.
(d) Neither the Plan nor any stock option agreement
executed hereunder shall constitute a contract of employment.
Participation in the Plan does not give any Director the right to be
retained, nominated or reelected as a Director of the Company or the
Bank.
3. Shares Covered by the Plan. The stock to be subject to
options under the Plan shall be shares of authorized common stock of the
Company and may be unissued shares or reacquired shares (including
shares purchased in the open market), or a combination thereof, as the
Committee may from time to time determine. Subject to the provisions of
paragraph 10, the maximum number of shares to be delivered upon exercise
of all options granted under the Plan shall not exceed forty thousand
(100,000) shares. Shares covered by an option that remain unpurchased
upon expiration or termination of the option may be made subject to
further options. No individual shall be eligible to participate in the
Plan or receive options on the basis of his or her status as a Director
of more than one entity.
4. Eligibility. Only those individuals who are
non-employee Directors of the Company or its Subsidiaries shall be
eligible to receive grants of options under the Plan. The Chairman of
the Board shall not be eligible to receive grants of options under the
Plan. Each such Company Director as of the date the Plan is adopted by
the Board of Directors shall receive options to acquire four thousand
(4,000) shares of Company stock. Individuals who are elected to serve
as Company Directors thereafter shall receive such options to acquire
shares of Company stock as shall be determined by the Committee in its
discretion.
5. Option Price. The option price per share of stock under
each option granted to a Director hereunder shall be the greater of Ten
Dollars ($10.00) per share or the fair market value of the share on the
date the option is granted. For all purposes of the Plan, the term
"fair market value" shall be the mean between the reported closing bid
and asked prices for the shares of common stock of the Company as quoted
by the North American Securities Dealers Automated Quotation System
("NASDAQ"). If the common stock of the Company is not quoted by NASDAQ,
the fair market value shall be determined by the Committee based upon
quotations of the entities which make a market in Company stock and such
other factors as the Committee shall deem appropriate. If the common
stock of the Company is not quoted by entities which make a market in
the Company's stock, the fair market value shall be determined by the
Committee based upon such factors as the Committee deems appropriate.
6. Option Period. No option period shall exceed ten (10)
years from the date of grant of such option.
7. Vesting and Exercise of Options.
(a) Options granted to Directors hereunder shall vest
in and thereby become immediately exercisable on the date on which such
options are granted.
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(b) Effective on the date a Director ceases to be a
Director for any reason other than death or permanent and total
disability, such options shall terminate and shall not be exercisable.
If a Director dies or becomes permanently and totally disabled, all
unexercised option shares may be exercised within one (1) year from the
date his status as a Director ceases for such reason (but not later than
the option expires pursuant to its terms). During such period, subject
to the limitations of the option grant, the optionee, his guardian,
attorney-in-fact, or personal representative, as the case may be, may
exercise the option. As used herein, "permanent and total disability"
shall have the same meaning ascribed to such term by Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended.
8. Payment for Stock. Full payment for shares purchased
shall be made at the time of exercising the option in whole or in part.
Such payment may be made in (a) cash or (b) at the discretion of the
Committee, by delivering whole shares of common stock of the Company
(the "Delivered Stock") or a combination of cash and Delivered Stock.
Delivered Stock shall be valued by the Committee at the current fair
market value determined as of the date of the exercise of the option, in
accordance with the provisions of paragraph 5. No shares shall be
issued until full payment for them has been made and the Director shall
have none of the rights of a shareholder with respect to such shares
until such shares are issued to him. Upon payment of the full purchase
price, the Company shall issue a certificate or certificates to the
optionee evidencing ownership of the shares purchased pursuant to the
exercise of the option which contain(s) such terms, conditions and
provisions as may be required and as are consistent with the terms,
conditions and provisions of the Plan and the stock option agreement
between the Director and the Company.
9. Nontransferability. No option shall be transferable,
except by the Director's will or the laws of descent and distribution.
During the Director's lifetime, his option shall be exercisable (to the
extent exercisable) only by him. The option and any rights and
privileges pertaining thereto shall not be transferred, assigned,
pledged or hypothecated by him in any way, whether by operation of law
or otherwise and shall not be subject to execution, attachment, or
similar process.
