SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. N.A.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HORIZON BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
Jack A. Selman
Selman & Munson, P.C.
111 Congress Avenue, Suite 1000
Austin, Texas 78701
(Name of Person(s) Filing Proxy Statement
If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box:
[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and O-11.
1) Title of each class of securities to which transaction
applies:
N.A.
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
N.A.
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[Horizon Bancorp, Inc. Letterhead]
August 8, 1996
Dear Fellow Shareholder:
The Annual Meeting of the Shareholders of Horizon Bancorp,
Inc. (the "Company") will be held on Tuesday, September 24, 1996 at
10:00 A.M. at the principal office of the Company located at 5800
MoPac Expressway, Austin, Texas. I hope each of you can attend.
Whether or not you plan to attend, please review the enclosed Proxy
Statement and then complete, sign and date the enclosed proxy and
return it in the accompanying postpaid return envelope as promptly
as possible. This will save the Company additional expense in
soliciting proxies and will ensure that your shares are represented
at the Meeting.
In addition to the election of two directors, shareholders are
being asked to consider two proposals regarding the Stock Option
Plans of the Company. The first proposal involves an amendment to
the existing 1992 Compensatory Stock Option Program to permit,
without conditions, the exercise of those options that were adopted
by the shareholders prior to the Company going public. The second
is a proposal to ratify the adoption of the 1997 Stock Option and
Incentive Plan. The Board has carefully considered these proposals
and believes that their approval will enhance the ability of the
Company to recruit and retain quality management. In addition,
shareholders are being asked to ratify the appointment of
BDO Seidman as the Company's auditors. Accordingly, your Board of
Directors unanimously recommends that you vote for each of the
proposals.
We look forward to seeing you at the Annual Meeting. Should
you have any questions, please do not hesitate to call. We
appreciate your support and encouragement in the past and we look
forward with great anticipation to your future support. Thank you
for your attention to this important matter.
Very truly yours,
/s/ Douglas B. Kadison
Douglas B. Kadison
Chairman of the Board of
Directors
<PAGE>
HORIZON BANCORP, INC.
5800 North MoPac Expressway
Austin, Texas 78731
NOTICE OF ANNUAL MEETING OF THE
SHAREHOLDERS
TO BE HELD SEPTEMBER 24, 1996
To All Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of Horizon Bancorp, Inc. (the "Company") will be
held on Tuesday, September 24, 1996 at 10:00 A.M. at the principal
office of the Company located at 5800 North MoPac Expressway,
Austin, Texas, for the purpose of considering and acting on the
following proposals:
1. To elect two directors for a term of three years and
until their successors are elected and qualified;
2. To consider and act upon a proposal to ratify the
adoption of the 1997 Stock Option and Incentive Plan;
3. To consider and act upon a proposal to amend the
Company's 1992 Compensatory Stock Option program to
remove certain conditions for the exercise of such
options;
4. To consider and act upon a proposal to ratify the
appointment of BDO Seidman as independent auditors for
the Company for the current year; and
5. To consider and transact such other business or matters
as may properly be brought before the Meeting or any
adjournments thereof. The Board of Directors is not
aware of any such business or matters to come before the
Meeting.
Shareholders of record at the close of business on August 8,
1996 will be entitled to vote at the meeting and any adjournments
thereof. Only shareholders of record as of the close of business
on that date will be entitled to vote at the Meeting or any
adjournments thereof. In the event there are not sufficient votes
for a quorum or to approve or ratify any of the foregoing proposals
at the time of the Meeting, the Meeting may be adjourned in order
to permit further solicitation of proxies by the Company.
By Order of the Board of
Directors
/s/ Paul A. Antrim
Paul A. Antrim, Secretary
Austin, Texas
August 8, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE
PROVIDED.
<PAGE>
PROXY STATEMENT
HORIZON BANCORP, INC.
5800 North MoPac Expressway
Austin, Texas 78731
_________________________________________
ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 24, 1996
_________________________________________
The following statement is furnished in connection with the
solicitation by the Board of Directors of Horizon Bancorp, Inc.,
herein referred to as the Company, of proxies to be used at the
Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held at the hour of 10:00 A.M., Austin, Texas time
on September 24, 1996, at the principal office of the Company,
located at 5800 North MoPac Expressway, Austin, Texas, and at any
adjournments thereof. Certain of the information provided herein
relates to Horizon Bank & Trust, SSB (the "Bank"), a wholly-owned
subsidiary of the Company.
The Company's Annual Report to the Shareholders on Form
10-KSB, including the consolidated financial statements for the
year ended April 30, 1996, accompanies this Proxy Statement and the
form of proxy (the "Proxy"), which are being mailed to shareholders
on or about August 14, 1996.
Shareholders of record at the close of business on August 8,
1996 (the "Voting Record Date") will be entitled to notice of the
Annual Meeting. At that date, there were issued and outstanding
1,386,757 shares of the Company's Common Stock, the holders of
which are entitled to one vote for each share then held. The
Company has no other class of securities outstanding.
VOTING REQUIRED AND PROXY INFORMATION
The presence, in person or by proxy, of the holders of at
least one-third of the total number of shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Annual
Meeting. As to the election of the directors, the Proxy being
provided by the Board of Directors enables a shareholder to vote
for the election of the nominee proposed by the Board, or to
withhold authority to vote for the nominee being proposed. Under
the Texas Business Corporation Act, directors are elected by a
plurality of the votes cast with a quorum present. The Company's
Articles of Incorporation prohibit cumulative voting for the
election of directors. In all matters other than the election of
directors, the affirmative vote of those persons holding of record
in the aggregate at least a majority of shares of stock present in
person or by proxy and entitled to vote at the Annual Meeting or
any adjournments thereof shall be the act of the shareholders.
Abstentions are included in the determination of shares present and
voting for purposes of whether a quorum exists, while broker
non-votes are not. Neither abstentions nor broker non-votes are
counted in determining whether a matter has been approved. In the
event there are not sufficient votes for a quorum or to approve or
ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further
solicitation of proxies.
Shareholders are requested to vote by completing the enclosed
Proxy and returning it signed and dated in the enclosed
postage-paid envelope. Shareholders are urged to indicate their
vote in the spaces provided on the Proxy. Proxies solicited by the Board
of Directors of the Company will be voted in accordance with the
directions given therein. Where no instructions are indicated,
signed Proxies will be voted FOR the election of the two nominees
for director named in this Proxy Statement, FOR ratification of the
1997 Stock Option Plan (the "Stock Option Plan"), FOR the amendment
to the 1992 Compensatory Stock Option Program and FOR the
ratification of the appointment of BDO Seidman as independent
auditors of the Company for the current year. Returning your
completed Proxy will not prevent you from voting in person at the
Annual Meeting should you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it any
time before it is exercised by (i) filing with the Secretary of the
Company written notice thereof (Paul A. Antrim, Secretary, Horizon
Bancorp, Inc., 5800 North MoPac Expressway, Austin, Texas 78731);
(ii) submitting a duly-executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary
notice of his or her intention to vote in person. If you are a
shareholder whose shares are not registered in your own name, you
will need additional documentation from your record holder to vote
personally at the Annual Meeting. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournments thereof
and will not be used for any other meeting.
The cost of solicitation of Proxies by mail on behalf of the
Board of Directors will be borne by the Company. Proxies may be
solicited by personal interview or by telephone, in addition to the
use of the mails by directors, officers and regular employees of
the Company and the Bank, without additional compensation therefor.
The Company also has made arrangements with brokerage firms, banks,
nominees and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record by the
beneficial owners of such shares. The Company will reimburse such
holders for their reasonable out-of-pocket expenses.
Proxies solicited hereby will be returned to the Board of
Directors, and will be tabulated by inspectors of election
designated by the Board of Directors, who will not be employed by,
or a director of, the Company or any of its affiliates.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth the beneficial ownership of the
Common Stock as of August 8, 1996 by (i) each shareholder known to
the Company to beneficially own more than five percent of the
shares of Common Stock outstanding, (ii) each director of the
Company, (iii) the executive officers of the Company appearing in
the Summary Compensation Table below and (iv) all directors and
executive officers as a group.
Number of Percent
Relationship With Common Shares of Class
Name and Address Company Benficially Owned 10
William B. Rhodes
1602 FM 1460
Round Rock, Texas
78664 Shareholder 98,415 1 6.50%
Laifer Capital
Management 6
45 West 45th Street
New York, New York
10036 Shareholder 115,800 7.64
Wellington Management
Company 7
75 State Street
Boston, Massachusetts
02107 Shareholder 106,000 7.00
Bay Pond Partners, L.P.
8
75 State Street
Boston, Massachusetts
02107 Shareholder 70,000 4.62
John Hancock Mutual 9
Life Insurance
Company
101 Huntington Avenue
Boston, Massachusetts
02199 Shareholder 107,000 7.06
Douglas B. Kadison Chairman of the
7706 Stoneywood Dr Board, President
Austin, Texas 78731 and Chief Executive
Officer 208,754 2,11 13.78
Charles S. Nichols, Vice Chairman of
Jr. the Board and
3324 Perry Lane Executive Vice
Austin, Texas 78731 President 186,716 2 12.32
Paul A. Antrim Executive Vice
4309 Sendero Drive President, Chief
Austin, Texas 78735 Financial Officer,
Secretary,Treasurer
and Director 114,494 2 7.56
Robert J. Ellis
7107 Brodie Lane
Austin, Texas 78731 Director 9,000 3 0.59
Michael Rotman, M.D.
311 Addie Roy Road
Austin, Texas 78746 Director 31,650 4 2.09
All Directors and
Executive
Officers as a Group (5
persons) including
those named above 550,614 5 36.35
_______________________
1 As reported in a Schedule 13D dated August 3, 1996, Mr. Rhodes
reported sole voting and dispositive power with respect to
98,415 shares owned by him. Includes options granted to Mr.
Rhodes to acquire 200 shares of Common Stock of the Company
which are immediately exercisable. Also includes a total of
500 shares of Common Stock held by Mr. Rhodes as trustee for
five family members.
2 Includes options granted to Messrs. Kadison, Antrim and
Nichols to acquire 39,688 shares each of Common Stock of the
Company, immediately exercisable.
3 Includes options granted to Mr. Ellis to acquire 7,600 shares
of Common Stock of the Company, immediately exercisable, and
500 shares held by A. G. Edwards as Trustee for the Individual
Retirement Account of Mr. Ellis' spouse.
4 Includes options granted to Dr. Rotman to acquire 1,200 shares
of Common Stock of the Company, immediately exercisable.
5 Includes the options and shares referred to in footnotes 2, 3,
4 and 11 herein.
6 As reported by Laifer Capital Management, Inc. in a Schedule
13G dated February 7, 1996, a registered investment adviser,
reported sole voting and investment power with respect to the
115,800 shares of the Common Stock.
7 As reported by Wellington Management Company in a Schedule 13G
dated February 9, 1996, a registered investment adviser,
reported sole voting and investment power with respect to the
106,000 shares of the Common Stock.
8 As reported by Bay Pond Partners, L.P. in a Schedule 13G dated
February 7, 1996, a registered investment adviser, reported
sole voting and investment power with respect to the 70,000
shares of the Common Stock.
