<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
SEPTEMBER 1, 1995
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
OLD NATIONAL BANCORP
(Exact name of registrant as specified in its charter)
INDIANA 6021
------------------------------- ----------------------------
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
35-1539838
------------------------------------
(I.R.S. Employer Identification No.)
420 MAIN STREET, EVANSVILLE, INDIANA 47708, (812) 464-1434
--------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
JEFFREY L. KNIGHT, ESQ. TIMOTHY M. HARDEN, ESQ.
CORPORATE SECRETARY & GENERAL COUNSEL NICHOLAS J. CHULOS, ESQ.
OLD NATIONAL BANCORP KRIEG DEVAULT ALEXANDER & CAPEHART
420 MAIN STREET ONE INDIANA SQUARE, SUITE 2800
EVANSVILLE, INDIANA 47708 INDIANAPOLIS, INDIANA 46204-2017
(812) 464-1363 (317) 636-4341
(AGENT FOR SERVICE) (COPY TO)
--------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate offering registration
to be registered registered per unit (1) price (1) fee
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, UP TO $ N/A $14,419,288 $4,972.17
NO PAR VALUE 519,614 SHARES
----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
calculated as of August 28, 1995, in accordance with Rule 457(f)(1) on the
basis of the market value of the securities to be exchanged for the common
stock to be issued by the registrant.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
FOR
REGISTRATION STATEMENT ON FORM S-4 AND PROSPECTUS
<TABLE>
<CAPTION>
Items of Form S-4 Headings in Prospectus
----------------- ----------------------
<S> <C> <C>
1. Forepart of Registration Statement and Forepart of Registration Statement;
Outside Front Cover Page of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Inside Front Cover Page of
Pages of Prospectus Prospectus
3. Risk Factors, Ratio of Earnings to Summary; Summary of Selected Financial
Fixed Charges and Other Information Data; Comparative Per Share Data
4. Terms of the Transaction Summary; General Information; Proposed
Affiliation; Federal Income Tax
Consequences; Comparative Per Share
Data; Comparison of Common Stock
5. Pro Forma Financial Information Pro Forma Condensed Combined Financial
Information
6. Material Contacts with the Company Not Applicable
Being Acquired
7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Opinion of Financial Advisor to FUSB
9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities
10. Information with Respect to S-3 Registrants Summary of Selected Financial Data;
Regulatory Considerations; Comparative
Per Share Data
11. Incorporation of Certain Information Incorporation of Certain Documents
by Reference by Reference
12. Information with Respect to S-2 or Not Applicable
S-3 Registrants
13. Incorporation of Certain Information Not Applicable
by Reference
</TABLE>
<PAGE>
<TABLE>
Items of Form S-4 Headings in Prospectus
----------------- ----------------------
<S> <C> <C>
14. Information with Respect to Registrants Not Applicable
Other Than S-3 or S-2 Registrants
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or Summary of Selected Financial Data
S-3 Companies
17. Information with Respect to Companies Not Applicable
Other Than S-3 or S-2 Companies
18. Information if Proxies, Consents or General Information; Proposed Affiliation;
Authorizations are to be Solicited Description of ONB; Description of
FUSB
19. Information if Proxies, Consents or Not Applicable
Authorizations are not to be Solicited or
in an Exchange Offer
</TABLE>
<PAGE>
[FIRST UNITED SAVINGS BANK, f.s.b. LETTERHEAD]
October ____, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of First United Savings Bank, f.s.b. ("FUSB") to be held at DePauw University,
Memorial Student Union Building, Room 221, 408 Locust Street in Greencastle,
Indiana on October 31, 1995, at 2:00 p..m., local time.
The purposes of the Annual Meeting are (i) to elect two (2) directors
of FUSB for terms expiring in 1998, subject to earlier termination as a
consequence of the affiliation of FUSB with Old National Bancorp ("ONB"), and
(ii) to consider and vote upon the Amended and Restated Agreement of Affiliation
and Merger ("Agreement"), dated September 29, 1994, by and among ONB, two of its
subsidiaries and FUSB. Under the terms of the Agreement, FUSB will affiliate
with ONB, and each outstanding share of FUSB common stock will be converted into
the right to receive .8925 of a share of ONB common stock subject to adjustment
as described in the Agreement, a copy of which is attached to the accompanying
Proxy Statement-Prospectus.
The Board of Directors of FUSB believes that the proposed affiliation
between ONB and FUSB is in the best interests of the shareholders of FUSB and
the customers and employees of FUSB and the communities which FUSB serves. Your
Board of Directors has unanimously approved the Agreement and recommends that
the shareholders approve it.
Enclosed with this letter are (i) a Notice of Annual Meeting of
Shareholders, (ii) a Proxy Statement-Prospectus containing information about the
Annual Meeting and the proposed affiliation, (iii) FUSB's Annual Report to
Shareholders for the fiscal year ended June 30, 1995, (iv) a proxy card for you
to complete, sign, date and return, and (v) a postage pre-paid envelope for your
use to return your proxy card to FUSB. We encourage you to read the enclosed
materials carefully and in their entirety.
Whether or not you attend the Annual Meeting, your Board of Directors
requests that you complete, sign and date the enclosed proxy card and return it
in the enclosed postage pre-paid envelope at your earliest convenience prior to
the Annual Meeting. If you desire, you may cancel your proxy at any time before
it is voted at the special meeting.
Please give this matter your careful consideration.
Sincerely,
William M. Marley
President and Chief Executive Officer
<PAGE>
FIRST UNITED SAVINGS BANK, f.s.b.
ONE NORTH LOCUST STREET
GREENCASTLE, INDIANA 46135
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on October 31, 1995
To Our Shareholders:
Notice is hereby given that, pursuant to the call of the Board of Directors, the
Annual Meeting of Shareholders of First United Savings Bank, f.s.b. ("FUSB")
will be held on October 31, 1995, at 2:00 p.m., local time, at DePauw
University, Memorial Student Union Building, Room 221, 408 Locust Street in
Greencastle, Indiana.
The purposes of the Annual Meeting are:
1. Affiliation with Old National Bancorp. To consider and vote upon the
Amended and Restated Agreement of Affiliation and Merger dated as of
September 29, 1994, among Old National Bancorp, Evansville, Indiana ("ONB"),
two of its subsidiaries and FUSB. Under the terms of the Agreement, FUSB
will affiliate with ONB and each outstanding share of FUSB common stock will
be converted into the right to receive .8925 of a share of ONB common stock,
subject to adjustment as described in the accompanying Proxy Statement-
Prospectus;
2. Election of Directors. To elect two Directors of FUSB for terms expiring in
1998, subject to earlier termination as a consequence of the affiliation
with ONB; and
3. Other Business. To transact such other business which may properly be
presented at the Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on September 8, 1995,
will be entitled to notice of, and to vote at, the Annual Meeting and any
adjournment thereof.
October ---, 1995 BY ORDER OF THE BOARD OF DIRECTORS
WILLIAM M. MARLEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT ~ PLEASE MAIL YOUR PROXY PROMPTLY.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS OF THE OUTSTANDING SHARES OF FUSB COMMON STOCK
IS REQUIRED FOR APPROVAL OF THE ONB AGREEMENT.
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE MEETING,
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED REVOCABLE PROXY IN THE ENVELOPE PROVIDED.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
PROSPECTUS
OF
OLD NATIONAL BANCORP
FOR UP TO
519,614 SHARES OF COMMON STOCK
(NO PAR VALUE)
------------------------
THIS PROSPECTUS ALSO CONSTITUTES
THE PROXY STATEMENT
OF
FIRST UNITED SAVINGS BANK, f.s.b.
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 1995
------------------------
This Proxy Statement-Prospectus ("Proxy Statement") constitutes the
Prospectus of Old National Bancorp with respect to a maximum of 519,614 shares
of ONB common stock, no par value per share ("ONB Common Stock"), being offered
to the shareholders of FUSB in connection with the proposed affiliation of ONB
and FUSB. It also serves as the Proxy Statement of FUSB in connection with the
solicitation of proxies by the Board of Directors of FUSB for use at the Annual
Meeting of Shareholders to be held on October 31, 1995, and at any adjournment
thereof, for the purpose of considering and voting upon (1) a proposal to
approve the Amended and Restated Agreement of Affiliation and Merger
("Agreement"), dated as of September 29, 1994, between ONB and FUSB, (2)
election of two Directors of FUSB for terms expiring in 1998, subject to earlier
termination as a consequence of the affiliation with ONB, and (3) any other
business which may properly be presented at the Annual Meeting or any
adjournment thereof.
As more fully discussed hereinafter, on the effective date of the proposed
affiliation, FUSB will affiliate with ONB and each outstanding share of FUSB
common stock, $.01 par value per share ("FUSB Common Stock"), will be converted
into the right to receive .8925 of a share of ONB Common Stock, subject to
adjustment in the event of certain deviations in the market price of ONB Common
Stock (the "Exchange Ratio"). ONB will pay cash for any fractional share
interests resulting from the Exchange Ratio. The proposed affiliation is
subject to approval by the holders of at least two-thirds of the outstanding
shares of FUSB Common Stock, receipt of required regulatory approvals and
certain other conditions set forth in the Agreement attached hereto as Appendix
A.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------------------------------------------
The date of this Proxy Statement is October --, 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION...................................................
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.........................
SUMMARY.................................................................
SUMMARY OF SELECTED FINANCIAL DATA......................................
GENERAL INFORMATION.....................................................
PROPOSED AFFILIATION....................................................
Description of the Affiliation.......................................
Stock Option Agreement...............................................
Background of and Reasons for the Affiliation.......................
Opinion of Financial Advisor to FUSB................................
Recommendation of the Board of Directors............................
Exchange of FUSB Common Stock.......................................
No Dissenters' or Appraisal Rights..................................
Resale of ONB Common Stock by FUSB Affiliates.......................
Conditions to Consummation..........................................
Termination.........................................................
Restrictions Affecting FUSB.........................................
Regulatory Approvals................................................
Accounting Treatment for the Affiliation............................
Effective Date......................................................
Management, Personnel and Operations After the Affiliation..........
Interests of Certain Persons in the Affiliation.....................
FEDERAL INCOME TAX CONSEQUENCES........................................
Tax Ruling..........................................................
Tax Consequences to ONB and FUSB....................................
Tax Consequences to FUSB Shareholders...............................
COMPARATIVE PER SHARE DATA.............................................
Nature of Trading Market............................................
Dividends...........................................................
Existing and Pro Forma Per Share Information........................
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.....................
DESCRIPTION OF ONB.....................................................
Business............................................................
Acquisition Policy and Pending Affiliations.........................
Incorporation of Certain Information by Reference ..................
</TABLE>
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF FUSB.....................................................
Business.............................................................
Incorporation of Certain Information by Reference....................
REGULATORY CONSIDERATIONS...............................................
Regulation of ONB and Affiliates.....................................
Regulation of FUSB...................................................
Capital Adequacy Guidelines..........................................
Branching and Acquisitions...........................................
Interstate Banking ..................................................
FDICIA ..............................................................
Deposit Insurance....................................................
Recent Legislation ..................................................
Additional Matters...................................................
COMPARISON OF COMMON STOCK..............................................
Authorized But Unissued Shares.......................................
Preemptive Rights....................................................
Dividend Rights......................................................
Voting Rights........................................................
Dissenters' Rights...................................................
Liquidation Rights...................................................
Assessment and Redemption............................................
Anti-Takeover Provisions.............................................
Director Liability...................................................
Director Nominations.................................................
ELECTION OF FUSB DIRECTORS..............................................
Nominees and Directors...............................................
Meetings and Committees of the Board of Directors....................
Remuneration of Named Executive Officer..............................
Stock Options........................................................
Employment Agreements................................................
Compensation of Directors............................................
Transactions with Certain Related Persons............................
OPINIONS................................................................
EXPERTS.................................................................
OTHER MATTERS...........................................................
APPENDICES:
A. Amended and Restated Agreement of Affiliation and Merger........ A-1
B. Purchase and Assumption Agreement............................... B-1
C. Fairness Opinion of McDonald & Co. Securities, Inc.............. C-1
</TABLE>
<PAGE>
AVAILABLE INFORMATION
ONB and FUSB are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith ONB files reports, proxy statements and other information with the
Securities and Exchange Commission ("SEC"), while FUSB, as a federally chartered
savings bank, files such information with the Office of Thrift Supervision
("OTS"). Such reports, proxy statements and other information filed by ONB may
be inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and may also be inspected and copied at prescribed rates at the
SEC's regional offices located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and at Northwestern Atrium Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such material may also
be obtained at prescribed rates from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Reports, proxy
statements and other information filed by FUSB may be inspected and copied at
the public information office of the OTS, 1700 G Street, N.W., Washington, D.C.
20522, and at the OTS Chicago Office located at 111 East Wacker Drive, Suite
800, Chicago, Illinois 60601. ONB Common Stock is quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") National
Market System and FUSB Common Stock is quoted on the NASDAQ Small Capital Market
System, and reports, proxy statements and other information concerning ONB are
available for inspection and copying at prescribed rates at the office of the
National Association of Securities Dealers, Inc., 1735 K Street, Washington,
D.C. 20006.
ONB has filed with the SEC a Registration Statement on Form S-4 under
the Securities Act of 1933, as amended ("Securities Act"), with respect to the
shares of ONB Common Stock to be issued in connection with its affiliation with
FUSB. This Proxy Statement does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the SEC. Reference is made to the
Registration Statement, including the exhibits filed as a part thereof or
incorporated therein by reference, which can be inspected and copied at
prescribed rates at the public reference facilities maintained by the SEC at the
addresses set forth above.
All information contained in this Proxy Statement with respect to FUSB
has been supplied by FUSB, and all information contained in this Proxy Statement
with respect to ONB has been supplied by ONB.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (EXCLUDING UNINCORPORATED
EXHIBITS) ARE AVAILABLE WITHOUT CHARGE TO EACH PERSON (INCLUDING ANY BENEFICIAL
OWNER) TO WHOM THIS PROXY STATEMENT IS DELIVERED UPON WRITTEN OR ORAL REQUEST.
DOCUMENTS RELATING TO ONB MAY BE REQUESTED FROM, JEFFREY L. KNIGHT, CORPORATE
SECRETARY AND GENERAL COUNSEL, OLD NATIONAL BANCORP, 420 MAIN STREET, P.O. BOX
718, EVANSVILLE, INDIANA 47705, (812) 464-1363. DOCUMENTS RELATING TO FUSB MAY
BE REQUESTED FROM WILLIAM M. MARLEY, PRESIDENT, FIRST UNITED SAVINGS BANK,
f.s.b., ONE NORTH LOCUST STREET, GREENCASTLE, INDIANA 46135, (317) 653-9793. IN
ORDER TO ASSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUESTS SHOULD BE MADE
BY OCTOBER --, 1995.
-i-
<PAGE>
The following documents previously filed by ONB (SEC File No. 0-10888)
with the SEC and FUSB (Docket No. 4886) with the OTS pursuant to the Exchange
Act are incorporated herein by reference:
1. ONB's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995
and June 30, 1995.
2. ONB's Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
3. ONB's Annual Report to Shareholders for the fiscal year ended December 31,
1994.
4. The description of ONB's common stock contained in ONB's Current Report on
Form 8-K, dated January 6, 1983, and the description of ONB's Preferred
Stock Purchase Rights contained in ONB's Form 8-A, dated March 1, 1990,
including the Rights Agreement, dated March 1, 1990, between the Registrant
and Old National Bank, as Trustee.
5. FUSB's Annual Report on Form 10-K for the fiscal year ended June 30, 1995.
6. The following information contained in the specified pages of FUSB's Annual
Report for its fiscal year ended June 30, 1995, accompanying this Proxy
Statement, is specifically incorporated by reference: (a) audited
consolidated financial statements of FUSB, the notes thereto and the Report
of Independent Auditors on pages --- to ---, (b) Common Stock Data on page
--- (under the caption "Market Price and Dividends"), (c) Selected
Consolidated Financial Data on page ---, and (d) Management's Discussion and
Analysis of Financial Condition and Results of Operations (under the caption
"Management's Discussion and Analysis") on pages --- through ---.
All documents subsequently filed by ONB pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the date on which the Annual
Meeting is held shall be deemed to be incorporated by reference into this Proxy
Statement and to be a part hereof from the date of filing such documents.
A COPY OF THE ANNUAL REPORT OF FUSB FOR THE FISCAL YEAR ENDED JUNE 30,
1995 ACCOMPANIES THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE AS
SPECIFIED ABOVE.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
ANY STATEMENTS CONTAINED IN THIS PROXY STATEMENT INVOLVING MATTERS OF OPINION,
WHETHER OR NOT SO STATED, ARE INTENDED AS SUCH AND NOT AS REPRESENTATIONS OF
FACT. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE SECURITIES OFFERED BY THIS PROXY
STATEMENT, NOR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR
PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT NOR ANY DISTRIBUTION OF THE SECURITIES COVERED HEREBY AT ANY TIME
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF ONB OR FUSB SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THIS PROXY STATEMENT.
-ii-
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
herein and was prepared to assist FUSB shareholders in their review of the Proxy
Statement. This summary does not purport to be complete and is qualified in all
respects by reference to the full text of this Proxy Statement and the
appendices hereto.
THE ANNUAL MEETING:
Date, Time and Place of October 31, 1995, at 2:00 p.m., local time,
Annual Meeting at the main office of FUSB, located at One
Locust Street, Greencastle, Indiana.
Purpose of Annual Meeting (1) To consider and vote upon the Amended
and Restated Agreement of Affiliation and
Merger ("Agreement"), under the terms of
which FUSB will affiliate with ONB. A copy
of the Agreement, which is incorporated
herein by reference, is attached to this
Proxy Statement as Appendix A. (2) To elect
two Directors of FUSB for terms expiring in
1998, subject to earlier termination as a
consequence of the affiliation with ONB.
See "NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS" and the discussions under the
captions "GENERAL INFORMATION," "PROPOSED
AFFILIATION," and "ELECTION OF FUSB
DIRECTORS."
Required Shareholder Vote on The affirmative vote, in person or by
Agreement proxy, of the holders of at least two-
thirds of the issued and outstanding shares
of FUSB Common Stock is required for
approval of the Agreement. As of September
8, 1995, members of the Board of Directors
and executive officers of FUSB beneficially
owned in the aggregate, directly and
indirectly, approximately 12.45% of the
outstanding shares of FUSB Common Stock,
including shares subject to option which
must be exercised prior to the affiliation
with ONB. See "GENERAL INFORMATION,"
"PROPOSED AFFILIATION -- Conditions to
Consummation." The approval of the
Agreement by the shareholders of ONB is not
required.
Required Shareholder Vote on The nominees for Director of FUSB this year
Election of Directors are Earl E. Clodfelter and William M.
Marley, each of whom is a current Director
of FUSB. The election of Directors requires
receipt of a plurality of affirmative votes
cast at the Annual Meeting. Shareholders
are entitled to vote their shares
cumulatively for the election of Directors.
See "GENERAL INFORMATION" and "Election of
FUSB Directors."
Shares Outstanding and Entitled to As of September 8, 1995, there were 546,550
Vote shares of FUSB Common Stock issued and
outstanding. Shareholders of FUSB of record
at the close of business on September 8,
1995, are entitled to
-iii-
<PAGE>
notice of, and to vote at, the Annual
Meeting. See "GENERAL INFORMATION."
Revocable Proxies Proxies are revocable at any time before
they are exercised by means of a later
dated proxy delivered to FUSB, by written
notice delivered to the Secretary of FUSB
or in person at the Annual Meeting. See
"GENERAL INFORMATION."
THE PARTIES TO THE
AFFILIATION:
Old National Bancorp As the largest independent bank holding
420 Main Street company headquartered in the State of
Evansville, Indiana 47708 Indiana, ONB owns and operates 23 affiliate
(812) 464-1434 banks with 112 offices located in the tri-
state area of southwestern Indiana,
southern and eastern Illinois and
northwestern Kentucky. As of June 30, 1995,
ONB had total assets of approximately $4.4
billion and its ratio of total capital to
risk-adjusted assets was 15.79%. This
capital ratio is well in excess of
applicable regulatory requirements. See
"DESCRIPTION OF ONB."
ONB is currently analyzing a number of
potential acquisitions. As of the date of
this Proxy Statement, ONB has entered into
definitive agreements to acquire (i) City
National Bancorp, Inc. ("City National"),
Fulton, Kentucky and (ii) Shawnee Bancorp,
Inc. ("Shawnee Bancorp"), Harrisburg,
Illinois, in connection with which
Shawnee Bancorp's wholly-owned subsidiary,
the Bank of Harrisburg, will merge into the
First National Bank of Harrisburg, an
affiliate of ONB. See "DESCRIPTION OF ONB
-- Acquisition Policy and Pending
Affiliations."
First United Savings Bank, f.s.b. FUSB is a federally chartered savings bank
One North Locust Street with full-service offices located in
Greencastle, Indiana 46135 Greencastle and Bloomington, Indiana and a
(317) 653-9793 loan production office located in Danville,
Indiana. It owns one operating subsidiary,
Greenmark, Inc., which markets and sells
property, casualty, life and crop insurance
("Greenmark"), as well as a non-operating
subsidiary, Kirkwood Corporation. As of
June 30, 1995, FUSB had total assets of
approximately $142 million and its ratio of
total capital to risk-adjusted assets was
11.4%. See "DESCRIPTION OF FUSB."
THE AFFILIATION:
Description of the Under the Agreement and its related
Affiliation Purchase and Assumption Agreement (attached
as Appendix B), the affiliation between
FUSB and ONB will be accomplished through
three sequential steps: (1) the Asset
Purchase ~ First Citizens Bank & Trust
Company, ONB's affiliate bank in
Greencastle ("First Citizens"), will
purchase the assets and assume the
liabilities of the office of FUSB located
in Greencastle and the loan production
office located in Danville for a purchase
price equal to the fair market value of
those assets and liabilities; (2) the
-iv-
<PAGE>
Greenmark Purchase ~ First Citizens will
purchase the outstanding stock of Greenmark
from FUSB for a purchase price of $310,000;
and (3) the Merger ~ FUSB, as it exists
following these steps, will merge with and
into a newly formed savings bank subsidiary
of ONB. The Asset Purchase, Greenmark
Purchase and Merger are collectively
referred to herein as the "Affiliation."
As a result of these steps, FUSB's existing
operations will be divided geographically
with First Citizens acquiring the
Greencastle and Danville operations, as
well as Greenmark, and with ONB directly
acquiring the Bloomington office as a
separately operating savings bank ("New
FUSB"). All of the steps are dependent upon
each other and will consummate sequentially
on the effective date of the Affiliation.
See "PROPOSED AFFILIATION -- Description of
the Affiliation" and Appendices A and B of
this Proxy Statement.
Exchange of FUSB Common Stock At the effective date of the Affiliation,
each outstanding share of FUSB Common Stock
(other than those 1,000 shares owned by
Greenmark, which will be canceled and
including 35,650 shares currently subject
to options, which are required by the terms
of the Agreement to be exercised prior to
such time) will be converted into the right
to receive .8925 of a share of ONB Common
Stock, subject to adjustment in the event
of certain deviations in the market price
of ONB Common Stock. No fractional shares
will be issued and ONB will pay cash for
any fractional share interests resulting
from the Exchange Ratio. The price at which
ONB Common Stock traded on ----------,
1995, as reported by the NASDAQ National
Market System, was $----- per share. See
"PROPOSED AFFILIATION -- Exchange of FUSB
Common Stock" and Appendix A to this Proxy
Statement.
Reasons for the Affiliation After careful review and consideration,
FUSB's Board of Directors has determined
that the terms of the Affiliation are fair
to, and in the best interest of, FUSB and
its shareholders. FUSB's Board believes
that the Affiliation will provide
significant value to all FUSB shareholders
and, at the same time, enable holders of
FUSB Common Stock to participate in the
expanded opportunities for growth that the
Affiliation will make possible. FUSB's
Board also determined that the Affiliation
would have a positive, long-term impact on
its customers and employees and the
communities it serves. See "PROPOSED
AFFILIATION -- Background of and Reasons
for the Affiliation."
Opinion of FUSB's Financial Advisor FUSB has retained McDonald & Company
Securities, Inc. ("McDonald & Company") as
its financial advisor in the Affiliation.
McDonald & Company rendered its oral
opinion on September 29, 1994, which was
subsequently confirmed in writing, that as
of the date of such opinion, the Exchange
Ratio pursuant to the Affiliation was fair,
from a financial point of view, to the
holders of FUSB Common Stock. The opinion
was updated and confirmed on the date of
this Proxy Statement. A
-v-
<PAGE>
copy of the opinion of McDonald & Company
dated as of the date of this Proxy
Statement is attached hereto as Appendix C
and should be read in its entirety with
respect to the assumptions made,
limitations on reviews undertaken and other
matters. See "PROPOSED AFFILIATION --
Opinion of Financial Advisor to FUSB."
Recommendation of the The Board of Directors of FUSB has
Board of Directors of unanimously approved the Agreement and
FUSB recommends that FUSB shareholders approve
the Agreement. See "PROPOSED AFFILIATION --
"Background of and Reasons for the
Affiliation" and "Recommendation of the
Board of Directors."
Conditions to the Consummation of the Affiliation is subject
Affiliation to certain conditions which include, among
others, (1) approval of the Agreement by
the affirmative vote of the holders of at
least two-thirds of the outstanding shares
of FUSB Common Stock, (2) receipt of
regulatory approvals for each step of the
Affiliation, and (3) receipt of a private
letter ruling from the Internal Revenue
Service or an opinion of counsel with
respect to certain federal income tax
matters. The Affiliation will not proceed
unless all of the conditions relating to
each step are met. For tax purposes, the
Asset Purchase and the Greenmark Purchase
must be consummated prior to the Merger.
See "PROPOSED AFFILIATION -- Conditions to
Consummation."
Termination of the Affiliation The Agreement may be terminated before the
Affiliation becomes effective upon the
occurrence of certain events which include,
among others, (1) a misrepresentation or
breach of any representation or warranty
set forth in the Agreement by ONB or FUSB,
which would result in material adverse
change in either ONB or FUSB on a
consolidated basis, (2) a breach of or
failure to comply with any covenant or
mutual agreement set forth in the Agreement
by ONB or FUSB, (3) the commencement or
threat of certain claims, proceedings or
litigation, (4) a material adverse change
in ONB or FUSB, since June 30, 1994, and
(5) the Affiliation not having been
consummated by January 31, 1996. Further,
ONB may terminate the Affiliation if it
reasonably determines that a condition
imposed by a regulatory agency in
connection with antitrust implications of
the Affiliation would render consummation
of the Affiliation unacceptable or
otherwise imprudent, or if the Affiliation
is not able to be consummated because of
agency disapproval or if a lawsuit is
instituted to enjoin the Affiliation on
antitrust grounds. At present, ONB does not
anticipate that any conditions to
consummation of the Asset Purchase will be
imposed for antitrust purposes. The parties
may also mutually agree to terminate the
Agreement. See "PROPOSED AFFILIATION --
Termination."
Effective Date of the ONB and FUSB anticipate that the
Affiliation Affiliation will be completed in the last
calendar quarter of 1995. See "PROPOSED
AFFILIATION -- Effective Date."
-vi-
<PAGE>
Management, Personnel and The Directors and officers of FUSB will
Operations After the continue to serve following the effective
Affiliation date of the Affiliation until otherwise
determined by ONB. ONB has agreed that the
six Directors of FUSB will continue to
serve for not less than three years
following the effective date with the
directors residing in and around
Greencastle serving First Citizens and the
directors residing in and around
Bloomington serving New FUSB. William M.
Marley, President of FUSB, will serve as
Vice Chairman of First Citizens, and other
officers and employees will serve in
capacities similar to those held prior to
the Affiliation, with those serving in
Bloomington serving New FUSB's operations
and those serving in Greencastle and
Danville serving First Citizens'
operations. Following the Affiliation,
employees of FUSB will receive benefits in
accordance with the current policies and
employee benefit plans of ONB, subject to
the continuation of certain of FUSB plans
until December 31, 1995. See "PROPOSED
AFFILIATION -- Description of the
Affiliation" and "Management, Personnel and
Operations After the Affiliation."
Federal Income Tax ONB and FUSB have requested a private
Consequences to FUSB letter ruling from the Internal Revenue
Shareholders Service to the effect that the Affiliation
will constitute a tax-free reorganization,
but if such a ruling is not received prior
to consummation of the Affiliation, ONB's
counsel, Krieg DeVault Alexander &
Capehart, has agreed to render a tax
opinion as to the tax consequences of the
Affiliation. In general, FUSB shareholders
who receive solely ONB Common Stock in
exchange for their shares of FUSB Common
Stock will not recognize gain or loss as a
result of the exchange. Shareholders are
urged to consult with their tax advisors
with respect to the tax consequences of the
Affiliation to them. See "FEDERAL INCOME
TAX CONSEQUENCES."
No Dissenters' Rights Shareholders of FUSB have no dissenters' or
appraisal rights in connection with the
Affiliation under federal law applicable to
FUSB. See "PROPOSED AFFILIATION -- No
Dissenters' or Appraisal Rights."
Interests of Certain Persons in Certain members of management and the Board
the Affiliation of Directors of FUSB have interests in the
Affiliation that are in addition to those
of FUSB shareholders generally. See
"PROPOSED AFFILIATION -- Interests of
Certain Persons in the Affiliation."
Resale of ONB Common Stock Certain resale restrictions apply to the
sale or transfer of shares of ONB Common
Stock issued to Directors, executive
officers and 10% shareholders of FUSB in
exchange for their shares of FUSB Common
Stock. See "PROPOSED AFFILIATION -- Resale
of ONB Common Stock by FUSB Affiliates."
Comparative Shareholder Rights The rights of shareholders of ONB and
shareholders of FUSB differ in a number of
respects. Upon consummation of the
Affiliation, FUSB
-vii-
<PAGE>
shareholders who receive ONB Common Stock
will take such stock subject to its terms
and conditions. The Articles of
Incorporation of ONB contain certain anti-
takeover measures which may discourage or
render more difficult a subsequent takeover
of ONB by another corporation. Further, ONB
has adopted a shareholder rights plan which
has a similar consequence. See "COMPARISON
OF COMMON STOCK.
Trading Market for Common Stock Shares of ONB Common Stock are traded on
the NASDAQ National Market System. The
closing price of ONB Common Stock as
reported by the NASDAQ National Market
System was $35.25 per share on September
29, 1994, the business day before the
Affiliation was publicly announced, and was
$----- per share on -----------, 1995. Both
of these per share prices of ONB Common
Stock reflect the 5% stock dividend issued
by ONB on February 10, 1995.
Shares of FUSB Common Stock are traded in
the over-the-counter market and are listed
on the NASDAQ. The high and low bid prices
of FUSB Common Stock as reported by NASDAQ
were:
. each $21.25 per share on July 26,
1994, the day before FUSB retained
McDonald & Company,
. each $20.50 per share on September 29,
1994, the day before the Affiliation
was publicly announced, and
. $----- and $----- per share on
September -----, 1995.
Assuming the Affiliation had been
consummated on September ---, 1995, FUSB
shareholders entitled to receive ONB Common
Stock would have received, in exchange for
all of the shares of FUSB Common Stock,
--------------- shares of ONB Common Stock
having an aggregate market value of
approximately $----- million, which
represents $------ per share of FUSB Common
Stock (including cash received in lieu of
any fractional share interest). See
"COMPARATIVE PER SHARE DATA."
-viii-
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- ONB
(UNAUDITED--DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
The following summary sets forth selected consolidated financial information
relating to ONB giving effect to the consummated affiliation with Citizens
National Bank Corporation, Tell City, Indiana, and Oblong Bancshares, Inc.,
Oblong, Illinois which occurred in 1995. This information should be read in
conjunction with the financial statements and notes incorporated herein by
reference.
<TABLE>
<CAPTION>
Twelve Months ended December 31,
--------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Results of Operations
---------------------
(Taxable equivalent basis)
Interest income $ 308,636 $ 302,728 $ 315,087 $ 348,575 $ 356,156
Interest expense 126,109 124,958 144,908 190,721 210,573
---------- ---------- ---------- ---------- ----------
Net interest income 182,527 177,770 170,179 157,854 145,583
Provision for loan losses 6,241 9,989 11,731 11,514 10,025
---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 176,286 167,781 158,448 146,340 135,558
Noninterest income 33,656 32,451 28,082 25,452 22,935
Noninterest expense 134,774 125,525 113,548 108,022 101,773
---------- ---------- ---------- ---------- ----------
Income before income taxes 75,168 74,707 72,982 63,770 56,720
Income taxes 27,190 28,534 28,245 23,918 21,365
---------- ---------- ---------- ---------- ----------
Net income $ 47,978 $ 46,173 $ 44,737 $ 39,852 $ 35,355
========== ========== ========== ========== ==========
Year-End Balances
-----------------
Total assets $4,386,839 $4,233,780 $3,949,725 $3,917,024 $3,857,020
Total loans--net of unearned income 2,718,041 2,456,946 2,279,245 2,264,064 2,244,545
Total deposits 3,469,753 3,484,294 3,343,146 3,223,359 3,200,193
Shareholders' equity 391,223 383,367 356,890 329,892 314,378
Per Share Data (1)
------------------
Net income - primary $ 2.03 $ 1.95 $ 1.88 $ 1.67 $ 1.43
Net income -
fully diluted (2) 1.98 1.90 1.82 1.62 1.43
Cash dividends paid 0.88 0.76 0.72 0.69 0.66
Book value at year-end 16.75 16.18 15.00 13.72 12.65
Selected Performance Ratios
---------------------------
(based on averages)
Return on assets 1.12% 1.12% 1.14% 1.04% 0.95%
Return on equity 12.29 12.56 13.06 12.45 11.32
Equity to assets 9.14 8.89 8.75 8.39 8.38
Primary capital to assets 10.12 9.83 9.65 9.23 9.21
Net charge-offs to average loans 0.31 0.27 0.35 0.41 0.55
Allowance for loan losses to average loans 1.62 1.65 1.56 1.42 1.44
</TABLE>
(1) Restated for all stock dividends.
(2) Assumes the conversion of ONB's subordinated debentures.
In years prior to 1991, the assumed conversion would not be significant.
-ix-
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- ONB (CONTINUED)
(UNAUDITED -- DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months ended June 30,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Results of Operations
---------------------
(Taxable equivalent basis)
Interest income $ 169,354 $ 149,410
Interest expense 77,768 59,949
---------- ----------
Net interest income 91,586 89,461
Provision for loan losses 2,183 3,018
---------- ----------
Net interest income after provision
for loan losses 89,403 86,443
Noninterest income 18,869 17,068
Noninterest expense 68,247 64,796
---------- ----------
Income before income taxes 40,025 38,715
Income taxes 15,711 15,081
---------- ----------
Net income $ 24,314 $ 23,634
---------- ----------
Period-End Balances
-------------------
Total assets $4,429,994 $4,249,617
Total loans--net of unearned income 2,811,216 2,583,073
Total deposits 3,595,004 3,434,838
Shareholders' equity 394,517 391,134
Per Share Data (1)
------------------
Net income - primary $ 1.05 $ 1.00
Net income - fully diluted (2) 1.02 0.97
Cash dividends paid 0.46 0.44
Book value at period-end 17.24 16.61
Selected Performance Ratios
---------------------------
(based on averages)
Return on assets 1.11% 1.12%
Return on equity 12.44 12.22
Equity to assets 8.95 9.15
Primary capital to assets 9.97 10.24
Net charge-offs to average loans 0.08 0.13
Allowance for loan losses to average loans 1.49 1.68
</TABLE>
(1) Restated for all stock dividends.
(2) Assumes the conversion of ONB's subordinated debentures.
-x-
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- FUSB
The following summary sets forth selected consolidated financial information
relating to FUSB. This information should be read in conjunction with the
financial statements and notes incorporated herein by reference.
<TABLE>
<CAPTION>
Twelve Months ended June 30,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Results of Operations
---------------------
(Taxable equivalent basis)
Interest income $ 9,537,512 $ 8,686,589 $ 9,219,921 $ 10,821,579 $ 12,337,901
Interest expense 5,858,417 5,414,275 6,175,994 7,784,664 9,129,001
------------ ------------ ------------ ------------ ------------
Net interest income 3,679,095 3,272,314 3,043,927 3,036,915 3,208,900
Provision for loan losses 745,774 121,614 89,674 127,391 57,313
------------ ------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 2,933,321 3,150,700 2,954,253 2,909,524 3,151,587
Noninterest income 603,668 599,654 582,538 710,855 504,347
Noninterest expense (1) 4,476,285 5,408,571 2,824,628 3,476,139 3,031,596
------------ ------------ ------------ ------------ ------------
Income (loss) before income taxes
and cumulative effect of change
in accounting principle (927,048) (1,658,217) 712,163 144,240 624,338
Income taxes (277,000) (657,800) 228,500 (14,000) 243,000
------------ ------------ ------------ ------------ ------------
Income (loss) before cumulative effect
of change in accounting principle (650,048) (1,000,417) 483,663 158,240 381,338
Cumulative effect of change in
accounting principle --- --- --- 30,400 ---
------------ ------------ ------------ ------------ ------------
Net income ($650,048) ($1,000,417) $ 483,663 $ 188,640 $ 381,338
============ ============ ============ ============ ============
Year-End Balances
-----------------
Total assets $142,039,710 $133,703,636 $138,590,017 $130,060,846 $137,675,350
Total loans--net of unearned income 121,593,615 110,900,334 111,765,436 102,010,050 102,621,053
Total deposits 112,343,290 113,248,577 116,902,114 116,090,522 121,798,106
Shareholders' equity $ 9,240,514 $ 9,841,899 $ 10,972,468 $ 10,523,197 $ 10,486,335
Per Share Data
--------------
Net income (loss) ($1.15) ($1.84) $ .90 $ .35 $ .71
Cash dividends paid - $ .24 $ .20 $ .40 $ .60
Book value at year-end $ 16.93 $ 18.15 $ 20.23 $ 19.52 $ 19.46
Selected Performance Ratios
---------------------------
(based on averages)
Return on assets (.48%) (.73%) .36% .14% .28%
Return on equity (7.30%) (9.16%) 4.50% 1.78% 3.65%
Equity to assets 6.56% 8.01% 7.98% 7.85% 7.68%
Primary capital to assets 5.8% 6.2% 7.9% 8.0% 6.1%
Net charge-offs to average loans .11% .04% .07% .06% .07%
Allowance for loan losses to average loans .74% .22% .15% .14% .08%
</TABLE>
(1) Includes charges for declines in net realizable value of direct investments
in real estate and investment securities of $200,000, $2,463,000 and
$625,000 in fiscal 1995, 1994 and 1992, respectively.