10. Changes in Stock.
(a) In the event of any change in the common stock
of the Company through stock dividends, split-ups, recapitalizations,
reclassifications, conversions, or otherwise, or in the event that other
stock shall be converted into or substituted for the present common
stock of the Company as the result of any stock conversion, merger,
consolidation, reorganization or similar transaction which constitutes a
Change in Control of the Company, then the Committee may make
appropriate adjustment or substitution in the aggregate number, price,
and kind of shares available under the Plan and in the number, price and
kind of shares covered under any options granted or to be granted under
the Plan. The Committee's determination in this respect shall be final
and conclusive. Provided, however, that the Company shall not, and shall
not permit its Subsidiaries to, recommend, facilitate or agree or
consent to a transaction or series of transactions which would result in
a Change of Control of the Company unless and until the person or
persons or entity or entities acquiring or succeeding to the assets or
capital stock of the Company or any of its Subsidiaries as a result of
such transaction or transactions agrees to be bound by the terms of the
Plan so far as it pertains to options theretofore granted and agrees to
assume and perform the obligations of the Company and its Successor
hereunder.
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(b) In the event of a Change in Control of the
Company pursuant to which another person or entity acquires control of
the Company (such other person or entity being the "Successor"), the
kind of shares of common stock which shall be subject to the Plan and to
each outstanding option shall, automatically by virtue of such Change in
Control of the Company, be converted into and replaced by shares of
common stock, or such other class of securities having rights and
preferences no less favorable than the class of stock of the Successor,
and the number of shares subject to the option and the purchase price
per share upon exercise of the option shall be correspondingly adjusted,
so that, by virtue of such Change in Control of the Company, each
Director shall have the right to purchase (i) that number of shares of
common stock of the Successor which have a fair market value equal, as
of the date of such Change in Control of the Company, to the fair market
value, as of the date of such Change in Control, of the shares of common
stock of the Company theretofore subject to his option and (ii) for a
purchase price per share which, when multiplied by the number of shares
of common stock of the Successor subject to the option, shall equal the
aggregate exercise price at which the optionee could have acquired all
of the shares of common stock of the Company theretofore optioned to the
optionee.
11. Use of Proceeds. The proceeds received by the Company
from the sale of stock pursuant to the Plan will be used for general
corporate purposes.
12. Investment Representations. Unless the shares subject
to an option are registered under the Securities Act of 1933, as
amended, each Director, in the stock option agreement between the
Company and the Director, shall agree for himself and his legal
representatives that any and all shares of common stock purchased upon
the exercise of the option shall be acquired for investment and not with
a view to, or for sale in connection with, any distribution thereof.
Any share issued pursuant to an exercise of an option subject to this
investment representation shall bear a legend evidencing such
restriction.
13. Amendment and Discontinuance. The Board of Directors
may, at any time, without the approval of the stockholders of the
Company, (except as otherwise required by applicable law, rule or
regulations, including without limitation any shareholder approval of
the safe harbor provisions of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934) alter, amend, modify, suspend, or
discontinue the Plan, but may not, without the consent of the holder of
an option, make any alteration which would adversely affect an option
previously granted under the Plan.
14. Liability. No member of the Board of Directors, the
Committee or officers or employees of the Company or the Bank shall be
personally liable for any action, omission or determination made in good
faith in connection with the Plan.
15. Effective Date and Duration. This Plan shall become
effective upon its approval by a majority of the shares of the Company's
common stock. No option may be exercised until the Plan has been
approved by the shareholders of the Company. On May 31, 2003, the Plan
shall expire except as to outstanding options which options shall remain
in effect until they have been exercised, terminated, or have expired.
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16. Miscellaneous.
(a) The term "Board" or "Board of Directors" used
herein shall mean the Board of Directors of the Company, unless the
context clearly requires otherwise, and to the extent that any powers
and discretion vested in the Board of Directors are delegated to any
committee of the Board, the term "Board of Directors" shall also mean
such committee.
(b) The term "Subsidiary" or "Subsidiaries" used
herein shall mean any banking institution or other corporation more than
fifty percent (50%) of whose total combined voting stock of all classes
is held by the Company or by another corporation qualifying as a
Subsidiary within this definition.