9 As reported by John Hancock Mutual Life Insurance Company
("John Hancock") and certain of John Hancock's subsidiaries,
including John Hancock Advisors, Inc. ("JHA"), John Hancock
Subsidiaries, Inc., John Hancock Asset Management and The
Berkley Financial Group in a Schedule 13G dated January 26,
1996. JHA reported sole voting and investment power with
respect to the 107,000 shares.
10 Assumes the exercise of all outstanding stock options of
officers and directors only which results in 1,514,818 in
outstanding shares.
11 Includes 2,000 shares of Common Stock held by Mr. Kadison and
his spouse as trustees for their minor children.
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
MATTER ONE.
ELECTION OF DIRECTORS
General
The Company's Board of Directors consists of five members.
The Board is divided into three classes, each of which contains
approximately one-third of the Board. Approximately one-third of
the directors are elected annually. Directors of the Company are
generally elected to serve for a three-year period or until their
respective successors are elected and qualified. A purpose of the
Annual Meeting is to elect two directors for a term of three years.
The table below sets forth certain information, as of the
Voting Record Date, regarding the composition of the Company's
Board of Directors, including each director's term of office. The
Board of Directors acting as the nominating committee has
recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the
Board of Directors (other than proxies in which the vote is
withheld as to a nominee) will be voted at the Annual Meeting FOR
the election of the nominees identified below. If either or both
of the nominees are unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute
nominees as the Board of Directors may recommend. At this time,
the Board of Directors knows of no reason why either nominee may be
unable to serve, if elected. Except as disclosed herein, there are
no arrangements or understandings between the nominees and any
other person pursuant to which the nominees were selected.
<PAGE>
Position(s) Held in Director Term
Name Age 1 the Company Since to Expire
NOMINEES FOR DIRECTOR
Paul A. Antrim 50 Executive Vice 1985 1999
President, Chief
Financial Officer,
Secretary, Treasurer
and Director
Michael Rotman,M.D. 55 Director 1992 1999
DIRECTORS CONTINUING IN OFFICE
Douglas B. Kadison 49 Chairman of the Board, 1985 1997
President and
Chief Executive Officer
Charles S. Vice Chairman of the 1985 1997
Nichols, Jr. 42 Board and Executive
Vice President
Robert J. Ellis 48 Director 1992 1998
_________________
1 At the Voting Record Date.
The following is a brief description of the business
experience of the directors of the Company. All directors have
held their present positions for at least five years unless
otherwise indicated.
Douglas B. Kadison. Mr. Kadison is the Chairman of the Board,
President and Chief Executive Officer of the Company. He is also
Chairman of the Board, President and Chief Executive Officer of the
Bank. His chief responsibilities with the Company and the Bank
include financial planning, general administration, employee
relations and motivation, corporate planning and marketing
strategy. Mr. Kadison also oversees the commercial lending
activities of the Bank. Prior to his association with these
companies, Mr. Kadison held several positions of responsibility in
commercial real estate lending, although he did not serve in those
capacities as a director or executive officer of a financial
institution. Mr. Kadison received a Bachelor of Business
Administration from the University of Wisconsin and has taken
graduate business courses at New York University.
Charles S. Nichols, Jr. Mr. Nichols is Vice Chairman of the
Board and an Executive Vice President of the Company. Mr. Nichols
is also a director and an Executive Vice President of the Bank.
Mr. Nichols' principal responsibilities include corporate planning
and management of residential lending operations, including
construction lending. Prior to associating with these companies,
Mr. Nichols held management positions in the mortgage banking
industry. Mr. Nichols received a Bachelor and Master of Business
Administration from Texas A&M University.
Paul A. Antrim. Mr. Antrim is a director, Executive Vice
President, Chief Financial Officer, Secretary and Treasurer of the
Company. Mr. Antrim is also a director, Executive Vice President
and Chief Financial Officer of the Bank. His principal
responsibilities are corporate planning, financial management and
general administration for the Bank. Prior to his association with
these companies, Mr. Antrim served in several senior management
positions in the mortgage banking industry. Mr. Antrim is a
graduate of the University of Texas at Austin with a Bachelor of
Business Administration. Mr. Antrim is a licensed Certified Public
Accountant in the State of Texas.
Robert J. Ellis. Mr. Ellis is a director of the Company and
the Bank and owns and operates RJE Consulting, a management
consulting business. Prior to founding RJE Consulting, Mr. Ellis
was Vice President, General Manager and a shareholder of
Communication Specialists, Inc., a commercial printing firm located
in Austin, Texas. Prior to joining Communication Specialists,
Inc., Mr. Ellis held various positions in the banking industry.
Mr. Ellis has received a Masters of Business Administration from
Tulane University.
Michael Rotman, M.D. Dr. Rotman is a director of the Company
and the Bank. He is Texas Board Certified in Cardiovascular
Disease and Internal Medicine. He attended medical school at the
University of Texas Medical Branch, Galveston, Texas and received
his advanced training at Duke Hospital, Durham, North Carolina. He
currently is a practicing cardiologist in Austin, Texas.
There are no family relationships among any directors or
executive officers of the Bank or the Company.
Meetings and Committees of the Board of Directors
of the Company and the Bank
Meetings and Committees of the Company. The Company's Board
of Directors meets at least annually and on an as-needed basis.
The Board of Directors met five times during fiscal 1996. No
incumbent director of the Company attended fewer than 75% of the
aggregate of the total number of Board meetings and the total
number of meetings held by the committees of the Board of Directors
on which he served during fiscal 1996. The Company does not
currently compensate its directors for their service in such
capacity, but outside directors of the Company receive directors
fees for serving as directors of the Bank.
The Board of Directors of the Company has standing Audit and
Stock Option Committees.
The Audit Committee recommends independent auditors to the
Board, reviews the results of the auditor's services, reviews with
management and the internal auditors the systems of internal
control and internal audit reports and assures that the books and
records of the Company are kept in accordance with applicable
accounting principles and standards. The members of the Audit
Committee are Directors Ellis and Rotman. This committee met once
during the fiscal year ended April 30, 1996.
The Stock Option Committee is also composed of directors Ellis
and Rotman. This Committee is responsible for administering the
Company's Stock Option Plan. See "Ratification of the 1997 Stock
Option and Incentive Plan." This Committee did not meet during the
fiscal year ended April 30, 1996.
The entire Board of Directors of the Company acts as a
nominating committee for selecting nominees for election as
directors. While the Board of Directors of the Company will
consider nominees recommended by shareholders, the Board has not
actively solicited such nominations. Pursuant to the Company's
Bylaws, nominations by shareholders must be delivered in writing to
the Secretary of the Company at least 30 days before the date of
the Meeting.
Meetings and Committees of the Bank. The Bank's Board of
Directors meets monthly and may have additional special meetings
upon the written request of the Chairman of the Board, the
President or at least a majority of the directors. The Board of
Directors met twelve times during the fiscal year ended April 30,
1996. During fiscal 1996, no director of the Bank attended fewer
than 75% of the aggregate of the total number of Board meetings and
the total number of meetings held by the committees of the Board of
Directors on which he served, except that director Howard Owen did
not attend 75% of the Bank's loan committee meetings due to
conflicts with his primary business. Non-employee directors are
paid a fee of $400 per month for attending regular and special
meetings and $75 for each Loan Committee meeting attended. No fee
is paid for service on any other committees. Board members who are
employees of the Bank receive no fee for their service on the Board
or its committees. The Bank has standing Executive, Audit,
Investment, Compensation, Interest Rate Risk, and Loan Committees.
The Bank's Executive Committee exercises the powers of the
full Board of Directors between board meetings on internal
operational matters. The Executive Committee is composed of
Directors Kadison, Nichols and Antrim. Several officers of the
Bank attend Executive Committee meetings in an advisory capacity
without the power to vote. The Executive Committee met as
frequently as once a week during the fiscal year ended April 30,
1996.
Outside directors Robert Ellis, Howard Owen and Larry Rother
serve on the Bank's Audit Committee with officer and advisory
non-voting member Paul Antrim. The committee selects the Bank's
independent accountants and meets with these accountants to discuss
the scope and results of their annual audit. In the fiscal year
ended April 30, 1996 the Audit Committee met one time in joint
meetings with the Board of Directors.
The Bank's Investment Committee is responsible for the review
and recommendation of securities investments for the Bank. The
members of that Committee are Paul Antrim, Robert Ellis, Douglas
Kadison and S. Mark Powell. The Investment Committee met four
times in fiscal 1996.
The Compensation Committee of the Bank is responsible for
recommending to the Board of Directors of the Bank the salary
actions (hiring, raises, bonuses) for all officers (vice president
and above) and any employee whose annual compensation (exclusive of
incentive bonuses) is equal to or greater than $50,000. Outside
directors Robert Ellis, Howard Owen and Larry Rother are the sole
members of this Committee. The Compensation Committee met seven
times in fiscal 1996.
The Interest Rate Risk Committee is comprised of Paul Antrim,
Douglas Kadison, Charles Nichols and Nancy Nichols. This Committee
meets at least monthly to review deposit levels and rates, loan
rates, funding needs and liquidity and to generally assess the
Bank's asset/liability mix. This Committee met fourteen times in
fiscal year 1996.
The Loan Committee meets almost weekly to review and take
action on loan applications that are outside the authority of the
loan officers. The members of the Loan Committee include Paul
Antrim, Robert Ellis, Douglas Kadison, Charles Nichols, Larry
Rother and Howard Owen. Mr. Mark Monroe, who is a senior officer
of the Bank, also serves as an advisory non-voting member of the
Loan Committee. The Loan Committee met forty-seven times in fiscal
year 1996.
Executive Compensation
During the year ended April 30, 1996, the Company did not pay
separate compensation to its executive officers. Separate
compensation will not be paid to the officers of the Company until
such time as the officers of the Company devote significant time to
separate management of Company affairs, which is not expected to
occur until the Company becomes actively involved in additional
significant business beyond that of the Bank.
The following table sets forth information concerning the
compensation paid or granted to the Bank's Chief Executive Officer,
its Chief Financial Officer and its Chief Lending Officer in fiscal
years ended April 30, 1996, 1995 and 1994. No other executive
officer of the Bank had an aggregate salary and bonus which
exceeded $100,000 in fiscal 1996.
Summary Compensation Table
Long Term
Compensation
Awards All
Annual Compensation Other
Other Compen-
Name and Annual Options/ sation
Principal Fiscal Salary Bonus Compensa- SAR's 3 2 ($)
Position Year 4 ($) 1($) tion ($) (#)
Douglas B.
Kadison,
President
and Chief 1996 $110,346 $69,922 $ 395 -- $8,814
Executive 1995 104,100 55,155 1,618 6,300 2,741
Officer 1994 81,000 50,703 1,765 5,400 2,476
Paul A. Antrim,
Executive Vice
President 1996 100,488 63,675 5 -- 14,624
and Chief 1995 94,800 50,230 240 6,300 4,902
Financial 1994 77,000 48,199 450 5,400 4,761
Officer
Charles S.
Nichols, Jr., 1996 107,166 67,907 255 -- 17,603
Executive Vice 1995 101,100 53,575 2,273 6,300 2,746
President 1994 81,000 50,703 1,525 5,400 2,651
________________
1 Includes bonuses accrued and paid subsequent to fiscal year
end.