-xi-
<PAGE>
PROSPECTUS PROXY STATEMENT
OF OF
OLD NATIONAL BANCORP FIRST UNITED SAVINGS BANK, F.S.B.
---------------------------------
ANNUAL MEETING OF SHAREHOLDERS OF
FIRST UNITED SAVINGS BANK, F.S.B.
TO BE HELD ON OCTOBER 31, 1995
---------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of FUSB in connection
with the solicitation by the Board of Directors of FUSB of proxies for use at
the Annual Meeting of Shareholders to be held on October 31, 1995, at 2:00 p.m.,
local time, at the main office of the FUSB located at One North Locust Street,
Greencastle, Indiana 46135. This Proxy Statement is first being mailed to FUSB
shareholders on October ---, 1995.
The purposes of the Annual Meeting of Shareholders are to (1) consider and
vote upon the Agreement, under the terms of which FUSB will affiliate with ONB
and each outstanding share of FUSB Common Stock will be converted into the right
to receive .8925 of a share of ONB Common Stock, subject to adjustment described
hereinafter; (2) elect two Directors of FUSB for terms expiring in 1998, subject
to earlier termination as a consequence of the Affiliation; and (3) transact
such other business which may properly be presented at the Annual Meeting or any
adjournment thereof.
Only holders of FUSB Common Stock of record at the close of business on
September 8, 1995 ("Record Date") are entitled to notice of, and to vote at, the
Annual Meeting. There were 546,550 shares of FUSB Common Stock outstanding on
the Record Date, which were held of record by approximately --- shareholders. A
majority of outstanding shares of Common Stock of FUSB entitled to vote,
represented in person or by proxy, at the Annual Meeting is necessary for a
quorum. Shareholders who abstain, cast broker non-votes or withhold authority
to vote on one or more Director nominees will be deemed present at the Annual
Meeting for purposes of determining whether a quorum is present.
The affirmative vote of the holders of at least two-thirds of the outstanding
shares of FUSB Common Stock is required for approval of the Agreement, for which
matter each share of FUSB Common Stock is entitled to one vote. Directors will
be elected upon receipt of a plurality of affirmative votes cast at the Annual
Meeting. See "ELECTION OF FUSB DIRECTORS." In the election of Directors, every
holder of a share of FUSB Common Stock has the right to vote his shares
cumulatively. Under cumulative voting, the number of shares a shareholder is
entitled to vote multiplied by the number of Directors to be elected represents
the number of votes he may cast at such election, and he may cast all such votes
for one candidate or distribute them among any two or more candidates.
The cost of soliciting proxies will be borne by FUSB. In addition to use of
the mails, proxies may be solicited personally or by telephone or telegraph by
directors, officers and certain employees of FUSB, who will not be specially
compensated for such soliciting.
The shares represented by proxies properly signed and returned will be voted
at the Annual Meeting as instructed by the shareholders of FUSB giving the
proxies. In the absence of specific instructions to the
<PAGE>
contrary, proxies will be voted FOR approval of the Agreement described in this
Proxy Statement, FOR election of the slated Directors and in accordance with the
recommendation of the Board of Directors of FUSB with respect to any other
matter which may properly be presented at the Annual Meeting. Unless otherwise
specified on the accompanying proxy, it is the intention of the persons named in
the proxy to cast one vote per share for each of the Director nominees named
herein. However, such persons reserve the right to vote each proxy cumulatively
and for the election of fewer than all of the nominees for Directors, but they
do not intend to do so unless candidates other than those Director nominees
named herein are proposed at the Annual Meeting by persons other than the Board
of Directors.
Any shareholder giving a proxy has the right to revoke it at any time before
it is exercised. Therefore, execution of a proxy will not affect a
shareholder's right to vote in person if he or she attends the Annual Meeting.
Revocation may be made by a later dated proxy delivered to FUSB, by written
notice delivered to the Secretary of FUSB prior to the Annual Meeting, or by
written notice delivered to the Secretary of FUSB at the Annual Meeting. To be
effective, any revocation must be received before the proxy is exercised.
PROPOSED AFFILIATION
At the Annual Meeting, shareholders of FUSB will consider and vote upon the
Agreement, certain features of which are summarized below. The following
summary of certain aspects of the Agreement does not purport to be a complete
description of the terms and conditions of the Agreement and is qualified in its
entirety by reference to the Agreement, which is attached to this Proxy
Statement as Appendix A and is incorporated herein by reference.
DESCRIPTION OF THE AFFILIATION
The Affiliation involves three sequential steps, the purpose of which is to
divide the operations of FUSB geographically within the ONB organization:
(1) The Asset Purchase. In the first step of the Affiliation, First Citizens
will purchase the assets and assume the liabilities of the full service
branches of FUSB located in Greencastle and of the loan production office
located in Danville, Indiana. In the transfer, First Citizens will pay
the fair market value of the acquired assets and liabilities to FUSB. As
a result, First Citizens will continue to operate as ONB's affiliate
doing business in Putnam and Hendricks Counties. The specific provisions
relating to the Asset Purchase are provided for in the Purchase and
Assumption Agreement attached to this Proxy Statement as Appendix B.
(2) The Greenmark Purchase. First Citizens will then purchase the
outstanding stock of Greenmark from FUSB for a purchase price of
$310,000. As permitted by Indiana law applicable to state banks, First
Citizens will continue the property, casualty and crop insurance agency
operations of Greenmark. It must, however, divest the life insurance
operations to a third party, which will then independently market life
insurance to First Citizens' customers.
(3) The Merger. FUSB, as it exists following these steps, will immediately
merge with ONB Interim Federal Savings Bank, a newly formed interim
savings bank subsidiary of ONB, to create New FUSB. By reason of the
merger, New FUSB will be a subsidiary of ONB. It will retain its
corporate title and charter as a federal savings bank, continuing its
Bloomington operations.
-2-
<PAGE>
All three steps will consummate sequentially on the effective date of the
Affiliation. Under the terms of the Agreement, none of the steps may consummate
independently; however, for tax purposes, the Asset Purchase and Greenmark
Purchase must consummate prior to the Merger.
As of June 30, 1995, FUSB had consolidated assets of $142.0 million,
consolidated deposits of $112.3 million, consolidated shareholders' equity of
$9.2 million and consolidated net income for the six calendar months then ended
of $1.6 million. Based upon the pro forma financial information included
elsewhere in this Proxy Statement and assuming that the Affiliation had been
consummated on June 30, 1995, FUSB represented as of such date 3.21% of the
consolidated assets of ONB, 3.12% of its consolidated deposits, 2.33% of its
consolidated shareholders' equity and, for the six month period ended June 30,
1995, 6.58% of its consolidated net income. See "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION."
STOCK OPTION AGREEMENT
At the time of execution of the Agreement, ONB and FUSB entered into a Stock
Option Agreement dated as of September 29, 1994, as amended as of June 29, 1995
("Stock Option Agreement"), pursuant to which FUSB granted an irrevocable option
("Option") to ONB to purchase up to such number of shares of FUSB Common Stock,
which will, immediately following the exercise of the Option in its entirety,
aggregate twenty-four and 80/100 percent (24.80%) of the issued and outstanding
shares of FUSB Common Stock ("Option Shares") at a price per Option Share
("Purchase Price") equal to $26.50 per Option Share.
The Stock Option Agreement provides that ONB may exercise the Option only if
any of the following events has occurred: (i) the acquisition by any person or
group of persons, other than ONB or any of its subsidiaries, of beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of FUSB
Common Stock; (ii) the making by any person or group of persons, other than ONB
or any of its subsidiaries, of a tender or exchange offer for fifteen percent
(15%) or more of the shares of FUSB Common Stock if such person or group of
persons has announced its opposition to the Affiliation or an intention not to
vote in favor of the Affiliation or if such person or group of persons has
announced its intention to enter into or entered into, an agreement to effect a
merger consolidation, share exchange or other combination with FUSB; or (iii)
the acceptance by FUSB of any firm proposal, however conditional or future, by
any person or group of persons, other than ONB or any of its subsidiaries, to:
(a) acquire FUSB by merger, consolidation, purchase of all or substantially all
of FUSB's assets or capital stock or any other similar transaction, or (b) make
a tender or exchange offer described in (ii) above.
If the conditions to exercise of the Option have been met, the Option may be
exercised by ONB in whole or in part at any time prior to January 31, 1996,
provided, however, that the Option will automatically expire if the Affiliation
is consummated as contemplated by the Agreement. In the event that ONB
exercises the Option, the option fee of $1,000 previously paid by ONB to FUSB
will be applied against the Purchase Price of the Option Shares.
The Stock Option Agreement provides that in the event that ONB has purchased
all of the Option Shares pursuant to the Stock Option Agreement, ONB may require
FUSB to pay ONB an amount in cash equal to the highest price paid or to be paid
by any person or group of persons for any share of FUSB Common Stock (or the
aggregate consideration paid for the assets of FUSB divided by the number of
shares of FUSB Common Stock then outstanding), as the case may be, multiplied by
the total number of Option Shares, plus interest at the rate of eight percent
(8%) per annum from the date of the purchase of the Option Shares through the
date of such repurchase. Additionally, the value of any such price or
consideration other than cash will be determined, in the
-3-
<PAGE>
case of consideration with a readily-ascertainable market value, on the basis of
such market value and, in the case of any other consideration, by agreement
between ONB and FUSB.
The Stock Option Agreement provides that in the event the Option is exercised
by ONB and the Agreement is terminated in accordance with the terms thereof,
FUSB will have the right to purchase, and ONB will have the right to require
FUSB to purchase, for cash, all of the Option Shares purchased by ONB pursuant
to the Stock Option Agreement. The purchase price for such Option Shares will
be calculated in the manner described in the previous paragraph.
BACKGROUND OF AND REASONS FOR THE AFFILIATION
Until 1985 Indiana banking laws prohibited banks located in Indiana from
expanding outside of their home counties. Moreover, until 1989 federal law
prohibited affiliations between healthy savings and loan associations and banks
or bank holding companies. The changes since that time have been swift, first
permitting in-state acquisitions of banks by bank holding companies, then
permitting regional interstate acquisitions and finally permitting virtual
nationwide expansion opportunities, including cross-industry acquisitions.
These developments stimulated aggressive acquisition activity among financial
institutions located in Indiana and neighboring states, resulting in the entry
of large bank holding companies into virtually every attractive market in the
midwestern United States. Moreover, developments and deregulation in the
industry generally have led to further increases in competition for financial
institution services. Compounded by the significant increase in regulatory
burdens over the past several years, these competitive factors have created an
environment in which it is increasingly difficult for community organizations
such as FUSB to achieve the economies of scale necessary to compete effectively.
In April of 1994, FUSB received an unsolicited indication of interest from a
bank holding company regarding an affiliation with FUSB. Partly in response to
this unsolicited proposal and after an evaluation of the competitive and
regulatory factors described above and other financial, legal, economic and
market considerations, FUSB engaged McDonald & Company in June of 1994, to
contact a number of institutions on behalf of FUSB which might be interested in
a business combination with FUSB. On June 27, 1994, FUSB publicly announced its
engagement of McDonald & Company. During June and July of 1994, 24 bank and
thrift holding companies were contacted by McDonald & Company. The institutions
contacted included companies which FUSB and McDonald & Company believed would
have a strategic interest in FUSB and the financial ability to acquire FUSB and
companies that expressed an interest in a business combination following FUSB's
public announcement of its evaluation of strategic alternatives deemed to have
the financial ability to pursue such a transaction. Twenty-two of those
institutions executed confidentiality agreements, after which they were provided
selected confidential information regarding FUSB. On July 27, 1994, FUSB
announced that it had hired McDonald & Company to assist it in locating a
financial institution with whom it might affiliate, and, as a result of that
announcement, received contacts from a number of other financial institutions.
As a result of these contacts, seven institutions submitted written proposals
during July of 1994, and four were offered the opportunity to conduct a due
diligence investigation of FUSB.
Final proposals were submitted by three of these institutions, including ONB,
in September of 1994. At a Board of Directors meeting held on September 16,
1994, FUSB, with the assistance of McDonald & Company and legal counsel,
analyzed each proposal and determined that the proposal submitted by ONB
provided the best opportunity for FUSB and its shareholders. As a result, the
directors authorized McDonald & Company and its legal counsel to proceed with
negotiations on behalf of FUSB for a definitive agreement with ONB.
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On the evening of September 29, 1994, the agreement was approved by both
parties and a press release regarding the execution of that agreement was issued
the next day. At the September 29, 1994 meeting of the FUSB Board, McDonald &
Company rendered its oral opinion, which was subsequently delivered in writing,
to the effect that, as of that date, the Exchange Ratio pursuant to the
Affiliation was fair, from a financial point of view, to the holders of FUSB
Common Stock. On the same date, FUSB granted ONB an option to acquire 24.8% of
its Common Stock, in order to protect ONB's proposed affiliation with FUSB from
other interested parties.
After review of regulatory considerations regarding the proposed transaction,
ONB and FUSB determined that it was in the best interests of the parties to
structure the transaction in the steps comprised of the Asset Purchase,
Greenmark Purchase and the Merger. To reflect this structure, the parties
amended and restated the original agreement on June 29, 1995, and entered into
the Purchase and Assumption Agreement relating to the Asset Purchase and
Greenmark Purchase, annexed hereto as Appendix B.
In determining to pursue the Affiliation, the Board of Directors of FUSB
specifically considered financial, managerial and other information regarding
ONB and its affiliate banks. In particular, the Board of Directors of FUSB
evaluated the respective businesses, financial condition and future prospects of
FUSB and ONB. The earnings history and stock performance of ONB were carefully
reviewed and discussed with McDonald & Company with a view towards the
investment potential for shareholders of FUSB.
Among other items considered in this evaluation were the prospects of FUSB and
ONB, as separate institutions and as combined; the compatibility of ONB's
affiliate bank markets to those of FUSB; the anticipated tax-free nature of the
Affiliation to FUSB shareholders receiving solely ONB Common Stock in exchange
for their shares of FUSB Common Stock; the timeliness of a merger given the
state of the economy and the stock markets as well as anticipated trends in
both; regulatory requirements; relevant price information involving recent
comparable bank acquisitions which occurred in the Midwest United States; an
analysis of alternatives to affiliating with ONB, including other potential
acquirors; the fact that the consideration to be received in the Affiliation by
FUSB shareholders reflects a significant premium for FUSB Common Stock over the
market prices at which such stock had traded in the weeks prior to the public
announcement relating to the retention of McDonald & Company and the Affiliation
on July 27, 1994 and September 30, 1994, respectively; the competitive process
undertaken by FUSB with the assistance of McDonald & Company and the expressions
of interest made by other financial institutions; the value implicit in the
Exchange Ratio in relation to book value and earnings of FUSB and the dividend
rate that FUSB shareholders who become ONB shareholders would be expected to
enjoy as a result of the Affiliation; the terms of the Agreement; and McDonald &
Company's fairness opinion.
The Board of Directors of FUSB also considered the impact of the Affiliation
on its customers and employees and the communities it serves. ONB's historical
practice of retaining employees of acquired institutions with competitive salary
and benefit programs was considered, as was the opportunity for training,
education, growth and advancement of FUSB's employees within ONB or one of its
affiliates. The Board of Directors of FUSB examined ONB's continuing commitment
to the communities served by institutions previously acquired by ONB. Further,
from the standpoint of customers, it was anticipated that more products and
services would become available because of ONB's greater resources.
Based upon the foregoing factors, the Board of Directors concluded that it was
advantageous to affiliate with ONB. The importance of the various factors
relative to one another cannot be precisely determined or stated.
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OPINION OF FINANCIAL ADVISOR TO FUSB
FUSB retained McDonald & Company to act as its financial advisor in connection
with the Affiliation. McDonald & Company participated with management of FUSB in
negotiating the terms of the Affiliation. Representatives of McDonald & Company
attended meetings of FUSB's Board of Directors in connection with the evaluation
of a possible business combination with another financial institution and in
connection with the evaluation of the Affiliation, including the meeting held on
September 29, 1994 at which time the Affiliation was approved. At such meeting,
representatives of McDonald & Company made an oral presentation to FUSB's Board
and reviewed with the Directors the various aspects of the Affiliation,
including the financial terms and conditions thereof.
At the September 29, 1994 meeting of FUSB's Board, McDonald & Company rendered
its oral opinion to the effect that, as of that date, the Exchange Ratio
pursuant to the Affiliation was fair, from a financial point of view, to the
holders of FUSB Common Stock. In addition, McDonald & Company has delivered its
written opinion to FUSB's Board dated as of September 29, 1994 and as of the
date of this Proxy Statement stating that, as of September 29, 1994 and as of
the date of this Proxy Statement, the Exchange Ratio pursuant to the Affiliation
is fair, from a financial point of view, to the holders of FUSB Common Stock.
McDonald & Company has consented to the inclusion herein of the summary of its
opinion to FUSB's Board dated September 29, 1994 and to the reference to the
entire opinion dated as of the date of this Proxy Statement attached hereto as
Appendix C.
THE FULL TEXT OF MCDONALD & COMPANY'S FAIRNESS OPINION ("OPINION"), DATED AS
OF THE DATE OF THIS PROXY STATEMENT, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX
C TO THIS PROXY STATEMENT. FUSB SHAREHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY. MCDONALD & COMPANY HAS NOT MADE OR SOUGHT TO OBTAIN APPRAISALS OF
FUSB' ASSETS IN RENDERING THE OPINION. NEITHER FUSB NOR ONB PLACED ANY
LIMITATION UPON MCDONALD & COMPANY WITH RESPECT TO THE INVESTIGATIONS MADE OR
PROCEDURES FOLLOWED BY MCDONALD & COMPANY IN RENDERING THE OPINION. THE OPINION
IS DIRECTED SOLELY TO THE BOARD OF DIRECTORS OF FUSB AND CONCERNS ONLY THE
CONSIDERATION PROVIDED FOR IN THE AGREEMENT AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY OF FUSB' SHAREHOLDERS AS TO HOW SUCH SHAREHOLDER SHOULD
VOTE AT THE ANNUAL MEETING. THE SUMMARY OF THE OPINION SET FORTH IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION INCLUDED IN APPENDIX C HERETO.
In arriving at its opinion, McDonald & Company reviewed, among other things,
the Agreement together with exhibits and schedules thereto, certain publicly
available information relating to the business, financial condition and
operations of FUSB and ONB as well as certain other non-public information
primarily financial in nature, furnished to it by FUSB and ONB relating to the
respective businesses, earnings, assets, financial forecasts and prospects.
McDonald & Company also held discussions with members of senior management of
FUSB and ONB concerning their respective businesses, assets, financial forecasts
and prospects. McDonald & Company also reviewed certain publicly available
information concerning the trading of, and the trading market for, FUSB Common
Stock and ONB Common Stock and certain publicly available information concerning
comparable companies and transactions, all as more fully set forth in its
opinion.
McDonald & Company was not engaged to and did not conduct a physical
inspection of any of the assets, properties or facilities of either FUSB or ONB,
and was not engaged to do and has not made, obtained or been furnished with any
independent evaluation or appraisal of any such assets, properties or facilities
or any of the liabilities of FUSB or ONB. McDonald & Company has assumed and
relied, without independent investigation, upon the accuracy and completeness of
the financial and other information provided to it or publicly available,
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has relied upon the representations and warranties of FUSB and ONB contained in
the Agreement, and has not independently attempted to verify any such
information. McDonald & Company has also assumed that all of the conditions to
the Affiliation as set forth in the Agreement, includng the tax-free treatment
of the Affiliation to the shareholders of FUSB Common Stock, would be
consummated on a timely basis in the manner contemplated by the Agreement. No
limitations were imposed by FUSB upon McDonald & Company with respect to the
scope of its investigation nor were any specific instructions given to McDonald
& Company in connection with its opinion.
In connection with rendering its opinion dated September 29, 1994, McDonald &
Company considered a variety of financial analyses which are summarized below.
McDonald & Company believes that its analyses must be considered as a whole and
that selecting portions of such analyses and factors may create an incomplete
view of the analytical process underlying McDonald & Company's opinion. In its
analyses, McDonald & Company made numerous assumptions with respect to industry
performance, business and economic conditions, and other matters. Any estimates
contained in McDonald & Company's analyses are not necessarily indicative of
future results or values, which may be significantly more or less favorable than
such estimates.
The following is a summary of selected analyses considered by McDonald &
Company in connection with McDonald & Company's opinion dated September 29,
1994:
COMPARISON WITH SELECTED COMPANIES. McDonald & Company compared the financial
performance and stock market valuation of FUSB with corresponding data for the
following selected thrifts: First Financial Bancorp, Inc., Glenway Financial
Corp., Haverfield Corporation, LGF Bancorp, Inc., SuburbFed Financial Corp.,
Security Savings Bank, FSB, and United Financial Bancorp. In addition, McDonald
& Company compared such data of ONB with the following selected banking
companies: Citizens Banking Corporation, Commerce Bancshares, Inc., Chemical
Financial Corporation, FirstMerit Corp., First Commerce Bancshares, First
Financial Bancorp, FirsTier Financial, Inc., Fort Wayne National Corp., Hawkeye
Bancorporation, Mid-America Bancorp, Mid Am, Inc., Peoples First Corporation,
Park National Corp., and Star Banc Corp. At the time, none of the companies
listed above had announced a merger transaction or disclosed a possible interest
in pursuing a possible merger transaction which would have significantly
affected its stock market valuation.
PRO FORMA MERGER ANALYSES. McDonald & Company analyzed the changes in per
share amount of earnings, book value and indicated dividend represented by one
share of FUSB Common Stock after the Affiliation. The analysis was performed on
the basis of financial information for both companies as of and for the twelve
months ended June 30, 1994, December 31, 1993, and December 31, 1992. The
analysis indicated, among other things, that exchanging one share of FUSB Common
Stock at the Exchange Ratio for shares of ONB Common Stock on a pro forma basis
would have resulted in a 59.5% increase in earnings per share for each share of
FUSB Common Stock for the twelve months ended December 31, 1993, a 18.6%
decrease in book value per share for each share of FUSB Common Stock as of June
30, 1994, and a 225.0% increase in dividends per share of FUSB Common Stock
based on FUSB's and ONB's indicated annual dividend rate as of September 29,
1994.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. McDonald & Company reviewed four
groups of selected pending thrift transactions involving (i) selling thrifts
with total assets less than $400 million, (ii) selling thrifts having a tangible
equity to assets ratio of more than 6.00%, (iii) selling thrifts having a return
on assets of less than 0.70%, and (iv) selling thrifts having non-performing
assets as a percent of total assests less than 2.00%. McDonald & Company
reviewed the ratios of the offer value to stated book value and tangible book
value, the multiple of the last twelve months earnings of the acquired company,
and the ratio of the offer value to assets in each such transaction and computed
mean and median ratios and multiples for each group. The calculations
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yielded ranges of median ratios of price to stated book value and tangible book
value of 131% to 168% and 133% to 169%, respectively. Median multiples of
earnings among the four groups ranged from 13.7x to 17.7x, and median ratios of
offer value to assets ranged from 10.0% to 14.6%. Based on the Exchange Ratio
and the ONB equivalent price per share as of September 29, 1994 of $36.50, the
ratio of price to stated book value and tangible book value were 171% and 177%,
respectively. The multiple of price to last twelve months earnings before
extraordinary charges of FUSB through June 30, 1994 was 32.0x and the ratio of
price to assets at June 30, 1994 was 13.5%.
NO COMPANY OR TRANSACTION USED IN THE ABOVE ANALYSES AS A COMPARISON IS
IDENTICAL TO FUSB, ONB, OR THE AFFILIATION. ACCORDINGLY, AN ANALYSIS OF THE
RESULTS OF THE FOREGOING NECESSARILY INVOLVES COMPLEX CONSIDERATIONS AND
JUDGEMENTS CONCERNING THE DIFFERENCES IN FINANCIAL AND OPERATING CHARACTERISTICS
OF THE COMPANIES AND OTHER FACTORS THAT COULD AFFECT THE PUBLIC TRADING VALUES
OR ACQUISITION VALUES OF THE COMPANIES TO WHICH THEY ARE BEING COMPARED.
MATHEMATICAL ANALYSIS (SUCH AS DETERMINING THE MEAN OR MEDIAN) IS NOT, IN
ITSELF, A MEANINGFUL METHOD OF USING COMPARABLE COMPANY OR COMPARABLE
TRANSACTION DATA.
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow analysis,
McDonald & Company estimated the present value of the future streams of after-
tax cash flows that FUSB could produce over a five year period from 1995 through
1999, under various assumptions, based upon FUSB management's forecasts.
McDonald & Company estimated the terminal value of FUSB after the five year
period by applying an estimated perpetual growth rate to the terminal year's
projected after-tax cash flow and then applied to this, multiples ranging from
9x to 11x. The cash flow streams and terminal values were then discounted to
present values using different discount rates chosen to reflect different
assumptions regarding the required rates of return of prospective buyers of
FUSB. On the basis of such varying assumptions, this discounted cash flow
analysis indicated a reference range of $20.67 to $27.92 per share of FUSB
Common Stock. This analysis was based upon management projections including
variations and assumptions made by McDonald & Company which included adjustments
to reflect the anticipated effects of potential merger-related cost savings
estimated by FUSB, as well as the effects of the potential tax liability for
conversion of FUSB Savings Bank to a commercial bank charter. Management's
projections are based upon many factors and assumptions, many of which are
beyond the control of FUSB or ONB. As indicated above, this analysis is not
necessarily indicative of actual values or actual future results and does not
purport to reflect the process at which any securities may trade at the present
time or at any time in the future.
In performing its analyses, McDonald & Company made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters. The analyses performed by McDonald & Company are not necessarily
indicative of actual values, which may be significantly more or less favorable
than the values suggested by such analyses. Such analyses were prepared solely
as part of McDonald & Company's opinion. The term "fair from a financial point
of view" is a standard phrase contained in investment banker fairness opinions
and refers to the fact that McDonald & Company's opinion as to the fairness of
the Exchange Ratio is addressed solely to the financial attributes of the
Exchange Ratio. The analyses do not purport to be appraisals or to reflect the
prices at which a company might actually be sold. In addition, as described
above, McDonald & Company's fairness opinion and presentation to the FUSB Board
of Directors were one of many factors taken into consideration by the FUSB Board
of Directors in making its determination to approve the Agreement.
Consequently, the McDonald & Company analyses described above should not be
viewed as determinative of the FUSB Board of Directors' conclusions with respect
to the value of FUSB or of the decision of the FUSB Board of Directors to agree
to the Exchange Ratio.
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McDonald & Company's opinions are based on economic and market conditions and
other circumstances existing on, and information made available as of, the date
of such opinion. In addition, the opinions do not address FUSB' underlying
business decision to effect the Affiliation or any other terms of the
Affiliation. McDonald & Company is not rendering any opinion as to the value of
FUSB Common Stock or ONB Common Stock at the Effective Time.
In connection with its opinion dated as of the date of this Proxy Statement,
McDonald & Company performed procedures to update certain of its analyses and
reviewed the assumptions on which such analyses were based and the factors
considered therewith.
McDonald & Company, as part of its investment banking business, is customarily
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. McDonald & Company has extensive experience with
the valuation of financial institutions. FUSB's Board of Directors selected
McDonald & Company as its financial advisor because of McDonald & Company's
industry expertise with respect to financial institutions and because of
McDonald & Company's industry experience in transactions similar to the
Affiliation. McDonald & Company is not affiliated with either FUSB or ONB.
In the ordinary course of business, McDonald & Company makes a market in FUSB
Common Stock and ONB Common Stock and may actively trade the securities of FUSB
and ONB for its own account and for the accounts of its customers. Accordingly,
at any time McDonald & Company may hold a long or short position in such
securities. In addition, McDonald & Company from time to time has provided
investment banking services to FUSB and may provide such services to ONB in the
future.
For its services as financial advisor, FUSB has paid McDonald & Company a
retainer of $15,000 and a fee of $35,000 upon the rendering of McDonald &
Company's September 29, 1994 fairness opinion. Additional fees equal to
approximately $189,000 will be payable to McDonald & Company upon consummation
of the Affiliation. FUSB has also agreed to reimburse McDonald & Company for
its reasonable out-of-pocket expenses and to indemnify McDonald & Company
against certain liabilities, including certain liabilities under federal
securities laws.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FUSB HAS CAREFULLY CONSIDERED AND UNANIMOUSLY
APPROVED THE AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF FUSB
APPROVE THE AGREEMENT.
Certain members of the management and Board of Directors of FUSB have
interests in the Affiliation that are in addition to those of FUSB shareholders
generally. See "Interests of Certain Persons in the Affiliation" and
"Management, Personnel and Operations After the Transaction."
EXCHANGE OF FUSB COMMON STOCK
Under the terms of the Agreement, shareholders of FUSB of record upon
consummation of the Affiliation (excluding Greenmark, which will have its 1,000
shares canceled on the effective date) will be entitled to receive .8925 of a
share of ONB Common Stock in exchange for each share of FUSB Common Stock held,
subject to
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adjustment if the Average Price Per Share (as defined below) is more than ten
percent above or below $34.7619 or in the event of a recapitalization of ONB.
As a result of the ten percent limitation:
(1) Increase in Average Price Per Share. If the Average Price Per Share of
ONB Common Stock exceeds $38.2381, then the exchange ratio will be
adjusted such that each issued and outstanding share of FUSB Common Stock
will be converted into the right to receive a fraction of a share of ONB
Common Stock determined by dividing $34.1275 by the Average Price Per
Share of ONB Common Stock.
(2) Decrease in Average Price Per Share. Similarly, if the Average Price Per
Share of ONB Common Stock is less than $31.2857, then the exchange ratio
will be adjusted such that each issued and outstanding share of FUSB
Common Stock will be converted into the right to receive a fraction of a
share of ONB Common Stock determined by dividing $27.9225 by the Average
Price Per Share of ONB Common Stock.
(3) Less Than Ten Percent Change. If the Average Price Per Share of ONB
Common Stock is not less than $31.2857 nor more than $38.2381, then there
will be no adjustment to the exchange ratio.
The "Average Price Per Share" of ONB Common Stock is defined in the Agreement as
the average of the per share closing prices of ONB Common Stock, as reported on
the NASDAQ National Market System, for the first five (5) business days on which
shares of ONB Common Stock are traded within the ten (10) calendar days
immediately preceding the effective date of the Affiliation.
As of September ---, 1995, the closing price of ONB Common Stock was $--- per
share, as reported by the NASDAQ National Market System. If the Affiliation had
been consummated on that date, the number of shares of ONB Common Stock
exchanged in the merger would have been ---------, with an aggregate market
value of approximately $--- million.
No fractional shares of ONB Common Stock will be issued to shareholders of
FUSB in connection with the Affiliation. Each shareholder of FUSB who otherwise
would be entitled to a fractional interest in a share of ONB Common Stock as a
result of the Exchange Ratio will be paid a cash amount equal to such fractional
interest multiplied by the Average Price Per Share of ONB Common Stock.
In connection with the Affiliation, Directors and executive officers of FUSB
who held outstanding options to purchase FUSB Common Stock were required to
exercise such options prior to consummation. Accordingly, those shares will be
exchanged for ONB Common Stock on the same terms disclosed above.
After the effective time of the Affiliation, stock certificates previously
representing FUSB Common Stock will represent only the right to receive shares
of ONB Common Stock and cash for any fractional shares. Following the effective
date of the Affiliation and prior to the surrender by holders of FUSB of their
stock certificates to ONB for exchange, such holders will not be entitled to
receive payment of dividends or other distributions declared on shares of ONB
Common Stock. Upon the subsequent exchange of such certificates, however, any
accumulated dividends or other distributions previously declared and withheld on
the shares of ONB Common Stock will be paid, without interest. At the effective
date of the Affiliation, the stock transfer books of FUSB will be closed and no
transfers of shares of FUSB Common Stock will thereafter be made. If, after the
effective date, certificates representing shares of FUSB Common Stock are
presented for registration or transfer, they will be canceled and exchanged for
shares of ONB Common Stock.
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Distribution of stock certificates representing shares of ONB Common Stock and
any cash payment for fractional shares (without interest) will be made, after
the effective date of the Affiliation, to each former shareholder of FUSB within
ten (10) business days following the shareholder's delivery to ONB of his or her
certificate(s) representing shares of FUSB Common Stock. Instructions as to
delivery of FUSB stock certificates to ONB will be sent to each FUSB shareholder
shortly after the effective date of the Affiliation.
NO DISSENTERS' OR APPRAISAL RIGHTS
In connection with the Affiliation, shareholders of FUSB do not have the
statutory right to dissent and require appraisal of their shares of FUSB Common
Stock. Federal law applicable to FUSB excepts transactions from dissenters'
rights provisions when the stock held by shareholders is listed on the NASDAQ as
of the date of the shareholder meeting and when the stock being offered is
listed as of the effective date. FUSB Common Stock and ONB Common Stock,
respectively, meet these tests. Shareholders of FUSB who would otherwise
dissent to the Affiliation may sell their shares of ONB Common Stock in the open
market at the market price following the effective date.
RESALE OF ONB COMMON STOCK BY FUSB AFFILIATES
No restrictions on the sale or transfer of the shares of ONB Common Stock
issued in the Affiliation will be imposed solely as a result of the Affiliation,
other than restrictions on the transfer of such shares issued to any FUSB
shareholder who may be deemed to be an "affiliate" of FUSB for purposes of Rule
145 under the Securities Act. Directors, executive officers and 10%
shareholders are generally deemed to be affiliates for purposes of Rule 145.
The Agreement provides that FUSB will provide ONB with a list identifying each
affiliate of FUSB. The Agreement also requires that each FUSB affiliate deliver
to ONB, prior to the effective date of the Affiliation, a written agreement to
the effect that such affiliate (1) has not sold, pledged, transferred, disposed
of or otherwise reduced the affiliate's market risk with respect to the shares
of FUSB Common Stock directly or indirectly owned or held by such person during
the thirty (30) day period prior to the effective date, and (2) will not sell,
pledge, transfer or otherwise dispose of or reduce the affiliate's market risk
with respect to the shares of ONB Common Stock to be received by such person
pursuant to the Agreement (i) until such time as financial results covering at
least thirty (30) days of combined operations of FUSB and ONB have been
published within the meaning of Section 201.01 of the Commission's Codification
of Financial Reporting Policies and (ii) unless done pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 145 or
another exemption from the registration requirements under the Securities Act.
The certificates representing ONB Common Stock issued to FUSB affiliates in the
Affiliation may contain a legend indicating these resale restrictions.
This is only a general statement of certain restrictions regarding the sale or
transfer of the shares of ONB Common Stock to be issued in the Affiliation.
Therefore, those shareholders of FUSB who may be deemed to be affiliates of FUSB
should consult with their legal counsel regarding the resale restrictions that
may apply to them.
CONDITIONS TO CONSUMMATION
Consummation of the Affiliation is conditioned upon, among other items, (1)
approval of the Agreement by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of FUSB Common Stock, (2) receipt by ONB
and FUSB of all applicable regulatory approvals required for each step of the
Affiliation, (3) receipt of an Internal Revenue Service letter ruling or opinion
of counsel with respect to certain federal
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income tax matters, (4) the issuance by McDonald & Company of a written fairness
opinion stating that the terms of the Affiliation are fair to the shareholders
of FUSB from a financial point of view dated as of the date hereof and confirmed
as of the effective date, (5) receipt by ONB of certain undertakings from
affiliates of FUSB, (6) receipt by ONB and FUSB of certain officers'
certificates and legal opinions, (7) the accuracy at the effective date of the
Affiliation of representations and warranties contained in the Agreement, (8)
the fulfillment of certain covenants and mutual agreements set forth in the
Agreement and (9) the exercise of all stock options held by officers and
directors of FUSB prior to the effective date. While the three steps of the
Affiliation will consummate on the effective date, it is a condition of the
Affiliation imposed for tax purposes that the Asset Purchase and the Greenmark
Purchase consummate prior to the Merger. The conditions to consummation of the
Affiliation, which are more fully enumerated in the Agreement, are requirements
subject to unilateral waiver by the party entitled to the benefit of such
conditions, as set forth in the Agreement.
TERMINATION
The Agreement may be terminated before consummation of the Affiliation by
either ONB or FUSB (as set forth in the Agreement) if, among other reasons, (1)
there has been a misrepresentation or a breach of any representation or warranty
set forth in the Agreement by FUSB or ONB which has had or could be expected to
have a material adverse effect on the financial condition, results of
operations, business, prospects, assets or capitalization of FUSB or ONB, or in
the number of issued and outstanding shares of FUSB, (2) ONB or FUSB has
breached or failed to comply with any covenant or mutual agreement set forth in
the Agreement, (3) consummation of the Affiliation has become inadvisable or
impracticable due to the commencement or threat of any claim, litigation or
proceeding against ONB, FUSB, First Citizens or any subsidiary of ONB or of
FUSB, or any officer or director of either relating to the Agreement or which is
likely to have a material adverse effect on the financial condition, results of
operations, business, prospects, assets or capitalization of ONB or FUSB, each
on a consolidated basis, (4) there has been a material adverse change in the
financial condition, results of operations, business, prospects, assets or
capitalization of ONB or FUSB, each on a consolidated basis, as of the effective
date of the Affiliation as compared to that in existence as of June 30, 1994,
(5) ONB's accountants conclude that ONB cannot utilize the pooling-of-interests
method of accounting for the Affiliation, or (6) consummation of the Affiliation
has not occurred by January 31, 1996. Further, ONB may terminate the Affiliation
if it reasonably determines that a term or condition imposed by a regulatory
agency in connection with antitrust implications of the Asset Purchase would so
materially and adversely impact the anticipated financial condition or results
of operations of New FUSB or First Citizens on a consolidated basis with ONB as
to render consummation unacceptable or otherwise imprudent, or the Affiliation
is not able to be consummated because of governmental disapproval or a lawsuit
is filed to enjoin the Affiliation on antitrust grounds. At present, ONB does
not anticipate that the Asset Purchase will be subject to conditions to
consummation as a result of the antitrust implications. The parties may also
mutually agree to terminate the Affiliation. Upon termination for any of these
reasons, the Agreement will be of no further force or effect.
RESTRICTIONS AFFECTING FUSB
The Agreement contains a number of restrictions regarding the conduct of
business of FUSB pending consummation of the Affiliation. Among other items,
FUSB may not, without the prior written consent of ONB, (1) change its capital
stock accounts, (2) distribute or pay any dividends, except that FUSB may pay to
its shareholders its normal and customary quarterly cash dividend in amounts not
to exceed $0.12 per share; provided, however, that no dividend may be paid to
shareholders of FUSB during the quarter in which the Affiliation is consummated,
if, during such quarter, FUSB shareholders will become entitled to receive
dividends on their shares of ONB Common Stock received pursuant to the
Agreement, (3) amend its Charter or By-Laws, (4) carry on its business other
than substantially in the manner as conducted as of the date of
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the Agreement and in the ordinary course of business, or (5) negotiate or
discuss with third parties relative to a merger, combination or sale of FUSB,
except under certain limited circumstances.