(c) The term "Change in Control of the Company" used
herein shall mean (i) any merger, consolidation or similar transaction
which involves the Company or any Subsidiary and in which persons who
are the shareholders of the Company immediately prior to such
transaction own, immediately after such transaction, shares of the
surviving or combined entity which possess voting rights equal to or
less than fifty percent (50%) of the voting rights of all shareholders
of such entity, determined on a fully diluted basis; (ii) any sale,
lease, exchange, transfer or other disposition of all or any substantial
part of the assets of the Company or any Subsidiary; (iii) any tender,
exchange, sale or other disposition (other than dispositions of the
stock of the Company or any Subsidiary in connection with bankruptcy,
insolvency, foreclosure, receivership or other similar transactions) or
purchases (other than purchases by the Company or any Company-sponsored
employee benefit plan, or purchases by members of the Board of Directors
of the Company or any Subsidiary) of more than twenty-five percent (25%)
of the outstanding common stock of the Company or any Subsidiary; (iv)
during any period of two (2) consecutive years during the term of the
Plan specified in paragraph 15, individuals who at the date of the
adoption of the Plan constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof, unless
the election of each director at the beginning of such period has been
approved by directors representing at least a majority of the directors
then in office who were directors on the date of the adoption of the
Plan; or (v) a majority of the Board of Directors or a majority of the
shareholders of the Company approve, adopt, agree to recommend, or
accept any agreement, contract, offer or other arrangement providing
for, or any series of transactions resulting in, any of the transactions
described above. Notwithstanding the foregoing, a Change in Control of
the Company shall not occur as a result of the issuance of stock by the
Company in connection with any private placement offering of its stock
or any public offering of its stock.
5
Exhibit 10(iii)
AMENDED AND RESTATED
1993 RESTRICTED STOCK PLAN
OF
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
1. Purpose. The Plan is designed to promote the interest
of The National Bank of Indianapolis Corporation ("Company") and its
Subsidiaries by encouraging their officers and employees, upon whose
judgment, initiative and industry the Company and its Subsidiaries are
largely dependent for the successful conduct and growth of their
business, to continue their association with the Company and its
Subsidiaries by providing additional incentive and opportunity for
unusual industry and efficiency through stock ownership, and by
increasing their proprietary interest in the Company and their personal
interest in its continued success and progress. The Plan provides for
the award of shares of common stock in the Company ("Restricted Stock")
to such employees ("Participants").
2. Administration.
(a) The Plan shall be administered by a committee of
not less than three (3) directors of the Company ("Committee") who shall
be designated from time to time by the Board of Directors. No director
who is also an officer or key employee of the Company or any of its
Subsidiaries shall be eligible to serve as a member of the Committee.
No member of the Committee shall be eligible, at any time when he is
such a member, to receive the grant of Restricted Stock under the Plan.
The decision of a majority of the members of the Committee shall
constitute a decision of the Committee. Subject to the provisions of
the Plan, the Committee is authorized (i) to award shares of Restricted
Stock; (ii) to determine the employees to be awarded shares of
Restricted Stock; (iii) to determine the price, if any, and the number
of shares subject to each award of Restricted Stock; (iv) to determine
the time or times at which shares of Restricted Stock will be awarded;
(v) to determine the time or times when shares of Restricted Stock will
become vested and nonforfeitable; and (vi) to determine the nature and
duration of the restrictions, if any, to be imposed upon the sale or
other disposition of shares acquired by any participant. Each award of
Restricted Stock under the Plan shall be evidenced by a written
restricted stock agreement containing terms and conditions established
by the Committee consistent with the provisions of the Plan.
(b) The Committee is authorized, subject to the
provisions of the Plan, to adopt, amend and rescind such rules and
regulations as it may deem appropriate for the administration of the
Plan and to make determinations and interpretations which it deems
consistent with the Plan's provisions. The Committee's determinations
and interpretations in this regard shall be final and conclusive.
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(c) Neither the Plan nor any restricted stock
agreement executed hereunder shall constitute a contract of employment.
Participation in the Plan does not give any employee the right to be
retained in the employ of the Company or any Subsidiary and does not
limit in any way the right of the Company or a Subsidiary to change the
duties or responsibilities of any employee or to terminate the
employment of any employee.
3. Shares Covered by the Plan. The Restricted Stock to be
awarded under the Plan shall be shares of authorized common stock of the
Company and may be unissued shares or reacquired shares (including
shares purchased in the open market), or a combination thereof, as the
Committee may from time to time determine. The maximum number of shares
to be awarded under the Plan shall not exceed seventy thousand (70,000)
shares. Shares forfeited under the Plan may be made subject to further
awards of Restricted Stock.