2 Taxable fringe benefits including excess life insurance
premiums and value of personal use of Bank provided automobile
as are determined as of the end of the calendar year for tax
purposes.
3 The term "SAR" refers to stock appreciation rights.
4 For the fiscal years ended April 30, 1996, 1995 and 1994.
All Other Compensation includes the following:
1996 1995 1994
Company Contribution to 401(k) Plan for:
Douglas B. Kadison $2,667 $ -- $ --
Paul A. Antrim $2,090 $ -- $ --
Charles S. Nichols, Jr. $2,667 $ -- $ --
Value of Personal Use of Company Provided
Automobile for: 1
Douglas B. Kadison $2,236 $2,420 $2,224
Paul A. Antrim $4,988 $4,601 $4,525
Charles S. Nichols, Jr. $2,631 $2,425 $2,399
Cost of Life Insurance Provided
by Company of Which 1 the Benefit
Exceeded $50,000 for:
Douglas B. Kadison $ 569 $ 321 $ 252
Paul A. Antrim $ 546 $ 301 $ 236
Charles S. Nichols, Jr. $ 511 $ 321 $ 252
One-Time Settlement of Excess Accrued
Vacation Paid on Basis of 35% of
Current Salary for:
Douglas B. Kadison $3,342 $ -- $ --
Paul A. Antrim $7,000 $ -- $ --
Charles S. Nichols, Jr. $11,794 $ -- $ --
________________
1 These items are as determined at the end of the calendar year
for tax purposes.
Employment Agreements
Effective on completion of the Company's public stock offering
on March 14, 1995, the Bank entered into employment agreements with
Messrs. Kadison, Nichols and Antrim. The current salaries of those
three officers are $121,381, $117,883 and $110,537, respectively.
The employment agreements are designed to assist the Bank in
maintaining a stable and competent management team. The continued
success of the Bank depends to a significant degree on the skills
and competence of its officers. The agreements provide for
termination upon the employee's death, disability, for cause or in
certain events specified by federal regulations. The employment
agreements are also terminable by the employee upon 90 days notice
to the Bank.
These employment agreements provide for an initial term of up
to three years. The term of employment under the employment
agreement is automatically extended for a period of one year, in
addition to the then-remaining term thereunder, on each anniversary
of the employment agreement. The employment agreements provide for
salary payments during the remainder of the term of the agreement
and for a lump sum payment to the employee of up to 299% of his
then-current annual compensation in the event there is a change in
control of the Bank and employment terminates involuntarily in
connection with such change in control of the Bank or the Company
or within 12 months thereafter. These termination payments are
subject to reduction if, in the event of a change in control, any
payments to the employee would be non-deductible by the Bank under
Section 280G of the Internal Revenue Code (the "Code"). For the
purposes of the employment agreements, a change in control is
defined as an acquisition of control of the Bank or the Company
(other than by a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or its subsidiary) as
defined in FDIC regulations which could require the filing of a
notice of change in control. The agreements guarantee
participation in an equitable manner in employee benefits
applicable to executive personnel.
Based on current salary information, if Messrs. Kadison,
Nichols and Antrim had been terminated as of April 30, 1996, under
circumstances entitling them to severance pay as described above,
they would have been entitled to receive a lump sum cash payment of
approximately $329,935, $320,426 and $300,459, respectively.
Benefit Plans
General. The Bank currently provides health care benefits to
its employees, including hospitalization and comprehensive medical
insurance, life and disability insurance, subject to certain
deductibles and co-payments by employees and other limitations.
Incentive Compensation Plan. The Bank has an Incentive
Compensation Plan (the "Plan") under which the Bank provides
incentive compensation awards to those key employees who attain and
sustain consistently high levels of performance that exceed
expectations and that contribute significantly to the success,
profitability and return to the Bank and the Company. The first
year of that Plan was fiscal year 1994. For the year ended April
30, 1996, the Bank had awarded $190,800 of 1996 incentive
compensation awards to three employees.
The Plan is designed to support the achievement of the Bank's
organizational mission, long-term goals and objectives as
delineated in the five-year strategic plan and supporting financial
goals contained therein. Incentive compensation awards are based
upon individual contributions to performance as measured by:
selected financial ratios, operating results and other qualitative
evaluations as specifically defined for the Plan participants.
These measures are constructed to recognize the influence of both
internal and external factors on performance by establishing the
relationship of actual performance to benchmark expectations. The
benchmark measures will include operating performance data,
external peer group comparisons and other specific objectives
agreed upon between a Plan participant and his executive manager.
The Plan protects shareholders' interests by requiring a
minimum return from earnings before any performance incentives can
be made. At the same time, the Plan specifies annual goals that
are the same as those contained in the strategic plan which is to
be updated annually and approved by the Board of Directors. The
Plan incorporates the use of the Bank's employee performance
planning and evaluation process as described in the Bank's
personnel policy and compensation administrative program. Although
initial implementation of the Plan contemplates inclusion of the
senior officers only, the Plan has been designed to permit future
inclusion of other key individuals.
The calculation of percent of earnings to be available for
distribution to Plan participants, and the individual incentive
formulas, are constructed to provide awards consistent with the
goals for earnings levels contemplated in the strategic plan
financial objectives and approved by the Board of Directors. The
incentive formulas ensure a level of incentive award that is
competitive with comparable positions and levels of performance in
other financial institutions in order that the Bank will be able to
attract, retain and motivate high-quality personnel to sustain
profitability, continued growth and other goals and objectives of
the Bank as delineated in its strategic plan.
At the option of the participant, each annual incentive award
will be paid in cash as soon as possible after the computation of
the award, or some or all of the award may be deferred to a future
year or years.
The Plan has been established to augment regular salary and
benefits programs of the Bank. The Plan is not meant to be a
substitute for salary levels and increases, but, rather, is
intended to recognize and reward "exceptional" performance.
The Compensation Committee of the Bank's Board of Directors is
assigned primary responsibility for the administration of the Plan.
However, it is the Compensation Committee that will recommend, and
the full Board of Directors that will approve or disapprove, final
disposition of all matters pertaining to administration of the
Plan.
The Compensation Committee, with Board approval, has the
responsibility to interpret, administer and amend the Plan as
necessary. The recommendations of the Committee as approved by the
Board, affecting the construction, interpretation and
administration of the Plan, shall be final and binding on all
parties, including the Bank and its employees.
Matters before the Compensation Committee shall be decided
based upon a majority vote of the committee members and recommended
to the Board of Directors for approval and final action. Any
officer of the Bank who also serves as a member of the Compensation
Committee shall not be authorized to vote on matters relating to
the eligibility for or determination of their own performance
incentive compensation awards.
Before the beginning of each Plan year, the Compensation
Committee reviews and revises, as appropriate, any operating rules
of the Plan. Performance measurements and the relative weighing of
any of the performance targets may be changed in order to emphasize
specific goals and objectives of the strategic plan. However, it
is anticipated that the Plan will require modification only in the
event of significant changes in economic, regulatory, personnel or
performance occurrences. The Chief Executive Officer will inform
the Compensation Committee of any proposed changes to the operating
rules.
Computation of incentive awards for individual participants
will be performed by the Chief Executive Officer or his designee.
Maintenance of Plan records, including but not limited to
participant payments and deferred awards, shall be the
responsibility of the Chief Financial Officer. Such computations
and records may be audited by the independent auditors of the
Company.
The Compensation Committee, with Board approval, may exclude
extraordinary occurrences which could affect the performance
awards, either positively or negatively, but are of their nature
outside the significant influence of Plan participants. The
characteristics of such extraordinary occurrences are generally
that they involve the Board of Directors in (i) the original
decision to take a given action, (ii) advance of the occurrence and
(iii) issues most often related to a restructuring of assets, or
unusual expense or income realization.
Extraordinary occurrences may be excluded when calculating
performance results to ensure that the best interests of the Bank
and its shareholders are not brought into conflict with the best
interests of Plan participants. When and if extraordinary
occurrences are excluded from the calculation of individual
performance measures, they should also be excluded in calculating
the bonus pool.
Stock Option Plans. The Company has issued stock options to
the employees, officers and directors of the Bank in the Company's
1992, 1993 and 1994 Stock Option Plans. Under these three Plans
the Company has options for 127,400 shares to an aggregate of 33
employees, officers and directors. In addition, the Company has
the authority to issue an additional 40,000 shares of its common
stock pursuant to its 1996 Stock Option and Incentive Plan. No
option awards have been granted under that Plan. Finally, the
Company in 1992 issued 68,808 shares of compensatory stock options
to three officers and one shareholder of the Company for them
personally guaranteeing certain debts of the Company. See "Matter
Three-Amendment to 1992 Compensatory Stock Option Program." None
of the above described options have been exercised.
401(k) Plan. The Bank has adopted a plan under Section 401(k)
of the Internal Revenue Code effective May 1, 1995. Under this
plan, a full-time employee age 21 or older who has been employed by
the Bank for a least one year may make a salary reduction
contribution in an amount equal to up to 25% of his salary. The
Bank makes an additional contribution in an amount equal to 25% of
the first 6% of the employee's salary contributed to the plan by
the employee. All contributions and earning are fully and
immediately vested. The Bank has the option each year to make a
supplemental year-end contribution. For fiscal year 1996, the Bank
has determined not to make a supplemental contribution. No
determination has been made for fiscal year 1997.
Certain Transactions
Indebtedness of Management. The Bank, like many financial
institutions, may make home mortgage, personal business or consumer
loans to directors, officers, shareholders and employees of the
Bank. These loans must be made in the ordinary course of business
and on the same terms and conditions, including interest rates and
collateral, as those of comparable transactions prevailing at the
time with non-affiliated parties. Loans to executive officers,
directors, persons owning five percent or more of the stock of the
Company and their related persons must be approved by a majority of
the disinterested members of the Board of Directors and are subject
to a number of additional restrictions. Loans to non-officer
employees can be approved by a lending officer as long as they are
disclosed to the compliance officer or the senior lending officer.
The Bank's affiliates must qualify for any loan on the same terms
and conditions that apply to other customers. Outstanding loans
(including letters of credit but excluding credit card and
overdraft lines) to executive officers, directors and five percent
or more shareholders of the Company, and their affiliates, amounted
to $696,791, or 6.2% of the Company's stockholders' equity at
April 30, 1996.
The following table sets forth the indebtedness of executive
officers and directors of the Bank and the Company, five percent or
more shareholders of the Company and members of the immediate
family of such executive officers or directors who are or were
indebted to the Bank at any time since May 1, 1994 in an amount in
excess of $60,000. The information set forth below includes
amounts originated before April 30, 1996.
Largest
Amount
Outstand- Balance
ing Since at
Name and Date of Type of May 1, April 30, Interest
Position Loan Loan 1994 1996 Rate
Douglas B.
Kadison
President 8/25/88 Homestead $166,504 $141,645 COF1
Charles S.
Nichols, Jr.
Executive Vice
President 8/1/88 Homestead $164,370 $142,507 COF1
Nancy Nichols
Senior Vice
President 9/28/88 Homestead $ 63,364 $ 58,623 COF1
Howard Owen, 5/9/95 Securities $ 60,000 $ 41,608 12.25%
Director 7/6/95 Overdraft $ 7,500 $ 7,283 18.00%
Line of
Credit
S. Mark Powell,3/10/95 Real Estate$135,000 $125,000 9.75%
Director 8/23/95 Commercial $ 40,000 $ 39,000 11.75%
Michael Rotman,11/15/95 House 2 $ 82,575 $ 82,075 9.00%
Director 5/11/95 Letter of $100,000 $100,000 12.25%
Credit 3
_______________
1 The interest rate on this loan is at the cost of funds of the
Bank. See a description of the terms below.