REGULATORY APPROVALS
Each step of the Affiliation requires regulatory approvals in order to be
effective: the Asset Purchase and Greenmark Purchase require the approvals of
the OTS, Indiana Department of Financial Institutions and FDIC; while the Merger
requires the approvals of the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended and of the OTS. The
Asset Purchase involves antitrust considerations because First Citizens and FUSB
compete directly in Greencastle and Putnam County. ONB, however, does not
anticipate that the Asset Purchase will raise significant antitrust issues.
Approval of the Affiliation is not to be interpreted as the opinion of these
regulatory authorities that the Affiliation is favorable to the shareholders of
FUSB from a financial point of view or that those regulatory authorities have
considered the adequacy of the terms of the Affiliation. Regulatory approval in
no way constitutes an endorsement or a recommendation of the Affiliation by such
regulatory authorities.
ACCOUNTING TREATMENT FOR THE AFFILIATION
It is anticipated that the Affiliation will be accounted for as a "pooling-of-
interests" transaction and it is a condition precedent to ONB's obligation to
consummate the Affiliate that it be so treated. Under this method of
accounting, shareholders of ONB and shareholders of FUSB will be deemed to have
combined their existing voting common stock interests. See "SUMMARY OF SELECTED
FINANCIAL DATA" and "PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION."
EFFECTIVE DATE
The Affiliation will become effective at the close of business on the day
specified in certificates filed with the OTS, Indiana Department of Financial
Institutions and FDIC. The effective date will occur on the last business day
of the month during which occurs (1) the fulfillment of all conditions precedent
to the Affiliation set forth in the Agreement and (2) the expiration of all
waiting periods in connection with the regulatory applications filed for
approval of the Affiliation.
ONB and FUSB currently anticipate that the Affiliation will consummate during
the last calendar quarter of 1995.
MANAGEMENT, PERSONNEL AND OPERATIONS AFTER THE AFFILIATION
The Directors of FUSB elected at the Annual Meeting and serving at the
effective date of the Affiliation will continue as Directors of either New FUSB
or First Citizens. Following the effective date of the Affiliation, ONB, as the
sole shareholder of New FUSB and First Citizens, will have the ability to elect
the respective Boards of Directors; however, ONB has agreed that the former
Directors of FUSB will continue as Directors for at least three years following
the effective date of the Affiliation. The directors based in and around
Greencastle will serve as directors of First Citizens; those based in and around
Bloomington will serve as directors of New FUSB. William M. Marley, President
of FUSB, will serve as Vice Chairman of First Citizens. The remaining officers
of FUSB will continue in their respective positions after the effective date,
with geographic distribution between New FUSB's Bloomington operations and First
Citizens' Greencastle
-13-
<PAGE>
operations. The officers working in Greencastle and Danville at the effective
date will serve as officers of First Citizens; those working in Bloomington on
the effective date will serve as officers of New FUSB.
In general, employees of FUSB will receive benefits in accordance with
policies of ONB following the Affiliation. In particular, those persons who are
full-time officers or employees of FUSB as of the effective date of the
Affiliation, who continue as full-time officers or employees of First Citizens,
New FUSB or any other subsidiary of ONB after the effective date, will receive
substantially the same employee benefits on substantially the same terms and
conditions that ONB may offer to similarly situated officers and employees of
its banking subsidiaries from time to time, including participation in the ONB
Employees' Retirement Plan ("ONB Pension Plan") and the ONB Employees' Savings
and Profit Sharing Plan ("ONB Profit Sharing Plan"). In addition, years of
service of an employee of FUSB prior to the effective date of the Affiliation
will be credited to each such employee for purposes of eligibility under ONB's
employee welfare benefit plans and for purposes of eligibility and vesting, but
not for benefit accrual or contributions under the ONB Pension Plan and the ONB
Profit Sharing Plan.
Those officers and employees of FUSB who otherwise meet the eligibility
requirements of the ONB Profit Sharing Plan, based upon their age and years of
service for FUSB, will become participants thereunder as of the January 1st
which coincides with or next follows the effective date of the termination of
the employee stock ownership plan sponsored by FUSB. Those employees of FUSB
who otherwise meet the eligibility requirements of the ONB Pension Plan, based
upon their age and years of service, will become participants thereunder on the
January 1st which coincides with or next follows the effective date of the
termination of the defined benefit pension plan sponsored by FUSB. Those
officers and employees who do not meet the eligibility requirements of the ONB
Pension Plan or ONB Profit Sharing Plan on such dates will become participants
thereunder on the first "plan entry date" (as defined in the ONB Pension Plan or
the ONB Profit Sharing Plan, as the case may be), which coincides with or next
follows the date on which such eligibility requirements are satisfied.
Further, FUSB has agreed that prior to the effective date, it will amend each
Director Supplemental Benefit Plan Agreement for each director of FUSB who is
not in pay status as of such effective date to (1) increase the monthly
allocation due under of the agreement from $350 to $700 to be effective as of
the effective date of the Affiliation; (2) provide for the cessation of benefit
accruals under each agreement effective as of the end of the month which
coincides with or next follows the end of the three year period beginning at the
effective date of the Affiliation in addition to provisions for benefit accrual
cessation currently in the agreements; (3) eliminate the minimum monthly benefit
provisions; and (4) provide for a lump sum cash payment of the director's
account balance under the agreement payable within ten business days following
the earliest of the benefit cessation date or the date the director ceases to be
a director of an affiliate of ONB or the date the director attains age sixty-
five.
In addition, prior to the effective date of the Affiliation, FUSB will enter
into a Director Supplemental Benefit Plan Agreement with Alan G. Stanley to (1)
provide for a monthly allocation in the amount of $350 to be effective as of the
effective date of the Affiliation, such monthly allocations to be made for a
period ending as of the end of the month which coincides with or next follows
the end of the three year period beginning at the effective date of the
Affiliation; (2) provide for the cessation of benefit accruals under such
agreement effective as of the end of the month which coincides with or next
follows the end of the three year period beginning at such effective date of the
Affiliation; and (3) provide for a lump sum cash payment of the account balance
under the agreement payable within ten business days following the earliest of
the benefit cessation date or the date Mr. Stanley ceases to be a director of an
affiliate of ONB.
-14-
<PAGE>
ONB has also agreed not to reduce the monthly allocation under the Director
Supplemental Benefit Plan Agreements for the three year period beginning as of
the effective date of the Affiliation. During such three year period, ONB will
not make any other modifications to any of the foregoing agreements (whether or
not in pay status) without first receiving the written consent of the affected
individual, unless otherwise required by law.
The changes to the Director Supplemental Benefit Plans of FUSB discussed above
will enable the Directors of FUSB to receive approximately the same level of
director benefits (including director's fees) as they are presently receiving
from FUSB for three years following the Affiliation and do not represent an
increase in those benefits.
Upon consummation of the Affiliation, ONB will cause the Employee Supplemental
Benefit Plan Agreements entered into between FUSB and each of Rosa Ada Wood,
Donna L. Bouslog and William M. Marley, as amended, to be terminated; provided,
however, that within ten business days of the termination of such agreements,
ONB must make a lump sum cash payment to each such employee equal to the amount
accrued on the books and records of FUSB for the benefit of such employee on the
effective date of the Affiliation. FUSB has agreed to amend each of such
Employee Supplemental Benefit Plan Agreements, prior to the effective date of
the Affiliation, to provide for the cessation of benefit accruals under the
agreements as of such effective date and for the payment of benefits to be made
in a lump sum in the event the agreement is terminated. As of June 30, 1995, $-
---, $----, and $---- had been accrued under these plans for the benefit of Rosa
Ada Wood, Donna L. Bouslog and William M. Marley, respectively.
Further, ONB will cause New FUSB or First Citizens to assume FUSB's
obligations (1) to pay health insurance premiums under FUSB's health insurance
plan (or another comparable plan) for Mr. Jim Ross, a former employee of FUSB,
until he attains age sixty-two on September 8, 1995; (2) to pay him $586.85 per
month until his death (with payments guaranteed for not less than a ten year
period beginning January 1, 1991) as a supplement to his retirement benefit
under the defined benefit pension plan sponsored by FUSB to a level which he
would have received had he retired effective December 31, 1995; and (3) to pay
him $1,041.67 per month until December 31, 2000. This covenant is made on the
condition that the obligations of FUSB being assumed by ONB's affiliate bank
have been fully accrued for on the books and records of FUSB, subject only to an
interest expense with respect to such accrual of $300 per month.
In connection with effecting the changes from FUSB benefit plans to ONB plans,
FUSB's Retirement Plan and Employee Stock Ownership Plan will be terminated or
frozen as of December 31, 1995, and FUSB's Stock Option Plan will be terminated
as of the effective date of the Affiliation. Benefits under the FUSB Retirement
Plan will be left in trust and payable at the times and in the amounts provided
for under that Plan. Benefits under the FUSB ESOP will be distributed to
participants in a lump sum or by direct rollover to the ONB Profit Sharing Plan
(without any separate or segregated account for the transferred assets) or into
individual retirement accounts.
INTERESTS OF CERTAIN PERSONS IN THE AFFILIATION
FUSB and William M. Marley, its President, entered into an employment
agreement in 1986 which was renewed for one additional year on October 30, 1994.
The agreement was amended in connection with the Affiliation to provide that Mr.
Marley will serve as Vice Chairman following the Affiliation and to further
conform his rights to employee benefits to those provided by ONB. This
agreement currently terminates on March 27, 1998.
-15-
<PAGE>
ONB has agreed to assume certain obligations regarding retired officers and
Directors and has, further, agreed to fund the Directors' Supplemental Benefit
Plan Agreements in existence for Directors of FUSB at increased levels for three
years following the effective date, following which it will cease such funding.
In connection with the Affiliation, the Employee Supplemental Benefit Plans for
three FUSB employees, including William M. Marley, will be terminated and all
accrued benefits thereunder will be paid to those employees in a lump sum cash
payment within 10 days following consummation of the Affiliation. See
"Management, Personnel and Operations after the Affiliation."
Further, ONB has agreed to provide extended indemnification to the same extent
provided by FUSB at the effective date to directors or officers of New FUSB and
First Citizens who were directors and officers of FUSB or any subsidiaries
against any and all losses in connection with or arising out of any claim which
is based upon any actual or alleged act or omission occurring at or prior to the
effective date. Indemnification of employees and directors following the
effective date will be provided to the same extent it is provided to individuals
working in similar capacities for ONB or its subsidiaries. In addition, ONB has
agreed for a period of one year after the effective date to use all reasonable
efforts to cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by FUSB with respect to claims arising
from facts or events which occurred before the effective date of the
Affiliation. Following the effective date, ONB will provide FUSB employees who
become officers of ONB or any of its subsidiaries with the same directors' and
officers' liability insurance coverage that ONB provides to other similarly
situated directors and officers of ONB and its bank subsidiaries.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax aspects of the
Affiliation. This discussion does not purport to cover all federal income tax
consequences relating to the Affiliation and does not contain any information
with respect to state, local or other tax laws.
TAX RULING
ONB and FUSB have requested a private letter ruling from the Internal Revenue
Service ("Service") substantially to the effect that:
(1) The acquisition of FUSB stock by ONB Interim Savings Bank in exchange
solely for voting common stock of ONB and cash for fractional shares will
qualify as a reorganization within the meaning of Section 368(a)(1)(A)
and Section 368(a)(2)(E) of the Internal Revenue Code of 1986 (the
"Code"). ONB, the Interim Savings Bank and FUSB will each be a "party to
a reorganization" under Section 368(b) of the Code. The sale by FUSB of
the Greencastle branch in connection with the Asset Purchase will not
prevent the Affiliation from qualifying as a tax- free reorganization
under (a) the continuity of interest, (b) the continuity of business
enterprise or (c) the "substantially all" requirements applicable to tax-
free reorganizations of this type.
(2) The shareholders of FUSB will not recognize any gain or loss on the
exchange of their FUSB stock solely for ONB voting stock.
(3) The Interim Savings Bank will not recognize any gain or loss on its
receipt of FUSB stock in exchange solely for ONB stock.
-16-
<PAGE>
(4) Each FUSB shareholder's basis in the ONB stock received in the exchange
will equal the basis of the FUSB stock surrendered therefor.
(5) Each FUSB shareholder's holding period for the ONB stock received in the
exchange will include the holding period of the FUSB stock surrendered
therefor, provided the FUSB stock was held as a capital asset on the date
of the exchange.
The Service may refuse to rule on all or certain aspects of the private letter
ruling request. Generally, the Service has taken the position that the Service
will not rule on the tax treatment of a reorganization, even if it is an
integral part of a larger transaction that involves other issues upon which the
Service will rule and it is impossible to determine the tax consequences of the
larger transaction without determining the tax consequences of the
reorganization. However, the Service has the discretion to rule on significant
subissues that must be resolved to determine whether the transaction qualifies
under Code Section 368(a)(1)(A) (including transactions qualifying by reason of
Code Section 368(a)(2)(E)).
The ruling issued by the Internal Revenue Service will be based upon the
assumption of certain facts to be stated in the opinion. Under the Agreement,
the obligations of each of ONB and FUSB to consummate the Affiliation is
conditioned upon the receipt of a tax ruling or a tax opinion from Krieg DeVault
Alexander & Capehart substantially to the effect as set forth above. In the
event that the Service refuses to rule on the tax-free nature of the
Affiliation, the Boards of Directors of ONB and FUSB have indicated that they
will rely on opinion of counsel to the same effect.
TAX CONSEQUENCES TO ONB AND FUSB
ONB will acquire the stock of FUSB in exchange for ONB Common Stock.
Consequently, based upon the assumption of certain facts to be stated in the
ruling, the merger of FUSB with ONB should constitute a tax-free reorganization.
TAX CONSEQUENCES TO FUSB SHAREHOLDERS
A FUSB shareholder who receives solely ONB Common Stock in exchange for all of
the shares of FUSB Common Stock actually owned by the shareholder will not
recognize any gain or loss upon such exchange for federal income tax purposes.
See the following paragraph for a discussion of the tax consequences of the
receipt of cash in lieu of fractional share interests of ONB Common Stock.
A FUSB shareholder who receives cash in lieu of a fractional share interest of
ONB Common Stock will be treated as having received such fraction of a share of
ONB Common Stock and then as having received cash in redemption of the
fractional share interest, under the provisions of Sections 302(a) and 302(b)(1)
of the Code.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON THE FEDERAL INTERNAL REVENUE CODE AS IN
EFFECT ON THE DATE OF THIS PROXY STATEMENT WITHOUT CONSIDERATION OF ANY STATE
LAWS OR THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY FUSB SHAREHOLDER. THE
ABOVE DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES ACQUIRED PURSUANT
TO THE EXERCISE OF STOCK OPTIONS OR OTHERWISE RECEIVED AS COMPENSATION.
SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISOR WITH RESPECT TO ALL TAX
CONSEQUENCES OF THE
-17-
<PAGE>
AFFILIATION TO THEM, INCLUDING THE EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS
AND ANY OTHER TAX CONSEQUENCES.
COMPARATIVE PER SHARE DATA
NATURE OF TRADING MARKET
Shares of ONB Common Stock are traded in the over-the-counter market and share
prices are reported by the NASDAQ National Market System under the symbol OLDB.
On September 29, 1994, the business day immediately preceding the public
announcement of the Affiliation, the closing price of ONB Common Stock reported
by the NASDAQ National Market System was $35.25 per share. Both of these per
share prices of ONB Common Stock reflect the 5% stock dividend issued by ONB on
February 10, 1995. The following table sets forth, for the periods indicated,
the high and low per share closing prices of ONB Common Stock as reported by the
NASDAQ National Market System. The prices shown below have been adjusted for
all stock splits and stock dividends paid by ONB.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1992
----
First Quarter $26-5/8 $24-3/4
Second Quarter 26-3/8 25-3/8
Third Quarter 27-5/8 25-3/4
Fourth Quarter 28-1/8 26-5/8
1993
----
First Quarter $30-3/8 $27-5/8
Second Quarter 31-1/2 29-5/8
Third Quarter 33-5/8 30-7/8
Fourth Quarter 36-1/8 33-1/4
1994
----
First Quarter $35-7/8 $34-1/2
Second Quarter 34-3/4 34-1/4
Third Quarter 35-1/2 34-1/4
Fourth Quarter 35-1/4 34-3/4
1995
----
First Quarter $35-1/4 $34-1/2
Second Quarter $34-3/4 $34
</TABLE>
Shares of FUSB Common Stock are traded in the over-the-market and share prices
are reported by NASDAQ under the symbol FUSB. On July 24, 1994, the business
day prior to FUSB retaining McDonald &
-18-
<PAGE>
Company, the high and low bid prices of FUSB Common Stock were each $21.25. On
September 29, 1994, the business day immediately preceding the public
announcement of the Affiliation, the high and low bid prices of FUSB Common
Stock reported by NASDAQ were each $20.50. On ---------------, 1995, the high
and low bid prices of FUSB Common Stock reported by NASDAQ were $------ and $---
------ per share.
The following table sets forth, for the periods indicated, the high and low
per share bid prices of FUSB Common Stock as reported by NASDAQ, adjusted for
all stock splits and stock dividends.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 HIGH LOW
------------------ ------ ------
<S> <C> <C>
1993
----
First Quarter $13.50 $11.25
Second Quarter 13.25 13.25
Third Quarter 13.75 13.25
Fourth Quarter 14.75 13.50
1994
----
First Quarter $15.75 $14.75
Second Quarter 16.00 14.50
Third Quarter 14.50 13.75
Fourth Quarter 20.25 14.00
1995
----
First Quarter $27.50 $26.75
Second Quarter 26.75 26.75
Third Quarter
Fourth Quarter
</TABLE>
DIVIDENDS
The following table sets forth the per share cash dividends paid on shares of
ONB Common Stock and shares of FUSB Common Stock since July 1, 1992. All
dividends have been adjusted to give effect to their respective stock dividends
and stock splits (if any).
-19-
<PAGE>
<TABLE>
<CAPTION>
ONB COMMON STOCK (1) FUSB COMMON STOCK (2)
-------------------- ---------------------
<S> <C> <C>
YEAR ENDED DECEMBER 31
----------------------
1993
----
First Quarter $.19 $-0-
Second Quarter .19 .20
Third Quarter .19 -0-
Fourth Quarter .19 -0-
1994
----
First Quarter $.22 .12
Second Quarter .22 .12
Third Quarter .22 -0-
Fourth Quarter .22 -0-
1995
----
First Quarter $.23 -0-
Second Quarter .23 -0-
Third Quarter
Fourth Quarter
</TABLE>
(1) There can be no assurance as to the amount of future dividends that may be
declared or paid on shares of ONB Common Stock since dividend policies are
subject to the discretion of the Board of Directors of ONB, general
business conditions and dividends paid to ONB by its affiliate banks. For
certain restrictions on the payment of dividends on shares of ONB Common
Stock, see "COMPARISON OF COMMON STOCK -- Dividend Rights."
(2) The Agreement provides that FUSB shareholders will not receive in any
quarter in which the proposed Affiliation is consummated a cash dividend
from both FUSB and ONB.
EXISTING AND PRO FORMA PER SHARE INFORMATION
The following table sets forth certain historical, pro forma and equivalent
information, giving effect to the pending affiliations with City National and
Shawnee Bancorp. The data is based on historical financial statements and the
pro forma financial information included on pages 23 through 29 and has been
restated to give effect to all stock dividends, including the 5% stock dividend
issued by ONB on February 10, 1995. Equivalent per share data is calculated by
multiplying the pro forma ONB information by the Exchange Ratio under the
Agreement.
-20-
<PAGE>
<TABLE>
<CAPTION>
As Reported
------------------------------------------
Net Income Cash Book Value at
ONB (Loss) Dividends Period End
----------------------- ---------- --------- -------------
<S> <C> <C> <C>
Six Months Ended
June 30, 1995 $ 1.05 $0.46 $17.24
Year Ended December 31,
1994 2.03 0.88 16.76
1993 1.95 0.76 16.18
1992 1.88 0.72 15.00
FUSB
-----------------------
Six Months Ended
June 30, 1995 $ 0.14 -0- $16.93
Year Ended December 31,
1994 (3.41) 0.24 14.08
1993 1.11 0.20 20.82
1992 0.15 0.20 20.08
</TABLE>
<TABLE>
<CAPTION>
Net Income
--------------------------------------------------------------
ONB FUSB ONB FUSB
Pro Forma(1) Equivalent(1) Pro Forma(2) Equivalent(2)
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Six Months Ended
June 30, 1995 $1.03 $0.92 $1.03 $0.92
Year Ended December 31,
1994 1.90 1.70 1.90 1.70
1993 1.94 1.73 1.93 1.72
1992 1.85 1.65 1.84 1.64
</TABLE>
<TABLE>
<CAPTION>
Cash Dividends
--------------------------------------------------------------
ONB FUSB ONB FUSB
Pro Forma(1) Equivalent(1) Pro Forma(2) Equivalent(2)
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Six Months Ended
June 30, 1995 $0.46 $0.41 $0.46 $0.41
Year Ended December 31,
1994 0.88 0.79 0.88 0.79
1993 0.76 0.68 0.76 0.68
1992 0.72 0.64 0.72 0.64
</TABLE>
-21-
<PAGE>
EXISTING AND PRO FORMA PER SHARE INFORMATION - (Continued)
<TABLE>
<CAPTION>
Shareholders' Equity
-----------------------------------------------------------
ONB FUSB ONB FUSB
Pro Forma(1) Equivalent(1) Pro Forma(2) Equivalent(2)
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
As of June 30, 1995 $17.25 $15.40 $17.20 $15.35
As of December 31, 1994 16.71 14.91 16.61 14.82
</TABLE>
<TABLE>
<CAPTION>
Market Value of Common Stock
-----------------------------------------
FUSB
------------------------
ONB Historical Equivalent
----- ---------- ----------
<S> <C> <C> <C>
As of September 29, 1994 (3) $35.25 $20.50 $31.46
</TABLE>
(1) Considers the pending merger with FUSB. See "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION".
(2) Considers the pending merger with FUSB, as well as the pending mergers with
City National and Shawnee Bancorp. See "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION".
(3) Represents the last business day prior to the public announcement of the
proposed merger with FUSB.
-22-
<PAGE>
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The accompanying financial statements present a Pro Forma Condensed
Combined Balance Sheet of ONB as of June 30, 1995 and Pro Forma Condensed
Combined Statements of Income for the six months ended June 30, 1995 and for
the years ended December 31, 1994, 1993, and 1992.
The Pro Forma Condensed Combined Balance Sheet as of June 30, 1995 is
presented giving effect to the mergers pending as of June 30, 1995 with Shawnee
Bancorp and City National and the consummated affiliation with Citizens National
Bank Corporation and Oblong Bancshares, Inc which occurred in 1995. The Pro
Forma Condensed Combined Statements of Income for the six months ended June 30,
1995 and the years ended December 31, 1994, 1993, and 1992 are presented giving
effect to each of these pending mergers as of January 1 of each of the years
presented.
The pro forma information is based upon historical financial
statements. The assumptions give effect to the proposed mergers under the
pooling-of-interests method of accounting. The information has been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission and is provided for comparative purposes only. The information does
not purport to be indicative of the results that actually would have occurred
had the mergers been effected on January 1 of the years presented.
-23-
<PAGE>
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1995
(Unaudited - Dollars in Thousands)
<TABLE>
<CAPTION>
CITY SHAWNEE
ASSETS ONB FUSB ADJUSTMENTS PRO FORMA NATIONAL BANCORP ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------- -------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks.... $ 179,590 $ 879 $ 180,469 $ 2,507 $ 1,270 $ 184,246
Money market investments... 5,324 5,614 10,938 3,150 14,088
Investment securities...... 1,318,535 5,327 1,323,862 54,711 13,413 1,391,986
Loans...................... 2,811,216 122,457 2,933,673 39,559 13,432 2,986,664
Reserve for loan losses.... (40,953) (863) (41,816) (505) (235) (42,556)
Excess cost over assets
acquired.................. 12,954 287 13,241 312 206 13,759
Other intangibles.......... 1,175 1,175 0 1,175
Premises and equipment..... 65,037 1,514 66,551 1,073 716 68,340
Other assets............... 77,116 6,825 83,941 2,662 469 87,072
---------- -------- ----------- ---------- -------- ------- ----------- ----------
$4,429,994 $142,040 $ 0 $4,572,034 $103,469 $29,271 $0 $4,704,774
========== ======== =========== ========== ======== ======= =========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits................... $3,595,004 $112,343 $3,707,347 $ 88,335 $24,082 $3,819,764
Medium term notes.......... 32,000 0 32,000 0 0 32,000
Subordinated debentures.... 31,545 0 31,545 0 0 31,545
Other borrowings........... 332,114 19,000 351,114 5,616 2,795 359,525
Other liabilities.......... 44,814 1,456 46,270 789 360 47,419
---------- -------- ----------- ---------- -------- ------- ----------- ----------
Total Liabilities..... 4,035,477 132,799 0 4,168,276 94,740 27,237 0 4,290,253
---------- -------- ----------- ---------- -------- ------- ----------- ----------
Common stock............... 22,890 6 514(a) 23,410 360 59 270(b)(c) 24,099
Capital surplus............ 209,631 4,956 (514)(a) 214,073 1,140 1,357 (270)(b)(c) 216,300
Retained earnings.......... 160,778 4,279 165,057 7,403 614 173,074
Net unrealized loss........ 1,218 1,218 (174) 4 1,048
---------- -------- ----------- ---------- -------- ------- ----------- ----------
Total shareholders'
equity........... 394,517 9,241 0 403,758 8,729 2,034 0 414,521
---------- -------- ----------- ---------- -------- ------- ----------- ----------
$4,429,994 $142,040 $ 0 $4,572,034 $103,469 $29,271 $0 $4,704,774
========== ======== =========== ========== ======== ======= =========== ==========
Outstanding common shares.. 22,890,065 23,409,678 24,099,478
========== ========== ==========
Shareholders' equity per
share..................... 17.24 17.25 17.20
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
-24-
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(Unaudited -- Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
----------------------- -------------------
CITY SHAWNEE
ONB FUSB PRO FORMA NATIONAL BANCORP PRO FORMA
-------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income................ $162,966 $ 5,095 $168,061 $3,687 $1,859 $172,837
Interest expense............... 77,768 3,166 80,934 2,068 549 83,551
-------- ------- -------- ------ ------ --------
Net interest income............ 85,198 1,929 87,127 1,619 540 89,286
Provision for loan losses...... 2,183 186 2,369 30 (2) 2,397
-------- ------- -------- ------ ------ --------
Net interest income after
provision for loan losses.... 83,015 1,743 84,758 1,589 542 86,889
Noninterest income............. 18,869 355 19,224 221 56 19,501
Noninterest expense............ 68,247 1,933 70,180 1,180 498 71,858
-------- ------- -------- ------ ------ --------
Income (loss) before income
taxes........................ 33,637 165 33,802 630 100 34,532
Provision for income taxes..... 9,323 53 9,376 129 38 9,543
-------- ------- -------- ------ ------ --------
Net income (loss).............. $ 24,314 $ 112 $ 24,426 $ 501 $ 62 $ 24,989
======== ======= ======== ====== ====== ========
Net income per common share: (d)
Assuming no dilution...... $1.05 $1.03 $1.03
===== ===== =====
Assuming full dilution.... $1.02 $1.01 $1.00
===== ===== =====
Weighted average common shares
outstanding: (d)
Assuming no dilution...... 23,140,212 23,659,825 24,349,622
========== ========== ==========
Assuming full dilution.... 24,481,411 25,001,024 25,690,821
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited -- Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
----------------------- -------------------
CITY SHAWNEE
ONB FUSB PRO FORMA NATIONAL BANCORP PRO FORMA
-------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income................ $295,946 $ 8,646 $304,592 $6,193 $1,859 $312,644
Interest expense............... 126,109 5,266 131,375 3,083 874 135,332
-------- ------- -------- ------ ------ --------
Net interest income............ 169,837 3,380 173,217 3,110 985 177,312
Provision for loan losses...... 6,241 619 6,860 60 2 6,922
-------- ------- -------- ------ ------ --------
Net interest income after
provision for loan losses.... 163,596 2,761 166,357 3,050 983 170,390
Noninterest income............. 33,656 524 34,180 386 177 34,743
Noninterest expense............ 134,774 6,505 141,279 2,126 853 144,258
-------- ------- -------- ------ ------ --------
Income (loss) before income
taxes........................ 62,478 (3,220) 59,258 1,310 307 60,875
Provision for income taxes..... 14,500 (1,138) 13,362 255 67 13,684
-------- ------- -------- ------ ------ --------
Net income (loss).............. $ 47,978 $(2,082) $ 45,896 $1,055 $ 240 $ 47,191
======== ======= ======== ====== ====== ========
Net income per common share: (d)
Assuming no dilution...... $2.03 $1.90 $1.90
===== ===== =====
Assuming full dilution.... $1.98 $1.86 $1.86
===== ===== =====
Weighted average common shares
outstanding: (d)
Assuming no dilution...... 23,595,468 24,115,081 24,804,878
========== ========== ==========
Assuming full dilution.... 25,213,197 25,732,810 26,422,607
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
-26-
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(Unaudited -- Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
----------------------- -------------------
CITY SHAWNEE
ONB FUSB PRO FORMA NATIONAL BANCORP PRO FORMA
-------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income................ $291,077 $9,045 $300,122 $5,900 $1,779 $307,801
Interest expense............... 124,958 5,841 130,799 2,841 844 134,484
-------- ------ -------- ------ ------ --------
Net interest income............ 166,119 3,204 169,323 3,059 935 173,317
Provision for loan losses...... 9,989 106 10,095 100 (6) 10,189
-------- ------ -------- ------ ------ --------
Net interest income after
provision for loan losses.... 156,130 3,098 159,228 2,959 941 163,128
Noninterest income............. 32,451 640 33,091 325 183 33,599
Noninterest expense............ 125,525 2,813 128,338 1,924 835 131,097
-------- ------ -------- ------ ------ --------
Income (loss) before income
taxes........................ 63,056 925 63,981 1,360 289 65,630
Provision for income taxes..... 16,883 329 17,212 316 71 17,599
-------- ------ -------- ------ ------ --------
Net income (loss).............. $ 46,173 $ 596 $ 46,769 $1,044 $ 218 $ 48,031
======== ====== ======== ====== ====== ========
Net income per common share: (d)
Assuming no dilution...... $1.95 $1.94 $1.93
===== ===== =====
Assuming full dilution.... $1.90 $1.88 $1.88
===== ===== =====
Weighted average common shares
outstanding: (d).............
Assuming no dilution...... 23,632,680 24,152,293 24,842,090
========== ========== ==========
Assuming full dilution.... 25,335,954 25,855,567 26,545,364
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
-27-
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
(Unaudited -- Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
----------------------- -------------------
CITY SHAWNEE
ONB FUSB PRO FORMA NATIONAL BANCORP PRO FORMA
-------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income................ $304,695 $9,712 $314,407 $6,231 $1,839 $322,477
Interest expense............... 144,908 6,785 151,693 3,364 999 156,056
-------- ------ -------- ------ ------ --------
Net interest income............ 159,787 2,927 162,714 2,867 840 166,421
Provision for loan losses...... 11,731 93 11,824 60 (44) 11,840
-------- ------ -------- ------ ------ --------
Net interest income after
provision for loan losses.... 148,056 2,834 150,890 2,807 884 154,581
Noninterest income............. 28,082 598 28,680 293 179 29,152
Noninterest expense............ 113,548 3,473 117,021 1,768 858 119,647
-------- ------ -------- ------ ------ --------
Income (loss) before income
taxes........................ 62,590 (41) 62,549 1,332 205 64,086
Provision for income taxes..... 17,853 (127) 17,726 324 61 18,111
-------- ------ -------- ------ ------ --------
Net income (loss).............. $ 44,737 $ 86 $ 44,823 $1,008 $ 144 $ 45,975
======== ====== ======== ====== ====== ========
Net income per common share: (d)
Assuming no dilution...... $1.88 $1.85 $1.84
===== ===== =====
Assuming full dilution.... $1.82 $1.79 $1.79
===== ===== =====
Weighted average common shares
outstanding: (d)
Assuming no dilution...... 23,772,874 24,292,487 24,982,284
========== ========== ==========
Assuming full dilution.... 25,781,590 26,301,203 26,991,000
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
OLD NATIONAL BANCORP
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) Exchange of 100% of FUSB for 519,613 shares of ONB Common Stock.
(b) Exchange of 100% of City National common stock for 551,597 shares of ONB
Common Stock.
(c) Exchange of 100% of Shawnee Bancorp common stock for 138,200 shares of ONB
Common Stock.
(d) All share and per share information has been restated for the 5% stock
dividend issued by ONB on February 10, 1995. Net income per share on a
fully diluted basis assumes the conversion of ONB's convertible
subordinated debentures.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE>
DESCRIPTION OF ONB
BUSINESS
ONB is a multi-bank holding company with 23 affiliate banks located in the
tri-state area comprised of southwestern Indiana and neighboring portions of
Illinois and Kentucky. With total consolidated assets of $4.4 billion as of
June 30, 1995, ONB is the largest independent bank holding company headquartered
in the State of Indiana. Since 1985, ONB has acquired 31 financial
institutions, 9 of which were combined with existing affiliate banks, and has
increased its banking offices to 112.
The principal activity of ONB is to own, manage and supervise its
affiliate banks and its non-bank subsidiaries, each of which is held by ONB as a
separate wholly-owned subsidiary. The primary sources of ONB's revenues are
dividends and fees received from its subsidiaries. There are various legal
limitations on the extent to which the affiliate banks may finance, pay
dividends to or otherwise supply funds to ONB. See "REGULATORY CONSIDERATIONS."
ONB's affiliate banks engage in a wide range of commercial and consumer
banking activities and provide other services relating to the general banking
business. Set forth below is a list of ONB's affiliate banks by state.
<TABLE>
<CAPTION>
Illinois Indiana Kentucky
-------- ------- --------
<S> <C> <C>
.First National Bank .Bank of Western Indiana .Farmers Bank & Trust
(Oblong) (Covington) Company (Henderson)
.Palmer-American National .Citizens National Bank (Tell City) .Farmers Bank & Trust
Bank (Danville) .Clinton State Bank (Clinton) Company (Madisonville)
.Peoples National Bank .Dubois County Bank (Jasper) .First State Bank (Greenville)
(Lawrenceville) .First Citizens Bank & Trust .Morganfield National Bank
.Security Bank & Trust Company (Greencastle)
Company (Mt. Carmel) .Gibson County Bank (Princeton)
.First National Bank .Indiana State Bank (Terre Haute)
(Harrisburg) .Merchants National Bank
(Terre Haute)
.Old National Bank (Evansville)
.Orange County Bank (Paoli)
.People's Bank & Trust Company
(Mt. Vernon)
.Rockville National Bank
(Rockville)
.Security Bank & Trust Company
(Vincennes)
.United Southwest Bank
(Washington)
</TABLE>
In addition to these affiliate banks, ONB has three non-bank affiliates.
Indiana Old National Insurance Company reinsures credit life, accident and
health insurance of installment consumer borrowers of ONB's affiliate banks; Old
National Realty Company, Inc. owns real properties which are incidental to ONB's
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<PAGE>
operations; and Old National Service Corporation provides data processing
services to ONB's affiliate banks and to third parties. ONB Investment
Services, Inc., a subsidiary of Old National Bank in Evansville and a registered
broker/dealer, provides brokerage services to a number of affiliate bank
customers.
ACQUISITION POLICY AND PENDING AFFILIATIONS
ONB anticipates that it will continue its policy of geographic expansion
through consideration of acquisitions of financial institutions located in
Indiana, Kentucky and Illinois. Management of ONB currently is reviewing and
analyzing potential acquisitions, as well as engaging in discussions or
negotiations preliminary to letters of intent or agreements in principle
concerning potential acquisitions. There can be no assurance that any of these
discussions or negotiations will result in definitive agreements or consummated
transactions.
As of the date of this Proxy Statement, ONB is a party to definitive
agreements to acquire (1) City National Bank, Fulton, Kentucky, and (2) Shawnee
Bancorp Inc., Harrisburg, Illinois. In connection with the acquisition of
Shawnee Bancorp's wholly-owned subsidiary, The Bank of Harrisburg, Harrisburg,
Illinois, will merge with The First National Bank of Harrisburg, a wholly-owned
bank subsidiary of ONB.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning ONB does not purport to be complete. For
additional information, see the documents filed by ONB and listed under
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" in this Proxy Statement which
are specifically incorporated herein by reference.
DESCRIPTION OF FUSB
BUSINESS
FUSB is a federally-chartered, SAIF insured stock savings bank headquartered
in Greencastle, Indiana. In 1986, FUSB converted from a federally-chartered
mutual association to a federally-chartered stock savings bank through the
issuance of common stock. In 1988, it acquired Fountain Federal Savings Bank of
Bloomington, Indiana and further expanded its market area in 1994 by opening a
loan production office in the Avon area of Danville, Indiana. Currently, FUSB
conducts its business from one office in Greencastle, Indiana, two full service
branches in Bloomington, Indiana, and its loan production office in Danville,
Indiana. It owns two subsidiaries: Greenmark which currently operates as a
property, casualty, life and crop insurance agency and Kirkwood Corporation
which is currently non-operating.
The principal business of FUSB has always been to accept deposits from the
general public and invest those deposits, together with funds from earnings and
borrowings, primarily in first mortgage loans secured by one to four family
residential properties and, to a lesser extent, in multi-family residential and
consumer loans.
-31-
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning FUSB does not purport to be complete.
For additional information, see the documents filed by FUSB and listed under
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" in this Proxy Statement which
are specifically incorporated herein by reference.
REGULATORY CONSIDERATIONS
REGULATION OF ONB AND AFFILIATES
ONB Regulation. ONB is registered as a bank holding company and is subject
to the regulations of the Board of Governors of the Federal Reserve System
("Federal Reserve") under the Bank Holding Company Act of 1956, as amended
("BHC Act"). Bank holding companies are required to file periodic reports with
and are subject to periodic examination by the Federal Reserve. The Federal
Reserve has issued regulations under the BHC Act requiring a bank holding
company to serve as a source of financial and managerial strength to its
subsidiary banks. It is the policy of the Federal Reserve that, pursuant to
this requirement, a bank holding company should stand ready to use its
resources to provide adequate capital funds to its subsidiary banks during
periods of financial stress or adversity. Additionally, under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a bank
holding company is required to guarantee the compliance of any insured
depository institution subsidiary that may become "undercapitalized" (as
defined in the statute) with the terms of any capital restoration plan filed by
such subsidiary with its appropriate federal banking agency up to the lesser of
(i) an amount equal to 5% of the institution's total assets at the time the
institution became undercapitalized, or (ii) the amount that is necessary (or
would have been necessary) to bring the institution into compliance with all
applicable capital standards as of the time the institution fails to comply
with such capital restoration plan. Under the BHC Act, the Federal Reserve has
the authority to require a bank holding company to terminate any activity or
relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of
a bank) upon the Federal Reserve's determination that such activity or control
constitutes a serious risk to the financial soundness and stability of any bank
subsidiary of the bank holding company.