4. Eligibility. Officers and key employees of the Company
or of any of its Subsidiaries, as selected by the Committee, shall be
eligible to receive awards of Restricted Stock under the Plan. Members
of the Committee shall not be eligible to receive awards of Restricted
Stock under the Plan while serving as members of the Committee.
5. Purchase Price. The purchase price per share of
Restricted Stock, if any, shall be determined by the Committee, in its
sole discretion. For all purposes of the Plan, the term "fair market
value" shall be the mean between the reported closing bid and asked
prices for the shares of common stock of the Company as quoted by the
North American Securities Dealers Automated Quotation System ("NASDAQ").
If the common stock of the Company is not quoted by NASDAQ, the fair
market value shall be determined by the Committee based upon quotations
of the entities which make a market in the Company stock and such other
factors as the Committee shall deem appropriate. If the common stock of
the Company is not quoted by entities which make a market in the
Company's stock, the fair market value shall be determined by the
Committee based upon such factors as the Committee deems appropriate.
6. Pass-Through of Dividends and Voting Rights. Upon the
issuance of shares of Restricted Stock under the Plan, subject to the
requirements of paragraph 7 concerning restrictions on the
transferability of Restricted Stock and the requirement that a
Participant remain an employee of the Company or its Subsidiaries, the
Participant shall be entitled to (i) receive all dividends payable and
paid with respect to Restricted Stock awarded and issued to the
Participant and (ii) exercise all voting rights associated with such
Restricted Stock. Provided, however, upon the transfer or other
disposition of any shares of Restricted Stock in violation of paragraph
7(a) or upon the forfeiture of any shares of Restricted Stock in
accordance with paragraph 7(b) or (c), the Participant shall not be
entitled to receive any dividends declared or exercise any voting rights
on or after the date such shares of Restricted Stock were transferred or
forfeited.
7. Vesting and Transfer of Restricted Stock.
(a) Restrictions on Transferability. Except as
provided in this paragraph 7, no shares of Restricted Stock awarded
under the Plan may be sold, assigned, transferred, pledged or
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hypothecated by the Participant in any way, whether by operation of law
or otherwise and shall not be subject to execution, attachment or
similar process. Each certificate evidencing shares of Restricted Stock
awarded under the Plan shall bear a legend which sets forth such
restrictions.
(b) Lapse of Restrictions and Vesting. The
restrictions on shares of Restricted Stock awarded under the Plan
contained in subparagraph (a) shall lapse and such shares shall become
fully vested, nonforfeitable and transferable upon the earliest to occur
of (i) the date(s) prescribed by the Committee in the restricted stock
agreement between the Company and the Participant; (ii) the
Participant's death; or (iii) the Participant's permanent and total
disability as defined in Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended. The specific terms and conditions regarding the
lapse of restriction and the vesting of shares of Restricted Stock shall
be contained in the restricted stock agreement between the Company and
the Participant. In no event shall a participant have any right under
the Plan or in a restricted stock agreement to affect the time at which
the Restricted Stock awarded to him becomes nonforfeitable.
(c) Forfeiture of Shares on Termination of
Employment. In the event the Participant's employment with the Company
or any Subsidiary is terminated for any reason other than "for cause" or
on account of the permanent and total disability or death, prior to the
time the shares of Restricted Stock become vested, as provided in
subparagraph (b) above, all of the unvested shares of Restricted Stock
shall be forfeited and shall thereupon revert to the Company. Such
forfeiture shall be effective on the date of the Participant's
termination of employment. Transfer of employment from the Company to a
corporation which is a Subsidiary of the Company, or vice versa, or from
one Subsidiary to another, shall not be deemed termination of
employment. The Committee shall have the authority to determine in each
case whether a leave of absence on military or government service shall
be deemed a termination of employment for purposes of this subparagraph.