2 Mr. Rotman has guaranteed this loan for his son.
3 This is a standby letter of credit which has not been drawn.
Home mortgage loans were made to certain executive officers
and directors under regulations applicable at the time these loans
were made. These regulations allowed the Bank to make qualifying
mortgage loans at the Bank's cost of funds as long as those
directors or officers remained employees or directors of the Bank
or the Company. The interest rate on these loans adjusts annually
to the Bank's then-current cost of funds. If the person's term on
the Bank's or the Company's Board of Directors ends and employment
with the Bank or the Company terminates, the loan reverts to a
market rate of interest on the next adjustment date. There are
currently three outstanding loans to two directors of the Company
and one executive officer of the Bank, and the following table
indicates their status at April 30, 1996:
Outstanding
Officer/Director Principal Balance
Douglas B. Kadison $141,645
Charles S. Nichols, Jr. $142,507
Nancy Nichols $ 58,623
No directors or executive officers of the Company or the Bank,
five percent shareholders of the Company or immediate family
members of such individuals were engaged in transactions with the
Company, the Bank or any subsidiary involving more than $60,000
during the last two fiscal years ended April 30, 1996 except those
detailed above.
The Company's Board of Directors unanimously recommends a vote
FOR the election of Paul A. Antrim and Michael Rotman as directors.
MATTER TWO.
RATIFICATION OF THE
1997 STOCK OPTION AND INCENTIVE PLAN
General
The 1997 Stock Option and Incentive Plan (the "Stock Option
Plan") has been adopted by the Board of Directors of the Company,
subject to ratification by the shareholders of the Company.
Approval by the shareholders of the adoption of the Stock Option
Plan will authorize the granting of future awards pursuant to the
provisions of the Stock Option Plan. Except for the formula awards
to non-employee directors of the Company, the 1997 Stock Option
Plan is virtually identical to the 1996 Stock Option Plan approved
at the 1996 shareholder meeting. Pursuant to the terms of the
Stock Option Plan, 65,000 shares of the Company's Common Stock are
reserved for issuance thereunder. Persons eligible to be selected
as participants include all employees, officers, directors and
advisory directors of the Company. Approximately 64 persons are
currently eligible to participate in the Stock Option Plan.
Awards for 196,208 shares of the Company's Common Stock are
outstanding to officers, directors, advisory directors and
employees pursuant to other Company stock option plans.
The Board of Directors believes that it was appropriate for
the Company to adopt a flexible and comprehensive stock option and
incentive plan which permits the granting of a variety of long-term
incentive awards to directors, officers and employees as a means of
enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Company most
depends. However, because the awards are granted only to eligible
directors, advisory directors, officers and employees of the
Company, the adoption of the Stock Option Plan could make it more
difficult for a third party to acquire control of the Company and
therefore could discourage offers for the Company's Common Stock
that may be viewed by the Company's shareholders to be in their
best interest. In addition, certain provisions included in the
Company's Articles of Incorporation and Bylaws may discourage
potential takeover attempts. Included among these provisions are
provisions (i) requiring a supermajority vote of shareholders for
approval of certain business combinations, (ii) establishing a
staggered Board of Directors and (iii) authorizing a class of
preferred stock with terms to be established by the Board of
Directors. These provisions could prevent the sale or merger of
the Company even where a majority of the shareholders may approve
of such transaction.
Additionally, federal regulations prohibit the beneficial
ownership of more than 10% of the stock of a savings bank, such as
the Bank, without prior approval of the federal and state
regulatory authorities. Federal and state law and regulations also
require approval prior to the acquisition of "control" (as defined
in the regulations) of an insured institution, including a holding
company thereof. These regulations could have the effect of
discouraging takeover attempts of the Company.
Attached as Exhibit A to this Proxy Statement is the complete
text of the Stock Option Plan. The principal features of the Stock
Option Plan are summarized below.
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock
options, stock appreciation rights ("SAR's"), limited stock
appreciation rights ("Limited SAR's") and restricted stock. Each
award shall be on such terms and conditions, consistent with the
Plan, as the committee administering the Plan may determine.
Awards to non-employee directors of the Company are established by
a fixed formula. See "Non-Employee Director Awards."
Shares may be either authorized but unissued shares or
reacquired shares held by the Company in its treasury. Any shares
subject to an award which expires or is terminated unexercised will
again be available for issuance under the Stock Option Plan or any
other plan of the Company or its subsidiaries. Generally, no award
or any right or interest therein is assignable or transferable
except under certain limited exceptions set forth in the Plan.
The Stock Option Plan is administered by a committee
consisting of at least two non-employee members of the Board of
Directors of the Company (the "Committee"), none of whom are
eligible to receive discretionary awards under the Stock Option
Plan. Directors Ellis and Rotman have been appointed as the
present members of the Committee. In granting awards under the
Stock Option Plan, the Committee considers, among other things,
position and years of service, value of the participant's services
to the Company and the Bank and the added responsibilities of such
individuals as director and officers of a public company.
Non-Employee Director Awards
Under the terms of the Stock Option Plan, ten-year,
non-qualified stock options are intended to be granted to the
current non-employee directors of the Company in a total amount of
10,964 shares if any options are granted under the Stock Option
Plan. The number of stock option shares intended to be granted
under the Stock Option Plan would be 7,309 shares to non-employee
director Robert Ellis and 3,655 shares to non-employee director
Michael Rotman. The options granted under the Stock Option Plan
will have an exercise price equal to the market value per share of
the Common Stock on the date of the grant. All of these grants
are made upon consideration of past services rendered to the Bank
and the Company and in an amount deemed necessary (after a review
of grants made by other converting institutions) to encourage the
continued retention of the non-employee directors who are
considered necessary for the continued success of the Bank and
the Company.
Stock Options
The term of stock options will not exceed ten years from the
date of grant. The Committee may grant either "incentive stock
options" as defined under Section 422 of the Code or stock options
not intended to qualify as such ("non-qualified stock options").
In general, stock options will not be exercisable after the
expiration of their terms. Unless otherwise determined by the
Committee, in the event that a participant ceases to maintain
continuous service (as defined in the Stock Option Plan) to the
Company, or one of its subsidiaries, for any reason other than
death or termination for cause, an exercisable stock option will
continue to be exercisable for three months (or one year in the
case of a disability as defined in Section 22(e)(3) of the Code)
but in no event after the expiration date of the option. In the
event of the death of a participant during such service or within
three months (or in the case of a disability within the meaning of
Section 22(e)(3) of the Code, the one-year period referred to
above) following termination, an exercisable option will continue
to be exercisable for one year, to the extent exercisable by the
participant immediately prior to his death, but in no event later
than ten years after grant. Following the death of any
participant, the Committee may, as an alternative means of
settlement of an option, elect to pay to the holder an amount of
cash equal to the amount by which the market value of the shares
covered by the option on the date of exercise exceeds the exercise
price. A stock option will automatically terminate and will no
longer be exercisable as of the date a participant is terminated
for cause.
Subject to certain limited exceptions, the exercise price for
the purchase of shares subject to a stock option at the date of
grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be
paid in full in cash or shares of Common Stock, or a combination of
both, as determined by the Committee.
Stock Appreciation Rights
The Committee may grant SAR's at any time, whether or not the
participant then holds stock options, granting the right to receive
the excess of the market value of the shares represented by the
SAR's on the date exercised over the exercise price. SAR's
generally will be subject to the same terms and conditions and
exercisable to the same extent as stock options, as described
above. Upon the exercise of a SAR, the participant will receive
the amount due in cash or shares, or a combination of both, as
determined by the Committee. SAR's may be related to stock options
("tandem SAR's"), in which case the exercise of one will reduce to
that extent the number of shares represented by the other.
Notwithstanding the foregoing, no SAR may be exercisable by a
director, senior officer (as defined in the Stock Option Plan) or
ten percent beneficial owner (as defined in the Stock Option Plan)
of the Company within six months of the date of its grant.
SAR's will require an expense accrual by the Company each year
for the appreciation on the SAR's which it is anticipated will be
exercised. The amount of the accrual is dependent upon whether and
the extent to which the SAR's are granted and the amount, if any,
by which the market value of the SAR's exceeds the exercise price.
Limited Stock Appreciation Rights
Limited SAR's will be exercisable only for a limited period in
the event of a tender or exchange offer for shares of the Company's
Common Stock, other than by the Company, where 25% or more of the
outstanding shares are acquired in that offer or any other offer
which expires within 60 days of that offer. The amount paid on
exercise of a Limited SAR will be the excess of (a) the market
value of the shares on the date of exercise, or (b) the highest
price paid pursuant to the offer, over the exercise price. Payment
upon exercise of a Limited SAR will be in cash.
Limited SAR's may he granted at the time of, and must be
related to, the grant of a stock option or SAR. The exercise of
one will reduce to that extent the number of shares represented by
the other. Limited SAR's will be exercisable only for the 45 days
following the expiration of the tender or exchange offer, during
which period the related stock option or SAR will be exercisable.
However, no Limited SAR will be exercisable by a director, senior
officer or ten percent beneficial owner of the Company within six
months of the date of its grant.
Restricted Stock
The Committee may grant restricted stock, subject to
forfeiture, if the participant fails to remain in the continuous
service of the Company, or one of its subsidiaries, as a director,
officer or employee for a stipulated period which may not be less
than six months from the date of grant. The holder of restricted
stock shall have all of the rights of a shareholder, including the
right to receive dividends (with payment deferred if the Committee
so decides) and the right to vote the shares. The participant may
not, however, sell, assign, transfer, pledge or otherwise encumber
any of the restricted stock during the restricted period.
The Committee may, in its discretion, accelerate the time at
which any or all restrictions will lapse, or may remove any or all
of the restrictions. In the event a participant ceases to be
employed by reason of death, disability or retirement, restricted
stock still subject to restrictions will be free of these
restrictions in proportion to the portion of the restricted period
then elapsed, unless otherwise provided by the Committee. In the
event of termination for any other reason, all shares will be
forfeited and returned to the Company, unless the Committee
provides otherwise.
Effect of Merger and Other Adjustments
Shares as to which awards may be granted under the Stock
Option Plan, and shares then subject to awards, will be adjusted by
the Committee in the event of any merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company.
In the case of any merger, consolidation or combination of the
Company with or into another company or other entity, whereby
either the Company is not the continuing company or its outstanding
shares are converted into or exchanged for securities, cash or
property, or any combination thereof pursuant to a plan or
agreement the terms of which are binding upon all shareholders, any
participant to whom a stock option, SAR or Limited SAR has been
granted at least six months prior to such event will have the right
(subject to other provisions of the Stock Option Plan) upon
exercise of the option, SAR or Limited SAR to an amount equal to
the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or
combination with respect to the shares covered or represented by
the stock option, SAR or Limited SAR over the exercise price of the
option, SAR or Limited SAR multiplied by the number of shares with
respect to which the option, SAR or Limited SAR has been exercised.