ONB and its affiliate banks are subject to the Federal Reserve Act, which
restricts financial transactions between banks and affiliated companies. The
statute limits credit transactions between a depository institution and its
executive officers and its affiliates, prescribes terms and conditions for
affiliate transactions deemed to be consistent with safe and sound banking
practice, and restricts the types of collateral security permitted in
connection with an institution's extension of credit to an affiliate.
Affiliate Regulation. The affiliate banks of ONB which are national banks
are supervised, regulated and examined by the OCC. The affiliate banks of ONB,
including First Citizens, which are state banks chartered in Indiana, are
supervised, regulated and examined by the Indiana Department of Financial
Institutions. ONB's affiliate banks chartered in Kentucky are supervised,
regulated and examined by the Kentucky Commissioner of Financial Institutions
and those affiliate banks chartered in Illinois are supervised, regulated and
examined by the Illinois Commissioner of Banks and Trust Companies. In
addition, those ONB affiliate banks which are state banks and members of the
Federal Reserve are supervised and regulated by the Federal Reserve and those
which are not members of the Federal Reserve, including First Citizens, are
supervised and regulated by the FDIC. Each regulator has the authority to
issue cease-and-desist orders if it determines that activities of the bank
regularly represent an unsafe and unsound banking practice or a violation of
law.
-32-
<PAGE>
Both federal and state law extensively regulate various aspects of the
banking business such as reserve requirements, truth-in-lending and truth-in-
savings disclosure, equal credit opportunity, fair credit reporting, trading in
securities and other aspects of banking operations. Current federal law also
requires banks, among other things to make deposited funds available within
specified time periods.
Each affiliate of ONB has the power to engage in the business of banking as
provided by the law of its incorporation. These laws differ from state to
state and from federal law to state law. However, insured state-chartered
banks are prohibited under FDICIA from engaging as principal in activities that
are not permitted for national banks under federal law, unless (i) the FDIC
determines that the activity would pose no significant risk to the appropriate
deposit insurance fund, and (ii) the bank is, and continues to be, in
compliance with all applicable capital standards.
REGULATION OF FUSB
General. As a SAIF-insured savings association, FUSB is subject to
supervision and regulation by the Director of the OTS, as will be New FUSB
following the Affiliation. Under the OTS regulations, FUSB is required to
obtain audits by independent auditors and to be examined periodically by the
Director of the OTS. FUSB is subject to assessments by the OTS and the FDIC to
cover the costs of such examinations. The Director of the OTS also is
authorized to promulgate regulations to ensure the safe and sound operations of
savings associations and may impose various requirements and restrictions on
the activities of savings associations.
The activities of savings associations are governed by the Home Owners' Loan
Act of 1933 ("HOLA") and, in certain respects, the Federal Deposit Insurance
Act, as amended ("FDI Act").
Qualified Thrift Lender Requirement. In order for FUSB to exercise the
powers granted to federally-chartered savings associations and maintain full
access to Federal Home Loan Bank advances, it must be a "qualified thrift
lender" ("QTL"). A savings institution is a QTL if its qualified thrift
investments continue to equal or exceed 65% of the savings institution's
portfolio assets on a monthly average basis in 9 out of 12 months. Qualified
thrift investments generally consist of (i) various housing related loans and
investments (such as residential construction and mortgage loans, home
improvement loans, manufactured housing loans, home equity loans and mortgage-
backed securities), (ii) certain obligations of the FSLIC, the FDIC, the FSLIC
Resolution Fund and the Resolution Trust Corporation (for limited periods), and
(iii) shares of stock issued by any Federal Home Loan Bank, the Federal Home
Loan Mortgage Corporation or the Federal National Mortgage Association.
Liquidity. Under applicable federal regulations, savings associations are
required to maintain an average daily balance of liquid assets (including cash,
certain time deposits, certain banker's acceptances, certain corporate debt
securities and highly rated commercial paper, securities of certain mutual
funds and specified United States government, state or federal agency
obligations) of not less than 5% of the average daily balance of the savings
association's net withdrawable deposits plus short-term borrowing during the
preceding calendar month. Under HOLA, this liquidity requirement may be
changed from time to time by the Director of the OTS to any amount within the
range of four percent to ten percent, depending upon economic conditions and
the deposit flows of member institutions. A savings institution is also
required to maintain an average daily balance of short-term liquid assets of
not less than 1% of the average daily balance of its net withdrawable deposits
and short-term borrowing during the preceding calendar month. At June 30, 1995,
FUSB was in compliance with these liquidity requirements.
-33-
<PAGE>
Loans-to-One-Borrower Limitations. HOLA generally requires savings
associations to comply with the loans-to-one-borrower limitations applicable to
national banks. In general, national banks may make loans to one borrower in
amounts up to 15% of the bank's unimpaired capital and surplus, plus an
additional 10% of capital and surplus for loans secured by readily marketable
collateral. At June 30, 1995, FUSB's loan-to-one-borrower limitation was
approximately $1.5 million. Under certain OTS regulations, a savings
institution may make loans to one borrower for residential housing developments
in amounts up to 30% of the bank's unimpaired capital and surplus upon prior
notice to and approval of the OTS and provided that all loans made in reliance
upon the increased lending limit do not, in the aggregate, exceed 150% of the
bank's unimpaired capital and surplus. At June 30, 1995, FUSB had one loan
made under this higher lending limit and one loan which was in excess of the
15% lending limit, but had been grandfathered.
Commercial Real Property Loans. HOLA limits the aggregate amount of
commercial real estate loans that a federal savings institution may make to an
amount not in excess of 400% of the savings institution's capital.
FUSB's Subsidiaries. The OTS regulations permit federal savings associations
to invest in the capital stock, obligations or specified types of securities of
subsidiaries (referred to as "service corporations") and to make loans to such
subsidiaries and joint ventures in which such subsidiaries are participants in
an aggregate amount not exceeding three percent of an institution's assets,
provided any investment over two percent is used for specified community or
inner-city development purposes. In addition, federal regulations permit
institutions to make specified types of loans to such subsidiaries, in which
the institution owns more than ten percent of the stock, in an aggregate amount
not exceeding 50% of the institution's regulatory capital if the institution's
investment is in compliance with applicable loans-to-one-borrower regulations.
A savings institution which acquires a non-savings institution subsidiary, or
which elects to conduct a new activity within a subsidiary, must give the FDIC
and the OTS at least 30 days' advance written notice. The FDIC may, after
consultation with the OTS, prohibit specific activities if it determines such
activities pose a serious threat to SAIF. FUSB has two such subsidiaries,
Greenmark and Kirkwood Corporation.
Branching. The rules of the OTS on branching by federally-chartered savings
associations permit nationwide branching to the extent allowed by federal
statute. This permits federal savings associations with inter-state networks
to diversify their loan portfolio and lines of business. The OTS authority
pre-empts any state law purporting to regulate branching by federal savings
associations.
CAPITAL ADEQUACY GUIDELINES
Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines which require a minimum ratio of total capital to
risk-weighted assets (including certain off-balance sheet activities such as
standby letters of credit) of 8%. At least half of the total required capital
must be "Tier 1 capital," consisting principally of common shareholders'
equity, noncumulative perpetual preferred stock, a limited amount of cumulative
perpetual preferred stock and minority interest in the equity accounts of
consolidated subsidiaries, less certain goodwill items. The remainder ("Tier 2
capital") may consist of a limited amount of subordinated debt and
intermediate-term preferred stock, certain hybrid capital instruments and other
debt securities, cumulative perpetual preferred stock, and a limited amount of
the general loan loss allowance. In addition to the risk-based capital
guidelines, the Federal Reserve has adopted a Tier 1 (leverage) capital ratio
under which the bank holding company must maintain a minimum level of Tier 1
capital to average total consolidated assets of 3% in the case of bank holding
companies which have the highest regulatory examination ratings and are not
contemplating significant growth or
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<PAGE>
expansion. All other bank holding companies are expected to maintain a ratio
of at least 1% to 2% above the stated minimum.
The following are ONB's regulatory capital ratios as of June 30, 1995:
Tier 1 Capital: 13.49%
Total Capital: 15.79%
Leverage Ratio: 8.6%
Depository institution affiliates of ONB and FUSB are required to meet
similar capital adequacy ratios. The FDIC, OCC and OTS have adopted risk-based
capital ratio guidelines to which depository institutions under their
respective supervision are subject. The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations. Risk-based
capital ratios are determined by allocating assets and specified off-balance
sheet commitments to four risk weighted categories, with higher levels of
capital being required for the categories perceived as representing greater
risk.
Like the capital guidelines established by the Federal Reserve, these
guidelines divide an institution's capital into two tiers. Depository
institutions are required to maintain a total risk-based capital ratio of 8%.
The agencies may, however, set higher capital requirements when an
institution's particular circumstances warrant. Depository institutions
experiencing or anticipating significant growth are expected to maintain
capital ratios, including tangible capital positions, well above the minimum
levels.
In addition, the agencies established guidelines prescribing a minimum Tier 1
leverage ratio of 3% for depository institutions that meet certain specified
criteria, including that they have the highest regulatory rating and are not
experiencing or anticipating significant growth. All other institutions are
required to maintain a Tier 1 leverage ratio of 3% plus an additional 100 to
200 basis points.
All of ONB's affiliate banks as well as FUSB exceed the risk-based capital
guidelines as of June 30, 1995.
Effective September 1, 1995, the OCC, the Federal Reserve and the FDIC
amended their capital standards to specify that the banking agencies will
include, in their evaluations of a bank's capital adequacy, an assessment of
its exposure to declines in the economic value of the bank's capital due to
changes in interest rates. Concurrently, these banking agencies issued for
comment a joint policy statement describing the process the banking agencies
will use to measure and assess the exposure of a bank's net economic value to
changes in interest rates. The information and exposure estimates collected
through this new proposed supervisory measurement process will be one
quantitative factor used by examiners to determine the adequacy of an
individual bank's capital for interest rate risk. Other quantitative factors
that examiners will consider include the bank's historical financial
performance and its earnings exposure to interest rate movements. Examiners
will also consider qualitative factors, including the adequacy of the bank's
internal interest rate risk management.
After the banking agencies and banking industry gain sufficient experience
with the proposed measurement process, the banking agencies intend, through a
subsequent rulemaking process, to issue a
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<PAGE>
proposed rule that would establish an explicit capital charge for interest rate
risk that will be based upon the level of a bank's measured interest rate risk
exposure.
The proposed interagency supervisory policy statement requires certain banks
to submit new interest rate risk consolidated reports of condition and income,
or call report, schedules beginning in March 1996, indicating the maturity,
repricing or price sensitivity of their various on- and off-balance-sheet
instruments. A bank would also have the option of reporting its internal market
estimates of the price sensitivity of its major portfolios and its net economic
value. Banks with assets under $300 million, composite CAMEL supervisory
ratings of 1 or 2, and moderate or low holdings of assets with intermediate-and
long-term maturity or repricing characteristics would be exempt from expanded
reporting requirements.
The supervisory model would apply a series of interest rate risk weights to a
bank's reported repricing and maturity balances. The risk weights estimate
price sensitivity of a bank's reported balances to a 200 basis-point change in
interest rates. The summation of these weighted balances, along with certain
price sensitivity information that a bank may be required to report, results in
a net risk-weighted exposure for the institution. That exposure represents the
estimated change in the bank's economic value to the specified change. Full
implementation of the proposed supervisory policy statement for assessing the
adequacy of bank capital for interest rate risk would occur on December 31,
1996.
It is too early to assess the impact, if any, these new rules and proposals
will have on ONB or its subsidiaries.
BRANCHING AND ACQUISITIONS
Branching. Branching by ONB affiliate banks in Indiana, Kentucky and
Illinois is subject to the jurisdiction, and requires the prior approval, of
the bank's primary federal regulatory authority and, if the branching bank is a
state bank, of the Indiana Department of Financial Institutions, Kentucky
Department of Financial Institutions or Illinois Commissioner of Banks and
Trust Companies (depending upon the location of the principal office of the
bank). Under current law, branches may be established by banks in Illinois and
Indiana throughout the state; whereas in Kentucky, branches may only be
established in the home county of the bank. As discussed below, Congress
recently authorized interstate branching, with certain limitations, beginning
in 1997.
Acquisitions. Bank holding companies, such as ONB, are prohibited by the
BHC Act from acquiring direct or indirect control of more than 5% of the
outstanding shares of any class of voting stock or substantially all of the
assets of any bank or savings association or merging or consolidating with
another bank holding company without prior approval of the Federal Reserve.
The BHC Act also currently prohibits ONB from acquiring control of any bank
operating outside the State of Indiana unless such action is specifically
authorized by the statutes of the state where the bank to be acquired is
located. That prohibition will no longer be applicable as of September 29,
1995, as discussed below. Additionally, ONB is prohibited by the BHC Act from
engaging in or from acquiring ownership or control of more than 5% of the
outstanding shares of any class of voting stock of any company engaged in a
nonbanking business unless such business is determined by the Federal Reserve
to be so closely related to banking as to be a proper incident thereto. The
BHC Act does not place territorial restrictions on the activities of such
nonbanking-related activities.
The BHC Act specifically authorizes a bank holding company, upon receipt of
appropriate approvals from the Federal Reserve and the Director of the OTS, to
acquire control of any savings association or
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<PAGE>
holding company thereof wherever located. Similarly, a savings and loan
holding company may acquire control of a bank. A savings association acquired
by a bank holding company cannot continue any non-banking activities not
authorized for bank holding companies. For this reason, Greenmark must be
purchased by First Citizens, which may legally preserve most of its insurance
agency powers. Savings associations acquired by a bank holding company may, if
located in a state where the bank holding company is legally authorized to
acquire a bank, be converted to the status of a bank, but deposit insurance
assessments and payments continue to be paid by the association to the Savings
Association Insurance Fund ("SAIF"). A savings association so converted to a
bank becomes subject to the branching restrictions applicable to banks. Also,
any insured depository institution may merge with, acquire the assets of, or
assume the liabilities of any other insured depository institution with the
appropriate regulatory approvals if (i) continued payments of deposit insurance
premiums are made on the acquired depository institution's deposits (including
an assumed rate of growth in such deposits) to SAIF (if the acquired
institution was a SAIF member) or to the Bank Insurance Fund ("BIF") (if the
acquired institution was a BIF member), (ii) the acquiring institution and any
holding company in control thereof meet all applicable capital requirements at
the time of the transaction, and (iii) if the acquiring institution is a BIF
member, the transaction meets any limitations on geographic expansion.
INTERSTATE BANKING
In 1994, Congress enacted sweeping changes to the interstate branching and
expansion powers of depository institutions and their holding companies in The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which
allows for interstate banking and interstate branching without regard to
whether such activity is permissible under state law. Beginning on September
29, 1995, bank holding companies may acquire banks anywhere in the United
States subject to certain state restrictions. Beginning on June 1, 1997, an
insured bank may merge with an insured bank in another state without regard to
whether such merger is prohibited by state law. Additionally, an out-of-state
bank may acquire the branches of an insured bank in another state without
acquiring the entire bank; provided, however, that the law of the state where
the branch is located permits such an acquisition. States may permit
interstate branching earlier than June 1, 1997, where both states involved with
the bank merger expressly permit it by statute. Further, bank holding
companies may merge existing bank subsidiaries located in different states into
one bank.
Beginning on September 29, 1995, an insured bank subsidiary may act as an
agent for an affiliated bank or savings association in offering limited banking
services (receive deposits, renew time deposits, close loans, service loans and
receive payments on loans obligations) both within the same state and across
state lines.
FDICIA
FDICIA accomplished a number of sweeping changes in the regulation of
depository institutions. FDICIA requires, among other things, federal bank
regulatory authorities to take "prompt corrective action" with respect to banks
which do not meet minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized.
The FDIC has adopted regulations to implement the prompt corrective action
provisions of FDICIA. Among other things, the regulations define the relevant
capital measures for the five capital categories. An institution is deemed to
be "well capitalized" if it has a total risk-based capital ratio of 10% or
greater, a
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Tier 1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
greater, and is not subject to a regulatory order, agreement or directive to
meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total risk-
based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4%
or greater, and generally a leverage ratio 4% or greater. An institution is
deemed to be "undercapitalized" if it has a total risk-based capital ratio of
less than 8%, a Tier 1 risk-based capital ratio of less than 4%, or generally a
leverage ratio of less than 4%, and "significantly undercapitalized" if it has
a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital
ratio of less than 3%, or a leverage ratio of less than 3%. An institution is
deemed to be "critically undercapitalized" if it has a ratio of tangible equity
(as defined in the regulations) to total assets that is equal to or less than
2%.
"Undercapitalized" banks are subject to growth limitations and are required
to submit a capital restoration plan. A bank's compliance with such plan is
required to be guaranteed by any company that controls the undercapitalized
institution as described above. If an "undercapitalized" bank fails to submit
an acceptable plan, it is treated as if it is significantly undercapitalized.
"Significantly undercapitalized" banks are subject to one or more of a number
of requirements and restrictions, including an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and case receipt of deposits from correspondent banks, and
restrictions on compensation of executive officers. "Critically
undercapitalized" institutions may not, beginning 60 days after becoming
"critically undercapitalized," make any payment of principal or interest on
certain subordinated debt or extend credit for a highly leveraged transaction
or enter into any transaction outside the ordinary course of business. In
addition, "critically undercapitalized" institutions are subject to appointment
of a receiver or conservator.
FDICIA further directs that each federal banking agency prescribe standards
for depository institutions and depository institution holding companies
relating to internal controls, information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth,
management compensation, a maximum ratio of classified assets to capital,
minimum earnings sufficient to absorb losses, a minimum ratio of market value
to book value of publicly traded shares and such other standards as the agency
deemed appropriate.
DEPOSIT INSURANCE
The deposits of ONB's affiliate banks are insured up to $100,000 per insured
account, by the BIF, except for deposits acquired in connection with
affiliations with savings associations, which deposits are insured by the SAIF.
Accordingly, ONB pays deposit insurance premiums to both BIF and SAIF and will
continue to pay SAIF premiums with respect to all deposits of FUSB acquired in
the Affiliation. If the FDIC believes that an increase in the insurance rates
is necessary, it may increase the insurance premiums applicable to BIF or SAIF.
Currently SAIF premiums are significantly higher than BIF premiums; however,
Congress is considering a number of alternatives to address this issue and
maintain relative equality among premium payments, including a large one-time
assessment on savings associations, requiring banks to help finance the bonds
issued to recapitalize the thrift industry, and merging SAIF and BIF. Some
Congressional proposals also require savings associations to convert to bank
charters. It is difficult at this time to assess whether Congress will address
the SAIF/BIF premium differential and, if so, what impact its legislative
solution to that problem will have on ONB and its subsidiaries, FUSB, or New
FUSB.
Effective January 1, 1993, the FDIC adopted a final rule that implements a
transitional risk-based assessment system whereby a base insurance premium will
be adjusted according to the capital category
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and subcategory of an institution to one of three capital categories consisting
of (1) well capitalized, (2) adequately capitalized, or (3) undercapitalized,
and one of three subcategories consisting of (a) health, (b) supervisory
concern, or (c) substantial supervisory concern. An institution's assessment
rate will depend upon the capital category and supervisory category to which it
is assigned. Assessment rates for banks range from .04% for an institution in
the highest category (i.e., well capitalized) to 0.31% for an institution in
the lowest category (i.e. undercapitalized and substantial supervisory
concern), and for savings associations range from .23% for well capitalized
institutions to .31% for institutions in the lowest category. The supervisory
subgroup to which an institution is assigned by the FDIC is confidential and
may not be disclosed. Deposit insurance assessments may increase depending
upon the category and subcategory, if any, to which the bank is assigned by the
FDIC. Any increase in insurance assessments could have an adverse effect on
the earnings of ONB's affiliate banks.
RECENT LEGISLATION
Congress is currently considering two pieces of proposed legislation which
would impact financial institutions. The first such bill, the Financial
Services Competitiveness Act, seeks to repeal the Glass-Steagall Act which has
severely limited the ability of financial institutions to underwrite securities
since immediately after the Depression. Should this bill be enacted in its
form as of the date of this Proxy Statement, it would expand the securities
powers of bank holding companies, like ONB, permitting them to form a
subsidiary to underwrite and deal in securities and debt instruments. ONB
currently may act as a broker/dealer for securities (as it does through its
affiliate ONB Investment Services), but it may not generally underwrite
corporate securities or debt. The effect of the bill would also be to permit
bank holding companies to acquire, and be acquired by, securities firms.
The second bill, the Financial Institutions Relief Act, would scale back
certain laws which are deemed by Congress to impose regulatory burdens on banks
and would eliminate redundancies in the law. Included in the affected laws are
the Truth-in-Savings Act, the Community Reinvestment Act and certain laws with
respect to disclosures in mortgage lending and the like.
The progress of both of these bills is currently suspended while Congress
determines what, if any, provisions regarding insurance powers should be
included. The extent of the ability of banks to sell insurance is highly
controversial, involving two powerful trade groups with a history of
intractability. The insurance issue could halt permanently the attempts to
obtain either Glass-Steagall relief or regulatory relief.
It cannot be predicted with certainty whether such legislation will be
enacted or the extent to which the banking industry in general, or ONB and its
affiliate banks in particular, would be affected.
ADDITIONAL MATTERS
In addition to the matters discussed above, ONB's affiliate banks and FUSB
are subject to additional regulation of their activities, including a variety
of consumer protection regulations affecting their lending, deposit and
collection activities and regulations affecting secondary mortgage market
activities.
The extensive regulation, supervision and examination of financial
institutions by the bank regulatory agencies is intended primarily for the
protection of the insurance fund and depositors. Moreover, such regulation
imposes substantial restrictions on the operations and activities of such
institutions, and grants to regulators broad discretion in connection with
their supervisory and enforcement activities and
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examination policies, including policies with respect to classification of
assets and establishment of adequate loan loss reserves. Any changes in such
regulations, whether by legislation or regulatory action, could have a material
impact on ONB affiliates and their operations. ONB cannot predict what, if
any, future actions may be taken by legislative or regulatory authorities or
what impact any such actions may have on the operations of its affiliates.
The earnings of financial institutions are also affected by general economic
conditions and prevailing interest rates, both domestic and foreign and by the
monetary and fiscal policies of the United States Government and its various
agencies, particularly the Federal Reserve.
Additional legislation and administrative actions affecting the banking
industry may be considered by Congress, state legislatures and various
regulatory agencies, including those referred to above. It cannot be predicted
with certainty whether such legislation of administrative action will be
enacted or the extent to which the banking industry in general or ONB and its
affiliate banks in particular would be affected thereby.
COMPARISON OF COMMON STOCK
The rights of holders of FUSB Common Stock who receive ONB Common Stock in
the Affiliation will be governed by the laws of the State of Indiana, the state
in which ONB is incorporated, and by ONB's Amended and Restated Articles of
Incorporation ("ONB's Articles of Incorporation") and ONB's By-Laws, as amended
("ONB's By-Laws"). The rights of FUSB shareholders are presently governed by
federal law applicable to savings associations and by FUSB's Charter and By-
Laws. The rights of FUSB shareholders differ in certain respects from the
rights they would have as ONB shareholders, including for ONB anti-takeover
measures and the vote required for the amendment of significant provisions of
the articles of incorporation and for the approval of significant corporate
transactions. The following summary comparison of ONB Common Stock and FUSB
Common Stock includes all material features of such shares but does not purport
to be complete and is qualified in its entirety by reference to ONB's Articles
of Incorporation and By-Laws and the Charter and By-Laws of FUSB.
AUTHORIZED BUT UNISSUED SHARES
ONB's Articles of Incorporation authorize the issuance of 30,000,000 shares
of ONB Common Stock, of which 22,890,065 whole shares were outstanding as of
June 30, 1995. The remaining authorized but unissued shares of common stock
may be issued upon authorization of the Board of Directors of ONB without prior
shareholder approval. ONB has 2,000,000 shares of preferred stock authorized.
These shares are available to be issued, without prior shareholder approval, in
classes with relative rights, privileges and preferences determined for each
class by the Board of Directors of ONB. No shares of preferred stock are
presently outstanding.
The Board of Directors of ONB has authorized a series of preferred stock
designated as Series A preferred stock. The Board of Directors of ONB has
designated 200,000 shares of Series A preferred stock in connection with the
shareholder rights plan of ONB. The ONB Series A preferred stock may not be
issued except upon exercise of certain rights ("Rights") pursuant to such
shareholder rights plan. No shares of Series A preferred stock have been
issued as of the date of this Proxy Statement. See "Anti-Takeover Provisions
-- ONB's Shareholder Rights Plan" below.
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The shares of ONB Series A preferred stock are nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent series of
preferred stock, are subordinate to all other series of preferred stock of ONB.
Each share of ONB Series A preferred stock will be entitled to receive, when,
as and if declared, a quarterly dividend in an amount equal to the greater of
$1.00 per share or 100 times the quarterly cash dividend declared on ONB Common
Stock. In addition, the ONB Series A preferred stock is entitled to 100 times
any non-cash dividends (other than dividends payable in equity securities)
declared on the ONB Common Stock, in like kind. In the event of liquidation,
the holders of ONB Series A preferred stock will be entitled to receive a
liquidation payment in an amount equal to the greater of $100.00 per share or
100 times the liquidation payment made per share of ONB Common Stock. Each
share of ONB Series A preferred stock will have 100 votes, subject to
adjustment, voting together with the ONB Common Stock and not as a separate
class unless otherwise required by law or ONB's Articles of Incorporation. In
the event of any merger, consolidation or other transaction in which common
shares are exchanged, each share of ONB Series A preferred stock will be
entitled to receive 100 times the amount received per share of ONB Common
Stock. The rights of the ONB Series A preferred stock as to dividends, voting
rights and liquidation are protected by antidilution provisions. See
"COMPARISON OF COMMON STOCK -- Anti-Takeover Provisions."
As of June 30, 1995, ONB had 1.4 million shares of ONB Common Stock reserved
for issuance under ONB's dividend reinvestment and stock purchase plan and 1.5
million shares of its common stock reserved for issuance upon conversion of its
outstanding 8% convertible subordinated debentures. Such debentures are
convertible at any time prior to maturity, unless previously redeemed, into
shares of ONB Common Stock at a conversion rate of 42.517 shares per $1,000
principal amount of debentures (equivalent to a conversion price of
approximately $24.70 per share), subject to adjustment in certain events.
The issuance of additional shares of ONB Common Stock to persons who were not
holders of ONB Common Stock prior to such issuance or the issuance of ONB
preferred stock may adversely affect the interests of ONB shareholders.
The Charter of FUSB authorizes the issuance of 5,000,000 shares of FUSB
Common Stock, $.01 par value per share, of which 546,550 shares were issued and
outstanding as of September 8, 1995, and options for 35,650 shares, which must
be exercised prior to the effective date of the Affiliation, were outstanding
on that date. Following the Affiliation, all of the outstanding shares of FUSB
Common Stock will be held by ONB.
FUSB has 2,000,000 shares of Preferred Stock, $1 par value, authorized, of
which none are issued. Such shares are available to be issued without
shareholder approval under the Charter of FUSB; however, pursuant to the
Agreement, FUSB is restricted in issuing such shares.
PREEMPTIVE RIGHTS
Neither ONB's nor FUSB's shareholders have preemptive rights to subscribe for
any new or additional ONB Common Stock or FUSB Common Stock, respectively, or
other securities.
DIVIDEND RIGHTS
The holders of common stock of ONB are entitled to dividends and other
distributions when, as and if declared by its Board of Directors out of funds
legally available therefor. A dividend may not be paid by ONB if, after giving
it effect, (1) ONB would not be able to pay its debts as they become due in the
usual
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course of business, or (2) ONB's total assets would be less than the sum of its
total liabilities plus, unless ONB's Articles of Incorporation permitted
otherwise, the amount that would be needed to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to
those receiving the dividend if ONB were to be dissolved at the time of the
dividend.
The amount of dividends, if any, that may be declared by ONB in the future
will necessarily depend upon many factors, including, without limitation,
future earnings, capital requirements, business conditions and capital levels
of subsidiaries (since ONB is primarily dependent upon dividends paid by its
subsidiaries for its revenues), the discretion of ONB's Board of Directors and
other factors that may be appropriate in determining dividend policies.
Cash dividends paid to ONB by its Illinois-chartered affiliate banks are
limited by Illinois law to the bank's net profits then on hand, less losses and
statutorily-defined bad debts. Cash dividends paid to ONB by its Indiana-
chartered affiliate banks are limited by Indiana law to the balance of the
bank's undivided profits account adjusted for statutorily-defined bad debts.
Cash dividends paid to ONB by its Kentucky-chartered affiliate banks are
limited by Kentucky law to so much of the net profits of the banks, after
deducting all expenses, losses, bad or suspended debts and interest and taxes
accrued or due from the banks, as the boards of directors of the banks deem
expedient. In addition, the approval of the Kentucky Commissioner of Banks is
required if the total of all dividends declared by a Kentucky bank in any
calendar year exceeds the bank's net profit for that year and the net retained
profits from the preceding two years, less any transfers to surplus or a fund
for retirement of preferred stock or debt. ONB's national affiliate banks and
the Bank may pay cash dividends on their common stock only out of adjusted
retained net profits for the year in which the dividend is paid and the two
preceding years.
The OTS regulations impose limitations on capital distributions by savings
associations, including FUSB. Under the rule, a savings institution is
classified as a tier 1 institution, a tier 2 institution, or a tier 3
institution, depending on its level of regulatory capital both before and after
giving effect to a proposed capital distribution. A tier 1 institution may
generally make capital distributions in any calendar year up to 100% of its net
income to date during the calendar year plus the amount that would reduce by
one-half its "surplus capital ratio" (i.e., the percentage by which the
institution's capital-to-assets ratio exceeds the ratio of its capital
requirements to its assets) at the beginning of the calendar year. No regulatory
approval of the capital distribution is required, but prior notice must be given
to the OTS. Restrictions exist on the ability of tier 2 and tier 3 institutions
to make capital distributions. For purposes of this regulation, FUSB is a tier--
institution.
Dividends paid by ONB's affiliate banks and FUSB will ordinarily be
restricted to a lesser amount than is legally permissible because of the need
for the banks to maintain adequate capital consistent with the capital adequacy
guidelines promulgated by the banks' principal federal regulatory authorities.
See "REGULATORY CONSIDERATIONS." If a bank's capital levels are deemed
inadequate by the regulatory authorities, payment of dividends to its parent
holding company may be prohibited without prior regulatory approval. None of
ONB's affiliate banks nor FUSB is currently subject to such a restriction.
VOTING RIGHTS
The holders of the outstanding shares of ONB Common Stock and FUSB Common
Stock are entitled to one vote per share on all matters presented for
shareholder vote. ONB shareholders do not have cumulative voting rights in the
election of directors. FUSB shareholders have the right to cumulative voting in
the election of Directors. See "GENERAL INFORMATION" and "ELECTION OF FUSB
DIRECTORS."
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Indiana law generally requires that mergers, consolidations, sales, leases,
exchanges or other dispositions of all or substantially all of the assets of a
corporation be approved by the affirmative vote of a majority of the issued and
outstanding shares entitled to vote at the shareholders meeting, subject in each
case to provisions in the corporation's articles of incorporation requiring a
higher percentage vote for certain transactions. ONB's Articles of
Incorporation provide that certain business combinations may, under certain
circumstances, require approval of more than a simple majority of the issued and
outstanding shares of ONB Common Stock. See "-- Anti-Takeover Provisions." The
laws applicable to FUSB require a two-thirds vote of shareholders to approve
mergers and consolidations.
Indiana law requires shareholder approval for most amendments to a
corporation's articles of incorporation -- under Indiana law, by a majority of a
quorum present at a shareholders' meeting (and, in certain cases, a majority of
all shares held by any voting group entitled to vote). Indiana law permits a
corporation in its articles of incorporation to prescribe a higher shareholder
vote for certain amendments to the Articles of Incorporation. ONB's Articles of
Incorporation require a super-majority shareholder vote of eighty percent (80%)
of the outstanding shares of ONB Common Stock for the amendment of certain
significant provisions. Amendments to FUSB's Charter must be approved by a
majority vote of shareholders.
DISSENTERS' RIGHTS
The holders of FUSB Common Stock and ONB Common Stock possess no dissenters'
rights in connection with the Affiliation. ONB shareholders would not have
dissenters' rights for any future merger or acquisition so long as ONB Common
Stock is traded on the NASDAQ National Market System.
LIQUIDATION RIGHTS
In the event of any liquidation or dissolution of ONB, the holders of shares
of ONB Common Stock are entitled to receive pro rata with respect to the number
of shares held by them any assets distributable to shareholders, subject to the
payment of ONB's liabilities and any rights of creditors and holders of shares
of ONB preferred stock then outstanding. In the event of any liquidation,
dissolution or winding up of FUSB, the holders of shares of FUSB Common Stock
are entitled to receive pro rata with respect to the number of shares held by
them any assets distributable to shareholders, subject to the payment of FUSB
liabilities, any rights of creditors and rights of any holders of FUSB preferred
stock then outstanding.
ASSESSMENT AND REDEMPTION
Shares of ONB Common Stock and FUSB Common Stock are not liable to further
assessment. Under Indiana law, ONB may redeem or acquire shares of ONB Common
Stock with funds legally available therefor, and shares so acquired constitute
authorized but unissued shares. ONB may not redeem or acquire shares of ONB
Common Stock if, after giving such redemption or acquisition effect, ONB would
not be able to pay its debts as they become due in the usual course of business,
or ONB's total assets would be less than the sum of its total liabilities plus,
unless ONB's Articles of Incorporation permitted otherwise, the amount that
would be needed to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those whose stock is
being redeemed or acquired if ONB were to be dissolved at the time of the
redemption or acquisition.
In addition, ONB must give prior notice to the Federal Reserve if the
consideration to be paid by them for any redemption or acquisition of their
respective shares, when aggregated with the consideration paid
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for all redemptions or acquisitions for the preceding twelve (12) months, equals
or exceeds 10% of their respective consolidated net worth.
Stock redemptions by FUSB would be deemed made by FUSB from its tax bad debt
reserve and would result in adverse tax consequences to FUSB. Moreover, FUSB
may not repurchase any of its capital stock if the effect thereof would cause
the net worth of the stock to be reduced below the amount required for its
liquidation account. For a description of certain OTS limitations on FUSB's
ability to repurchase its shares, see "Comparison of Common Stock - Dividend
Rights."
ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to ONB, as described below, may have the
effect of discouraging or rendering it more difficult for a person or other
entity to acquire control of ONB. These measures may have the effect of
discouraging certain tender offers for shares of ONB Common Stock which might
otherwise be made at premium prices or certain other acquisition transactions
which might be viewed favorably by a significant number of shareholders.
Indiana Law. Under the business combinations provision of Indiana law, any
10% shareholder of an Indiana corporation, with a class of voting shares
registered under Section 12 of the Securities and Exchange Act or which has
specifically adopted this provision in the corporation's articles of
incorporation, is prohibited for a period of five (5) years from completing a
business combination with the corporation unless, prior to the acquisition of
such 10% interest, the board of directors of the corporation approved either the
acquisition of such interest or the proposed business combination. Further, the
corporation and a 10% shareholder may not consummate a business combination
unless all provisions of the articles of incorporation of the corporation are
complied with and a majority of disinterested shareholders approve the
transaction or all shareholders receive a price per share determined in
accordance with the business combinations provision of Indiana law.
An Indiana corporation may elect to remove itself from the protection provided
by the Indiana business combinations provision, but such an election remains
ineffective for eighteen (18) months and does not apply to a combination with a
shareholder who acquired a 10% ownership position prior to the effective date of
the election. ONB is covered by the business combinations provision of Indiana
law.
In addition to the business combinations provision, Indiana law also contains
a "control share acquisition" provision which, although different in structure
from the business combinations provision, may have a similar effect of
discouraging or making more difficult a hostile takeover of an Indiana
corporation. This provision also may have the effect of discouraging premium
bids for outstanding shares. Indiana law provides that, unless otherwise
provided in an Indiana corporation's articles of incorporation or by-laws,
certain acquisitions of shares of the corporation's common stock will be
accorded voting rights only if a majority of the disinterested shareholders
approves a resolution granting the potential acquiror the ability to vote such
shares. Upon disapproval of the resolution, the shares held by the acquiror
shall be redeemed by the corporation at the fair value of the shares as
determined by the control share acquisition provision.
This provision does not apply to a plan of affiliation and merger, if the
corporation complies with the applicable merger provisions and is a party to the
agreement of merger or plan of share exchange. ONB is subject to the control
share acquisition provision.
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ONB's Articles of Incorporation. In addition to the protections provided by
Indiana law, ONB's Articles of Incorporation require the affirmative vote of the
holders of at least eighty percent (80%) of the issued and outstanding shares of
capital stock for any business combination which is not recommended by the vote
of two-thirds or more of the members of the Board of Directors. For purposes of
ONB's Articles of Incorporation, "business combination" is defined to include:
(1) a merger or consolidation of ONB with or into any other corporation, (2) any
sale, lease, exchange or other disposition of any material part of the assets of
ONB, or (3) any liquidation or dissolution of ONB or any material subsidiary of
ONB. Further, this provision cannot be altered, amended or repealed without the
affirmative vote of the holders of at least eighty percent (80%) of the issued
and outstanding shares of ONB Common Stock entitled to vote thereon.
ONB's Articles of Incorporation also include provisions requiring (1) the
Board of Directors to consider non-financial factors in the evaluation of
business combinations and tender or exchange offers, and (2) any person
acquiring fifteen percent (15%) of the then issued and outstanding stock of ONB
to pay equal consideration in connection with the acquisition of any further
shares. These provisions require an eighty percent (80%) affirmative vote of
the issued and outstanding shares of ONB Common Stock entitled to vote thereon
in order to be altered, amended or repealed.