(d) Forfeiture on Termination For Cause. If a
Participant's employment is terminated "for cause" prior to the time the
shares of Restricted Stock become vested, as provided in subparagraph
(b) above, all of the unvested shares of Restricted Stock shall be
forfeited and shall thereupon revert to the Company. Such forfeiture
shall be effective on the date the Participant receives notice of his
termination for cause. As used in this Plan, "for cause" shall be
defined as (i) the willful and continued failure of a Participant to
perform his required duties as an officer or employee of the Company or
any Subsidiary, (ii) action by a Participant involving willful
misfeasance or gross negligence, (iii) the requirement or direction of a
federal or state regulatory agency having jurisdiction over the Company
or any Subsidiary to terminate the employment of the Participant, (iv)
conviction of a Participant of the commission of any criminal offense
involving dishonesty or breach of trust or (v) any intentional breach by
a Participant of a material term, condition or covenant of any agreement
of employment, termination or severance or any other agreement between
the Participant and the Company or any Subsidiary.
(e) Refund of Purchase Price. Immediately upon any
forfeiture of shares of Restricted Stock hereunder, the Company shall
refund to the Participant the amount, if any, the Participant paid for
such shares together with interest on such refund, computed annually,
calculated
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<PAGE>
on the basis of the regular savings passbook interest rate of the
Company's banking Subsidiary at such rates as are in effect from time to
time from the date the Restricted Stock was issued to the Participant
through the date of such refund.
(f) Change in Control of Company. In the event of a
Change in Control of the Company, the (i) restrictions on the transfer
of all shares of Restricted Stock awarded under the Plan provided in
subparagraph (a) above, shall thereupon immediately lapse and (ii) all
the shares of Restricted Stock awarded under the Plan subject to
forfeiture under subparagraph (b) shall thereupon immediately become
fully vested and nonforfeitable.
8. Payment for Stock. Full payment of the purchase price,
if any, for shares awarded under the Plan shall be made at the time of
issuance of the shares of Restricted Stock. Such payment shall be made
in cash. No shares of Restricted Stock shall be issued until full
payment for them has been made, and a Participant shall have none of the
rights of a shareholder with respect to such shares until such shares
are issued to him. Upon payment of the full purchase price, if any, the
Company shall issue a certificate or certificates to the Participant
evidencing ownership of the shares purchased which contain(s) such
terms, conditions and provisions as may be required and as are
consistent with the terms, conditions and provisions of the Plan.
9. Changes in Stock.
(a) Subject to the provisions of paragraph 7(f), in
the event of any change in the common stock of the Company through stock
dividends, split-ups, recapitalizations, reclassifications, conversions,
or otherwise, or in the event that other stock shall be substituted for
the present common stock of the Company as the result of any merger,
consolidation, reorganization, or similar transaction which results in a
Change in Control of the Company, then the Committee may make
appropriate adjustment or substitution in the aggregate number, price,
and kind of shares available under the Plan and in the number, price and
kind of shares covered under any awards of Restricted Stock made or to
be made under the Plan. The Committee's determination in this respect
shall be final and conclusive. Provided, however, that the Company
shall not, and shall not permit its Subsidiaries to, recommend,
facilitate or agree or consent to a transaction or series of
transactions which would result in a Change of Control of the Company
unless and until the person or persons or entity or entities acquiring
or succeeding to the assets or capital stock of the Company or any of
its Subsidiaries as a result of such transaction or transactions agrees
to be bound by the terms of the Plan so far as it pertains to shares of
Restricted Stock theretofore awarded but unvested and agrees to assume
and perform the obligations of the Company and its Subsidiaries
hereunder.
(b) Subject to the provisions of paragraph 7(f), in
the event of a Change in Control of the Company pursuant to which
another person or entity acquires control of the Company (such other
person or entity being the "Successor"), the kind of shares of common
stock which shall be subject to the Plan and to each award of Restricted
Stock shall, automatically by virtue of such Change in Control of the
Company, be converted into and replaced by shares of common stock, or
such other class of securities having rights and preferences no less
favorable than common stock of the Successor, and the number of shares
subject to the award and the purchase price per share, if any,
4
<PAGE>
shall be correspondingly adjusted, so that, by virtue of such Change in
Control of the Company, each Participant shall have that number of
shares of Restricted Stock of the Successor which have a fair market
value equal, as of the date of such Change in Control of the Company, to
the fair market value, as of the date of such Change in Control of the
Company, of the shares of Restricted Stock of the Company theretofore
awarded to him.
10. Use of Proceeds. The proceeds received by the Company
from the sale of stock pursuant to the Plan, if any, will be used for
general corporate purposes.