Unless the Committee shall otherwise provide, in the event of a
merger, consolidation or combination of the Company with or into
another company pursuant to terms specified above, the restricted
period shall lapse with respect to restricted stock awarded at
least six months prior to such event.
The restricted period with respect to an award of restricted
stock will lapse, and the stock will become fully vested, if the
service of a participant is involuntarily terminated for any reason
within 18 months after a change in control of the Company. A
change in control will be deemed to occur when (i) a person or
group becomes the beneficial owner of shares of the Company
representing 25% or more of the total number of votes which may be
cast for the election of the Board of Directors of the Company,
(ii) in connection with any tender or exchange offer (other than an
offer by the Company), merger or other business combination, sale
of assets or contested election, or combination of the foregoing,
the persons who are Directors of the Company cease to be a majority
of the Board of Directors, or (iii) shareholders of the Company
approve a transaction pursuant to which the Company will cease to
be an independent publicly-owned thrift holding company or pursuant
to which substantially all of its assets will be sold; provided,
however, that the occurrence of any such events shall not be deemed
a change in control if, prior to such occurrence, at least a
majority of the Board of Directors approves such occurrence.
In addition, in the event of a tender or exchange offer (other
than an offer made by the Company) or if the event specified in
clause (iii) above occurs, all outstanding stock options and SAR's
not fully exercisable will become exercisable in full and remain so
for a period of 60 days, after which they will revert to being
exercisable in accordance with their terms. However, no stock
option or SAR will be exercisable by any director, senior officer
or ten percent beneficial owner of the Company, or one of its
subsidiaries, within six months of the date of the grant of such
stock option or SAR and no options or SAR's previously exercised or
terminated shall be exercisable.
Amendment and Termination
The Board of Directors of the Company may at any time amend,
suspend or terminate the Stock Option Plan or any portion thereof
but may not, without the prior approval of the shareholders, make
any amendment which (i) materially increases the total number of
shares which may be subject to awards, (ii) materially increases
the number of shares which may be subject to awards to participants
who are not employees, or (iii) changes the class of persons
eligible to participate in the Stock Option Plan. Unless
previously terminated, the Stock Option Plan shall continue in
effect for a term of ten years from the earlier of the date that
the Stock Option Plan is adopted or the date that the shareholders'
approval of the Plan is obtained, after which no further awards may
be granted under the Stock Option Plan.
Federal Income Tax Consequences
Under present federal income tax laws, awards under the Stock
Option Plan will have the following consequences:
(1) The grant of an award will neither, by itself, result in the
recognition of taxable income to the participant nor entitle
the Company to a deduction at the time of such grant.
(2) The exercise of a stock option which is an "Incentive Stock
Option" within the meaning of Section 422 of the Code will
generally not, by itself, result in the recognition of taxable
income to the participant nor entitle the Company to a
deduction at the time of such exercise. However, the
difference between the exercise price and the fair market
value of the option shares on the date of exercise is an item
of tax preference which may, in certain situations, trigger
the alternative minimum tax to the participant. The
participant will recognize long-term capital gain or loss upon
resale of the shares received upon such exercise, provided
that the participant holds the shares for more than two years
following the grant and more than one year following exercise.
The gain recognized upon sale of the incentive stock option
will generally be taxed at the ordinary income tax rates then
in effect.
(3) The exercise of a stock option which is not an Incentive Stock
Option will generally result in the recognition of ordinary
income by the participant on the date of exercise in an amount
equal to the difference between the exercise price and the
fair market value on the date of exercise of the shares
acquired pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of
ordinary income by the participant on the date of exercise in
an amount of cash, and/or the fair market value on that date
of the shares, acquired pursuant to the exercise.
(5) Holders of restricted stock will recognize ordinary income on
the date that the shares of restricted stock are no longer
subject to a substantial risk of forfeiture, in an amount
equal to the fair market value of the shares on that date. In
certain circumstances, a holder may elect to recognize
ordinary income and determine such fair market value on the
date of the grant of the restricted stock. Holders of
restricted stock will also recognize ordinary income equal to
their dividend or dividend equivalent payments when such
payments are received.
(6) The Company will generally be allowed a deduction at the time,
and in the amount of, any ordinary income recognized by the
participant under the various circumstances described above,
provided that the Company meets its federal withholding tax
obligations.
Awards Under the Stock Option Plan
Except for the non-employee director grants described above,
no awards have been granted under the Stock Option Plan. The
benefits and amounts of such Awards are not currently determinable.
The following table sets forth information with respect to
options that would have been received by or allocated to each
indicated individual or group listed therein if the 1997 Stock
Option and Incentive Plan had been in effect during fiscal 1995.
1997 STOCK OPTION AND INCENTIVE PLAN
Name and Position Number of Units 1
Douglas B. Kadison, President and Chief
Executive Officer 7,200
Paul A. Antrim, Executive Vice President and
Chief Financial Officer 7,200
Charles S. Nichols, Jr., Executive Vice
President 7,200
All current executive officers as a group 21,600
All non-employee directors as a group 6,800
All employees, including all current officers,
who are not executive officers, as a group 36,600
1 Each unit represents an option to purchase one share of
Company Common Stock.
Pursuant to regulations under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), an option
grantee participant is no longer penalized for selling the Common
Stock received upon exercise of an option within six months of
exercise so long as the sale occurs six months after the date of
the option grant. Accordingly, an option grantee participant is no
longer subject to the risk that the value of the stock received
upon exercise will decrease below the exercise price before the
grantee is able to sell such stock without penalty.
The Board of Directors of the Company unanimously recommends
a vote FOR this proposal.
MATTER THREE.
AMENDMENT TO 1992 COMPENSATORY STOCK OPTION PROGRAM
The Company adopted a Compensatory Stock Option Program in
1992 to award stock options for 68,808 shares of the Company to
Douglas B. Kadison, Charles S. Nichols, Jr., Paul A. Antrim and
William Waxman (collectively the "Option Holders") each of whom
personally guaranteed certain debts of the Company. The Program
was approved by the shareholders of the Company and the options
were issued pursuant to Stock Option Agreements to the Option
Holders. Under their terms, the Options could only be exercised
if (i) all of the debt of the Company existing as of September 30,
1992 had been fully paid and satisfied, (ii) any pledge of the
Company's stock of Horizon Bank & Trust, SSB to secure the debt of
the Company must have been approved by the holders of the Company's
capital stock entitled to vote at least 66 2/3% of the shares of
all classes of the Company, and (iii) the book value per share of
the Common Stock must be at least $3.50 per share of the Common
Stock. These conditions for exercise have been met for the last
two fiscal years and the Board of Directors of the Company believes
that they are no longer necessary. Furthermore, condition (ii)
would impair the Option Holder's ability to exercise these options
if the Company decided to borrow funds secured by the stock of the
Bank. The purpose of the proposed amendment to the Program is to
delete these exercise conditions from the Program. The Board
believes that such an amendment is in the best interest of the
Company in that it does not impair the prior options granted in the
event the Company desires to borrow money by pledging the Bank's
stock.
Summary Description of Program
The 1992 Compensatory Stock Option Program options were
granted for a period of ten years beginning September 30, 1992.
The exercise price per share is $0.50 except for the options
granted to William M. Waxman (a former director of the Company and
the Bank), which options do not require a payment of any
consideration for exercise. The persons granted these options and
the number of option shares granted are as follows:
Number of
Name Optioned Shares
Douglas B. Kadison 18,988
Charles S. Nichols, Jr. 18,988
Paul A. Antrim 18,988
William M. Waxman 11,844
Total 68,808
None of these options have been exercised by the above
persons.
Business Purpose
Since the date the Options were granted, the Company has
listed its shares of common stock on NASDAQ and those shares are
publicly traded. In addition, the exercise conditions referred to
above have all been met for the last two fiscal years and the Board
of Directors of the Company no longer believes they are necessary
as a part of the Program. In particular, the requirement that the
shareholders of the Company must approve any borrowings by the
Company in which the stock of the Bank is pledged or impair the
Program options is cumbersome to the operations of the Company.
The Company has no current plans to borrow funds, but may find
it useful to do so in the future. Such borrowings could be used to
support the future expansion of operations or diversification into
other banking-related businesses and for other business or
investment purposes, including possibly the repurchase of the
Company's Common Stock. The Board of Directors has the authority
to adopt stock repurchase plans, subject to statutory and
regulatory requirements. Since the Company has no current plans in
this area, there is currently insufficient information upon which
an intention to repurchase stock could be based.
The Board of Directors of the Company unanimously recommends
a vote FOR this proposal.
MATTER FOUR.
SELECTION OF AUDITOR
The Company's independent auditors for the year ended April
30, 1996 were BDO Seidman, Independent Certified Accountants. The
Board of Directors of the Company have selected BDO Seidman,
Independent Certified Public Accountants, to conduct an audit of
the Company's financial statements for the fiscal year ending
April 30, 1997, subject to ratification of such appointment by the
shareholders of the Company. The Board of Directors knows of no
direct or indirect financial interest of BDO Seidman with the
Company. A representative of BDO Seidman is expected to attend the
Annual Meeting to respond to appropriate questions and will have an
opportunity to make a statement if he so desires.
The Board of Directors of the Company unanimously recommends
a vote FOR this proposal.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no other matters which
properly may be presented at the Annual Meeting, but if other
matters do properly come before the meeting, it is intended that
the persons named in the proxy will vote according to their best
judgment.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers, directors and persons who
own more than ten percent of the shares of the Common Stock
outstanding, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Officers, directors and
greater than ten percent shareholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they
file. Based upon review of the information provided to the
Company, the Company believes that during the year ended April 30,
1996, officers, directors and greater than ten percent shareholders
complied with all Section 16(a) filing requirements.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
To be considered for inclusion in the proxy statement relating
to the Annual Meeting to be held in September 1997, shareholder
proposals must be received at the principal executive offices of
the Company at 5800 North MoPac Expressway, Austin, Texas 78731 no
later than April 14, 1997. If such proposal is in compliance with
all of the requirements of 17 C.F.R. Section 240.14a-8 ("Rule 14a-8") of
the Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), it will be included in the
proxy statement and set forth on the appropriate form of proxy
issued for such annual meeting of shareholders. It is urged that
any such proposals be sent certified mail, return receipt
requested.
Shareholder proposals which are not submitted for inclusion in
the Company's proxy materials pursuant to Rule 14a-8 under the
Exchange Act may be brought before an annual meeting pursuant to
Article SIXTH of the Company's Articles of Incorporation and
Section 15 of its Bylaws. For business to be properly brought
before an annual meeting, a shareholder must have given timely
notice thereof in writing to the Secretary of the Company. To be
timely, a shareholder's notice must be delivered to or mailed by
first class United States mail, postage prepaid, to the principal
executive offices of the Company not later than the close of
business on the tenth day following the day on which notice of the
annual meeting was mailed to the shareholders. A shareholder's
notice must set forth certain information in accordance with
Section 15 of the Company's Bylaws. The notice must include the
shareholder's name and address, as they appear on the Company's
record of shareholders, the class and number of shares of the
Company's Common Stock beneficially owned by such shareholder, a
brief description of the proposed business, the reason for
considering such business at the annual meeting and any material
interest of the shareholder in the proposed business.