ONB's Shareholder Rights Plan. On January 25, 1990, the Board of Directors of
ONB declared a dividend of one (1) right for each issued and outstanding share
of ONB Common Stock ("Right"). See "COMPARISON OF COMMON STOCK -- Authorized
But Unissued Shares." The dividend was payable on March 15, 1990 to holders of
record of ONB Common Stock at the close of business on March 1, 1990. Each Right
entitles the registered holder to purchase from ONB one-hundredth (1/100) of a
share of ONB Series A preferred stock at an initial Purchase Price of $60.00,
subject to adjustment. The terms and conditions of the Rights are contained in
a Rights Agreement between ONB and Old National Bank in Evansville, as Rights
Agent.
The foregoing information concerning ONB's Shareholder Rights Plan does not
purport to be complete. For additional information, see the Rights Agreement,
dated March 1, 1990, between ONB and Old National Bank, as Trustee, which is
specifically incorporated herein by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
DIRECTOR LIABILITY
Under Indiana law, a director of ONB will not be liable to shareholders for
any action taken as a director, or any failure to take any action, unless (1)
the director has breached or failed to perform his duties as a director in good
faith with the care an ordinarily prudent person in a like position would
exercise under similar circumstances and in a manner the director reasonably
believes to be in the best interests of the corporation and (2) such breach or
failure to perform constitutes willful misconduct or recklessness. There is no
similar provision applicable to FUSB under federal law.
DIRECTOR NOMINATIONS
ONB's By-Laws require that all nominations for election as directors of ONB
shall be made by the Board of Directors of ONB in accordance with the By-Laws.
The Nominating Committee is comprised of five (5) directors of ONB, none of
whom is an officer or employee of ONB. The Nominating Committee maintains the
responsibility to recruit potential director candidates, recommend changes to
the entire Board of Directors concerning the size, composition and
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responsibilities of the Board of Directors, review proxy documents received from
shareholders relating to the Board of Directors and review suggestions of
shareholders regarding nominees for election as directors. All such suggestions
of shareholders with respect to director nominations must be submitted in
writing to the Nominating Committee not less than 120 days prior to the date of
the annual or Annual Meeting of shareholders at which directors will be elected.
With respect to FUSB, the Chairman of the Board of Directors is required by
the bylaws to appoint a Nominating Committee consisting of the Board of
Directors or a committee of the Board of Directors of not less than three
members. Such committee is authorized to make nominations for Directors in
writing to the Secretary of FUSB at least twenty days prior to the Annual
Meeting, which nominations are then posted at FUSB's office. Nominations for
Directors may also be made in writing by shareholders and delivered to the
Secretary of FUSB at least five days prior to the Annual Meeting.
ELECTION OF FUSB DIRECTORS
NOMINEES AND DIRECTORS
The Board of Directors of FUSB is currently composed of six members. FUSB's
bylaws provide that the Directors shall be divided into three classes as nearly
equal in number as possible. Directors of FUSB are generally elected to serve
for a three-year period or until their respective successors are elected and
qualified. The nominees for Director this year are Earl E. Clodfelter and
William M. Marley, each of whom is a current Director of FUSB. If elected by
the Shareholders at the Annual Meeting, Messrs. Clodfelter and Marley will serve
as Directors of FUSB until 1998, subject to earlier termination upon
consummation of the Affiliation. Following the Affiliation, they will serve as
Directors of First Citizens in accordance with the bylaws of First Citizens,
which provide that Directors serve one year terms.
The following table sets forth certain information regarding each nominee for
election as a Director and each Director continuing in office after the Annual
Meeting. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies as to which authorization is withheld) will be
voted at the Annual Meeting for the election of the nominees identified below.
If any Director nominee is unable or declines to serve (an event which the Board
of Directors does not anticipate), the proxies will have discretionary authority
to vote for a substitute nominee named by the Board of Directors if the Board
elects to fill such nominee's position. The table also sets forth the number of
shares of FUSB Common Stock beneficially owned by all Directors and executive
officers of FUSB as a group.
-46-
<PAGE>
<TABLE>
<CAPTION>
Expiration Shares of Common
---------- ------------------
Director of of Term as Stock Beneficially Percent
----------- ---------- ------------------ --------
Director Age FUSB Since Director* Owned on 9/8/95 (1) of Class
-------- --- ----------- ---------- ------------------- --------
<S> <C> <C> <C> <C> <C>
NOMINEES
Earl E. Clodfelter 61 1974 1998 4,200 (2) .76%
William M. Marley 55 1985 1998 24,182 (3) 4.36%
DIRECTORS CONTINUING
IN OFFICE
John W. Bender 56 1990 1996 1,800 (4) .33%
Harold A. Harrell 59 1989 1997 1,500 (5) .27%
Gary R. Pershing 46 1983 1996 12,917 (6) 2.35%
Alan G. Stanley 69 1986 1997 6,200 (7) 1.13%
All Directors and
executive officers as a
group (10) persons 71,971 (8) 12.45%
</TABLE>
* Terms assume continuation of staggered Board provided by the bylaws of
FUSB. Following the Affiliation, all Directors will serve one year terms
expiring in 1996.
(1) Includes shares beneficially owned by members of the immediate families of
the directors or director nominees residing in their homes. Unless
otherwise indicated, each shareholder has sole investment and/or voting
power with respect to the shares shown as beneficially owned by him.
(2) Includes 1,000 shares held jointly by Mr. Clodfelter and his wife and 3,200
shares subject to stock options granted under the First United Savings Bank
Stock Option Plan ("Stock Option Plan").
(3) Includes 10,000 shares held jointly by Mr. Marley and his wife, 8,200
shares subject to stock options granted under the Stock Option Plan, and 50
shares held by Mr. Marley's daughter. Also includes 3,950 whole shares
allocated to Mr. Marley's account under the First United Savings Bank
Employee Stock Ownership Plan and Trust (the "ESOP") as of December 31,
1994, but does not include any shares allocated to such account since that
date.
(4) Includes 800 shares subject to a stock option granted under the Stock
Option Plan.
(5) Includes 1,000 shares subject to stock options granted under the Stock
Option Plan.
(6) Includes 1,885 shares held jointly by Mr. Pershing and his wife, 3,200
shares subject to stock options granted under the Stock Option Plan, 1,745
shares held by a profit sharing plan of which Mr. Pershing and his wife are
beneficiaries, 2,202 shares held by his wife, 1,000 shares held jointly by
his wife and son, and 100 shares held jointly by Mr. Pershing and his son.
(7) Includes 620 shares held jointly by Mr. Stanley and his wife, 3,200 shares
subject to stock options granted under the Stock Option Plan, 1,190 shares
held by his wife in an individual retirement account, and 1,190 shares held
in Mr. Stanley's individual retirement account.
(8) Includes 31,400 shares subject to stock options granted under the Stock
Option Plan and 8,392 whole shares allocated as of December 31, 1994, under
the ESOP.
Presented below is certain information concerning the Directors of FUSB.
-47-
<PAGE>
John W. Bender serves as Chairman of Bender Lumber Co., Inc., Bloomington,
Indiana. Mr. Bender will serve on the Board of New FUSB following the
Affiliation.
Earl E. Clodfelter is a farmer and insurance agent. He served on the Putnam
County Council for twenty years and now serves as Putnam County Commissioner.
He also serves as a director of Communications Corporation, Inc., a company
providing local telephone service, based in Roachdale, Indiana. Mr. Clodfelter
will serve on the Board of First Citizens following the Affiliation.
Harold A. Harrell is an attorney with the law firm of Andrews, Harrell, Mann,
Chapman & Coyne of Bloomington, Indiana. He serves as Vice-Chairman of the
Board of Directors of FUSB. Mr. Harrell will serve on the Board of New FUSB
following the Affiliation.
William M. Marley has been President and Chief Executive Officer of FUSB since
August 1, 1985. He served as Executive Vice President between 1983 and 1985, and
prior thereto served as Vice President-Financial Services. Mr. Marley served on
the Board of the Indiana League of Savings Institutions from 1989 to 1992. Mr.
Marley will serve on the Board of First Citizens following the Affiliation.
Gary R. Pershing has served as Chairman of the Board, President and Managing
Partner of Pershing & Company, Inc., a certified public accounting firm in
Greencastle, since 1977. He serves as Chairman of the Board of Directors of
FUSB. Mr. Pershing will serve on the Board of First Citizens following the
Affiliation.
Alan G. Stanley has been a self-employed professional engineer and
professional land surveyor and served as Putnam County Surveyor for more than
twenty years. He served as the President of Alan Stanley & Associates, Inc.
from 1980 until 1993 and is currently President of Alan Stanley PE/PC. Mr.
Stanley will serve on the Board of First Citizens following the Affiliation.
Ernest H. Collins and Norman J. Knights now serve as honorary Directors of
FUSB.
Directors will be elected upon receipt of a plurality of affirmative votes
cast at the Annual Meeting. Plurality means that individuals who receive the
largest number of votes cast are elected up to the maximum number of Directors
to be chosen at the Annual Meeting. Abstentions, broker non-votes and
instructions on the accompanying proxy to withhold authority to vote for one or
more of the nominees will result in the respective nominees receiving fewer
votes. However, the number of votes otherwise received by the nominee will not
be reduced by such action.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS OF FUSB
The Board of Directors meetings are generally held on a monthly basis. The
Board of Directors held a total of 14 meetings during the fiscal year ended
June 30, 1995. No Director attended fewer than 75% of the sum of the meetings
of the Board of Directors held while he served as a Director and the meetings of
committees on which he served.
The Audit Committee, comprised of Messrs. Stanley (Chairman), Clodfelter and
Bender, recommends the appointment of FUSB's independent accountants in
connection with its annual audit and meets with them to outline the scope and
review of such audit. That committee met three times during the year ended June
30, 1995.
-48-
<PAGE>
FUSB's Compensation Committee administers the Stock Option Plan and the ESOP,
and consists of all members of the Board of Directors except William M. Marley.
The Compensation Committee met two times during the year ended June 30, 1995.
The Board of Directors of FUSB also has a Pension Committee, the members of
which are Messrs. Harrell, Stanley, and Clodfelter. This committee has
responsibility for decisions affecting First United's pension plan, and it met
three times during the year ended June 30, 1995.
The Board of Directors served as the Nominating Committee for the 1995 Annual
Meeting.
REMUNERATION OF NAMED EXECUTIVE OFFICER
The following table sets forth information as to annual, long-term and other
compensation for services in all capacities to FUSB and its subsidiaries for the
last three fiscal years, of the person who served as chief executive officer of
FUSB during the fiscal year ended June 30, 1995 (the "Named Executive Officer").
There were no executive officers of FUSB who earned over $100,000 in salary and
bonuses during that fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------------------------- ------------------------------------
Other Annual Restricted Securities All Other
Fiscal Compensation Stock Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) Awards($) Options($) ($)(2)
--------------------------- ------ --------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William M. Marley 1995 $94,300 $7,728 -- -- -- $23,679
President, Chief Executive 1994 90,100 -0- -- -- 2,200 20,474
1993 86,000 6,615 -- -- 400 8,659
</TABLE>
(1) The Named Executive Officer of FUSB receives certain perquisites, but the
incremental cost of providing such perquisites does not exceed the lesser
of $50,000 or 10% of the officer's salary and bonuses.
(2) Includes FUSB's contributions to the ESOP allocable to the Named Executive
Officer and allocations made for Mr. Marley under the First United Savings
Bank Supplemental Benefit Plan.
STOCK OPTIONS
The following table includes the number of shares covered by stock options
held by the Named Executive Officer as of June 30, 1995. Also reported are the
values for "in-the-money" options (options whose exercise price is lower than
the market value of the shares at fiscal year end) which represent the spread
between the exercise price of any such existing stock options and the fiscal
year-end market price of the stock.
OUTSTANDING STOCK OPTIONS GRANTED AND VALUE REALIZED AS OF 6/30/95
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Fiscal Year End Options at Fiscal Year End (1)
-------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William M. Marley 8,200 -- $130,626 --
</TABLE>
(1) Amounts reflecting gains on outstanding options are based on the June 30,
1995, average between bid and asked prices, which was $27.75 per share.
-49-
<PAGE>
EMPLOYMENT AGREEMENT
The Board of Directors has approved a three-year employment contract with its
President and Chief Executive Officer, William M. Marley. The contract can be
extended for additional one-year terms to maintain a three-year term unless
notice is properly given by either party to the contract. Unless extended
further, the contract will expire in 1997. Mr. Marley receives his current
salary under the contract, which salary is subject to increases approved by the
Board of Directors. The contract also provides, among other things, for
participation in other fringe benefits and benefit plans available to FUSB
employees. Mr. Marley may terminate his employment upon 30 days' written notice
to FUSB. FUSB may discharge Mr. Marley for "cause" (as defined in the contract)
at any time or in certain events specified by Office of Thrift Supervision
("OTS") regulations. Upon termination of Mr. Marley's employment by FUSB for
other than cause or in the event of termination by Mr. Marley "for cause" (as
defined in the contract), Mr. Marley will receive his base compensation under
the contract (a) for an additional three years (or the remaining term of the
contract, if shorter) if the termination follows a change of control (as defined
in the contract), or (b) for an additional two years (or the remaining term of
the contract, if shorter) if the termination does not follow a change of
control. In addition, during such period, Mr. Marley will continue to
participate in FUSB's group insurance plans or receive comparable benefits.
Moreover, within a period of three months after such termination following a
change of control, Mr. Marley will have the right to cause FUSB to purchase any
stock options he holds for a price equal to the fair market value (as defined in
the contract) of the shares subject to such options minus their option price.
Payments pursuant to the contract may trigger adverse tax consequences to FUSB
and Mr. Marley under the so-called "golden parachute" provision of the Internal
Revenue Code of 1986, as amended (the "Code").
The employment contract provides FUSB protection of its confidential
business information and protection from competition by Mr. Marley should he
voluntarily terminate his employment without cause or be terminated by FUSB for
cause.
COMPENSATION OF DIRECTORS
Each Director (including Directors who are also employees) of FUSB
receives a monthly honorarium of $250 and an additional fee of $500 for each
monthly Board meeting attended by him. Directors are not reimbursed for
expenses incurred in attending meetings. There are no fees paid for attendance
at Board committee meetings. Directors are also entitled to receive stock
options under FUSB's Stock Option Plan.
In addition, FUSB has adopted a supplemental benefit plan which provides each
of FUSB's Directors with supplemental benefits after the Director ceases to be a
member of the Board, attains age 65, or upon death. The retirement benefits
payable for a period of 120 months are equal to the balance of the Director's
account under the Plan; provided that for Directors on the Board as of June 30,
1993, who serve until age 65, the minimum monthly benefit is $650. The
Director's account consists of all amounts accrued under FUSB's prior
supplemental benefit plan for Directors as of June 30, 1993, plus $350 per month
consisting of fees deferred by the Director while on the Board. Interest equal
to the United States Treasury Bill two years interest rate in effect as of the
last business day of each month is credited to the balance of such accounts.
Death benefits are also payable under the plan. Except in the event of a change
of control, Directors must serve for five years in order to receive the
retirement benefits provided under the plan.
-50-
<PAGE>
TRANSACTIONS WITH CERTAIN RELATED PERSONS
FUSB has followed the policy of offering loans to its Directors, officers and
employees for the financing of their principal residences and for other personal
loan purposes, including overdraft and credit card lines of credit. All such
loans made since the adoption of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 and all such loans in excess of $60,000 were made in the
ordinary course of business on substantially the same terms and collateral as
those of comparable transactions prevailing at the time and do not involve more
than the normal risk of collectibility or present other unfavorable features.
The law firm of Andrews, Harrell, Mann, Chapman & Coyne, of which Harold A.
Harrell is a partner, rendered legal services during the year ended June 30,
1995, to FUSB, and it is expected that the firm will continue to do so in the
next fiscal year. The legal services were rendered in the ordinary course of
business and the amount of fees paid to the law firm by FUSB did not exceed 5%
of the firm's gross revenues for the firm's last full fiscal year.
OPINIONS
Certain legal matters in connection with the Agreement will be passed upon for
ONB by the law firm of Krieg DeVault Alexander & Capehart, One Indiana Square,
Suite 2800, Indianapolis, Indiana 46204, and for FUSB by the law firm of Barnes
& Thornburg, 11 South Meridian Street, Suite 1313, Indianapolis, Indiana 46240.
EXPERTS
The consolidated financial statements of ONB and affiliates incorporated by
reference in this Proxy Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and have been so incorporated by reference in this Proxy Statement in
reliance upon the authority of said firm as experts in auditing and accounting
in giving said report.
The consolidated financial statements of FUSB at June 30, 1995 and for each of
the three years in the period then ended incorporated into this Proxy Statement
have been audited by Ernst & Young, LLP, independent auditors, as set forth in
their reports thereon incorporated herein, and are included in reliance upon
such reports given upon the authority of such firm as experts in auditing and
accounting.
Representatives of Ernst & Young, LLP are not expected to be at the Annual
Meeting.
OTHER MATTERS
The Annual Meeting is called for the purposes set forth in the Notice attached
to this Proxy Statement. The Board of Directors of FUSB knows of no other
matters for action by shareholders at the Annual Meeting other than the matters
described in the Notice. However, the enclosed revocable proxy will confer
discretionary authority to the persons named therein with respect to any such
matters, none of which are known to the Board of Directors of FUSB as of the
date hereof, which may properly come before the Annual Meeting. It is the
intention of the persons named in the proxy to vote pursuant to the proxy with
respect to such matters in accordance with the recommendation of the Board of
Directors of FUSB.
-51-
<PAGE>
APPENDIX A
AMENDED AND RESTATED
AGREEMENT OF AFFILIATION AND MERGER
THIS AMENDED AND RESTATED AGREEMENT OF AFFILIATION AND MERGER
("Agreement"), effective as of this 29th day of September, 1994, by and among
OLD NATIONAL BANCORP ("ONB"), FIRST CITIZENS BANK & TRUST COMPANY ("First
Citizens"), FIRST UNITED SAVINGS BANK, f.s.b. ("Savings Bank") and ONB INTERIM
FEDERAL SAVINGS BANK ("Interim Thrift"),
W I T N E S S E T H:
-------------------
WHEREAS, ONB is an Indiana corporation registered as a bank holding company
under the federal Bank Holding Company Act of 1956, as amended, with its
principal office located in Evansville, Vanderburgh County, Indiana; and
WHEREAS, First Citizens is an Indiana chartered bank and a wholly-owned
subsidiary of ONB, with its principal banking office located in Greencastle,
Putnam County, Indiana; and
WHEREAS, Savings Bank is a federally chartered savings bank, with its
principal banking office located in Greencastle, Putnam County, Indiana; and
WHEREAS, in order to effectuate the Merger (as hereinafter defined), ONB
will form Interim Thrift and will cause it to approve and to become a party to
this Agreement; and
WHEREAS, ONB, First Citizens and Savings Bank are parties to an Agreement
of Affiliation and Merger dated September 29, 1994 ("Original Agreement") and
desire to amend and restate the Original Agreement in accordance with this
Agreement; and
WHEREAS, First Citizens and Savings Bank have entered into a certain
Purchase and Assumption Agreement dated May 31, 1995 relating to the branches of
Savings Bank located in Greencastle, Indiana, the loan origination office of
Savings Bank located in Danville, Indiana and the stock of Greenmark, Inc.,
d/b/a Greenmark Insurance Agency ("Purchase and Assumption Agreement"); and
WHEREAS, ONB and Savings Bank have entered into a Stock Option Agreement
("Option Agreement") in connection with the Merger (as hereinafter defined) and
are amending the Stock Option Agreement concurrently with the execution of this
Agreement; and
WHEREAS, the Board of Directors of ONB and at least two-thirds (2/3) of the
entire Board of Directors of each of First Citizens and Savings Bank have
approved this Agreement and have authorized its execution and delivery.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and mutual obligations herein contained
and other good and valuable consideration, the receipt and
A-1
<PAGE>
sufficiency of which are hereby acknowledged, ONB, First Citizens and Savings
Bank, and Interim Thrift upon its formation, hereby agree as follows:
SECTION 1
THE MERGER
----------
1.01. General Description. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as hereinafter defined), Interim
Thrift shall merge with and into Savings Bank under the laws of the United
States of America and under the Charter of Savings Bank (the "Merger"). Savings
Bank shall survive the Merger ("Surviving Thrift") and thereafter Savings Bank
shall be a wholly-owned subsidiary of ONB and shall continue its existence as a
federally-chartered stock savings bank.
1.02. Name, Offices and Management. The name of the Surviving Thrift
shall be "First United Savings Bank, f.s.b." Its principal office shall be
located at 100 Fountain Square, Bloomington, Indiana 47404. The Board of
Directors of the Surviving Thrift shall consist of those directors of Savings
Bank serving at the Effective Time who reside in or around Bloomington, Indiana,
until such time as their successors have been duly elected and have qualified,
subject to Section 7.08 of this Agreement. Those directors of Savings Bank
serving at the Effective Time who reside in or around Greencastle, Indiana shall
become directors of First Citizens, until such time as their successors have
been duly elected and have qualified, subject to Section 7.08 of this Agreement.
The officers of the Surviving Thrift shall consist of the officers of Savings
Bank who are employed at the Bloomington, Indiana offices of Savings Bank at the
Effective Time and such other persons as ONB may select, until such time as
their successors shall have been duly elected and have qualified. The officers
of Savings Bank who are employed at the Greencastle or Danville, Indiana offices
of Savings Bank at the Effective Time shall become officers of First Citizens,
until such time as their successors shall have been duly elected and have
qualified; provided, however, that immediately following the Effective Time (a)
William M. Marley shall be elected Vice Chairman of First Citizens and shall
serve, subject to the provisions of the employment agreement dated March 18,
1986, between Savings Bank and Mr. Marley, as amended pursuant to Section 6.15
hereof, in such capacity for such term as the Board of Directors of ONB may, in
its discretion, determine, and (b) a person not currently employed on a full-
time basis by First Citizens shall be elected Chairman, President and Chief
Executive Officer of First Citizens and Savings Bank, who shall serve for such
term as the Board of Directors of First Citizens may, in its discretion,
determine.
1.03. Charter and By-Laws. The Charter and By-Laws of Savings Bank in
existence at the Effective Time shall remain the Charter and By-Laws of the
Surviving Thrift until such Charter and By-Laws shall be further amended as
provided by applicable law.
1.04. Assets and Liabilities. At the Effective Time, title to all assets,
real estate and other property owned by Savings Bank and Interim Thrift shall
vest in the Surviving Thrift without reversion or impairment. At the Effective
Time, all liabilities and obligations of Savings Bank and Interim Thrift shall
be assumed by the Surviving Thrift. Such liabilities shall include all of
Savings Bank's obligations with respect to the liquidation account that was
established at the time Savings Bank converted from mutual to stock form.
1.05. Tax Free Reorganization. ONB, Interim Thrift and Savings Bank
intend for the Merger to qualify as a reorganization within the meaning of
Section 368(a)(2)(E) and related sections of the Internal
A-2
<PAGE>
Revenue Code of 1986, as amended ("Code"), and agree to cooperate and to take
such actions as may be reasonably necessary to assure such result.
SECTION 2
MANNER AND BASIS
OF EXCHANGE OF STOCK
--------------------
2.01. Exchange Ratio. (a) Upon and by virtue of the Merger becoming
effective at the Effective Time, each issued and outstanding share of Savings
Bank Common Stock (as hereinafter defined), except for the 1,000 shares of
Savings Bank Common Stock held by Greenmark, Inc. which shall be canceled as of
the Effective Time, shall be converted into the right to receive eighty-five one
hundredths (0.85) of a share of ONB common stock ("Exchange Ratio"), subject to
adjustment, if any, as set forth in Sections 2.01(b) and 2.03 hereof. Upon and
by virtue of the Merger becoming effective at the Effective Time, each issued
and outstanding share of Interim Thrift capital stock shall be converted into an
equal number of shares of common stock of the Surviving Thrift.
(b) If the Average Price Per Share (as hereinafter defined) of ONB common
stock is more than ten percent (10%) above or below $36.50, then the Exchange
Ratio shall be adjusted in accordance with this subsection. Accordingly, if the
Average Price Per Share of ONB common stock exceeds $40.15, then the Exchange
Ratio shall be adjusted such that each issued and outstanding share of Savings
Bank Common Stock shall be converted into the right to receive a fraction of a
share of ONB common stock determined by dividing $34.1275 by the Average Price
Per Share of ONB common stock. Similarly, if the Average Price Per Share of ONB
common stock is less than $32.85, then the Exchange Ratio shall be adjusted such
that each issued and outstanding share of Savings Bank Common Stock shall be
converted into the right to receive a fraction of a share of ONB common stock
determined by dividing $27.9225 by the Average Price Per Share of ONB common
stock. If the Average Price Per Share of ONB common stock is not less than
$32.85 or not more than $40.15, then there shall be no adjustment to the
Exchange Ratio.
(c) The "Average Price Per Share" of ONB common stock shall be calculated
based upon the average of the per share closing prices of ONB common stock as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market System for the first five (5) business days on
which shares of ONB common stock are traded within the ten (10) calendar days
immediately preceding the Effective Time.
2.02. No Fractional Shares. Certificates for fractional shares of ONB
common stock shall not be issued for fractional interests resulting from
application of the Exchange Ratio. Each shareholder of Savings Bank who would
otherwise have been entitled to a fraction of a share of ONB common stock shall
be paid in cash an amount equal to such fraction multiplied by the Average Price
Per Share of ONB common stock.
2.03. Recapitalization. If, between the date of this Agreement and the
Effective Time, ONB distributes or issues a stock dividend with respect to its
shares of common stock, or combines, subdivides, reclassifies or splits up its
issued and outstanding shares of common stock, such that the number of issued
and outstanding shares of ONB common stock is increased or decreased, then the
Exchange Ratio shall be adjusted so that Savings Bank's shareholders shall
receive, in the aggregate, such number of shares of ONB common stock
representing the same percentage of outstanding shares of ONB common stock at
the Effective
A-3
<PAGE>
Time as would have been represented by the number of shares such shareholders
would have received if any of the foregoing actions had not occurred.
2.04. Distribution of ONB Common Stock and Cash. (a) Immediately
following the Effective Time, ONB shall mail to each Savings Bank shareholder a
letter of transmittal providing instructions as to the transmittal to ONB of
certificates representing shares of Savings Bank Common Stock and the issuance
of shares of ONB common stock in exchange therefor pursuant to the terms of this
Agreement.
(b) Following the Effective Time, ONB shall distribute stock certificates
representing shares of ONB common stock and any cash payment, without interest,
for fractional shares, if any, to each former shareholder of Savings Bank within
ten (10) business days following delivery to ONB of the shareholder's
certificates representing such shareholder's shares of Savings Bank Common Stock
accompanied by a properly completed and executed letter of transmittal, all in
form and substance reasonably satisfactory to ONB and Savings Bank.
(c) Following the Effective Time, stock certificates representing Savings
Bank Common Stock shall be deemed to evidence ownership of ONB common stock for
all corporate purposes; provided, however, that no dividends or other
distributions otherwise payable subsequent to the Effective Time on shares of
ONB common stock shall be paid to any Savings Bank shareholder entitled to
receive the same until such shareholder has surrendered to ONB his or her
certificate or certificates representing Savings Bank Common Stock in exchange
for a certificate representing ONB common stock. Upon surrender of the
certificates representing shares of Savings Bank Common Stock, there shall be
paid in cash to the record holder of the new certificate evidencing shares of
ONB common stock the amount of all dividends and other distributions, without
interest thereon, withheld with respect to such shares of ONB common stock.
(d) ONB shall be entitled to rely upon the stock transfer books of Savings
Bank to establish the persons entitled to receive shares of ONB common stock
pursuant to this Agreement, which books, in the absence of actual knowledge by
ONB of any adverse claim thereto, shall be conclusive with respect to the
ownership of shares of Savings Bank Common Stock.
(e) With respect to any certificate for shares of Savings Bank Common Stock
which has been lost, stolen or destroyed, ONB shall be authorized to issue its
common stock (and to pay cash for fractional shares) to the registered owner of
such certificate upon ONB's receipt of an agreement to indemnify ONB against
loss with respect to such lost, stolen or destroyed certificate and an affidavit
of lost, stolen or destroyed stock certificate, both in form and substance
reasonably satisfactory to ONB, and upon compliance by the Savings Bank
shareholder with all other reasonable requirements of ONB in connection with
lost, stolen or destroyed stock certificates.
SECTION 3
DISSENTING SHAREHOLDERS
-----------------------
Shareholders of Savings Bank are not entitled to statutory dissenters'
rights since Savings Bank Common Stock is listed on NASDAQ. Savings Bank shall
take no action which would result in the loss of such listing on NASDAQ prior to
the Effective Time.
A-4
<PAGE>
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SAVINGS BANK
----------------------------------------------
Savings Bank hereby represents and warrants to ONB as follows:
4.01. Organization and Authority. (a) Savings Bank is a federally
chartered savings bank duly organized and validly existing under the laws of the
United States of America. Savings Bank has full power and authority (corporate
and otherwise) to own and lease its properties as presently owned and leased and
to conduct its business in the manner and by the means utilized as of the date
hereof. Except for shares in Greenmark, Inc. and Kirkwood Corporation, except
for shares of common stock of the Federal Home Loan Bank of Indianapolis and
except as provided in the Disclosure Schedule, Savings Bank has no subsidiaries
and owns no voting stock or equity securities of, or any interest in, any
corporation, partnership, association or other entity. Savings Bank has a class
of stock registered pursuant to Section 12, and is subject to the reporting
requirements, of the Securities Exchange Act of 1934, as amended (the "1934
Act"). Savings Bank is subject to primary federal regulatory supervision and
examination by the Office of Thrift Supervision ("OTS").
(b) Greenmark, Inc. ("Greenmark") is an Indiana corporation duly
organized and validly existing under the laws of the State of Indiana.
Greenmark's sole business activity is the marketing of property, casualty, life
and crop insurance. Savings Bank owns all of the issued and outstanding capital
stock of Greenmark. Greenmark has no subsidiaries and, except for 1,000 shares
of Savings Bank Common Stock, owns no voting stock or equity securities of, or
any interest in, any corporation, partnership, association or other entity.
(c) Kirkwood Corporation ("Kirkwood") is an Indiana corporation duly
organized and validly existing under the laws of the State of Indiana. Savings
Bank owns all of the issued and outstanding shares of capital stock of Kirkwood.
Kirkwood conducts no operations or business, has no assets (other than One
Thousand Dollars ($1,000) in cash or cash equivalents), liabilities or
obligations and owns no voting stock or equity securities of, or any interest
in, any corporation, partnership, association or other entity. Greenmark and
Kirkwood are hereinafter referred to collectively as the "Subsidiaries".
4.02. Authorization. (a) Savings Bank has the requisite corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder, subject to the fulfillment of the conditions precedent set forth in
Section 8.02 hereof. This Agreement and its execution and delivery by Savings
Bank have been duly authorized and approved by the Board of Directors of Savings
Bank. The Agreement constitutes a valid and binding obligation of Savings Bank,
subject to the fulfillment of the conditions precedent set forth in Section 8.02
hereof, and is enforceable in accordance with its terms, except to the extent
limited by general principles of equity and public policy and by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger (i) conflicts with or violates Savings Bank's Charter or By-Laws; (ii)
conflicts with or violates any local, state, federal or foreign law, statute,
ordinance, rule or regulation (provided that the approvals of or filings with
applicable government regulatory agencies or authorities required for
consummation of the Merger are obtained) or any court or administrative
judgment, order, injunction, writ or decree; (iii) conflicts with, results in a
breach of or constitutes a default under any note, bond, indenture, mortgage,
deed of trust, license, lease, contract,
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agreement, arrangement, commitment or other instrument to which Savings Bank is
a party or by which Savings Bank is subject or bound and which is material to
Savings Bank; (iv) except with respect to the right of McDonald & Company
Securities, Inc. to its fee for its investment banking services in connection
with the Merger, results in the creation of or gives any person, corporation or
entity the right to create any lien, charge, claim, encumbrance or security
interest, or results in the creation of any other rights or claims of any other
party or any other adverse interest, upon any right, property or asset of
Savings Bank; or (v) terminates or gives any person, corporation or entity the
right to terminate, accelerate, amend, modify or refuse to perform under any
note, bond, indenture, mortgage, deed of trust, license, lease, contract,
agreement, arrangement, commitment or other instrument to which Savings Bank is
bound or with respect to which Savings Bank is to perform any duties or
obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions of
applicable federal and state banking, thrift, securities and corporation
statutes, all as amended, and the rules and regulations promulgated thereunder,
no notice to, filing with, exemption by or consent, authorization or approval of
any governmental agency or body is necessary for the consummation of the Merger
by Savings Bank.
4.03. Capitalization. (a) The authorized capital stock of Savings
Bank consists, and at the Effective Time will consist, of 2,000,000 shares of
preferred stock, $1.00 par value per share, none of which shares are issued or
outstanding ("Preferred Stock") and 5,000,000 shares of common stock, $.01 par
value per share, 543,300 (including 1,000 shares owned by Greenmark) of which
shares are validly issued and outstanding, which number of issued and
outstanding shares of Savings Bank Common Stock is subject to increase to a
total of 583,200 shares pursuant to the exercise of options (collectively, the
"Stock Options") granted under the First United Savings Bank Stock Option Plan
("Stock Option Plan") to purchase an aggregate of 39,900 shares of Savings Bank
Common Stock (in Section 2 hereof and sometimes hereinafter referred to as
"Savings Bank Common Stock"). Such issued and outstanding shares of Savings
Bank Common Stock have been duly and validly authorized by all necessary
corporate action of Savings Bank, are validly issued, fully paid and
nonassessable and have not been issued in violation of any pre-emptive rights of
any present or former Savings Bank shareholders. Savings Bank has no capital
stock authorized, issued or outstanding other than as described in this Section
4.03(a) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of Savings Bank Common Stock, except for
39,900 shares of Savings Bank Common Stock pursuant to the exercise of Stock
Options. As of June 30, 1994, Savings Bank had total shareholders equity of
$9,841,899, which consisted of common stock of $5,423, paid-in capital of
$4,907,561 and retained earnings of $4,928,915. A description of the terms,
relative rights, preferences and limitations of the Savings Bank Common Stock
and the Preferred Stock is contained in the Charter of Savings Bank, a copy of
which is set forth in the Disclosure Schedule pursuant to Section 4.04 hereof
(for purposes of this Agreement, "Disclosure Schedule" shall mean the schedules
referencing the applicable provisions of this Section 4 which are attached
hereto and made a part of this Agreement).
(b) The authorized capital stock of Greenmark consists, and at the
Effective Time will consist, of 1,000 shares of common stock, no par value per
share, thirty-three (33) of which shares are outstanding and validly issued to
Savings Bank. Such issued and outstanding shares of common stock of Greenmark
have been duly and validly authorized by all necessary corporate action of
Greenmark, are validly issued, fully paid and non-assessable and have not been
issued in violation of any pre-emptive rights of any present or former Greenmark
shareholders. All of the issued and outstanding shares of Greenmark common
stock are owned by Savings Bank free and clear of all liens, pledges, charges,
claims, encumbrances, restrictions, security interests, options and pre-emptive
rights and of all other rights or claims of any other person, corporation or
entity with respect thereto. Greenmark has no capital stock authorized, issued
or outstanding other than as described in this Section 4.03(b) and has no
intention or obligation to authorize or issue any other capital stock or any
additional shares of common stock of Greenmark. As of June 30, 1994, Greenmark
had total
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assets of $227,843, total liabilities of $14,276 and total capital of $213,117,
which capital consisted of common stock of $-0-, capital surplus of $30,000, and
undivided profits of $183,117.
(c) The authorized capital stock of Kirkwood consists, and at the
Effective Time will consist, of 1,000 shares of common stock, $1.00 par value
per share, all of which shares are outstanding and validly issued to Savings
Bank. Such issued and outstanding shares of common stock of Kirkwood have been
duly and validly authorized by all necessary corporate action of Kirkwood, are
validly issued, fully paid and non-assessable and have not been issued in
violation of any pre-emptive rights of any present or former Kirkwood
shareholders. All of the issued and outstanding shares of Kirkwood common stock
are owned by Savings Bank free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights or claims of any other person, corporation or entity
with respect thereto. Kirkwood has no capital stock authorized, issued or
outstanding other than as described in this Section 4.03(c) and has no intention
or obligation to authorize or issue any other capital stock or any additional
shares of common stock of Kirkwood. As of June 30, 1994, Kirkwood had total
assets of $1,000, no liabilities and total capital of $1,000, which capital
consisted solely of common stock of $1,000.
(d) Except for options to purchase 39,900 shares of Savings Bank
Common Stock under the Stock Option Plan, there are no options, warrants,
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any capital stock, or any securities
convertible into or representing the right to purchase or otherwise acquire any
capital stock or debt securities, of Savings Bank by which Savings Bank is or
may become bound. Savings Bank does not have any contractual or other
obligation to repurchase, redeem or otherwise acquire any of its issued and
outstanding shares of Savings Bank Common Stock. Set forth in the Disclosure
Schedule is a true, accurate and complete (i) copy of an incentive stock option
agreement and a non-qualified stock option agreement that are identical in all
material respects to the remaining outstanding stock option agreements (except
as to the number of shares subject to the option, the purchase price per share
and the duration of the option), (ii) copy of the Stock Option Plan and (iii) a
list of all optionees and including the number of shares subject to each Stock
Option.
(e) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to the
capital stock, or any securities convertible into or representing the right to
purchase or otherwise acquire the capital stock or any debt securities, of the
Subsidiaries by which the Subsidiaries are or may become bound. The
Subsidiaries do not have any contractual or other obligation to repurchase,
redeem or otherwise acquire any of their respective outstanding shares of
capital stock.
(f) Except as set forth in the Disclosure Schedule, Savings Bank has
no knowledge of any person who beneficially owns 5% or more of the issued and
outstanding shares of Savings Bank Common Stock.
4.04. Organizational Documents. The Charter and By-Laws of Savings
Bank, representing true, accurate and complete copies of such corporate
documents of Savings Bank in effect as of the date of this Agreement, have been
delivered to ONB and are included in the Disclosure Schedule.
4.05. Compliance with Law. (a) Except as provided in the Disclosure
Schedule, neither Savings Bank nor any of the Subsidiaries has engaged in any
activity or has taken or omitted to take any action which has resulted in the
violation of any local, state, federal or foreign law, statute, regulation,
rule, ordinance, order, restriction or requirement nor is it in violation of any
order, injunction, judgment, writ or decree of any court or government agency or
body, the violation of which could have a material adverse effect on the
financial condition, results of operations, business, assets or capital of
Savings Bank and the Subsidiaries on a consolidated basis. Each of Savings Bank
and Greenmark possesses and holds all licenses, franchises,
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permits, certificates and other authorizations necessary for the continued
conduct of its business without interference or interruption, and such licenses,
franchises, permits, certificates and authorizations held by Savings Bank or
Greenmark are transferable to First Citizens, as applicable, at the Effective
Time without any restrictions or limitations thereon or the need to obtain any
consents of government agencies or other third parties other than as set forth
in this Agreement.