11. Investment Representations. Unless the shares subject
to an award are registered under the Securities Act of 1933, each
Participant in the Restricted Stock Agreement between the Company and
the Participant shall agree for himself and its legal representatives
that any and all shares of common stock acquired upon the award of
Restricted Stock shall be acquired for investment and not with a view
to, or for sale in connection with, any distribution thereof. Any
shares issued pursuant to an award of Restricted Stock subject to this
investment representation shall bear a legend evidencing such
restriction.
12. Amendment and Discontinuance. The Board of Directors
may, at any time, without the approval of the stockholders of the
Company (except as otherwise required by applicable law, rule or
regulations, including without limitation any shareholder approval of
the safe harbor rule promulgated under the Securities Exchange Act of
1934) alter, amend, modify, suspend, or discontinue the Plan, but may
not, without the consent of the affected Participant or without the
approval of the stockholders of the Company, make any alteration which
would: (a) increase the aggregate number of shares subject to award
under the Plan, except as provided in paragraph 9; (b) withdraw
administration of the Plan from the Committee or Board of Directors; (c)
extend the term of the Plan or the maximum period by which any awards of
shares of Restricted Stock shall vest; (d) change the class of
individuals eligible for awards of Restricted Stock under the Plan; (e)
without the consent of the affected Participant, alter or impair any
shares of Restricted Stock previously awarded under the Plan or (f)
permit any member of the Committee to become eligible for awards of
Restricted Stock under the Plan.
13. Liability. No member of the Board of Directors, the
Committee or officers or employees of the Company or its Subsidiaries
shall be personally liable for any action, omission or determination
made in good faith in connection with the Plan.
14. Effective Date and Duration. This Plan shall become
effective upon its approval by a majority of the shares of the common
stock of the Company. Awards of Restricted Stock may be granted under
the Plan for a period of ten (10) years commencing January 1, 1994. No
awards of Restricted Stock shall be made after May 31, 2006. Upon such
date, the Plan shall expire except as to forfeitable shares of
Restricted Stock which shall remain outstanding until they become vested
or are forfeited.
5
<PAGE>
15. Miscellaneous.
(a) The term "Board" or "Board of Directors" used
herein shall mean the Board of Directors of the Company, and to the
extent that any powers and discretion vested in the Board of Directors
are delegated to any committee of the Board or officer of the Company,
the term "Board of Directors" shall also mean such committee or officer.
(b) The term "Subsidiary" or "Subsidiaries" used
herein shall mean any herein shall mean any as follows: banking
institution or other corporation more than fifty percent (50%) of whose
total combined voting stock of all classes is held by the Company or by
another corporation qualifying as a Subsidiary within this definition.
(c) The term "Change in Control of the Company"
used herein shall mean (i) any merger, consolidation or similar
transaction which involves the Company or any Subsidiary and in
which persons who are the shareholders of the Company immediately
prior to such transaction own, immediately after such transaction,
shares of the surviving or combined entity which possess voting
rights equal to or less than fifty percent (50%) of the voting
rights of all shareholders of such entity, determined on a fully
diluted basis; (ii) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets of the
Company or any Subsidiary; (iii) any tender, exchange, sale or
other disposition (other than dispositions of the stock of the
Company or any Subsidiary in connection with bankruptcy,
insolvency, foreclosure, receivership or other similar
transactions) or purchases (other than purchases by the Company or
any Company-sponsored employee benefit plan, or purchases by
members of the Board of Directors of the Company or any Subsidiary)
of more than twenty-five percent (25%) of the common stock of the
Company or any Subsidiary; (iv) during any period of two (2)
consecutive years during the term of the Plan specified in
paragraph 17, individuals who at the date of the adoption of the
Plan constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof, unless the
election of each director at the beginning of such period has been
approved by directors representing at least a majority of the
directors then in office who were directors on the date of the
adoption of the Plan; or (v) a majority of the Board of Directors
or a majority of the shareholders of the Company approve, adopt,
agree to recommend, or accept any agreement, contract, offer or
other arrangement providing for, or any series of transactions
resulting in, any of the transactions described above.
Notwithstanding the foregoing, a Change in Control of the Company
shall not occur as a result of the issuance of stock by the Company
in connection with any private placement offering of its stock or
any public offering of its stock.
6
Exhibit 21
SUBSIDIARIES OF THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
- -------------------------------------------------------------
1. The National Bank of Indianapolis
1
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