A copy of the Form 10-KSB (without exhibits) for the year
ended April 30, 1996 as filed with the SEC will be furnished
without charge to shareholders of record upon written request to
Horizon Bancorp, Inc., Paul A. Antrim, Secretary, 5800 North MoPac
Expressway, Austin, Texas 78731.
BY THE ORDER OF THE BOARD OF
DIRECTORS:
By: /s/ Douglas B. Kadison
Douglas B. Kadison,
Chairman of the Board of
Directors
Austin, Texas
August 8, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE>
EXHIBIT A
HORIZON BANCORP, INC.
1997 Stock Option and Incentive Plan
1. Plan Purpose. The purpose of the Plan is to promote the
long-term interests of the Corporation and its shareholders by
providing a means for attracting and retaining directors, advisory
directors, officers and employees of the Corporation and its
Affiliates. It is intended that designated Options granted
pursuant to the provisions of this Plan to persons employed by the
Corporation or its Affiliates will quality as Incentive Stock
Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to
the Plan:
"Affiliate" - means any "parent corporation" or
"subsidiary corporation" of the Corporation, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option,
a Non-Qualified Stock Option, a Stock Appreciation Right, a Limited
Stock Appreciation Right, or of Restricted Stock, or any
combination thereof, as provided in the Plan.
"Bank" - means Horizon Bank & Trust, SSB and any
successor entity.
"Code" - means the Internal Revenue Code of 1986, as
amended,
"Committee" - means the Committee referred to in Section
3 hereof.
"Continuous Service" - means the absence of any
interruption or termination of service as a director, advisory
director, officer or employee of the Corporation or an Affiliate,
except that when used with respect to persons granted an Incentive
Option means the absence of any interruption or termination of
service as an employee of the Corporation or an Affiliate. Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Corporation or in the case of transfers between payroll locations
of the Corporation or between the Corporation, its parent, its
subsidiaries or its successor. With respect to any advisory
director, continuous service shall mean availability to perform
such functions as may be required of the Bank's advisory directors.
"Corporation" - means Horizon Bancorp, Inc., a Texas
corporation.
"Disinterested Person" - means any member of the Board of
Directors of the Corporation who (A) is an outside director as
defined under Section 162(m) of the Code and the regulations
thereunder and (B) a person who within the prior year has not been,
and is not being, granted any awards related to the Shares under
this Plan or any other plan of the Corporation or any of its
Affiliates except for awards which (i) are calculated in accordance
with a formula as contemplated in paragraph (c)(ii) of Rule 16b-3
("Rule 16b-3") under the Securities Exchange Act of 1934; (ii)
result from participation in an ongoing securities acquisition plan
meeting the conditions of paragraph (d)(2) of Rule 16b-3; or, (iii)
arise from an election by a director to receive all or part of his
board fees in securities. No recipient of a stock award granted
pursuant to Section 21 hereof shall be deemed not to be a
Disinterested Person solely by reason of such grant.
"Employee" - means any person, including an officer or
director, who is employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security
Act of 1974, as amended.
"Exercise Price" - means (i) in the case of an Option,
the price per Share at which the Shares subject to such Option may
be purchased upon exercise of such Option and (ii) in the case of
a Right, the price per Share (other than the Market Value per Share
on the date of exercise and the Offer Price per Share as defined in
Section 10 hereof) which, upon grant, the Committee determines
shall be utilized in calculating the aggregate value which a
Participant shall be entitled to receive pursuant to Sections 9, 10
or 13 hereof upon exercise of such Right.
"Incentive Stock Option" - means an option to purchase
Shares granted by the Committee pursuant to Section 6 hereof which
is subject to the limitations and restrictions of Section 8 hereof
and is intended to qualify under Section 422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock
appreciation right with respect to Shares granted by the Committee
pursuant to Sections 6 and 10 hereof.
"Market Value" - means the average of the high and low
quoted sales price on the date in question (or, if there is no
reported sale on such date, on the last preceding date on which any
reported sale occurred) of a Share on the Composite Tape for the
New York Stock Exchange-Listed Stocks, or, if on such date the
Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading
on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on
which the Shares are listed or admitted to trading, or, if the
Shares are not listed or admitted to trading on any such exchange,
the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the National Association of
Securities Dealers, Inc., Automated Quotations System, or any
similar system then in use, or, if no such quotations are
available, the fair market value on such date of a Share as the
Committee shall determine.
"Non-Qualified Stock Option" - means an option to
purchase Shares granted by the Committee pursuant to Section 6
hereof, which option is not intended to qualify under
Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a
Non-Qualified Stock Option.
"Participant" - means any officer, director, advisory
director or employee of the Corporation or any Affiliate who is
selected by the Committee to receive an Award.
"Plan" - means the 1997 Stock Option and Incentive Plan
of the Corporation.
"Related" - means (i) in the case of a Right, a Right
which is granted in connection with, and to the extent exercisable,
in whole or in part, in lieu of, an Option or another Right and
(ii) in the case of an Option, an Option with respect to which and
to the extent a Right is exercisable, in whole or in part, in lieu
thereof has been granted.
"Restricted Period" - means the period of time selected
by the Committee for the purpose of determining when restrictions
are in effect under Section 11 hereof with respect to Restricted
Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been
contingently awarded to a Participant by the Committee subject to
the restrictions referred to in Section 11 hereof, so long as such
restrictions are in effect.
"Right" - means a Limited Stock Appreciation Right or a
Stock Appreciation Right.
"Shares" - means the shares of common stock of the
Corporation.
"Senior Officer" - means the Corporation's president,
principal financial officer, or principal accounting officer, any
vice president of the Corporation in charge of a principal business
unit, division or function (such as lending, administration or
finance), any other officer who performs a policy-making function,
or any other person who performs similar policy-making functions
for the Corporation. Officers of the Corporation's Affiliates
shall be deemed Senior Officers of the Corporation if they perform
such policy-making functions for the Corporation.
"Stock Appreciation Right" - means a stock appreciation
right with respect to Shares granted by the Committee pursuant to
Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial
owner of more than ten percent of any class of the Corporation's
equity securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
3. Administration. The Plan shall be administered by a
Committee consisting of two or more members, each of whom shall be
a Disinterested Person. The members of the Committee shall be
appointed by the Board of Directors of the Corporation. Except as
limited by the express provisions of the Plan, the Committee shall
have sole and complete authority and discretion to (i) select
Participants and grant Awards; (ii) determine the number of Shares
to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the terms
and conditions upon which Awards shall be granted under the Plan;
(iv) prescribe the form and terms of instruments evidencing such
grants and (v) establish from time to time regulations for the
administration of the Plan, interpret the Plan, and make all
determinations deemed necessary or advisable for the administration
of the Plan. The Committee may maintain, and update from time to
time as appropriate, a list designating selected directors as
Disinterested Persons. The purpose of such list shall be to
evidence the status of such individuals as Disinterested Persons,
and the Board of Directors may appoint to the Committee any
individual actually qualifying as a Disinterested Person,
regardless of whether identified as such on said list.
A majority of the Committee shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which
a quorum is present, or acts approved in writing by a majority of
the Committee without a meeting, shall be acts of the Committee.
4. Participation in Committee Awards. The Committee may
select from time to time Participants in the Plan from those
directors, advisory directors, officers and employees (other than
Disinterested Persons), of the Corporation or its Affiliates who,
in the opinion of the Committee, have the capacity for contributing
to the successful performance of the Corporation or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the
operation of Section 12 hereof, the maximum number of Shares with
respect to which Awards may be made under the Plan is 65,000
shares. The Shares with respect to which Awards may be made under
the Plan may be either authorized and unissued shares or issued
shares heretofore or hereafter reacquired and held as treasury
shares. Shares which are subject to Related Rights and Related
Options shall be counted only once in determining whether the
maximum number of Shares with respect to which Awards may be
granted under the Plan has been exceeded. An Award shall not be
considered to have been made under the Plan with respect to any
Option or Right which terminates or with respect to Restricted
Stock which is forfeited, and new Awards may be granted under the
Plan with respect to the number of Shares as to which such
termination or forfeiture has occurred.
6. General Terms and Conditions of Options and Rights. The
Committee shall have full and complete authority and discretion,
except as expressly limited by the Plan, to grant Options and/or
Rights and to provide the terms and conditions (which need not be
identical among Participants) thereof. In particular, the
Committee shall prescribe the following terms and conditions: (i)
the Exercise Price of any Option or Right, which shall not be less
than the Market Value per Share at the date of grant of such Option
or Right, (ii) the number of Shares subject to, and the expiration
date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and
rate (cumulative or otherwise) of exercise of such Option or Right,
and (iv) the restrictions, if any, to be placed upon such Option or
Right or upon Shares which may be issued upon exercise of such
Option or Right. The Committee may, as a condition of granting any
Option or Right, require that a Participant agree not to thereafter
exercise one or more Options or Rights previously granted to such
Participant.
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right
granted under the Plan shall be exercisable during the lifetime of
the Participant to whom such Option or Right was granted only by
such Participant and, except as provided in paragraphs (c) and (d)
of this Section 7, no such Option or Right may be exercised unless
at the time such Participant exercises such Option or Right, such
Participant has maintained Continuous Service since the date of
grant of such Option or Right. Cash settlements of Rights may be
made only in accordance with any applicable restrictions pursuant
to Rule 16b-3(e) under the Securities Exchange Act of 1934 or any
similar or successor provision.
(b) To exercise an Option or Right under the Plan, the
Participant to whom such Option or Right was granted shall give
written notice to the Corporation in form satisfactory to the
Committee (and, if partial exercises have been permitted by the
Committee, by specifying the number of Shares with respect to which
such Participant elects to exercise such Option or Right) together
with full payment of the Exercise Price, if any and to the extent
required. The date of exercise shall be the date on which such
notice is received by the Corporation. Payment, if any is
required, shall be made either (i) in cash (including check, bank
draft or money order) or (ii) if permitted by the Committee, by
delivering (A) Shares already owned by the Participant and having
a fair market value equal to the applicable exercise price, such
fair market value to be determined in such appropriate manner as
may be provided by the Committee or as may be required in order to
comply with or to conform to requirements of any applicable laws or
regulations, or (B) a combination of cash and such Shares.
(c) If a Participant to whom an Option or Right was
granted shall cease to maintain Continuous Service for any reason
(including total or partial disability and normal or early
retirement, but excluding death and termination of employment by
the Corporation or any Affiliate for cause), such Participant may,
but only within the period of three months immediately succeeding
such cessation of Continuous Service (or one year in the case of a
disability as defined in Section 22(e)(3) of the Code) and in no
event after the expiration date of such Option or Right, exercise
such Option or Right to the extent that such Participant was
entitled to exercise such Option or Right at the date of such
cessation, provided, however, that such right of exercise after
cessation of Continuous Service shall not be available to a
Participant if the Committee otherwise determines and so provides
in the applicable instrument or instruments evidencing the grant of
such Option or Right. Notwithstanding the foregoing, if a
Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service due to normal retirement, and such
Participant has served the Corporation or the Bank for at least ten
years, the Option or Right granted to such Participant shall become
immediately exercisable, and the Participant may exercise such
Option or Right only during the shortest of the following periods
(i) the five year period immediately succeeding such cessation of
Continuous Service, or (ii) the period remaining until the
expiration of such Option or Right. If the Continuous Service of
a Participant to whom an Option or Right was granted by the
Corporation is terminated for cause, all rights under any Option or
Right of such Participant shall expire immediately upon the giving
to the Participant of notice of such termination.