(b) All agreements, understandings and commitments with, and all
orders and directives of, all government regulatory agencies or authorities with
respect to the financial condition, results of operations, business, assets or
capital of Savings Bank which presently are binding upon or require action by,
or at any time during the last five (5) years have been binding upon or have
required action by, Savings Bank, including, without limitation, all
correspondence, communications and commitments related thereto, are set forth in
the Disclosure Schedule. There are no uncured violations, or violations with
respect to which refunds or restitutions may be required, cited in any
examination report provided to Savings Bank as a result of an examination by any
regulatory agency or body or set forth in any accountant's, auditor's or other
report to Savings Bank.
(c) All of the existing offices and branches of Savings Bank have been
legally authorized and established in accordance with all applicable federal,
state and local laws, statutes, regulations, rules, ordinances, orders,
restrictions and requirements. Savings Bank does not have any approved but
unopened offices or branches.
4.06. Accuracy of Statements Made and Materials Provided to ONB. (a)
No representation, warranty or other statement made, or any information
provided, by Savings Bank in this Agreement or in the Disclosure Schedule (and
any update thereto) and no written report, statement, list, materials or other
written information which shall be provided subsequent to the date hereof by any
executive officer of Savings Bank or any of Savings Bank's agents to ONB or any
of its agents in connection with this Agreement, the Merger, ONB's due diligence
investigation or confidential review of Savings Bank or otherwise, including,
without limitation, any written information with respect to Savings Bank's
business, capital, assets, financial condition, results of operations, and
directors and officers for inclusion in the Registration Statement (as defined
in Section 7.02 hereof) and proxy statement-prospectus relating to the Merger,
contains or shall contain (with respect to information relating to the
Registration Statement at the time it is declared effective and with respect to
information relating to the proxy statement-prospectus at the time it is mailed
to Saving Bank's shareholders) any untrue or misleading statement of material
fact or omits or shall omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not false or misleading.
(b) All materials or information provided by Savings Bank to ONB for
use by ONB in any filing with any state or federal bank or thrift regulatory
agency or authority shall not, at the time such filings are made, contain any
untrue or misleading statement of material fact or shall omit to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not false or misleading.
4.07. Litigation and Pending Proceedings. (a) Except as set forth in
the Disclosure Schedule, there are no claims, actions, suits, proceedings,
arbitrations or investigations pending or, to the best knowledge of Savings Bank
after due inquiry, threatened in any court or before any government agency or
authority, arbitration panel or otherwise (nor does Savings Bank have any
knowledge of a basis for any claim, action, suit, proceeding, litigation,
arbitration or investigation) against, by or affecting Savings Bank which could
have a material adverse effect on the financial condition, results of
operations, business, assets or capital of
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Savings Bank, whether individually or on a consolidated basis, or which would
prevent the performance of this Agreement, declare the same unlawful or cause
the rescission hereof.
(b) Neither Savings Bank nor either of the Subsidiaries is (i) subject
to any outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority, (ii) presently charged
with or under governmental investigation with respect to any actual or alleged
violations of any law, statute, rule, regulation or ordinance, or (iii) the
subject of any pending or, to the best knowledge of Savings Bank, threatened
proceeding by any government regulatory agency or authority having jurisdiction
over its business, properties or operations.
4.08. Financial Statements and Reports. Savings Bank has delivered
to ONB copies of the following financial statements and reports of Savings Bank
(collectively, the "Savings Bank Financial Statements"):
(a) Consolidated statements of condition as of June 30, 1993 and 1994
and the related statements of income and statements of changes in stockholders'
equity of Savings Bank as of and for the fiscal years ended June 30, 1992, 1993
and 1994; and
(b) Consolidated statements of cash flows of Savings Bank for the
fiscal years ended June 30, 1992, 1993 and 1994.
The Savings Bank Financial Statements are true, accurate and complete
in all material respects and present fairly the consolidated financial positions
of Savings Bank as of and at the dates shown and the consolidated results of
operations for the periods covered thereby. The Savings Bank Financial
Statements described in clauses (a) and (b) above are audited financial
statements and have been prepared in conformance with generally accepted
accounting principles applied on a consistent basis. The Savings Bank Financial
Statements do not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, absolute or contingent, or any
other facts, which inclusion or omission would render any of the Savings Bank
Financial Statements false, misleading or inaccurate in any material respect as
of the respective dates thereof.
4.09. Properties, Contracts, Employees and Other Agreements. (a)
Set forth in the Disclosure Schedule is a true, accurate and complete copy and,
when applicable, a list or description of the following:
(i) A brief description and the location of all real property
owned by Savings Bank and the principal buildings and
structures located thereon, together with a legal
description of such real property, and each lease of real
property to which Savings Bank is a party (excluding any
exhibits thereto which are not material), identifying the
parties thereto, the annual rental payable, the expiration
date of the lease and a brief description of the property
covered;
(ii) All loan or credit agreements and promissory notes relating
to money borrowed by Savings Bank, all land or conditional
sales contracts or other title retention agreements and all
agreements for the purchase of federal funds to which
Savings Bank or either of the Subsidiaries is a party;
(iii) All agreements, contracts, leases, lines of credit,
understandings, commitments or obligations of Savings Bank
or either of the Subsidiaries which individually or in the
aggregate:
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(A) involve payment or receipt by Savings Bank (other than
as disbursements of loan proceeds to customers or loan
payments by customers) or either of the Subsidiaries
of more than $10,000 during any twelve (12) month
period;
(B) involve payments based on profits of Savings Bank or
either of the Subsidiaries;
(C) relate to the purchase of goods, products, supplies or
services in excess of $5,000;
(D) were not made in the ordinary course of business; or
(E) may not be terminated without penalty within one (1)
year from the date of this Agreement; and
(iv) The name and current annual salary of each director,
officer and employee of Savings Bank or either of the
Subsidiaries whose current annual salary from Savings Bank
or either of the Subsidiaries is in excess of $50,000, and
the profit sharing, bonus or other form of compensation
(other than salary) paid or payable by Savings Bank or
either of the Subsidiaries to or for the benefit of each
such person for the calendar years ended December 31, 1993
and 1994, and any employment, severance or deferred
compensation agreement or arrangement with respect to each
such person;
(b) Savings Bank has, prior to the date of this Agreement, provided or
given access to ONB to the files and documentation of all of its borrowers, or
persons or entities that are or may become obligated to Savings Bank under a
letter of credit, line of credit, loan transaction, loan agreement, promissory
note or other commitment of Savings Bank, in excess of $10,000 individually or
in the aggregate, whether in principal, interest or otherwise, and including all
guarantors of such indebtedness; and
(c) To the best knowledge of Savings Bank, each of the agreements,
contracts, commitments, leases, instruments and documents set forth in the
Disclosure Schedule relating to this Section 4.09 is valid and enforceable in
accordance with its terms. Savings Bank is and, to its best knowledge, all
other parties thereto are in compliance with the provisions thereof, and Savings
Bank is not and, to its best knowledge, no other party thereto is in default in
the performance, observance or fulfillment of any material obligation, covenant
or provision contained therein. None of the foregoing requires the consent of
any party to its assignment in connection with the Merger.
4.10. Absence of Undisclosed Liabilities. Except as set forth in the
Disclosure Schedule, except as provided in the Savings Bank Financial
Statements, except for accounts payable incurred and unfunded loan commitments
made to customers in the ordinary course of business, except for additional
borrowings from the Federal Home Loan Bank of Indianapolis incurred in the
ordinary course of business between the date hereof and the Effective Time and
except for the transactions contemplated by the Purchase and Assumption
Agreement, neither Savings Bank nor either of the Subsidiaries has any
obligation, agreement, contract, commitment, liability, lease or license which
exceeds $5,000 individually or in the aggregate, or any obligation, agreement,
contract, commitment, liability, lease or license made outside of the ordinary
course of business.
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4.11. Title to Assets. (a) Savings Bank has good and marketable
title in fee simple absolute to all real property (including, without
limitation, all real property used as the Greencastle office of Savings Bank and
all other real estate owned) which is reflected in the Savings Bank Financial
Statements as of June 30, 1994; good and marketable title to all personal
property reflected in the Savings Bank Financial Statements as of June 30, 1994,
other than personal property disposed of in the ordinary course of business
since June 30, 1994; good and marketable title to or right to use by valid and
enforceable lease or contract all other properties and assets (whether real or
personal, tangible or intangible) which Savings Bank purports to own or which
Savings Bank uses in its business; and good and marketable title to, or right to
use by valid and enforceable lease, all property and assets acquired and not
disposed of or leased, as the case may be, since June 30, 1994. All of such
properties and assets owned by Savings Bank are owned free and clear of all land
or conditional sales contracts, mortgages, liens, pledges, restrictions,
security interests, charges, claims, rights of third parties or encumbrances of
any nature except (i) as set forth in the Disclosure Schedule; (ii) as
specifically noted in reasonable detail in the Savings Bank Financial
Statements; (iii) statutory liens for taxes not yet delinquent or being
contested in good faith by appropriate proceedings; (iv) pledges or liens
required to be granted in connection with the acceptance of government deposits
or granted in connection with repurchase or reverse repurchase agreements; and
(v) easements, encumbrances and liens of record, minor imperfections of title,
building or use restrictions, variations and other limitations which are not
substantial in amounts, do not materially detract from the value or materially
interfere with the present or contemplated use of any of the properties subject
thereto or otherwise materially impair the use thereof for the purposes for
which they are held or used. All real property owned or leased by Savings Bank
is in material compliance with all applicable zoning and land use laws.
(b) To the best of Savings Bank's knowledge, Savings Bank has
conducted its business in compliance with all federal, state, county and
municipal laws, statutes, regulations, rules, ordinances, orders, directives,
restrictions and requirements relating to, without limitation, responsible
property transfer, underground storage tanks, petroleum products, air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or toxic or hazardous substances or to the manufacturing, recycling,
handling, processing, distribution, use, generation, treatment, storage,
disposal or transport of any hazardous or toxic substances or petroleum products
(including polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, without
limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and all regulations
of the Environmental Protection Agency, the Nuclear Regulatory Agency, the Army
Corp of Engineers, the Department of Interior, the United States Fish and
Wildlife Service and any state department of natural resources or state
environmental protection agency now or at any time thereafter in effect
(collectively, "Environmental Laws"). There are no pending or, to the best
knowledge of Savings Bank, threatened claims, actions or proceedings by any
sewage district or other federal, state or local governmental agency or
authority against Savings Bank with respect to any of the Environmental Laws
and, to the best of Savings Bank's knowledge, there is no basis or grounds for
any such claim, action or proceeding. No environmental clearances or other
governmental environmental approvals are required for the conduct of Savings
Bank's business or consummation of the Merger. To the best of Savings Bank's
knowledge, Savings Bank is not the owner, and has not been in the chain of title
or the operator or lessee, of any property on which any substances have been
used, stored, deposited, treated, recycled or disposed of, which substances if
known to be present on, at or under such property would require clean-up,
removal or some other remedial action under any of the Environmental Laws.
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(c) Savings Bank (i) is not in default in any respect under any
agreements pursuant to which it leases real or personal property, (ii) has no
knowledge of any default under such agreements by any party thereto and (iii)
has no knowledge of any event which, with notice or lapse of time or both, would
constitute a default or a breach thereof.
4.12. Loans and Investments. (a) Except as set forth in the
Disclosure Schedule, Savings Bank has no loan in excess of $10,000 that has been
classified by management as "Substandard," "Doubtful" or "Loss" or in excess of
$10,000 that has been identified by accountants or auditors (internal or
external) as having a significant risk of uncollectability. The most recent
loan watch list of Savings Bank and a list of all loans in excess of $10,000
that Savings Bank has determined to be ninety (90) days or more past due with
respect to principal or interest payments or has placed on nonaccrual status are
set forth in the Disclosure Schedule.
(b) All loans reflected in the Savings Bank Financial Statements as of
June 30, 1994 and which have been made, extended, renewed, restructured,
approved, amended or acquired since June 30, 1994 (i) have been made for good,
valuable and adequate consideration in the ordinary course of business; (ii) to
the best of Savings Bank's knowledge, constitute the legal, valid and binding
obligation of the obligor and any guarantor named therein, except to the extent
limited by general principles of equity and public policy or by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relative to or
affecting the enforcement of creditors' rights; (iii) are evidenced by notes,
instruments or other evidences of indebtedness which are true, genuine and what
they purport to be; and (iv) are secured, to the extent that Savings Bank has a
security interest in collateral or a mortgage securing such loans, by perfected
security interests or recorded mortgages naming Savings Bank as the secured
party or mortgagee.
(c) Except as set forth in the Disclosure Schedule, the reserves, the
allowance for possible loan and lease losses and the carrying value for real
estate owned which are shown on the Savings Bank Financial Statements are, in
the opinion of management of Savings Bank, adequate in all respects under the
requirements of generally accepted accounting principles applied on a consistent
basis to provide for possible losses on items for which reserves were made, on
loans and leases outstanding and real estate owned as of the respective dates.
To the best knowledge of Savings Bank, the aggregate loan balances outstanding
as of June 30, 1994, in excess of the reserve for loan losses as of such date,
are collectible in accordance with their respective terms.
(d) None of the investments reflected in the Savings Bank Financial
Statements as of and for the period ended June 30, 1994 and none of the
investments made by Savings Bank since June 30, 1994 are subject to any
restriction, whether contractual or statutory, which materially impairs the
ability of Savings Bank to dispose freely of such investment at any time.
Savings Bank is not a party to any repurchase agreements with respect to
securities.
(e) Set forth in the Disclosure Schedule is a true, accurate and
complete list of all loans in which Savings Bank has any participation interest
or which have been made with or through another financial institution on a
recourse basis against Savings Bank.
(f) The aggregate amount of Savings Bank's indebtedness to the Federal
Home Loan Bank of Indianapolis does not, and will not at the Effective Time,
exceed $20 Million.
4.13. Anti-takeover Provisions. Savings Bank has no shareholder
rights plan or any other plan, program, agreement or provision involving,
restricting, prohibiting or discouraging a change in control,
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merger or other combination of Savings Bank or which may be considered an anti-
takeover mechanism, except for provisions contained in its Charter, By-Laws and
employee benefit plans.
4.14. Employee Benefit Plans. (a) With respect to the employee
benefit plans, as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether written or oral, sponsored
or otherwise maintained by Savings Bank; in which Savings Bank participates as a
participating employer; to which Savings Bank contributes; with respect to which
Savings Bank acts as administrator, trustee or fiduciary, whether written or
oral; and including any such plans which have been terminated, merged into
another plan, frozen or discontinued (collectively, the "Savings Bank Plans"):
(i) all such Savings Bank Plans have, on a continuous basis since their
adoption, been maintained in compliance in all materials respects with the
requirements prescribed by all applicable statutes, orders and governmental
rules or regulations, including, without limitation, ERISA, the Internal Revenue
Code, as amended ("Code"), and the Department of Labor ("Department") and the
Treasury Regulations promulgated thereunder; (ii) all Savings Bank Plans
intended to constitute tax-qualified plans under Section 401(a) of the Code have
complied since their adoption, or have been amended to comply, in all material
respects, with all applicable requirements of the Code and the Treasury
Regulations promulgated thereunder, and favorable determination letters have
been timely received from the Internal Revenue Service ("Service") with respect
to each such Savings Bank Plan stating that each, in its current form (or at the
time of its disposition if it has been terminated, merged, frozen or
discontinued), is qualified under and satisfies all applicable provisions of the
Code and Treasury Regulations, except that determination letters relating to the
provisions of the Tax Reform Act of 1986 have not yet been requested; (iii) no
Savings Bank Plan (or its related trust) holds any Savings Bank Common Stock or
any stock of a related or affiliated person or entity, except as provided in the
Disclosure Schedule; (iv) Savings Bank has no liability to the Department or the
Service with respect to any Savings Bank Plan; (v) Savings Bank has not engaged
in any transaction that may subject Savings Bank or any Savings Bank Plan to a
civil penalty imposed by Section 502 of ERISA; (vi) no prohibited transaction
(as defined in Section 406 of ERISA and as defined in Section 4975(c) of the
Code) has occurred with respect to any Savings Bank Plan; (vii) each Savings
Bank Plan subject to ERISA or intended to be qualified under Section 401(a) of
the Code has been and, if applicable, is being operated in accordance with the
applicable provisions of ERISA and the Code and the Department and Treasury
Regulations promulgated thereunder; (viii) to the best of Savings Bank's
knowledge, no participant or beneficiary or non-participating employee has been
denied any benefit due or to become due under any Savings Bank Plan or has been
misled as to his or her rights under any Savings Bank Plan; (ix) all obligations
required to be performed by Savings Bank under any provision of a Savings Bank
Plan have been performed by it and it is not in default under or in violation of
any provision of a Savings Bank Plan; (x) no event has occurred which would
constitute grounds for an enforcement action by any party under Part 5 of Title
I of ERISA under any Savings Bank Plan; and (xi) there are no actions, suits,
proceedings or claims pending (other than routine claims for benefits) or, to
the best knowledge of Savings Bank, threatened against Savings Bank, any Savings
Bank Plan or the assets of any Savings Bank Plan.
(b) With regard to any Savings Bank Plan intended to be qualified
under Section 401(a) of the Code, to the best knowledge of Savings Bank, no
director, officer, employee or agent of Savings Bank has engaged in any action
or failed to act in such a manner that, as a result of such action or failure to
act, (i) the Service could revoke or deny that plan's qualification under
Section 401(a) of the Code or the exemption under Section 501(a) of the Code for
any trust related to such Plan or (ii) a participant or beneficiary or a non-
participating employee has been denied any benefit due or to become due under
such Savings Bank Plan or has been misled as to his or her rights under such
Savings Bank Plan.
(c) Savings Bank has provided to ONB in the Disclosure Schedule true,
accurate and complete copies or summaries and, in the case of any plan or
program which has not been reduced to writing, a
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complete summary, of all of the following: (i) pension, retirement, profit-
sharing, savings, stock purchase, stock bonus, stock ownership, stock option and
stock appreciation or depreciation right plans and agreements and all amendments
thereto (except that with respect to the stock option agreements between Savings
Bank and certain employees of Savings Bank with respect to the Stock Options,
only a true, accurate and complete copy of an incentive stock option agreement
and a non-qualified stock option agreement that are identical in all material
respects to the remaining outstanding stock option agreements have been included
in the Disclosure Schedule and with respect to Savings Bank's health insurance
plan, only a summary thereof has been included in the Disclosure Schedule); (ii)
all employment, deferred compensation (whether funded or unfunded), salary
continuation, consulting, bonus, severance and collective bargaining agreements,
arrangements or understandings; (iii) all executive and other incentive
compensation plans and programs; (iv) all group insurance and health contracts,
policies or plans; and (v) all other incentive, welfare or employee benefit
plans, understandings, arrangements or agreements, maintained or sponsored,
participated in, or contributed to by Savings Bank for its current or former
directors, officers or employees, including each of the Director Supplemental
Retirement Benefit Plan Agreements and each of the Employee Supplemental
Retirement Plan Agreements referenced in Section 7.03 hereof. Except as
otherwise provided in the Disclosure Schedule, all of the foregoing have been,
since their inception, drafted, implemented, administered and, where applicable,
amended or terminated in accordance with their terms and with applicable law.
(d) No current or former director, officer or employee of Savings Bank
is entitled to any benefit under any welfare benefit plans (as defined in
Section 3(1) of ERISA) after termination of employment with Savings Bank, except
that such individuals may be entitled to continue their group health care
coverage pursuant to Section 4980B of the Code if they pay the cost of such
coverage pursuant to the applicable requirements of the Code with respect
thereto.
(e) With respect to any group health plan (as defined in Section
607(1) of ERISA) sponsored or maintained by Savings Bank, in which Savings Bank
participates as a participating employer or to which Savings Bank contributes,
to the best knowledge of Savings Bank, no director, officer, employee or agent
of Savings Bank has engaged in any action or failed to act in such a manner
that, as a result of such action or failure to act, a tax would be imposed upon
Savings Bank under Section 4980B(a) of the Code. With respect to all such
plans, all applicable provisions of Section 4980B of the Code and Section 601 of
ERISA have been complied with in all material respects by Savings Bank.
(f) Except as otherwise provided in the Disclosure Schedule, there are
no collective bargaining, employment, management, consulting, deferred
compensation, reimbursement, severance or similar agreements, commitments or
understandings, or any employee welfare, benefit or retirement plan, binding
upon Savings Bank and no such agreement, commitment, understanding or plan is
under discussion or negotiation by management with any employee or group of
employees, any member of management or any other person.
4.15. Obligations to Employees. All accrued obligations and
liabilities of Savings Bank, whether arising by operation of law, by contract or
by past custom, for payments to trusts or other funds, to any government agency
or authority or to any present or former director, officer, employee or agent of
Savings Bank (or his heirs, legatees or legal representatives) have been and are
being paid to the extent required by applicable law or by the plan, trust,
contract or past custom or practice, and adequate actuarial accruals and
reserves for such payments have been and are being made by Savings Bank in
accordance with generally accepted accounting principles and applicable law
applied on a consistent basis and actuarial methods with respect to the
following: (a) withholding taxes, unemployment compensation or social security
benefits; (b) all pension, profit-sharing, savings, stock purchase, stock bonus,
stock ownership, stock option and stock appreciation rights plans; (c) all
employment, deferred compensation (whether funded or unfunded), salary
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continuation, consulting, severance, reimbursement or bonus plans or agreements;
(d) all executive and other incentive compensation plans or programs; (e) all
group insurance and health contracts and policies; and (f) all other incentive,
welfare, retirement or employee benefit plans or agreements maintained,
sponsored, participated in, or contributed to by Savings Bank for its current or
former directors, officers, employees and agents, including, without limitation,
all liabilities and obligations to the Savings Bank Plans (as defined in Section
4.14(a) hereof). All obligations and liabilities of Savings Bank, whether
arising by operation of law, by contract or by past custom or practice, for all
other forms of compensation which are or may be payable to its current or former
directors, officers, employees or agents have been and are being paid to the
extent required by applicable law or by the plan or contract, and adequate
actuarial accruals and reserves for payment therefor have been and are being
made by Savings Bank in accordance with generally accepted accounting and
actuarial principles applied on a consistent basis. All accruals and reserves
referred to in this Section 4.15 are correctly and accurately reflected and
accounted for in all material respects in the Savings Bank Financial Statements
and the books, statements and records of Savings Bank.
4.16. Taxes, Returns and Reports. Savings Bank has (a) duly filed
all federal, state, local and foreign tax returns of every type and kind
required to be filed, and each such return is true, accurate and complete in all
material respects; (b) paid all taxes, assessments and other governmental
charges due or claimed to be due upon it or any of its income, properties or
assets; and (c) not requested an extension of time for any such payments (which
extension is still in force). Except for taxes not yet due and payable, the
reserve for taxes in the Savings Bank Financial Statements as of June 30, 1994
is adequate to cover all of Saving Bank's tax liabilities (including, without
limitation, income taxes and franchise fees) that may become payable in future
years with respect to any transactions consummated prior to June 30, 1994.
Savings Bank does not have, nor will it have, any liability for taxes of any
nature for or with respect to the operation of its business, including the
business of any subsidiary, or ownership of its assets, including the assets of
any subsidiary, from the date hereof up to and including the Effective Time,
except to the extent set forth in the Subsequent Savings Bank Financial
Statements (as hereinafter defined). Savings Bank is not currently under audit
by any state or federal taxing authority. No federal, state or local tax
returns of Savings Bank have been audited by any taxing authority during the
past five (5) years.
4.17. Deposit Insurance. The deposits of Savings Bank are insured by
the Federal Deposit Insurance Corporation ("FDIC"), as amended, and Savings Bank
has paid or properly reserved or accrued for all current premiums and
assessments with respect to such deposit insurance.
4.18. Insurance. Set forth in the Disclosure Schedule is a list and
brief description of all policies of insurance (including, without limitation,
bankers' blanket bond, directors' and officers' liability insurance, property
and casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by Savings Bank on the date
hereof or with respect to which Savings Bank pays any premiums. Each such
policy is in full force and effect, all premiums due thereon have been paid when
due, and a true, accurate and complete copy thereof has been made available to
ONB prior to the date hereof.
4.19. Books and Records. The books and records of Savings Bank are
in all material respects complete and correct and accurately reflect the basis
for the respective financial condition, results of operations, assets and
capital of Savings Bank set forth in the Savings Bank Financial Statements.
4.20. Broker's, Finder's or Other Fees. Except for the fees of
Savings Bank's attorneys, accountants and investment bankers and the printing
and mailing costs relating to the proxy statement pertaining to the Merger, all
of which will be paid by Savings Bank prior to the Effective Time, no agent,
broker or other person acting on behalf of Savings Bank or acting under any
authority of Savings Bank is or shall be entitled
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to any commission, broker's or finder's fee or any other form of compensation or
payment from any of the parties hereto relating to this Agreement and the
Merger. A copy of Savings Bank's agreement with its investment banker relative
to its fees in connection with the Merger is set forth in the Disclosure
Schedule.
4.21. Interim Events. Except as otherwise permitted hereunder and
except for the transactions contemplated by the Purchase and Assumption
Agreement, since June 30, 1994, Savings Bank has not:
(a) Suffered any changes having a material adverse effect on its
financial condition, results of operations, assets, capital or business, except
as disclosed in the Disclosure Schedule;
(b) Suffered any material damage, destruction or loss to any of its
properties, whether covered by insurance or not;
(c) Declared, distributed or paid any dividend or other distribution
to its shareholders, except for payment of dividends as permitted by Section
6.03(a)(iii) hereof and except for 39,900 shares of Savings Bank Common Stock
issued pursuant to the exercise of the Stock Options;
(d) Repurchased, redeemed or otherwise acquired shares of its capital
stock, issued any shares of its capital stock or stock appreciation rights or
sold or agreed to issue or sell any shares of its capital stock or any right or
option to purchase or acquire any such stock or any security convertible into
such stock or taken any action to reclassify, recapitalize or split up its
stock, except for 39,900 shares of Savings Bank Common Stock issued pursuant to
the exercise of the Stock Options;
(e) Granted or agreed to grant any increase in benefits payable or to
become payable under any pension, retirement, profit sharing, health, bonus,
insurance or other welfare or benefit plan or agreement to employees, officers
or directors of Savings Bank, except as provided in the Disclosure Schedule;
(f) Except as provided in the Disclosure Schedule, increased the
salary, compensation or fees of any director, officer or employee, except for
normal increases in the ordinary course of business and in accordance with past
practices, or entered into any employment contract or understanding with any
officer or employee or installed any employee welfare, pension, retirement,
stock option, profit sharing or other similar plan or arrangement;
(g) Leased, sold or otherwise disposed of any of its assets except in
the ordinary course of business or as provided in the Disclosure Schedule or
leased, purchased or otherwise acquired from third parties any assets except in
the ordinary course of business;
(h) Except for the Merger, merged, consolidated or sold shares of
capital stock of Savings Bank; agreed or committed to merge or consolidate with
or into any third party; agreed or committed to sell the substantial assets or
any shares of capital stock of Savings Bank; or except pursuant to foreclosure
actions and liens or security interests securing loans, acquired or agreed to
acquire any securities, equity interest or business of any third party;
(i) Incurred, assumed or guaranteed any obligation or liability (fixed
or contingent) other than obligations and liabilities incurred in the ordinary
course of business (including borrowings in the ordinary course of business from
the Federal Home Loan Bank of Indianapolis);
(j) Mortgaged, pledged or subjected to a lien, security interest,
option or other encumbrance any of its assets except for tax and other liens
which arise by operation of law and with respect to which payment
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is not past due and except for pledges or liens: (i) required to be granted in
connection with acceptance by Savings Bank of government deposits or (ii)
granted in connection with repurchase or reverse repurchase agreements;
(k) Cancelled, released or compromised any loan, debt, obligation,
claim or receivable other than in the ordinary course of business;
(l) Entered into any transaction, contract or commitment other than
in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or loaning
of monies, other than in the ordinary course of its lending business; or
(n) Conducted its business in any manner other than substantially as
it was being conducted through June 30, 1994, except as otherwise provided in
the Disclosure Schedule.
4.22. Regulatory Filings. Savings Bank has filed and will continue
to file in a timely manner all filings with all federal and state regulatory
agencies and authorities as required by applicable law. All such filings with
federal and state regulatory agencies were true, accurate and complete in all
respects as of the dates of the filings and have been prepared in conformity
with generally accepted regulatory accounting principles applied on a consistent
basis, and no such filing contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements, at
the time and in light of the circumstances under which they were made, not false
or misleading.
4.23. Contracts. Savings Bank is not in default under or in breach
of or, to the best knowledge of Savings Bank, alleged to be in default under or
in breach of, any loan or credit agreement, conditional sales or other title
retention agreement, security agreement, bond, indenture, mortgage, license,
contract, lease, commitment or any other instrument or obligation, which breach
or default could have a material adverse effect on the financial condition,
results of operation, business, assets or capital of Savings Bank.
4.24. No Third Party Options. Except as provided in the Disclosure
Schedule with respect to the options to purchase 39,900 shares of Savings Bank
Common Stock under Savings Bank's stock option plan, there are no agreements,
options, commitments or rights with, of or to any third party to acquire any
shares of capital stock or assets of Savings Bank which are binding upon Savings
Bank or either of the Subsidiaries.
4.25. Representations and Warranties at the Effective Time. All
representations and warranties of Savings Bank contained herein shall be true,
accurate and complete in all material respects on and as of the Effective Time
as though made or given at such time, except as otherwise expressly contemplated
by this Agreement or the Purchase and Assumption Agreement.
4.26. Nonsurvival of Representations and Warranties. The
representations and warranties of Savings Bank contained in this Agreement shall
expire at the Effective Time, and thereafter Savings Bank and all directors,
officers and employees thereof shall have no further liability with respect
thereto. Nothing in the foregoing shall result in the termination of any of the
covenants provided for in this Agreement that shall survive by their terms the
Effective Time.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF ONB
-------------------------------------
ONB represents and warrants to Savings Bank with respect to itself
and, at the time it is formed and becomes a party to this Agreement, with
respect to Interim Thrift as follows:
5.01. Organization and Authority. ONB is a corporation duly
organized and validly existing under the laws of the State of Indiana, is a
registered bank holding company under the BHC Act, and has full power and
authority (corporate and otherwise) to own and lease its properties as presently
owned and leased and to conduct its business in the manner and by the means
utilized as of the date hereof. Interim Thrift is a federal stock savings bank
duly organized and validly existing under the laws of the United States of
America and has full power and authority (corporate and otherwise) to own and
lease its properties as presently owned and leased and to conduct its business
in the manner and by the means utilized as of the date hereof. First Citizens
is an Indiana chartered bank duly organized and validly existing under the laws
of the State of Indiana and has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and leased and to
conduct its business in the manner and by the means utilized as of the date
hereof.
5.02. Authorization. (a) Each of ONB and Interim Thrift has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder subject to the fulfillment of the conditions
precedent set forth in Section 8.01 hereof. This Agreement and its execution
and delivery by ONB and Interim Thrift have been duly authorized and approved by
the respective Boards of Directors of ONB and Interim Thrift. This Agreement
constitutes a valid and binding obligation of ONB and Interim Thrift, subject to
the conditions precedent set forth in Section 8.01 hereof, and is enforceable in
accordance with its terms, except to the extent limited by general principles of
equity and public policy and by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger (i) conflicts with or violates ONB's Articles of Incorporation or By-Laws
or Interim Thrift's Charter or By-Laws; (ii) conflicts with or violates any
local, state, federal or foreign law, statute, ordinance, rule or regulation
(provided that the approvals of or filings with applicable government regulatory
agencies or authorities required for consummation of the Merger are obtained) or
any court or administrative judgment, order, injunction, writ or decree; (iii)
conflicts with, results in a breach of or constitutes a default under any note,
bond, indenture, mortgage, deed of trust, license, contract, lease, agreement,
arrangement, commitment or other instrument to which ONB or Interim Thrift is a
party or by which ONB or Interim Thrift is subject or bound and which is
material to ONB on a consolidated basis; (iv) results in the creation of or
gives any person, corporation or entity the right to create any lien, charge,
claim, encumbrance or security interest, or results in the creation of any other
rights or claims of any other party or any other adverse interest, upon any
right, property or asset of ONB or Interim Thrift; or (v) terminates or gives
any person, corporation or entity the right to terminate, accelerate, amend,
modify or refuse to perform under any note, bond, indenture, mortgage, deed of
trust, license, lease, contract, agreement, arrangement, commitment or other
instrument to which ONB or Interim Thrift is bound or with respect to which ONB
or Interim Thrift is to perform any duties or obligations or receive any rights
or benefits.
(c) Other than in connection or in compliance with the provisions of
the BHC Act and applicable federal and state banking, thrift, securities and
corporation statutes, all as amended, and the rules and regulations promulgated
thereunder, no notice to, filing with, exemption by or consent, authorization or
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approval of any governmental agency or body is necessary for consummation by ONB
and Interim Thrift of the Merger.
5.03. Capitalization. (a) The authorized capital stock of ONB as of
the date of this Agreement consists of (i) 30,000,000 shares of common stock, no
par value per share, of which approximately 19,284,182 shares were issued and
outstanding as of June 30, 1994, and (ii) 2,000,000 shares of preferred stock,
no shares of which have been or are presently intended to be issued, other than
in connection with any obligations of ONB to issue such preferred stock under
its shareholders' rights plan. Such issued and outstanding shares of ONB common
stock have been duly and validly authorized by all necessary corporate action of
ONB, are validly issued, fully paid and nonassessable, and have not been issued
in violation of any pre-emptive rights of any present or former ONB
shareholders. All of the issued and outstanding shares of common stock of ONB's
subsidiaries are owned by ONB free and clear of all liens, pledges, charges,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights or claims of any other person, corporation or entity
with respect thereto, other than pursuant to the indentures governing its
outstanding subordinated debentures and medium term notes. Except as described
in this Section 5.03, ONB has no other authorized capital stock. Except for
shares of ONB common stock to be issued in connection with (i) ONB's dividend
reinvestment and stock purchase plan, (ii) ONB's outstanding convertible
subordinated debentures, (iii) acquisitions by ONB of other financial
institutions or holding companies, and (iv) ONB's restricted stock plan and
other employee benefit plans, ONB has no intention or obligation to authorize or
issue any other capital stock or any additional shares of ONB capital stock. On
a consolidated basis as of June 30, 1994, ONB had total shareholders' equity of
approximately $321.5 million, which consisted of common stock of $19.2 million,
capital surplus of $186.1 million and retained earnings of $117.4 million.
(b) Except for shares of ONB common stock to be issued in connection
with (i) ONB's dividend reinvestment and stock purchase plan, (ii) ONB's
outstanding convertible subordinated debentures, (iii) acquisitions by ONB of
other financial institutions or holding companies, and (iv) ONB's restricted
stock plan and other employee benefit plans, there are no options, warrants,
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any shares of ONB common stock, or any
securities convertible into or representing the right to purchase or otherwise
acquire any common stock or debt securities of ONB, by which ONB is or may
become bound. ONB does not have any contractual or other obligation to
repurchase, redeem or otherwise acquire any of its issued and outstanding shares
of common stock.
(c) ONB has no knowledge of any person who beneficially owns 5% or
more of its issued and outstanding shares of common stock.
5.04. Organizational Documents. The Articles of Incorporation and
By-Laws of ONB in effect as of the date of this Agreement have been delivered to
Savings Bank and represent true, accurate and complete copies of such corporate
documents of ONB in effect as of the date of this Agreement.
5.05. Compliance With Law. Neither ONB nor any of its subsidiaries
has engaged in any activity or has taken or omitted to take any action which has
resulted or could result in the violation of any local, state, federal or
foreign law, statute, rule, regulation, ordinance, order, restriction or
requirement or of any order, injunction, judgment, writ or decree of any court
or government agency or body, the violation of which could have a material
adverse effect on the financial condition, results of operations, business,
assets or capitalization of ONB and its subsidiaries on a consolidated basis.
Each of ONB and its subsidiaries possesses and holds all licenses, franchises,
permits, certificates and other authorizations necessary for the continued
conduct of its business without interference or interruption.
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5.06. Regulatory Filings. ONB has filed and will continue to file in
a timely manner all required filings with the Securities and Exchange Commission
("SEC"), including, but not limited to, all reports on Form 8, Form 8-K, Form
10-K and Form 10-Q and proxy statements, and with all other federal and state
regulatory agencies as required by applicable law. All filings by ONB with the
SEC and with all other federal and state regulatory agencies were true, accurate
and complete in all material respects as of the dates of the filings and no such
filings contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, at the time and in the
light of the circumstances under which they were made, not false or misleading.
5.07. Litigation and Pending Proceedings. (a) There are no claims,
actions, suits, proceedings, investigations or arbitrations pending or, to the
best knowledge of ONB after due inquiry, threatened in any court or before any
government agency or authority, arbitration panel or otherwise (nor does ONB
have any knowledge of a basis for any claim, action, suit, proceeding,
litigation, investigation or arbitration) against, by or affecting ONB or its
subsidiaries which could have a material adverse effect on the financial
condition, results of operations, business, assets or capitalization of ONB and
its subsidiaries on a consolidated basis, or which would prevent the performance
of this Agreement, declare the same unlawful or cause the rescission hereof.
(b) Neither ONB nor any of its subsidiaries is (i) subject to any
outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority having a material adverse
effect on its business, assets, capitalization, financial condition or results
of operations on a consolidated basis, (ii) presently charged with or under
governmental investigation with respect to any actual or alleged violations of
any law, statute, rule, regulation or ordinance, or (iii) the subject of any
pending or, to the best knowledge of ONB, threatened proceeding by any
government regulatory agency or authority having jurisdiction over its business,
properties or operations.
5.08. Financial Statements and Reports. (a) ONB has delivered to
Savings Bank copies of the following financial statements and reports of ONB and
its subsidiaries (collectively, the "ONB Financial Statements"):
(i) Consolidated balance sheets and related consolidated
statements of income and consolidated statements of
changes in shareholders' equity of ONB as of and for the
years ended December 31, 1991, 1992 and 1993 and as of and
for the periods ended June 30, 1993 and 1994; and
(ii) Consolidated statements of cash flows of ONB for the years
ended December 31, 1991, 1992 and 1993 and for the periods
ended June 30, 1993 and 1994.