(d) In the event of the death of a Participant while in
the Continuous Service of the Corporation or an Affiliate or within
the three month or five year periods referred to in paragraph (c)
of this Section 7, the person to whom any Option or Right held by
the Participant at the time of his death is transferred by will or
the laws of descent and distribution, or in the case of an Award
other than an Incentive Stock Option, pursuant to a qualified
domestic relations order, as defined in the Code or Title I of
ERISA or the rules thereunder may, but only to the extent such
Participant was entitled to exercise such Option or Right
immediately prior to his death, exercise such Option or Right at
any time within a period of one year succeeding the date of death
of such Participant, but in no event later than ten years from the
date of grant of such Option or Right. Following the death of any
Participant to whom an Option was granted under the Plan,
irrespective of whether any Related Right shall have theretofore
been granted to the Participant or whether the person entitled to
exercise such Related Right desires to do so, the Committee may, as
an alternative means of settlement of such Option, elect to pay to
the person to whom such Option is transferred by will or by the
laws of descent and distribution, or in the case of an Option other
than an Incentive Stock Option, pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the
rules thereunder, the amount by which the Market Value per Share on
the date of exercise of such Option shall exceed the Exercise Price
of such Option, multiplied by the number of Shares with respect to
which such Option is properly exercised. Any such settlement of an
Option shall be considered an exercise of such Option for all
purposes of the Plan.
(e) Notwithstanding the provisions of subparagraphs (c)
and (d) above, the Committee may, in its sole discretion, establish
different terms and conditions pertaining to the effect of
termination to the extent permitted by applicable federal and state
law.
8. Incentive Stock Options. Incentive Stock Options may be
granted only to Participants who are Employees. Any provision of
the Plan to the contrary notwithstanding, (i) no Incentive Stock
Option shall be granted more than ten years from the earlier of the
date the Plan is adopted by the Board of Directors of the
Corporation and the date the Plan is approved by the shareholders
and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii)
the Exercise Price of any Incentive Stock Option shall not be less
than the Market Value per Share on the date such Incentive Stock
Option is granted, (iii) any Incentive Stock Option shall not be
transferable by the Participant to whom such Incentive Stock Option
is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's
lifetime only by such Participant, (iv) no Incentive Stock Option
shall be granted to any individual who, at the time such Incentive
Stock Option is granted, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock
of the Corporation or any Affiliate unless the Exercise Price of
such Incentive Stock Option is at least 110 percent of the Market
Value per Share at the date of grant and such Incentive Stock
Option is not exercisable after the expiration of five years from
the date such Incentive Stock Option is granted, and (v) the
aggregate Market Value (determined as of the time any Incentive
Stock Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant in any calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right
shall, upon its exercise, entitle the Participant to whom such
Stock Appreciation Right was granted to receive a number of Shares
or cash or combination thereof, as the Committee in its discretion
shall determine, the aggregate value of which (i.e., the sum of the
amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood
that the Corporation shall not issue any fractional shares) the
amount by which the Market Value per Share on the date of such
exercise shall exceed the Exercise Price of such Stock Appreciation
Right, multiplied by the number of Shares with respect of which
such Stock Appreciation Right shall have been exercised. A Stock
Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to
time in each case determine. At the time of grant of an Option the
Committee shall determine whether and to what extent a Related
Stock Appreciation Right shall be granted with respect thereto;
provided, however, and notwithstanding any other provision of the
Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions
and limitations of Section 8 hereof as if such Related Stock
Appreciation Right were an Incentive Stock Option and as if other
rights which are Related to Incentive Stock Options were Incentive
Stock Options. In the case of a Related Option, such Related
Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option,
any Related Stock Appreciation Right shall terminate to the extent
of the Shares with respect to which the Related Option was
exercised or terminated. Notwithstanding the foregoing, no Stock
Appreciation Right shall be exercisable by a director, Senior
Officer or Ten Percent Beneficial Owner of the Corporation within
six months of the date of its grant.
10. Limited Stock Appreciation Rights. At the time of grant
of an Option or Stock Appreciation Right to any Participant, the
Committee shall have full and complete authority and discretion to
also grant to such Participant a Limited Stock Appreciation Right
which is Related to such Option or Stock Appreciation Right;
provided, however and notwithstanding any other provision of the
Plan, that if the Related Option is an Incentive Stock Option, the
Related Limited Stock Appreciation Right shall satisfy all the
restrictions and limitations of Section 8 hereof as if such Related
Limited Stock Appreciation Right were an Incentive Stock Option and
as if all other Rights which are Related to Incentive Stock Options
were Incentive Stock Options. Notwithstanding any other provision
of the Plan, a Limited Stock Appreciation Right shall be
exercisable only during the period beginning on the first day
following the date of expiration of any "offer" (as such term is
hereinafter defined) and ending on the forty-fifth day following
such date, provided, however, that no Limited Stock Appreciation
Right shall be exercisable by a director, Senior Officer or Ten
Percent Beneficial Owner within six months of the date of its
grant.
A Limited Stock Appreciation Right shall, upon its exercise,
entitle the Participant to whom such Limited Stock Appreciation
Right was granted to receive an amount of cash equal to the amount
by which the "Offer Price per Share" (as such term is hereinafter
defined) or the Market Value on the date of such exercise, as shall
have been provided by the Committee in its discretion at the time
of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect
to which such Limited Stock Appreciation Right shall have been
exercised. Upon the exercise of a Limited Stock Appreciation
Right, any Related Option and/or Related Stock Appreciation Right
shall cease to be exercisable to the extent of the Shares with
respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or
Related Stock Appreciation Right, any Related Limited Stock
Appreciation Right shall terminate to the extent of the Shares with
respect to which such Related Option or Related Stock Appreciation
Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall
mean any tender offer or exchange offer for Shares other than one
made by the Corporation, provided that the corporation, person or
other entity making the offer acquires pursuant to such offer
either (i) 25% of the Shares outstanding immediately prior to the
commencement of such offer or (ii) a number of Shares which,
together with all other Shares acquired in any tender offer or
exchange offer (other than one made by the Corporation) which
expired within sixty days of the expiration date of the offer in
question, equals 25% of the Shares outstanding immediately prior to
the commencement of the offer in question. The term "Offer Price
per Share" as used in this Section 10 shall mean the highest price
per Share paid in any Offer which Offer is in effect any time
during the period beginning on the sixtieth day prior to the date
on which a Limited Stock Appreciation Right is exercised and ending
on the date on which such Limited Stock Appreciation Right is
exercised. Any securities or property which are part or all of the
consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the
valuation placed on such securities or property by the corporation,
person or other entity making such Offer or (B) the valuation
placed on such securities or property by the Committee.
11. Terms and Conditions of Restricted Stock. The Committee
shall have full and complete authority, subject to the limitations
of the Plan, to grant awards of Restricted Stock and, in addition
to the terms and conditions contained in paragraphs (a) through (f)
of this Section 11, to provide such other terms and conditions
(which need not be identical among Participants) in respect of such
Awards, and the vesting thereof, as the Committee shall determine
and provide in the agreement referred to in paragraph (d) of this
Section 11.
(a) At the time of an award of Restricted Stock, the
Committee shall establish for each Participant a Restricted Period
of not less than six months during which or at the expiration of
which, as the Committee shall determine and provide in the
agreement referred to in paragraph (d) of this Section 11, the
Shares awarded as Restricted Stock shall vest. Subject to any such
other terms and conditions as the Committee shall provide, shares
of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered by the Participant, except as hereinafter
provided, during the Restricted Period. Except for such
restrictions, and subject to paragraphs (c), (d) and (e) of this
Section 11 and Section 12 hereof, the Participant as owner of such
shares shall have all the rights of a stockholder, including but
not limited to the right to receive all dividends paid on such
shares and the right to vote such shares. The Committee shall have
the authority, in its discretion, to accelerate the time at which
any or all of the restrictions shall lapse with respect to any
shares of Restricted Stock prior to the expiration of the
Restricted Period with respect thereto, or to remove any or all of
such restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws or
other changes in circumstances occurring after the commencement of
such Restricted Period.
(b) Except as provided in Section 14 hereof, if a
Participant ceases to maintain Continuous Service for any reason
(other than death, total or partial disability or normal or early
retirement) unless the Committee shall otherwise determine, all
shares of Restricted Stock theretofore awarded to such Participant
and which at the time of such termination of Continuous Service are
subject to the restrictions imposed by paragraph (a) of this
Section 11 shall upon such termination of Continuous Service be
forfeited and returned to the Corporation. Unless the Committee
shall have provided in the agreement referred to in paragraph (d)
of this Section 11 for a ratable lapse of restrictions with respect
to an award of shares of Restricted Stock during the Restricted
Period, if a Participant ceases to maintain Continuous Service by
reason of death, total or partial disability or normal or early
retirement, such portion of such shares of Restricted Stock awarded
to such Participant which at the time of such termination of
Continuous Service are subject to the restrictions imposed by
paragraph (a) of this Section 11 as shall be equal to the portion
of the Restricted Period with respect to such shares which shall
have elapsed at the time of such termination of Continuous Service
shall be free of restrictions and shall not be forfeited.
(c) Each certificate in respect of shares of Restricted
Stock awarded under the Plan shall be registered in the name of the
Participant and deposited by the Participant, together with a stock
power endorsed in blank, with the Corporation and shall bear the
following (or a similar) legend:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) contained in
the 1997 Stock Option and Incentive Plan of Horizon
Bancorp, Inc. and an Agreement entered into between the
registered owner and Horizon Bancorp, Inc. Copies of such
Plan and Agreement are on file in the offices of the
Secretary of Horizon Bancorp, Inc., 5800 North MoPac
Expressway, Austin, Texas 78731."
(d) At the time of an award of shares of Restricted
Stock, the Participant shall enter into an Agreement with the
Corporation in a form specified by the Committee, agreeing to the
terms and conditions of the award and such other matters as the
Committee shall in its sole discretion determine.
(e) At the time of an award of shares of Restricted
Stock, the Committee may, in its discretion, determine that the
payment to the Participant of dividends declared or paid on such
shares, or specified portion thereof, by the Corporation shall be
deferred until the earlier to occur of (i) the lapsing of the
restrictions imposed under paragraph (a) of this Section 11 or
(ii) the forfeiture of such shares under paragraph (b) of this
Section 11, and shall be held by the Corporation for the account of
the Participant until such time. In the event of such deferral,
there shall be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning of
the year at a rate per annum as the Committee, in its discretion,
may determine. Payment of deferred dividends, together with
interest accrued thereon as aforesaid, shall be made upon the
earlier to occur of the events specified in (i) and (ii) of the
immediately preceding sentence.
(f) At the expiration or lapse of the restrictions
imposed by paragraph (a) of this Section 11, the Corporation shall
redeliver to the Participant (or where the relevant provision of
paragraph (b) of this Section 11 applies in the case of a deceased
Participant, to his legal representative, beneficiary or heir) the
certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 11 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in
paragraph (a) of this Section 11.
12. Adjustments Upon Changes in Capitalization. In the event
of any change in the outstanding Shares subsequent to the effective
date of the Plan by reason of any reorganization, recapitalization,
stock split, stock dividend, combination or exchange of shares,
merger, consolidation or any change in the corporate structure or
Shares of the Corporation, the maximum aggregate number and class
of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore
have been granted under the Plan shall be appropriately adjusted by
the Committee, whose determination shall be conclusive. Any shares
of stock or other securities received, as a result of any of the
foregoing, by a Participant with respect to Restricted Stock shall
be subject to the same restrictions and the certificate(s) or other
instruments representing or evidencing such shares or securities
shall be legended and deposited with the Corporation in the manner
provided in Section 11 hereof.
13. Effect of Merger. In the event of any merger,
consolidation or combination of the Corporation (other than a
merger, consolidation or combination in which the Corporation is
the continuing entity and which does not result in the outstanding
Shares being converted into or exchanged for different securities,
cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all
shareholders of the Corporation (except to the extent that
dissenting shareholders may be entitled, under statutory provisions
or provisions contained in the certificate of incorporation, to
receive the appraised or fair value of their holdings), any
Participant to whom an Option or Right has been granted at least
six months prior to such event shall have the right (subject to the
provisions of the Plan and any limitation applicable to such Option
or Right), thereafter and during the term of each such Option or
Right, to receive upon exercise of any such Option or Right an
amount equal to the excess of the fair market value on the date of
such exercise of the securities, cash or other property, or
combination thereof, receivable upon such merger, consolidation or
combination in respect of a Share over the Exercise Price of such
Right or Option, multiplied by the number of Shares with respect to
which such Option or Right shall have been exercised. Such amount
may be payable fully in cash, fully in one or more of the kind or
kinds of property payable in such merger, consolidation or
combination, or partly in cash and partly in one or more of such
kind or kinds of property, all in the discretion of the Committee.
Unless the Committee shall have provided otherwise in the agreement
referred to in paragraph (d) of Section 11 hereof, in the event of
any such merger, consolidation or combination any Restricted Period
shall lapse with respect to Shares of Restricted Stock awarded at
least six months prior to such event, all such Shares shall be
fully vested in the Participants to whom such Shares were awarded,
and the holders of such Shares shall be eligible to receive in
respect thereof the full amount receivable per Share in such
merger, consolidation or combination.
14. Effect of Change in Control. Each of the events
specified in the following clauses (i) through (iii) of this
Section 14 shall be deemed a "change of control": (i) any third
person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, shall become the beneficial owner
of shares of the Corporation with respect to which 25% or more of
the total number of votes for the election of the Board of
Directors of the Corporation may be cast, (ii) as a result of, or
in connection with, any cash tender offer, exchange offer, merger
or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were
directors of the Corporation shall cease to constitute a majority
of the Board of Directors of the Corporation or (iii) the
shareholders of the Corporation shall approve an agreement
providing either for a transaction in which the Corporation will
cease to be an independent publicly owned entity or for a sale or
other disposition of all or substantially all the assets of the
Corporation provided, however, that the occurrence of any such
events shall not be deemed a "change in control" if, prior to such
occurrence, a resolution specifically approving such occurrence
shall have been adopted by at least a majority of the Board of
Directors of the Corporation. If the Continuous Service of any
Participant of the Corporation or any Affiliate is involuntarily
terminated for whatever reason, at any time within eighteen months
after a change in control, unless the Committee shall have
otherwise provided in the agreement referred to in paragraph (d) of
Section 11 hereof, any Restricted Period with respect to Restricted
Stock theretofore awarded to such Participant shall lapse upon such
termination and all Shares awarded as Restricted Stock shall become
fully vested in the Participant to whom such Shares were awarded.
If a tender offer or exchange offer for Shares (other than such an
offer by the Corporation) is commenced, or if the event specified
in clause (iii) above shall occur, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of an
Option or Stock Appreciation Right, all Options and Stock
Appreciation Rights theretofore granted and not fully exercisable
shall become exercisable in full upon the happening of such event
and shall remain so exercisable for a period of sixty days
following such date, after which they shall revert to being
exercisable in accordance with their terms; provided, however, that
no Option or Stock Appreciation Right shall be exercisable by a
director, Senior Officer or Ten Percent Beneficial Owner of the
Corporation within six months of the date of grant of such Option
or Stock Appreciation Right and no Option or Stock Appreciation
Right which has previously been exercised or otherwise terminated
shall become exercisable.
15. Assignments and Transfers. No Award nor any right or
interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or
transferred except, in the event of the death of a Participant, by
will or the laws of descent and distribution or, in the case of
Awards other than Incentive Stock Options, pursuant to a qualified
domestic relations order, as defined in the Code or Title I of
ERISA or the rules thereunder.
16. Employee Rights Under the Plan. No director, officer or
employee shall have a right to be selected as a Participant nor,
having been so selected, to be selected again as a Participant and
no director, officer, employee or other person shall have any claim
or right to he granted an Award under the Plan or under any other
incentive or similar plan of the Corporation or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of
the Corporation or any Affiliate.
17. Delivery and Registration of Stock. The Corporation's
obligation to deliver Shares with respect to an Award shall, if the
Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to
whom such Shares are to be delivered, in such form as the Committee
shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933, as amended, or any other
Federal, state or local securities legislation or regulation. It
may be provided that any representation requirement shall become
inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under such
securities act or other securities legislation. The Corporation
shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such shares to listing on any stock exchange
on which Shares may then be listed, and (ii) the completion of such
registration or other qualification of such Shares under any state
or Federal law, rule or regulation, as the Committee shall
determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934. Any provision of the Plan which
is inconsistent with said Rule shall, to the extent of such
inconsistency, be inoperative and shall not affect the validity of
the remaining provisions of the Plan.
18. Withholding Tax. Upon the termination of the Restricted
Period with respect to any shares of Restricted Stock (or at any
such earlier time, if any, that an election is made by the
Participant under Section 83(b) of the Code, or any successor
provision thereto, to include the value of such shares in taxable
income), the Corporation shall retain a sufficient number of shares
held by it to cover the amount required to be withheld. The
Corporation shall have the right to deduct from all dividends paid
with respect to shares of Restricted Stock the amount of any taxes
which the Corporation is required to withhold with respect to such
dividend payments.
The Corporation shall have the right to deduct from all
amounts paid in cash with respect to the exercise of a Right under
the Plan any taxes required by law to be withheld with respect to
such cash payments. Where a Participant or other person is
entitled to receive Shares pursuant to the exercise of an Option or
Right pursuant to the Plan, the Corporation shall have the right to
require the Participant or such other person to pay the Corporation
the amount of any taxes which the Corporation is required to
withhold with respect to such Shares.
No discretion or choice shall be conferred upon any
Participant, or other Person entitled to receive Shares, with
respect to the form, timing or method of any such tax withholding.
19. Amendment or Termination. The Board of Directors of the
Corporation may amend, suspend or terminate the Plan or any portion
thereof at any time, but (except as provided in Section 12 hereof)
no amendment shall be made without approval of the shareholders of
the Corporation which shall (i) materially increase the aggregate
number of Shares with respect to which Awards may be made under the
Plan, (ii) materially increase the aggregate number of Shares which
may be subject to Awards to Participants who are not Employees or
(iii) change the class of persons eligible to participate in the
Plan; provided, however, that no such amendment, suspension or
termination shall impair the rights of any Participant, without his
consent, in any Award theretofore made pursuant to the Plan.
20. Effective Date and Term of Plan. The Plan shall become
effective upon its adoption by the Board of Directors of the
Corporation, subject to the approval of the Plan by stockholders of
the Corporation. It shall continue in effect for a term of ten
years from the earlier of the date of adoption of the Plan by the
Board of Directors or its approval by the shareholders, unless
sooner terminated under Section 19 hereof.
21. Formula Grant. If any options are granted under the
Plan, the following non-employee members of the Board of Directors
of the Corporation at the time of stockholder ratification of this
Plan are hereby granted ten-year, Non-Qualified Stock Option to the
following shares: Robert Ellis 7,309 shares and Michael Rotman
3,655 shares. The Exercise Price per share on such options shall
equal the Market Value per share of the Shares on the date of
grant. Each such Option shall be evidenced by a Non-Qualified
Stock Option Agreement in a form approved by the Board of Directors
and shall be subject in all respects to the terms and conditions of
this Plan, which are controlling.
22. Notwithstanding anything else in this Plan to the
contrary, to the extent that the Plan provides for formula awards,
as defined in Rule 16b-3(c)(2)(ii) under the Securities Exchange
Act of 1934, such provisions may not be amended more than once
every six months, other than to comport with changes in the Code,
ERISA or the rules thereunder.
<PAGE>
APPENDIX
PROXY HORIZON BANCORP, INC.
5800 North MoPac Expressway
Austin, Texas 78731
(512) 371-0700
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints the directors of Horizon Bancorp,
Inc., Douglas B. Kadison, Charles S. Nichols, Jr., Paul A. Antrim,
Robert J. Ellis and Michael Rotman, and each of them, as the proxy
for the undersigned, with power of substitution, to vote and
otherwise represent all of the shares of the undersigned at the
Annual Meeting of Shareholders of the Corporation on September 24,
1996, and any adjournments thereof, with the same effect as if the
undersigned were present and voting the shares, on the following
matters and in the following manner:
1. ELECTION OF PAUL A. ANTRIM AND MICHAEL ROTMAN, M.D. AS
DIRECTORS.
[ ]FOR BOTH NOMINEES [ ]WITHHOLD AUTHORITY TO
(EXCEPT AS MARKED TO VOTE FOR BOTH NOMINEES
THE CONTRARY BELOW)
INSTRUCTION: To withhold your vote for any individual
nominee, write that name on the following line:
2. TO APPROVE A PROPOSAL TO RATIFY THE ADOPTION OF THE 1997 STOCK
OPTION AND INCENTIVE PLAN.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. TO APPROVE A PROPOSAL TO AMEND THE COMPANY'S 1992 COMPENSATORY
STOCK OPTION PROGRAM WHICH WILL REMOVE CERTAIN CONDITIONS FOR
THE EXERCISE OF SUCH OPTIONS.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
4. TO APPROVE A PROPOSAL TO RATIFY THE APPOINTMENT OF BDO SEIDMAN
AS INDEPENDENT AUDITORS FOR THE CORPORATION FOR THE CURRENT
YEAR.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
5. TO VOTE OR OTHERWISE REPRESENT THE SHARES ON SUCH OTHER
BUSINESS AS MAY BE PROPERLY BROUGHT BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF ACCORDING TO THEIR DECISION.
(Continued and to be signed on the reverse side.)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATION IS
MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
ELECTION OF PAUL A. ANTRIM AND MICHAEL ROTMAN, M.D. AS DIRECTORS
AND EACH OF THE ABOVE PROPOSALS. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT
THE MEETING.
The undersigned acknowledges receipt of the Notice of Annual
Shareholders' Meeting, the Annual Report of the Company on Form
10-KSB and the Proxy Statement.
Dated: ______________, 1996.
Signature
Signature, if held jointly
NOTE: Please vote, date and then sign your name as it appears on
your stock certificate. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If
more than one trustee, all should sign. All joint owners must
sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