(b) The ONB Financial Statements are true, accurate and complete in
all material respects and present fairly the consolidated financial positions of
ONB and its subsidiaries as of and at the dates shown and the consolidated
results of operations for the periods covered thereby. The ONB Financial
Statements described in clauses (a)(i) and (ii) above which consist of fiscal
year-end information are audited financial statements and have been prepared in
conformance with generally accepted accounting principles applied on a
consistent basis except as may otherwise be indicated in any accountants notes
or reports with respect to such financial statements. The ONB Financial
Statements do not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, absolute or contingent, or any
other facts, which inclusion or omission would render the ONB Financial
Statements false, misleading or inaccurate in any material respect.
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5.09. Shares to be Issued in the Merger. The shares of ONB common
stock which Savings Bank shareholders will be entitled to receive upon
consummation of the Merger pursuant to this Agreement will, at the Effective
Time, be duly authorized and will, when issued in accordance with this
Agreement, be validly issued, fully paid and nonassessable and will have been
registered under the Securities Act of 1933, as amended ("1933 Act") and listed
for trading on the NASDAQ National Market System.
5.10. Shareholder Approval. The approval by ONB's shareholders of
the Merger is not required.
5.11. Interim Events. Since June 30, 1994, ONB has not entered into
or incurred any obligation, agreement, contract, commitment, liability, lease or
license which could have a material adverse effect on the financial condition,
results of operations, business, assets or capitalization of ONB and its
subsidiaries on a consolidated basis.
5.12. Environmental Matters. To the best of ONB's knowledge, each of
ONB's subsidiaries has conducted its business in compliance with the
Environmental Laws. There are no pending or, to the best knowledge of ONB,
threatened claims, actions or proceedings by any sewage district or other
federal, state or local governmental agency or authority against any of ONB's
subsidiaries with respect to any of the Environmental Laws and, to the best of
ONB's knowledge, there is no basis or grounds for any such claim, action or
proceeding. No environmental clearances or other governmental approvals are
required for the conduct of business by any of ONB's subsidiaries or the
consummation of the Merger. To the best of ONB's knowledge, ONB is not the
owner, and has not been in the chain of title or the operator or lessee, of any
property on which any substances have been used, stored, deposited, treated,
recycled or disposed of, which substances if known to be present on, at or under
such property would require clean-up, removal or some other remedial action
under any of the Environmental Laws.
5.13. Representations and Warranties at the Effective Date. All
representations and warranties of ONB and First Citizens contained herein shall
be true, accurate and complete in all material respects on and as of the
Effective Time as though made or given at such time.
5.14. Nonsurvival of Representations and Warranties. The
representations and warranties of ONB and First Citizens contained in this
Agreement shall expire at the Effective Time and, thereafter, ONB and First
Citizens and all directors, officers and employees of ONB and First Citizens
shall have no further liability with respect thereto. Nothing in the foregoing
shall result in the termination of any covenants provided for herein that shall
survive by their terms the Effective Time.
SECTION 6
COVENANTS OF SAVINGS BANK
-------------------------
Savings Bank covenants and agrees with ONB as follows:
6.01. Shareholder Approval. Subject to Section 6.06(b) hereof,
Savings Bank shall submit this Agreement to its shareholders for approval at a
meeting to be called and held in accordance with applicable law and the Charter
and By-Laws of Savings Bank at a date reasonably in advance of the Effective
Time. Subject to Section 6.06(b) hereof, the Board of Directors of Savings Bank
shall recommend to Savings Bank's shareholders that such shareholders approve
this Agreement and the Merger and shall solicit proxies voting in favor of this
Agreement from such shareholders.
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6.02. Other Approvals and Actions. (a) Savings Bank shall proceed
expeditiously, cooperate fully and use its best efforts to assist ONB in
procuring upon reasonable terms and conditions all consents, authorizations,
approvals, registrations and certificates, in completing all filings and
applications and in satisfying all other requirements prescribed by law which
are necessary for consummation of the Merger on the terms and conditions
provided in this Agreement at the earliest possible reasonable date. The Merger
shall not be consummated unless and until the necessary approvals of the OTS, or
the notifications required by OTS regulations, are received or made.
(b) Savings Bank shall cooperate with ONB in effectuating the
freezing, termination or dissolution of the First United Savings Bank Employee
Stock Ownership Plan and Trust ("ESOP") and the First United Savings Bank
Financial Institutions Retirement Fund ("Savings Bank Retirement Plan"), as
provided in Section 7.03 hereof, for making any applications to the Service for
a determination letter to the effect that such actions will not adversely affect
their tax-qualified status, and for filing all required notices and applications
with the Pension Benefit Guaranty Corporation related thereto.
(c) Savings Bank shall take all necessary steps to (i) amend the Stock
Option Plan to eliminate automatic grants of additional options to acquire
shares of Savings Bank Common Stock at its meeting of shareholders to be held in
October, 1994, (ii) terminate the Stock Option Plan as of the Effective Time
such that, among other things, the Stock Options will terminate or lapse if not
exercised prior to the Effective Time, and (iii) amend each Director
Supplemental Benefit Plan Agreement and each Employee Supplemental Benefit Plan
Agreement in accordance with Section 7.03 hereof.
(d) Savings Bank shall do all acts and things required to be done by
it pursuant to Section 7.09 hereof.
6.03. Conduct of Business. (a) On and after the date of this
Agreement and until the Effective Time or until this Agreement shall be
terminated as herein provided, Savings Bank shall not, without the prior written
consent of ONB, except as contemplated by the Purchase and Assumption Agreement:
(i) make any changes in its capital stock accounts
(including, without limitation, any stock split, stock
dividend, recapitalization or reclassification);
(ii) authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to the
issued and outstanding shares of Savings Bank Common Stock
as set forth in Section 4.03 hereof and other than
pursuant to existing options to purchase an aggregate of
39,900 shares of Savings Bank Common Stock;
(iii) distribute or pay any dividends on its shares of common
stock, or make any other distribution to its shareholders,
except that Savings Bank may pay to its shareholders its
normal and customary quarterly cash dividend in an amount
not greater than twelve cents ($0.12) per share of Savings
Bank Common Stock for each such dividend until the
Effective Time; provided, however, that no dividend may be
paid to Savings Bank's shareholders during the quarterly
period in which the Merger is consummated if, during such
period, Savings Bank's shareholders will become entitled
to receive dividends on their shares of ONB common stock
received pursuant to this Agreement;
(iv) redeem any of its outstanding shares of common stock;
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(v) merge, combine or consolidate or effect a share exchange
with or sell its assets or any of its securities to any
other person, corporation or entity not in the ordinary
course of business or enter into any other transaction not
in the ordinary course of business, except as provided in
the Disclosure Schedule;
(vi) purchase any assets or assume any liabilities of any bank
or thrift holding company, bank, thrift, corporation or
other entity, other than in the ordinary course of
business;
(vii) except in the ordinary course of business in accordance
with sound banking practices (and, with respect to loan
transactions or commitments, letters of credit and deposit
accounts, only on terms and conditions which are not
materially more favorable than those available to the
borrower or customer from competitive sources in
transactions in the ordinary course of business) make any
loan commitment, payment or disbursement, accept any
deposit, enter into any lease, contract, agreement
understanding or arrangement, or engage in any
transaction;
(viii) acquire or dispose of any property or asset constituting a
capital investment in excess of $5,000 individually or
$10,000 in the aggregate, except as provided in the
Disclosure Schedule;
(ix) except for the pledge of securities to secure public funds
deposits or except for additional borrowings in the
ordinary course of business from the Federal Home Loan
Bank of Indianapolis, subject any of its properties or
assets to a mortgage, lien, claim, charge, option,
restriction, security interest or encumbrance;
(x) promote to a new position or increase the rate of
compensation (except for promotions and compensation
increases in the ordinary course of business and in
accordance with past practices and established employment
policies), or enter into any agreement to promote to a new
position or increase the rate of compensation, of any
director, officer or employee of Savings Bank, except as
provided in the Disclosure Schedule;
(xi) execute, create, institute, modify or amend (except with
respect to any amendments to the Savings Bank Plans
required by law, rule or regulation and except with
respect to the termination or amendment of the Savings
Bank Plans as described in Section 6.02(b) and (c) hereof
and as contemplated by Sections 7.03 and 7.07 hereof) any
pension, retirement, savings, stock purchase, stock bonus,
stock ownership, stock option, stock appreciation or
depreciation right or profit sharing plans; any
employment, deferred compensation, consulting, bonus or
collective bargaining agreement; any group insurance or
health contract or policy; or any other incentive,
retirement, welfare or employee welfare or benefit plan,
agreement or understanding for current or former
directors, officers or employees of Savings Bank; or
change the level of benefits or payments under any of the
foregoing or increase or decrease any severance or
termination of pay benefits or any other fringe or
employee benefits other than as required by law or
regulatory authorities or as provided in the Disclosure
Schedule;
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(xii) modify, amend or institute new employment policies or
practices, or enter into, renew or extend any employment,
consulting, compensation or severance agreements with
respect to any present or former directors, officers or
employees of Savings Bank except as contemplated by
Section 7.07 hereof;
(xiii) hire or employ any new or additional employees of Savings
Bank, except those which are reasonably necessary for the
proper operation of Savings Bank's business;
(xiv) amend, modify or restate its Charter or By-Laws from
those in effect on the date of this Agreement and as
delivered to ONB hereunder;
(xv) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option or right to acquire any shares of
Savings Bank Common Stock or either of the Subsidiaries or
substantially all of the assets of Savings Bank or either
of the Subsidiaries, or enter into any agreement or
commitment relative to the foregoing;
(xvi) fail to continue to make additions to in accordance with
past practices and to otherwise maintain in all respects
Savings Bank's reserve for loan and lease losses, or any
other reserve account, in accordance with safe, sound and
prudent banking practices and in accordance with generally
accepted accounting principles applied on a consistent
basis;
(xvii) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but not
limited to, trade payables, incurred in the regular and
ordinary course of business as such debts, liabilities,
obligations and expenses become due;
(xviii) issue, or authorize the issuance of, any securities
convertible into or exchangeable for Savings Bank Common
Stock;
(xix) except for accounts payable and similar liabilities and
obligations incurred in the ordinary course of business,
for the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected in the Savings
Bank Financial Statements or the Subsequent Savings Bank
Financial Statements and for additional borrowings in the
ordinary course of business from the Federal Home Loan
Bank of Indianapolis, borrow any money or incur any
indebtedness, including, without limitation, through the
issuance of debentures, or incur any liability or
obligation (whether absolute, accrued, contingent or
otherwise), in an aggregate amount exceeding $5,000, other
than legal, accounting, and investment banker fees and
proxy printing and mailing costs relating to the Merger or
the operation of Savings Bank's business;
(xx) open, close, move or, in any material respect, expand,
diminish, renovate, alter or change any of its offices or
branches;
(xxi) pay or commit to pay any management or consulting or other
similar type of fees, except for the fees paid to Savings
Bank's investment banker which shall not exceed
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in the aggregate the amount of fees set forth in the
agreement between Savings Bank and McDonald & Company
Securities, Inc. set forth in the Disclosure Schedule;
(xxii) enter into any contract, agreement, lease, commitment,
understanding, arrangement or transaction or incur any
liability or obligation (other than as contemplated by
Section 6.03(a)(vii) hereof) requiring payments by Savings
Bank which exceed $5,000, whether individually or in the
aggregate, or that is not in the ordinary course of
business;
(xxiii) amend or modify in any respect the written employment
agreement dated March 18, 1986 between Savings Bank and
William M. Marley, the President of Savings Bank, a copy
of which has been included in the Disclosure Schedule,
except as may be otherwise required by any government
regulatory agency and as may be contemplated by Sections
6.15 and 7.07 hereof; or
(xxiv) elect or appoint any director of Savings Bank in addition
to or other than those persons who were directors of
Savings Bank on September 30, 1994.
(b) Savings Bank shall maintain, or cause to be maintained, in full
force and effect, insurance on its assets, properties and operations, fidelity
coverage and directors' and officers' liability insurance on its directors,
officers and employees in such amounts and with regard to such liabilities and
hazards as are currently insured by Savings Bank as of the date of this
Agreement.
6.04. Preservation of Business. On and after the date of this
Agreement and until the Effective Time or until this Agreement is terminated as
herein provided, Savings Bank shall (a) carry on its business diligently,
substantially in the manner as is presently being conducted and in the ordinary
course of business; (b) use its best efforts to preserve its business
organization intact, keep available the services of the present officers and
employees and preserve its present relationships with customers and persons
having business dealings with it; (c) maintain all of the properties and assets
that it owns or utilizes in good operating condition and repair, reasonable wear
and tear excepted; (d) maintain its books, records and accounts in the usual,
regular and ordinary manner, on a basis consistent with prior years and in
compliance with all material respects with all statutes, laws, rules and
regulations applicable to it and to the conduct of its business; and (e) not do
or fail to do anything which will cause a material breach of, or material
default in, any contract, agreement, commitment, obligation, understanding,
arrangement, lease or license to which it is a party or by which it is or may be
subject or bound.
6.05. Restrictions Regarding Affiliates. Savings Bank shall, within
30 days after the date of this Agreement and promptly thereafter until the
Effective Time to reflect any changes, provide ONB with a list identifying each
person who may be deemed to be an affiliate of Savings Bank for purposes of Rule
145 under the 1933 Act. Savings Bank shall use its best efforts to cause each
director, executive officer and other person who may be deemed to be such an
affiliate of Savings Bank to deliver to ONB on or prior to the Effective Time
hereunder a written agreement, substantially in the form as attached hereto as
Exhibit A, providing that such person (a) has not sold, pledged, transferred,
disposed of or otherwise reduced his or her market risk with respect to the
shares of Savings Bank Common Stock directly or indirectly owned or held by such
person during the thirty (30) day period prior to the Effective Time, and (b)
will not sell, pledge, transfer, dispose of or otherwise reduce his or her
market risk with respect to the shares of ONB common stock to be received by
such person pursuant to this Agreement (i) until such time as financial results
covering at least 30 days of combined operations of First Citizens and Savings
Bank have been published as and when required and within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies,
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and (ii) unless such sales are pursuant to an effective Registration Statement
under the 1933 Act or pursuant to Rule 145 under the 1933 Act or another
exemption from the 1933 Act.
6.06. Other Negotiations. (a) Subject to Section 6.06(b) hereof, on
and after the date of this Agreement and until the Effective Time or until this
Agreement is terminated as herein provided (except with the prior written
approval of ONB), Savings Bank shall not, nor shall it permit or authorize its
directors, officers, employees, agents or representatives to, directly or
indirectly, initiate, solicit, encourage or engage in discussions or
negotiations with, or provide information to, any corporation, association,
partnership, person or other entity or group concerning any merger,
consolidation, share exchange, combination, purchase or sale of substantial
assets, sale of shares of common stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing, the right to acquire capital stock) or similar transaction relating
to Savings Bank or to which Savings Bank may become a party (all such
transactions are hereinafter referred to as "Acquisition Transactions").
Savings Bank shall promptly communicate to ONB the terms of any proposal or
offer which it may receive with respect to an Acquisition Transaction and any
request by or indication of interest on the part of any third party with respect
to the initiation of any Acquisition Transaction or discussions with respect
thereto.
(b) On and after the date of this Agreement and until the Effective
Time or until this Agreement is terminated as herein provided, Savings Bank may
engage, and may permit and authorize its directors, officers, employees, agents
or representatives to engage in discussions or negotiations with or provide
information to any corporation, association, partnership, person or other entity
or group concerning an unsolicited offer by such third party with respect to an
Acquisition Transaction only with the prior written approval of ONB, which
approval shall be provided to Savings Bank promptly upon receipt by ONB of a
letter from Savings Bank signed by at least a majority of its Board of Directors
then in office indicating that Savings Bank has received an unsolicited offer
regarding an Acquisition Transaction which the Board of Directors of Savings
Bank (i) considers, in the exercise of its fiduciary duties as a Board, to be
superior (in more than an insubstantial manner and taking into account all
relevant factors) to the then current offer of ONB pursuant to this Agreement
and (ii) concludes, after consultation with its counsel, that its fiduciary
duties as a Board require it to consider and, in light of such duties, take such
other actions with respect to such unsolicited offer as may be necessary or
appropriate; and such approval may, in all other instances, be provided to
Savings Bank when and if ONB shall, in its sole discretion, determine. This
Section 6.06 shall not authorize Savings Bank or any of its directors, officers,
employees, agents or representatives to initiate any discussions or negotiations
relative to an Acquisition Transaction with a third party.
6.07. Press Releases. Except as required by law, Savings Bank shall
not issue any press releases or make any other public announcements or
disclosures relating to the Merger without the prior consent of ONB, which
consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. Savings Bank shall promptly
supplement, amend and update, upon the occurrence of any change prior to the
Effective Time, and as of the Effective Time, the Disclosure Schedule with
respect to any matters or events hereafter arising which, if in existence or
having occurred as of the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedule or this Agreement and
including, without limitation, any fact which, if existing or known as of the
date hereof, would have made any of the representations or warranties of Savings
Bank contained herein materially incorrect, untrue or misleading.
6.09. Information, Access Thereto, Confidentiality. ONB and its
respective representatives and agents shall, at all times during normal business
hours prior to the Effective Time, have full and continuing access to the
properties, facilities, operations, books and records of Savings Bank. ONB and
its respective
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<PAGE>
representatives and agents may, prior to the Effective Time, make or cause to be
made such reasonable investigation of the operations, books, records and
properties of Savings Bank and of its financial and legal condition as deemed
necessary or advisable to familiarize themselves with such operations, books,
records, properties and other matters; provided, however, that such access or
investigation shall not interfere unnecessarily with the normal operations of
Savings Bank; and provided further, that if ONB elects to conduct or have
conducted on its behalf an environmental review, study, survey or assessment to
verify the representations and warranties given by Savings Bank with respect to
the environmental matters specified in Section 4.11(b) hereof, such
environmental review, study, survey or assessment shall be completed and all
reports and findings related thereto shall be disclosed to Savings Bank within
forty-five (45) days of the date thereof. Upon request, Savings Bank shall
furnish ONB or its representatives or agents, its attorneys' responses to
external auditors requests for information, management letters received from its
external auditors and such financial, loan and operating data and other
information reasonably requested by ONB which has been or is developed by
Savings Bank or its auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by Savings Bank of any
claim of attorney-client privilege), and will permit ONB and its respective
representatives or agents to discuss such information directly with any
individual or firm performing auditing or accounting functions for Savings Bank,
and such auditors and accountants shall be directed to furnish copies of any
reports or financial information as developed to ONB or its auditors or
accountants. No investigation by ONB shall affect the representations and
warranties made by Savings Bank herein. Any confidential information or trade
secrets received by ONB or its representatives or agents in the course of such
examination shall be treated confidentially, and any correspondence, memoranda,
records, copies, documents and electronic or other media of any kind containing
such confidential information or trade secrets or both shall be destroyed by ONB
or, at Savings Bank's request, returned to Savings Bank in the event this
Agreement is terminated as provided in Section 9 hereof. This Section 6.09 shall
not require the disclosure of any information to ONB which would be prohibited
by law.
6.10. Subsequent Savings Bank Financial Statements. As soon as
available after the date of this Agreement, Savings Bank shall deliver to ONB
the monthly unaudited consolidated balance sheets and profit and loss statements
of Savings Bank prepared for its internal use, Savings Bank's Forms 10-Q for
each quarterly period completed prior to the Effective Time and all other
financial reports or statements submitted to regulatory authorities after the
date hereof, to the extent permitted by law (collectively, "Subsequent Savings
Bank Financial Statements"). The Subsequent Savings Bank Financial Statements
shall be prepared on a basis consistent with past accounting practices and
generally accepted accounting principles applied on a consistent basis and shall
present fairly the financial condition and results of operations as of the dates
and for the periods presented. The Subsequent Savings Bank Financial Statements
will not include any assets, liabilities or obligations or omit to state any
assets, liabilities or obligations, absolute or contingent, or any other facts,
which inclusion or omission would render such financial statements inaccurate,
incomplete or misleading in any material respect.
6.11. Employee Benefits. The provision of any employee benefits by
ONB or any of its subsidiaries to employees of Savings Bank shall not (i) create
any employment contract, agreement or understanding with any of the officers or
employees of Savings Bank or (ii) except as expressly provided in this
Agreement, prohibit or restrict ONB or its subsidiaries, whether before or after
the Effective Time, from changing, amending or terminating any employee benefits
provided to its employees from time to time; provided that any such change,
amendment or termination applies to a broad class of similarly situated
employees and not only to former employees of Savings Bank.
6.12. Supplemental Benefit Agreements. Savings Bank shall not enter
into any Director Supplemental Benefit Plan Agreements or Employee Supplemental
Benefit Plan Agreements in addition to
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those set forth in the Disclosure Schedule. Savings Bank shall amend or modify
such agreements only as required by Section 7.03 hereof.
6.13. Shorewalk Development. Notwithstanding anything in this
Agreement to the contrary, Savings Bank shall not enter into any agreement,
understanding or arrangement relating to the sale or the transfer of any
interest in the Shorewalk at Geist development without the prior written consent
of ONB, which consent will not be unreasonably withheld.
6.14. Restructure. Savings Bank hereby understands, acknowledges and
agrees that ONB, in its sole discretion, may change the structure of the Merger.
Such change of structure may include, without limitation, acquiring Savings Bank
as a wholly-owned subsidiary and having its principal office in Bloomington,
Indiana. Savings Bank covenants and agrees to execute and deliver such
amendments, agreements and instruments and take such further actions as ONB may
reasonably request in connection with such restructure; provided, that any such
restructure shall not change the Exchange Ratio or tax-free nature of the
transactions contemplated by this Agreement and that the covenants of ONB set
forth in Section 7 hereof will be honored and assumed by any new resulting
entity to the extent not honored or assumed by ONB.
6.15. Employment Agreement. Prior to the Effective Time, Savings
Bank shall cause the employment agreement dated March 18, 1986 between Savings
Bank and Mr. William M. Marley to be amended such that his position with Savings
Bank will be Vice Chairman, that the requirement that he participate in a stock
option plan or supplemental benefit plan (other than as required herein) shall
be deleted and that he will receive employee benefits in accordance with ONB's
employee benefit plans.
6.16. Certain Actions. Savings Bank shall not intentionally or
knowingly take, cause to be taken or fail to take any action which will cause or
result in a misrepresentation or a breach of a covenant or warranty of this
Agreement that will give ONB the right to terminate this Agreement pursuant to
Section 9.01(b) hereof.
SECTION 7
COVENANTS OF ONB
----------------
ONB covenants and agrees with Savings Bank as follows:
7.01. Approvals. (a) ONB shall have primary responsibility for the
preparation, filing and cost of all holding company, bank and savings
association regulatory applications required for consummation of the Merger.
ONB shall file all such applications as soon as practicable after the execution
of this Agreement. ONB shall provide to Savings Bank's counsel copies of all
material written communications with all state and federal bank regulatory
agencies relating to such applications. ONB shall proceed expeditiously,
cooperate fully and use its best efforts to procure, upon terms and conditions
reasonably acceptable to ONB, all consents, authorizations and approvals to
complete all filings and applications and to satisfy all other requirements
prescribed by law which are necessary for consummation of the Merger on the
terms and conditions provided in this Agreement at the earliest possible
reasonable date.
(b) So long as this Agreement is submitted to Savings Bank's
shareholders for a vote thereon, Interim Thrift shall submit this Agreement to
ONB, as its sole shareholder, for approval by unanimous written consent without
a meeting in accordance with applicable law and the Charter and By-Laws of
Interim Thrift,
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and the Board of Directors of Interim Thrift shall recommend to its sole
shareholder that such shareholder approve this Agreement and the Merger.
(c) So long as the actions contemplated by Section 7.01(b) hereof have
occurred, ONB shall vote all of its shares of capital stock of Interim Thrift in
favor of approval of this Agreement.
7.02. SEC Registration. ONB shall file with the SEC as soon as
practicable after the execution of this Agreement a Registration Statement on an
appropriate form under the 1933 Act covering the shares of ONB common stock to
be issued pursuant to this Agreement and shall use its best efforts to cause the
same to become effective and thereafter, until the Effective Time or termination
of this Agreement, to keep the same effective and, if necessary, amend and
supplement the same. Such Registration Statement and any amendments and
supplements thereto are referred to in this Agreement as the "Registration
Statement." The Registration Statement shall include a proxy statement-
prospectus reasonably acceptable to ONB and Savings Bank, prepared for use in
connection with the meeting of shareholders of Savings Bank referred to in
Section 6.01 hereof, all in accordance with the rules and regulations of the
SEC. ONB shall, as soon as practicable after filing the Registration Statement,
make all filings required to obtain all Blue Sky exemptions, authorizations,
consents or approvals required for issuance of ONB common stock. In advance of
filing the Registration Statement and all other filings described in Section
7.01 hereof, ONB shall provide Savings Bank and its counsel with a copy of the
Registration Statement and each such other filing and provide an opportunity for
them to comment thereon prior to filing.
7.03. Employee and Director Benefit Plans. (a) General. ONB will
make available to the employees of Savings Bank who continue as employees of any
subsidiary of ONB after the Effective Time substantially the same employee
benefits on substantially the same terms and conditions that ONB may offer to
similarly situated employees of its banking subsidiaries from time to time.
(b) Eligibility and Vesting. Years of service of an employee of
Savings Bank prior to the Effective Time shall be credited to each such employee
eligible for coverage under Section 7.03(a) hereof for purposes of eligibility
under ONB's employee welfare benefit plans and for purposes of eligibility and
vesting, but not for purposes of benefit accrual or contributions, under the ONB
Pension Plan and the ONB Employees' Savings and Profit Sharing Plan ("ONB Profit
Sharing Plan"). Those employees of Savings Bank who otherwise meet the
eligibility requirements of the ONB Profit Sharing Plan, based upon their age
and years of service for Savings Bank, shall become participants thereunder on
the January 1st which coincides with or next follows the effective date of the
termination of the ESOP as described in Section 7.03(f) hereof. Those employees
of Savings Bank who otherwise meet the eligibility requirements of the ONB
Pension Plan, based upon their age and years of service for Savings Bank, shall
become participants thereunder on the January 1st which coincides with or next
follows the effective date of the termination of the Savings Bank Retirement
Plan as described in Section 7.03(c) hereof. Those employees who do not meet
the eligibility requirements of the ONB Pension Plan or the ONB Profit Sharing
Plan on such dates shall become participants thereunder on the first plan entry
date under the ONB Pension Plan or the ONB Profit Sharing Plan, as the case may
be, which coincides with or next follows the date on which such eligibility
requirements are satisfied.
(c) Financial Institutions Retirement Fund. The Savings Bank
Retirement Plan will be terminated and frozen effective December 31, 1995, and
all accrued benefits of participants in the Savings Bank Retirement Plan shall
thereupon become fully vested. Each participant in the Savings Bank Retirement
Plan shall leave his or her accrued benefits in the Savings Bank Retirement Plan
and have them payable at the times and in the amounts provided for under that
plan. ONB shall be responsible for the termination of the Savings Bank
Retirement Plan and for making application to the Service for a determination
letter to the
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effect that the termination of the Savings Bank Retirement Plan does not
adversely affect its tax-qualified status. Savings Bank shall make
contributions to the Savings Bank Retirement Plan for the period from the
Effective Time through December 31, 1995 only to the extent required to maintain
the plan's tax-qualified status and avoid any federal income taxes or penalties.
(d) Director Supplemental Benefit Plan Agreements. ONB shall continue
to make, or shall cause one or more of its subsidiaries to make, the payments
due under each of the Director Supplemental Benefit Plan Agreements which were
in pay status immediately prior to the Effective Time (because the director
ceased to be a director or attained "Retirement Age", as defined in such
agreements, prior to the Effective Time) in accordance with the terms thereof.
Prior to the Effective Time, Savings Bank shall amend each Director
Supplemental Benefit Plan Agreement for each director of Savings Bank as of the
Effective Time who is not currently in pay status to (i) increase the monthly
allocation due under Section 2 of the agreement from $350 to $700 to be
effective as of the Effective Time, (ii) provide for the cessation of benefit
accruals under each agreement effective as of the end of the month which
coincides with or next follows the end of the three (3) year period beginning at
the Effective Time, in addition to provisions for benefit accrual cessation
currently in the agreements, (iii) eliminate the minimum monthly benefit
provisions, and (iv) provide for a lump sum cash payment of the director's
account balance under the agreement payable within ten (10) business days
following the earliest of the benefit cessation date or the date the director
ceases to be a director of an affiliate of ONB or the date the director attains
age 65. Prior to the Effective Time, Savings Bank shall enter into a Director
Supplemental Benefit Plan Agreement with Alan G. Stanley to (i) provide for a
monthly allocation in the amount of $350 to be effective as of the Effective
Time, such monthly allocations to be made for a period ending as of the end of
the month which coincides with or next follows the end of the three (3) year
period beginning at the Effective Time, (ii) provide for the cessation of
benefit accruals under such agreement effective as of the end of the month which
coincides with or next follows the end of the three (3) year period beginning at
the Effective Time, and (iii) provides for a lump sum cash payment of the
account balance under the agreement payable within ten (10) business days
following the earliest of the benefit cessation date or the date the director
ceases to be a director of an affiliate at ONB. ONB hereby agrees not to reduce
the monthly allocation under the Director Supplemental Benefit Plan Agreements
for the three (3) year period beginning as of the Effective Time. During such
three-year period, ONB agrees not to make any other modifications to any such
agreements (whether or not in pay status) without first receiving the written
consent of the affected individual, unless otherwise required by law.
(e) Employee Supplemental Benefit Plan Agreements. Upon the
consummation of the Merger, ONB shall cause the Employee Supplemental Benefit
Plan Agreements entered into by Savings Bank and each of Rose Ada Wood, Donna L.
Bouslog and William M. Marley, as amended, to be terminated; provided, however,
that within ten (10) business days of the termination of such agreements, ONB
shall make a lump sum cash payment to each such employee equal to the amount
accrued on the books and records of Savings Bank for the benefit of such
employee at the Effective Time. Prior to the Effective Time, Savings Bank shall
amend each of such Employee Supplemental Benefit Plan Agreements to provide for
the cessation of benefit accruals under the agreements as of the Effective Time
and for the payment of benefits to be made in a lump sum in the event the
agreement is terminated.
(f) ESOP. The ESOP shall be terminated effective December 31, 1995.
Savings Bank shall make contributions to the ESOP for the plan year beginning
January 1, 1994 and ending December 31, 1994 and the plan year beginning January
1, 1995 and ending December 31, 1995 in accordance with the terms of the ESOP
and not exceeding Two Thousand Dollars ($2,000) per month. Effective as of the
Effective Time, all participants with an account balance under the ESOP shall
become fully vested in such accounts regardless
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of their vested position under the ESOP. Participants' benefits under the ESOP
shall be distributed, in connection with the ESOP termination, in a single lump
sum or by direct rollover to the ONB Profit Sharing Plan or an individual
retirement account. Savings Bank shall eliminate in connection with the
termination of the ESOP the optional form of distribution in installments. Such
distributions (or the cash proceeds thereof) shall be eligible to be rolled over
directly to the rollover account under the ONB Profit Sharing Plan; provided,
however, that if any participant in the ESOP directly rolls over any ONB common
stock into the ONB Profit Sharing Plan, such stock will be valued, for purposes
of establishing the participant's rollover account value, at the per share
closing price of ONB common stock as quoted on the NASDAQ National Market System
on the date of such stock's rollover into the ONB Profit Sharing Plan and such
stock will be commingled with other assets in the ONB Profit Sharing Plan with
no separate accounting maintained for such stock with respect to any
participant. Upon a direct rollover of any ONB common stock into the ONB Profit
Sharing Plan, any participant who effects such a rollover will thereafter be
entitled only to an undivided interest in the assets of the ONB Profit Sharing
Plan and will not be entitled to maintain the rollover proceeds as a segregated
portion of the ONB Profit Sharing Plan assets. ONB shall be responsible for the
termination of the ESOP and for making application to the Service for a
determination letter to the effect that the termination of the ESOP does not
adversely affect its tax-qualified status.
(g) Certain Employee. ONB agrees to cause First Citizens or Surviving
Thrift to assume Savings Bank's obligations (i) to pay health insurance premiums
under Savings Bank's health insurance plan (or another comparable plan) for Mr.
Jim Ross, a former employee of the Savings Bank, until he attains age 62 on
September 8, 1995, (ii) to pay him $586.85 per month until his death (with
payments guaranteed for not less than a ten year period beginning January 1,
1991) as a supplement to his retirement benefit under the Savings Bank
Retirement Plan to a level which he would have received had he retired effective
December 31, 1995, and (iii) to pay him $1,041.67 per month until December 31,
2000. This covenant is made on the condition that the foregoing obligations
have been fully accrued for on the books and records of Savings Bank, subject
only to an interest expense with respect to such accrual of $300 per month.
7.04. Authorization of ONB Common Stock. The Board of Directors of
ONB shall, prior to the Effective Time, authorize the issuance of the required
number of shares of ONB common stock to be issued pursuant to this Agreement and
take all other necessary corporate action to consummate the Merger contemplated
hereby.
7.05. Press Releases. Except as required by law, ONB shall not issue
any press releases or make any other public announcements or disclosures
relating primarily to Savings Bank with respect to the Merger without the prior
consent of Savings Bank, which consent shall not be unreasonably withheld.
7.06. Information, Access Thereto, Confidentiality. Savings Bank and
its representatives and agents shall, at all times during normal business hours
prior to the Effective Time, have full and continuing access to the facilities,
operations, books, records and properties of ONB. Savings Bank and its
representatives and agents may, prior to the Effective Time, make or cause to be
made such reasonable investigation of the operations, books, records and
properties of ONB and of its financial and legal condition as Savings Bank shall
deem reasonable necessary or advisable to familiarize itself with such books,
records, properties and other matters; provided, however, that such access or
investigation shall not interfere unnecessarily with the normal operations of
ONB. Upon request, ONB will furnish to Savings Bank or its representatives or
agents, such financial and operating data and other information reasonably
requested by Savings Bank which has been or is developed by ONB or its auditors,
accountants or attorneys (provided with respect to attorneys, such disclosure
would not result in the waiver by ONB of any claim of attorney-client
privilege), and will permit Savings Bank and its representatives or agents to
discuss such information directly with any individual or firm performing
auditing or accounting functions for ONB so long as a representative
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<PAGE>
or agent of ONB participates in such discussions. No investigation by Savings
Bank shall affect the representations and warranties made by ONB. Any
confidential information or trade secrets received by Savings Bank or its
respective employees or agents in the course of such examination shall be
treated confidentially, and any correspondence, memoranda, records, copies,
documents and electronic or other media of any kind containing such confidential
information or trade secrets or both shall be destroyed by Savings Bank or, at
ONB's request, returned to ONB in the event this Agreement is terminated as
provided in Section 9 hereof. This Section 7.06 shall not require the
disclosure of any information to Savings Bank which would be prohibited by law.
7.07. Employment Agreement. Following the Effective Time, ONB agrees
to honor and abide by the terms of the written employment agreement, in the form
which has been included in the Disclosure Schedule, dated March 18, 1986 between
Savings Bank and William M. Marley, the President of Savings Bank, as amended
pursuant to Section 6.15 hereof, except as may be otherwise required by any
government regulatory agency. Such employment agreement shall be extended for
one (1) additional year in October 1994, consistent with Savings Bank's past
practices, upon the existing terms and conditions.
7.08. Directors. For a period of not less than three (3) years
following the Effective Time, ONB agrees to elect as directors of First
Citizens or Surviving Thrift those persons who are serving as directors of
Savings Bank as of the Effective Time in accordance with Section 1.02 hereof.
7.09. Compliance with Antitrust and Other Laws. Each of ONB, First
Citizens and Savings Bank shall use its best efforts to resolve such objections,
if any, which may be asserted with respect to the transactions contemplated by
the Purchase and Assumption Agreement ("P & A Transaction") and the Merger by
the Board of Governors of the Federal Reserve System ("Federal Reserve"), the
Department of Justice, the FDIC, the OTS or any other federal or state
governmental agency or body (collectively, the "Governmental Entities"),
including, without limitation, objections under any antitrust or banking laws.
Each of ONB and First Citizens shall use its best efforts to take such actions
as may be reasonably required by any such Governmental Entities in order to
resolve any such objections. Best efforts shall include, but not be limited to,
the proffer of ONB and/or First Citizens of its willingness to accept an order
agreeing to the divestiture, or the holding separate, of any assets or deposits
of First Citizens unless the acceptance of any such order is determined by the
Board of Directors of ONB after consultation with the Board of Directors of
Savings Bank and their respective legal and financial advisors to so materially
and adversely impact the anticipated financial condition or results of
operations of the Surviving Thrift or First Citizens (on a consolidated basis
with ONB) after the Effective Time as to render the consummation of the P&A
Transaction or the Merger unacceptable to ONB or otherwise imprudent. If ONB or
First Citizens shall determine that it is necessary or advisable in order to
resolve or minimize objections that may be asserted with respect to the P&A
Transaction or the Merger by a Governmental Entity or otherwise, that ONB or
First Citizens shall not acquire (directly or indirectly) from Savings Bank
certain assets or deposit liabilities of Savings Bank, then ONB or First
Citizens shall so notify Savings Bank and shall identify those assets and
deposit liabilities, if any, which ONB or First Citizens proposes that it should
not acquire, and Savings Bank shall take appropriate steps to divest such assets
or deposit liabilities, provided that the obligation of Savings Bank to
consummate any such divestiture shall be subject to the condition that the P&A
Transaction and the Merger be simultaneously consummated. In the event a suit
is threatened or instituted challenging the P&A Transaction or the Merger as
violative of the antitrust laws, ONB, First Citizens and Savings Bank shall use
their best efforts to avoid the filing of, resist or resolve any such suit.
Notwithstanding any such threatened or actual lawsuit, this Section shall not in
any way affect or limit any party's right to terminate this Agreement pursuant
to Section 9.01(a) hereof. Notwithstanding anything contained in this
Agreement, the representations and warranties of ONB or Savings Bank in this
Agreement shall not be deemed to be untrue or breached, ONB or Savings Bank
shall not be deemed to have failed to perform any covenant or obligation
contained in this
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<PAGE>
Agreement, and no condition to ONB's or Savings Bank's obligation to effect the
P&A Transaction or the Merger shall be deemed not to have been satisfied, by or
as a result of any divestitures or other acts consummated pursuant to this
Section 7.09.
7.10. Indemnification and Insurance. (a) Indemnification. From and
after the Effective Time, ONB will cause the Surviving Thrift (with respect to
those directors and officers of Savings Bank who become directors or officers of
the Surviving Thrift immediately following the Effective Time) and First
Citizens (with respect to those directors and officers of Savings Bank who
become directors or officers of First Citizens immediately following the
Effective Time) to assume and honor any obligations as provided for and
permitted by applicable federal and state law which Savings Bank had immediately
prior to the Effective Time with respect to the indemnification of each person
who is on the date hereof, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, a director or officer of Savings Bank
or any of the Subsidiaries or was serving at the request of Savings Bank as a
director or officer of any domestic or foreign corporation, joint venture,
trust, employee benefit plan or other enterprise (collectively, the
"Indemnitees") arising out of Savings Bank's Charter or By-Laws in effect at the
Effective Time against any and all losses in connection with or arising out of
any claim which is based upon, arises out of or in any way relates to any actual
or alleged act or omission occurring at or prior to the Effective Time in the
Indemnitee's capacity as a director or officer (whether elected or appointed),
of Savings Bank or any of the Subsidiaries. Indemnification of employees and
directors of Savings Bank and the Subsidiaries following the Effective Time will
be provided to the same extent it is provided from time to time to other persons
working in similar capacities for ONB or its subsidiaries following the
Effective Time.
(b) Insurance. For a period of one (1) year after the Effective Time,
ONB shall use all reasonable efforts to cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained by
Savings Bank (provided that ONB may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are
substantially no less advantageous) with respect to claims arising from facts or
events which occurred before the Effective Time. Following the Effective Time,
ONB will provide any Savings Bank employees who become officers of ONB or any of
its subsidiaries with the same directors' and officers' liability insurance
coverage that ONB provides to other similarly situated officers of ONB and its
bank subsidiaries.
7.11. Tax-Free Reorganization. ONB and First Citizens shall take no
actions following the Effective Time which would cause the Merger to lose its
status as a reorganization described in (S) 368(a)(2)(E) of the Code. To that
end, First Citizens will continue at least one historic business line of Savings
Bank, or use at least a significant portion of Savings Bank's historic business
assets in a business, in each case within the meaning of Treas. Reg.
(S) 1.368-1(d).
7.12 Board Approval. ONB shall present this Agreement to its Board
of Directors for approval at the Board's October, 1994 meeting.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
8.01. ONB. The obligation of ONB and Interim Thrift to consummate
the Merger is subject to the satisfaction and fulfillment of each of the
following conditions on or prior to the Effective Time, unless waived in writing
by ONB:
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<PAGE>
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Savings Bank contained in this Agreement shall
be true, accurate and correct in all material respects at and as of the
Effective Time as though such representations and warranties had been made or
given on and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of Savings Bank
shall have been fulfilled or complied with from the date of this Agreement
through and as of the Effective Time.
(c) Deliveries at Closing. ONB shall have received from Savings Bank
at the Closing the items and documents, in form and content reasonably
satisfactory to ONB, set forth in Section 11.02(b) hereof.
(d) Registration Statement Effective. ONB shall have registered its
shares of common stock to be issued to shareholders of Savings Bank in
accordance with this Agreement with the SEC pursuant to the 1933 Act, and all
state securities and Blue Sky approvals, authorizations and exemptions required
to offer and sell such shares shall have been received by ONB. The Registration
Statement with respect thereto shall have been declared effective by the SEC and
no stop order shall have been issued or threatened.
(e) Regulatory Approvals. The Federal Reserve, the OTS and the FDIC
shall have authorized and approved or not objected to the Merger on terms and
conditions satisfactory to ONB. In addition, all appropriate orders, consents,
approvals and clearances from all other regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are required by law
for consummation of the Merger shall have been obtained on terms and conditions
satisfactory to ONB.
(f) Shareholder Approvals. The shareholders of Interim Thrift and
Savings Bank shall have approved and adopted this Agreement as required by
applicable law and their respective Charters.
(g) Officers' Certificate. Savings Bank shall have delivered to ONB a
certificate signed by its Chairman or President and its Secretary or Cashier,
dated as of the Effective Time, certifying that (i) all the representations and
warranties of Savings Bank are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the covenants of Savings Bank
have been complied with from the date of this Agreement through and as of the
Effective Time; and (iii) Savings Bank has satisfied and fully complied with all
conditions necessary to make this Agreement effective as to it.
(h) Tax Matters. The Internal Revenue Service ("IRS") shall have
issued a private letter ruling, or legal counsel to ONB shall have rendered an
opinion, in form and content satisfactory to the parties hereto, to the effect
that the Merger (including any effect thereon resulting from the P&A
Transaction) will constitute a tax-free reorganization under the Code (as
described in Section 1.05 hereof) to each party hereto and to the shareholders
of Savings Bank, except with respect to cash received by Savings Bank's
shareholders for fractional shares resulting from application of the Exchange
Ratio.
(i) Affiliate Agreements. ONB shall have received (i) from Savings
Bank a list identifying each affiliate of Savings Bank in accordance with
Section 6.05 hereof dated as of the Effective Time and (ii) from each affiliate
of Savings Bank the agreements dated as of the Effective Time contemplated by
Section 6.05 hereof.
(j) Fairness Opinion. McDonald & Company Securities, Inc.
("McDonald") shall have issued its written fairness opinion stating that the
Exchange Ratio relating to the Merger is fair to the shareholders of Savings
Bank from a financial point of view. Such written fairness opinion shall (i) be
in form and substance reasonably satisfactory to ONB; (ii) be dated as of a date
not later than the mailing date of the
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<PAGE>
proxy statement-prospectus relating to the Merger to be mailed to Savings Bank's
shareholders; and (iii) be confirmed by McDonald as of the Effective Time.
(k) Stock Options. All employees and directors of Savings Bank having
options to purchase shares of Savings Bank shall have exercised such options in
accordance with the terms thereof.
(l) P&A Transaction. The P&A Transaction between First Citizens and
Savings Bank shall have been consummated.
8.02. Savings Bank. The obligation of Savings Bank to consummate the
Merger is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by
Savings Bank:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of ONB contained in this Agreement shall be true,
accurate and correct in all material respects on and as of the Effective Time as
though such representations and warranties had been made or given at and as of
the Effective Time.
(b) Covenants. Each of the covenants and agreements of ONB shall have
been fulfilled or complied with from the date of this Agreement through and as
of the Effective Time.
(c) Deliveries at Closing. Savings Bank shall have received from ONB
at the Closing the items and documents, in form and content reasonably
satisfactory to Savings Bank, listed in Section 11.02(a) hereof.
(d) Registration Statement Effective. ONB shall have registered its
shares of common stock to be issued to shareholders of Savings Bank in
accordance with this Agreement with the SEC pursuant to the 1933 Act, and all
state securities and Blue Sky approvals, authorizations and exemptions required
to offer and sell such shares shall have been received by ONB. The Registration
Statement with respect thereto shall have been declared effective by the SEC and
no stop order shall have been issued or threatened.
(e) Regulatory Approvals. The Federal Reserve, the OTS and the FDIC
shall have authorized and approved or not objected to the Merger. In addition,
all appropriate orders, consents, approvals and clearances from all other
regulatory agencies and governmental authorities whose orders, consents,
approvals or clearances are required by law for consummation of the Merger shall
have been obtained.
(f) Shareholder Approvals. The shareholders of Interim Thrift and
Savings Bank shall have approved and adopted this Agreement as required by
applicable law and their respective Articles of Incorporation and Charter.
(g) Officers' Certificate. ONB shall have delivered to Savings Bank a
certificate signed by its Chairman or President and its Secretary, dated as of
the Effective Time, certifying that (i) all the representations and warranties
of ONB are true, accurate and correct in all material respects on and as of the
Effective Time; (ii) all the covenants of ONB have been complied with from the
date of this Agreement through and as of the Effective Time; and (iii) ONB has
satisfied and fully complied with all conditions necessary to make this
Agreement effective as to it.
(h) Tax Matters. The IRS shall have issued a private letter ruling,
or legal counsel to ONB shall have rendered an opinion, in form and content
satisfactory to the parties hereto, to the effect that the Merger
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<PAGE>
(including any effect thereon resulting from the P&A Transaction) will
constitute a tax-free reorganization under the Code (as described in Section
1.05 hereof) to each party hereto and to the shareholders of Savings Bank,
except with respect to cash received by Savings Bank's shareholders for
fractional shares resulting from application of the Exchange Ratio.
(i) Fairness Opinion. McDonald shall have issued its written fairness
opinion stating that the Exchange Ratio relating to the Merger is fair to the
shareholders of Savings Bank from a financial point of view. Such written
fairness opinion shall (i) be in form and substance reasonably satisfactory to
Savings Bank; (ii) be dated as of a date not later than the mailing date of the
proxy statement-prospectus relating to the Merger to be mailed to Savings Bank's
shareholders; and (iii) be confirmed by McDonald as of the Effective Time.
(j) P&A Transaction. The P&A Transaction between First Citizens and
Savings Bank shall have been consummated.
SECTION 9
TERMINATION OF MERGER
---------------------
9.01. Manner of Termination. This Agreement and the Merger may be
terminated at any time prior to the Effective Time by written notice delivered
by ONB to Savings Bank, or by Savings Bank to ONB, as follows:
(a) By ONB or Savings Bank, if:
(i) the Merger contemplated by this Agreement has not been
consummated by January 31, 1996; or
(ii) the respective Boards of Directors of ONB and Savings
Bank mutually agree to terminate this Agreement.
(b) By ONB, if:
(i) ONB's independent auditors determine that the Merger will
not qualify for pooling-of-interest accounting treatment
for ONB; or
(ii) any item, event or information set forth in any
supplement, amendment or update to the Disclosure Schedule
has had or would be expected to have, in the reasonable
discretion of ONB, a material adverse effect on the
business, prospects, assets, capitalization, financial
condition or results of operations of Savings Bank; or
(iii) there has been a misrepresentation or a breach of any
warranty by or on the part of Savings Bank in its
representations and warranties set forth in this Agreement
which has had or would be expected to have, in the
reasonable discretion of ONB, a material adverse effect on
the business, prospects, assets, capitalization, financial
condition or results of operations of Savings Bank;
provided, however, that in the event of any inaccuracy in
the representations and warranties contained in Section
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<PAGE>
4.03 hereof relative to the number of issued and
outstanding shares of Savings Bank or the Subsidiaries,
ONB shall have the absolute right to terminate this
Agreement without regard to the materiality of any such
inaccuracy; or
(iv) there has been a breach of or failure to comply with any
covenant set forth in this Agreement by or on the part of
Savings Bank; or
(v) it shall reasonably determine that the P&A Transaction or
the Merger has become inadvisable or impracticable by
reason of commencement or threat of any claim, litigation
or proceeding (except as contemplated by Section 7.09
hereof) against ONB, First Citizens, Savings Bank, any of
the Subsidiaries or any subsidiary of ONB, or any director
or officer of any of such entities (A) relating to this
Agreement, the P&A Transaction or the Merger or (B) which
is likely to have a material adverse effect on the
business, prospects, assets, capitalization, financial
condition or results of operations of Savings Bank or of
ONB on a consolidated basis; or
(vi) except as provided in the Disclosure Schedule, there has
been a material adverse change in the business, prospects,
assets, capitalization, financial condition or results of
operations of Savings Bank as of the Effective Time as
compared to that in existence as of June 30, 1994; or
(vii) (A) subject to ONB's obligations in Section 7.09 hereof,
ONB reasonably determines that any term or condition
imposed upon or proposed to ONB, First Citizens or the
Surviving Thrift by a Governmental Entity relative to the
federal antitrust laws with respect to the P&A Transaction
or the Merger would so materially and adversely impact the
anticipated financial condition or results of operations
of the Surviving Thrift or First Citizens (on a
consolidated basis with ONB) after the Effective Time as
to render the consummation of the P&A Transaction or the
Merger unacceptable to ONB or otherwise imprudent, or (B)
the P&A Transaction or the Merger is not able to be
consummated because a Governmental Entity denies approval
of the Merger on antitrust grounds or a lawsuit is filed
to enjoin the P&A Transaction or the Merger on antitrust
grounds (and such denial or legal action is not subject to
further administrative or judicial appeal).
(c) By Savings Bank, if:
(i) there has been a misrepresentation or a breach of any
warranty by or on the part of ONB in its representations
and warranties set forth in this Agreement which has had
or would be expected to have, in the reasonable discretion
of Savings Bank, a material adverse effect on the
business, assets, capitalization, financial condition or
results of operation of ONB on a consolidated basis; or
(ii) there has been a breach of or failure to comply with any
covenant set forth in this Agreement by or on the part of
ONB; or
(iii) there has been a material adverse change in the financial
condition, results of operations, business, assets or
capitalization of ONB on a consolidated basis as of the
Effective Time as compared to that in existence on June
30, 1994.
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<PAGE>
9.02. Effect of Termination. Upon termination by written notice,
this Agreement shall be of no further force or effect, and there shall be no
further obligations or restrictions on future activities on the part of ONB,
Savings Bank and their respective directors, officers, employees, agents and
shareholders, except as provided in compliance with the confidentiality
provisions of this Agreement set forth in Section 6.09 and Section 7.06 hereof
and the payment of expenses set forth in Section 12.09 hereof.
SECTION 10
EFFECTIVE TIME OF THE MERGER
----------------------------
Upon the terms and subject to the conditions specified in this
Agreement, the Merger shall become effective at the close of business on the
date specified in the Articles of Combination of Interim Bank with and into
Savings Bank as filed with the OTS ("Effective Time"). The Effective Time shall
occur on the last business day of the month following (a) the fulfillment of all
conditions precedent to the Merger set forth in Section 8 hereof, and (b) the
expiration of all waiting periods in connection with the bank or thrift
regulatory applications filed for the approval of the Merger.
SECTION 11
CLOSING
-------
11.01. Closing Date and Place. So long as all conditions precedent
set forth in Section 8 have been satisfied and fulfilled, the closing of the
Merger ("Closing") shall take place on the Effective Time at a location to be
reasonably determined by ONB.
11.02. Deliveries. (a) At the Closing, ONB shall deliver to Savings
Bank the following:
(i) an opinion of its counsel dated as of the Effective Time
and substantially in the form set forth in Exhibit B
attached hereto;
(ii) the officers' certificate contemplated by Section 8.02(g)
hereof;
(iii) copies of all approvals by government regulatory agencies
necessary to consummate the Merger;
(iv) copies of the resolutions of the Board of Directors of
ONB and Interim Thrift and of ONB, as the sole shareholder
of Interim Thrift, certified by the President or Secretary
of ONB and Interim Thrift, respectively, relative to the
approval of this Agreement and the Merger; and
(v) such other documents as Savings Bank or its legal counsel
may reasonably request.
(b) At the Closing, Savings Bank shall deliver to ONB the following:
(i) an opinion of its counsel dated as of the Effective Time
and substantially in the form set forth in Exhibit C
attached hereto;
(ii) the officers' certificate contemplated by Section 8.01(g)
hereof;
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<PAGE>
(iii) a list of Savings Bank's shareholders as of the Effective
Time certified by the President and Secretary of Savings
Bank;
(iv) copies of the resolutions adopted by the Board of
Directors and shareholders of Savings Bank, certified by
the Chairman or President and Secretary of Savings Bank,
relative to the approval of this Agreement and the Merger;
(v) the list of affiliates of Savings Bank and the affiliate
agreements as set forth in Section 8.01(i) hereof; and
(vi) such other documents as ONB or its legal counsel may
reasonably request.
SECTION 12
MISCELLANEOUS
-------------
12.01. Effective Agreement. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties hereto.
12.02. Waiver; Amendment. (a) ONB or Savings Bank may by an
instrument in writing: (i) extend the time for the performance of any of the
covenants or agreements of the other party under this Agreement; (ii) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant hereto or thereto; (iii)
waive the performance by the other party of any of the covenants or agreements
to be performed by it or them under this Agreement; or (iv) waive the
satisfaction or fulfillment of any condition, the nonsatisfaction or
nonfulfillment of which is a condition to the right of the party so waiving to
consummate the Merger. The waiver by any party hereto of a breach of or
noncompliance with any provision of this Agreement shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only by a
written agreement executed by the parties hereto and, if such amendment,
modification or supplement occurs after the approval of the Agreement by the
shareholders of Savings Bank, only in a manner that will not materially and
adversely affect the rights of Savings Bank's shareholders hereunder without
obtaining their approval thereof.
12.03. Notices. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand and receipted for,
sent by certified United States Mail, return receipt requested, first class
postage pre-paid, delivered by overnight express receipted delivery service or
telecopied if confirmed immediately thereafter by also mailing a copy of such
notice, request or other communication by certified United States Mail, return
receipt requested, with First Class postage prepaid as follows:
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<PAGE>
If to ONB or First Citizens: with a copy to (which shall not
constitute notice):
Old National Bancorp Krieg DeVault Alexander & Capehart
ATTN: Jeffrey L. Knight, ATTN: Nicholas J. Chulos, Esq.
General Counsel and Corporate Secretary One Indiana Square, Suite 2800
420 Main Street Indianapolis, Indiana 46204-2017
P.O. Box 718 Telephone: (317) 238-6224
Evansville, Indiana 47705 Telecopier: (317) 636-1507
Telephone: (812) 464-1363
Telecopier: (812) 464-1567
If to Savings Bank: with a copy to (which shall not
constitute notice):
First United Savings Bank, f.s.b. Barnes & Thornburg
ATTN: William M. Marley, President ATTN: Claudia V. Swhier, Esq.
One North Locust Street 1313 Merchants Bank Building
Greencastle, Indiana 46135 11 South Meridian Street
Telephone: (317) 653-9793 Indianapolis, Indiana 46204
Telecopier: (317) 653-9796 Telephone: (317) 638-1313
Telecopier: (317) 231-7452
or such substituted address or person as any party has given to the other in
writing. All such notices, requests or other communications shall be effective:
(a) if delivered by hand, when delivered; (b) if mailed in the manner provided
herein, three (3) business days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
business day after deposit with such service; and (d) if by telecopier, on the
next business day if also confirmed by mail in the manner provided herein.
12.04. Headings. The headings in this Agreement have been inserted
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
12.05. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
12.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
12.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana and applicable
federal laws.
12.08. Entire Agreement. This Agreement, the P&A Agreement and the
Option Agreement supersede all other understandings, commitments,
representations, negotiations or agreements, whether oral or written, among the
parties hereto and thereto relating to the Merger, the P&A Transaction and the
Option Agreement and the matters contemplated herein and therein and constitute
the entire agreements between the parties hereto and thereto relating to the
subject matter hereof and thereof.
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<PAGE>
12.09. Expenses. ONB and Savings Bank shall each pay their
respective expenses incidental to the Merger. Notwithstanding the foregoing, if
the Merger or the P&A Transaction is not able to be consummated because a
Governmental Entity denies approval of the Merger or the P&A Transaction on
antitrust grounds or a lawsuit is filed to enjoin the Merger or the P&A
Transaction on antitrust grounds (and such denial or legal action is not subject
to further administrative or judicial appeal), and ONB thereafter terminates
this Agreement pursuant to Section 9.01(b)(vii) hereof, ONB will, within ten
(10) days after such termination of the Merger, reimburse Savings Bank for all
reasonable out-of-pocket expenses and fees incurred by it or on its behalf in
connection with the negotiation, preparation, execution and performance of this
Agreement, the Merger and all documents and applications related thereto up to a
maximum of Sixty Thousand Dollars ($60,000). In the event of such a termination
of this Agreement, ONB shall not be obligated to pay Savings Bank any amount for
any reason other than the foregoing sum.
12.10 Certain References. Whenever in this Agreement a singular word
is used, it also shall include the plural wherever required by the context and
vice-versa. Except expressly stated otherwise, all references in this Agreement
to periods of days shall be construed to refer to calendar, not business, days.
The term "business day" shall mean any day except Saturday and Sunday when Old
National Bank in Evansville, the lead bank of ONB, is open for the transaction
of business.
12.11 Disclosure Schedule. The Disclosure Schedule attached hereto
is intended to be and hereby is specifically made a part of this Agreement.
12.12. Effect of this Agreement. The Original Agreement was executed
and delivered on September 29, 1994, and this Agreement has been executed and
delivered on June 29, 1995 but shall be effective as of September 29, 1994.
* * * *
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<PAGE>
IN WITNESS WHEREOF, ONB, First Citizens, Savings Bank and Interim
Thrift have made and entered into this Agreement as of the day and year first
above written and have caused this Agreement to be executed, attested and
delivered by their duly authorized officers.
OLD NATIONAL BANCORP
By: /s/ John N. Royse
-----------------------------------
John N. Royse, President
ATTEST:
By: /s/ Jeffrey L. Knight
-------------------------------------
Jeffrey L. Knight, Secretary
FIRST UNITED SAVINGS BANK, F.S.B.
By: /s/ William M. Marley
-----------------------------------
William M. Marley, President and
Chief Executive Officer
ATTEST:
By: /s/ Donna L. Bouslog
-------------------------------------
Its: Senior Vice President and Secretary
FIRST CITIZENS BANK AND TRUST
COMPANY
By: /s/ Dan L. Doan
-----------------------------------
Dan L. Doan, Chairman
ATTEST:
By: /s/ Kenneth R. Heeke
-------------------------------------
Its: Senior Vice President and Cashier
ONB INTERIM FEDERAL SAVINGS BANK
By: /s/ Dan L. Doan
-----------------------------------
Dan L. Doan, Chairman and President
ATTEST:
By: /s/ Jeffrey L. Knight
--------------------------------------
Jeffrey L. Knight, Secretary
A-42
<PAGE>
APPENDIX B
PURCHASE AND ASSUMPTION AGREEMENT
---------------------------------
THIS PURCHASE AND ASSUMPTION AGREEMENT (the "Agreement"), effective as
of the 31st day of May, 1995, by and between FIRST CITIZENS BANK AND TRUST
COMPANY ("First Citizens") and FIRST UNITED SAVINGS BANK, f.s.b. ("FUSB"),
W I T N E S S E T H:
-------------------
WHEREAS, First Citizens is an Indiana chartered bank, maintains its
principal office in Greencastle, Putnam County, Indiana and is a wholly-owned
subsidiary of Old National Bancorp ("ONB"); and
WHEREAS, FUSB is a federally chartered stock savings bank and
maintains its principal office in Greencastle, Putnam County, Indiana; and
WHEREAS, First Citizens, FUSB and ONB are parties to a certain Amended
and Restated Agreement of Affiliation and Merger effective as of September 29,
1994 (the "Merger Agreement"), and ONB and FUSB are parties to a certain Stock
Option Agreement dated September 29, 1994, as amended (the "Option Agreement");
and
WHEREAS, the respective Boards of Directors of First Citizens and FUSB
have unanimously approved this Agreement and have authorized its execution and
delivery.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
obligations of the parties herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
First Citizens and FUSB hereby agree and enter into this Agreement as set forth
below.
SECTION 1
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
------------------------------------------------
1.01. Purchase and Sale of Thrift Assets. Upon the terms and subject
to the conditions of this Agreement, at the Effective Time (as hereinafter
defined), First Citizens shall purchase, acquire and accept from FUSB, and FUSB
shall sell, transfer, convey and assign to First Citizens, all right, title and
interest of FUSB in and to all of the assets associated with, relating to or
used at FUSB's offices (collectively, the "Offices") as of the Effective Time
located at (a) One North Locust Street, Greencastle, Indiana 46135, (b) 1811
Indianapolis Road, Greencastle, Indiana 46135 and (c) 5250 East U.S. 36, 155
Prestwick Pointe, Danville, Indiana 46122, including, but not limited to, the
following (the "Purchased Assets"):
(i) All records, instruments and documents relating to the
Purchased Assets and the Assumed Liabilities (as
hereinafter defined);
(ii) Fee simple interest in all real property, and the
buildings and other improvements thereon, that are owned
by FUSB and at which an Office is located;
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(iii) Fee simple interest in the real property owned by FUSB
constituting the employee parking lot on Franklin Street,
Greencastle, Indiana and the vacant lot adjacent to One
North Locust Street, Greencastle, Indiana;
(iv) All loans of FUSB attributed to the Offices as of the
Effective Time;
(v) All furniture, fixtures, equipment and other items of
personal property located at, associated with or used at
any of the Offices;
(vi) All leases, contracts and agreements relating to the
Offices to which FUSB is a party; and
(vii) All teller working cash, vault cash and other cash at the
Offices as of the Effective Time.
1.02. Assumption of Thrift Liabilities. Upon the terms and subject
to the conditions of this Agreement, at the Effective Time, First Citizens shall
assume, discharge and pay all of FUSB's liabilities relating to or associated
with the Offices, including, but not limited to, the following (the "Assumed
Liabilities"):
(i) All deposit liabilities of FUSB attributed to the Offices
as of the Effective Time, and including all accrued but
unpaid interest on such deposits through the Effective
Time; and
(ii) All other obligations and liabilities of FUSB in
existence at the Effective Time which relate to the
Offices.
1.03. Purchase Price. The purchase price for the Purchased Assets
shall be the fair market value of such assets as of the Effective Time and shall
be calculated taking into account the Assumed Liabilities. To the extent that
the fair market value of the Purchased Assets exceeds the fair market value of
the Assumed Liabilities at the Effective Time, First Citizens shall pay such
excess amount to FUSB in cash or other immediately available funds.
1.04. Purchase of Greenmark Stock. At the Effective Time, First
Citizens shall purchase from FUSB, and FUSB shall sell, transfer and assign to
First Citizens, thirty-three (33) shares of common stock of Greenmark, Inc.
("Greenmark") d/b/a Greenmark Insurance Agency, which shares constitute all of
the outstanding capital stock of Greenmark, for Three Hundred Ten Thousand
Dollars ($310,000) payable in cash or other immediately available funds. Such
shares of common stock of Greenmark shall be transferred by FUSB to First
Citizens hereunder free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights and claims of any other person, corporation or entity.
1.05. Allocation of Purchase Price. The purchase price for the
Purchased Assets and the assets of Greenmark shall be allocated by First
Citizens in accordance with the allocation set forth on the Form 8594 to be
filed by the parties hereto with the Internal Revenue Service.
B-2
<PAGE>
SECTION 2
CERTAIN SHAREHOLDER MATTERS
---------------------------
Neither this Agreement nor the transactions contemplated hereby
require the approval of the shareholders of First Citizens or FUSB.
SECTION 3
REPRESENTATIONS AND WARRANTIES
------------------------------
3.01. Representations and Warranties of FUSB. FUSB hereby
represents and warrants to First Citizens as follows:
(a) Authorization. This Agreement and its execution and
delivery by FUSB have been duly authorized and approved by the Board
of Directors of FUSB. This Agreement constitutes a valid and binding
obligation of FUSB, subject to the fulfillment of the conditions
precedent set forth in Section 4 hereof, and is enforceable in
accordance with its terms, except to the extent limited by general
principles of equity and public policy and by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt and other laws of general application relating to
or affecting the enforcement of creditors' rights.
(b) No Violations. Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby (i)
conflicts with or violates FUSB's Charter or By-Laws; (ii) conflicts
with or violates any local, state, federal or foreign law, statute,
ordinance, rule or regulation (provided that the approvals of all
applicable government regulatory agencies or authorities required for
consummation of the transactions contemplated hereby are obtained) or
any court or administrative judgment, order, injunction, writ or
decree; (iii) conflicts with, results in a breach of or constitutes a
default under any note, bond, indenture, mortgage, deed of trust,
license, lease, contract, agreement, arrangement, commitment or other
instrument to which FUSB is a party or by which FUSB is subject or
bound and which is material to FUSB; (iv) except with respect to the
right of McDonald & Company Securities, Inc. to its fee for its
investment banking services in connection with the Merger Agreement,
results in the creation of or gives any person, corporation or entity
the right to create any lien, charge, claim, encumbrance or security
interest, or results in the creation of any other rights or claims of
any other party or any other adverse interest, upon any right,
property or asset of FUSB; or (v) terminates or gives any person,
corporation or entity the right to terminate, accelerate, amend,
modify or refuse to perform under any note, bond, indenture, mortgage,
deed of trust, license, lease, contract, agreement, arrangement,
commitment or other instrument to which FUSB is bound or with respect
to which FUSB is to perform any duties or obligations or receive any
rights or benefits.
(c) Ownership of Purchased Assets. All of the Purchased
Assets are owned by FUSB free and clear of all land or conditional
sales contracts, mortgages, liens, pledges, restrictions, security
interests, charges, claims, rights of third parties or encumbrances of
any nature except (i) as set forth in the Disclosure Schedule provided
in connection with Merger Agreement; (ii) as specifically noted in
reasonable detail in the Savings Bank Financial Statements (as defined
in the Merger Agreement); (iii) statutory liens for taxes not yet
delinquent or being contested in good faith by appropriate
proceedings; (iv) pledges or liens required to be granted in
connection with the
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<PAGE>
acceptance of government deposits or granted in connection with
repurchase or reverse repurchase agreements; and (v) easements,
encumbrances and liens of record, minor imperfections of title,
building or use restrictions, variations and other limitations which
are not substantial in amount, do not materially detract from the
value or materially interfere with the present or contemplated use of
any of the property subject thereto or otherwise materially impair the
use thereof for the purposes for which they are held or used.
(d) Representations, Warranties and Covenants in Merger
Agreement. All of the representations and warranties of FUSB contained
in the Merger Agreement are true, accurate and complete in all
material respects as of the date of this Agreement, and FUSB has
complied in all material respects with all of the covenants contained
in the Merger Agreement from the date thereof through the date hereof.
3.02. Representations and Warranties of First Citizens. First
Citizens hereby represents and warrants to FUSB as follows:
(a) Authorization. This Agreement and its execution and
delivery by First Citizens have been duly authorized and approved by
the Board of Directors of First Citizens. This Agreement constitutes a
valid and binding obligation of First Citizens, subject to the
conditions precedent set forth in Section 4 hereof, and is enforceable
in accordance with its terms, except to the extent limited by general
principles of equity and public policy and by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt and other laws of general application relating to
or affecting the enforcement of creditors' rights.
(b) No Violations. Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby (i)
conflicts with or violates First Citizens' Articles of Incorporation
or By-Laws; (ii) conflicts with or violates any local, state, federal
or foreign law, statute, ordinance, rule or regulation (provided that
the approvals of applicable government regulatory agencies or
authorities required for consummation of the transactions contemplated
hereby are obtained) or any court or administrative judgment, order,
injunction, writ or decree; (iii) conflicts with, results in a breach
of or constitutes a default under any note, bond, indenture, mortgage,
deed of trust, license, contract, lease, agreement, arrangement,
commitment or other instrument to which First Citizens is a party or
by which First Citizens is subject or bound and which is material to
First Citizens; (iv) results in the creation of or gives any person,
corporation or entity the right to create any lien, charge, claim,
encumbrance or security interest, or results in the creation of any
other rights or claims of any other party or any other adverse
interest, upon any right, property or asset of First Citizens; or (v)
terminates or gives any person, corporation or entity the right to
terminate, accelerate, amend, modify or refuse to perform under any
note, bond, indenture, mortgage, deed of trust, license, lease,
contract, agreement, arrangement, commitment or other instrument to
which First Citizens is bound or with respect to which First Citizens
is to perform any duties or obligations or receive any rights or
benefits.
B-4
<PAGE>
SECTION 4
CONDITIONS PRECEDENT TO CONSUMMATION
------------------------------------
4.01. First Citizens. The obligation of First Citizens to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
and fulfillment of each of the following conditions on or prior to the Effective
Time, unless waived in writing by First Citizens:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of FUSB contained in this Agreement
shall be true, accurate and complete in all material respects at and
as of the Effective Time as though such representations and warranties
had been made or given at and as of the Effective Time.
(b) Regulatory Approvals. The Federal Deposit Insurance
Corporation (the "FDIC"), the Office of Thrift Supervision (the "OTS")
and the Indiana Department of Financial Institutions (the "DFI") shall
have authorized and approved or not objected to the transactions
contemplated by this Agreement on terms and conditions satisfactory to
First Citizens. In addition, all appropriate orders, consents,
approvals and clearances from all other regulatory agencies and
governmental authorities whose orders, consents, approvals or
clearances are required by law for consummation of the transactions
contemplated by this Agreement shall have been obtained on terms and
conditions satisfactory to First Citizens.
(c) Officers' Certificate. FUSB shall have delivered to First
Citizens a certificate signed by its Chairman or President and its
Secretary, dated as of the Effective Time, certifying that (i) all of
the representations and warranties of FUSB contained in this Agreement
are true, accurate and complete in all material respects at and as of
the Effective Time, and (ii) FUSB has satisfied and fully complied
with all conditions necessary to make this Agreement effective as to
it.
4.02. FUSB. The obligation of FUSB to consummate the transactions
contemplated by this Agreement is subject to the satisfaction and fulfillment of
each of the following conditions on or prior to the Effective Time, unless
waived in writing by FUSB:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of First Citizens contained in this
Agreement shall be true, accurate and complete in all material
respects at and as of the Effective Time as though such
representations and warranties had been made or given at and as of the
Effective Time.
(b) Regulatory Approvals. The FDIC, the OTS and the DFI shall
have authorized and approved or not objected to the transactions
contemplated by this Agreement on terms and conditions satisfactory to
First Citizens. In addition, all appropriate orders, consents,
approvals and clearances from all other regulatory agencies and
governmental authorities whose orders, consents, approvals or
clearances are required by law for consummation of the transactions
contemplated by this Agreement shall have been obtained on terms and
conditions satisfactory to First Citizens.
(c) Officers' Certificate. First Citizens shall have
delivered to FUSB a certificate signed by its Chairman or President
and its Secretary or Cashier, dated as of the Effective Time,
certifying that (i) all of the representations and warranties of First
Citizens contained in this Agreement are true, accurate and complete
in all material respects at and as of the Effective Time, and (ii)
First Citizens
B-5
<PAGE>
has satisfied and fully complied with all conditions necessary to
make this Agreement effective as to it.
SECTION 5
TERMINATION OF AGREEMENT
------------------------
This Agreement and the transactions contemplated hereby (a) may be
terminated at any time by written agreement of First Citizens and FUSB and (b)
shall automatically terminate without the need for any action or notice by
either party hereto in the event that the Merger Agreement is terminated in
accordance with the terms thereof. Upon termination of this Agreement, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of First Citizens
or FUSB or their respective directors, officers, employees, agents and
shareholders, except as provided in the Merger Agreement.
SECTION 6
EFFECTIVE TIME AND CLOSING
--------------------------
(a) Effective Time. Upon the terms and subject to the conditions
specified in this Agreement, the transactions contemplated hereby shall become
effective on a date and at a time (the "Effective Time") which shall be
immediately prior to the effective time of the Merger contemplated by the Merger
Agreement.
(b) Closing. The closing of the transactions contemplated by this
Agreement shall occur immediately prior to the Effective Time.
SECTION 7
MISCELLANEOUS
-------------
7.01. Effective Agreement. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by either party hereto without the prior written consent of the other
party hereto.
7.02. Waiver; Amendment.
(a) Either party hereto may by an instrument in writing: (i)
extend the time for the performance of any of the covenants or
agreements of the other party under this Agreement; (ii) waive any
inaccuracies in the representations or warranties of the other party
contained in this Agreement; (iii) waive the performance by the other
party of any of the covenants or agreements to be performed by it or
them under this Agreement; or (iv) waive the satisfaction or
fulfillment of any condition, the nonsatisfaction or nonfulfillment of
which is a condition to the right of the party so waiving to
consummate the transactions contemplated by this Agreement. The waiver
by any party hereto of a breach of or noncompliance with any provision
of this Agreement shall not operate or be construed as a continuing
waiver or a waiver of any other or subsequent breach or noncompliance
hereunder.
B-6
<PAGE>
(b) This Agreement may be amended, modified or supplemented
only by a written agreement executed by the parties hereto and, if
such amendment, modification or supplement occurs after the approval
of the Merger Agreement by the shareholders of FUSB, then only in a
manner that will not materially and adversely affect the rights of
FUSB's shareholders hereunder without obtaining their approval
thereof.
7.03. Notices. All notices, requests and other communications
hereunder shall be in writing (which shall include facsimile communication) and
shall be deemed to have been duly given if delivered by hand and receipted for,
sent by certified United States Mail, return receipt requested, first class
postage pre-paid, delivered by overnight express receipted delivery service or
telecopied if confirmed immediately thereafter by also mailing a copy of such
notice, request or other communication by certified United States Mail, return
receipt requested, with first class postage pre-paid as follows:
If to First Citizens: with a copy to (which shall not
constitute notice):
First Citizens Bank and Trust Company Krieg DeVault Alexander & Capehart
c/o Old National Bancorp ATTN: Nicholas J. Chulos, Esq.
ATTN: Jeffrey L. Knight, One Indiana Square, Suite 2800
Corporate Secretary and Indianapolis, Indiana 46204-2017
General Counsel Telephone: (317) 238-6224
420 Main Street, P.O. Box 718 Telecopier: (317) 636-1507
Evansville, Indiana 47705
Telephone: (812) 464-1363
Telecopier: (812) 464-1567
If to FUSB: with a copy to (which shall not
constitute notice):
First United Savings Bank, f.s.b. Barnes & Thornburg
ATTN: William M. Marley, President ATTN: Claudia V. Swhier, Esq.
One North Locust Street 1313 Merchants Bank Building
Greencastle, Indiana 46135 11 South Meridian Street
Telephone: (317) 653-9793 Indianapolis, Indiana 46204
Telecopier: (317) 653-9796 Telephone: (317) 638-1313
Telecopier: (317) 231-7452
or such substituted address or person as any party has given to the other in
writing. All such notices, requests or other communications shall be effective:
(a) if delivered by hand, when delivered; (b) if mailed in the manner provided
herein, three (3) business days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
business day after deposit with such service; and (d) if by facsimile, on the
next business day if also confirmed by mail in the manner provided herein.
7.04. Headings. The headings in this Agreement have been inserted
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
7.05. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
B-7
<PAGE>
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
7.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
7.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana and applicable
federal laws.
7.08. Entire Agreement. This Agreement, the Merger Agreement and the
Option Agreement supersede all other understandings, commitments,
representations, negotiations, agreements and contracts, whether oral or
written, between the parties hereto and thereto relating to the transactions
contemplated by this Agreement, the Merger Agreement and the Option Agreement
and constitute the entire agreements between the parties hereto and thereto
relating to the subject matter hereof and thereof.
7.09. Expenses. Except as provided otherwise in the Merger
Agreement, ONB and FUSB shall each pay its respective expenses incidental to the
transactions contemplated hereby.
7.10. Certain References. Whenever in this Agreement a singular word
is used, it also shall include the plural wherever required by the context and
vice-versa. Except expressly stated otherwise, all references in this Agreement
to periods of days shall be construed to refer to calendar, not business, days.
The term "business day" shall mean any day except Saturday and Sunday when First
Citizens is open for the transaction of business.
7.11. Disclosure Schedule. The parties hereto agree that no
disclosure schedule shall be required pursuant to this Agreement.
7.12. Employee Benefits. The parties hereto agree that Section 7.03
of the Merger Agreement shall control and apply to all employees of FUSB
employed at one of the Offices at the Effective Time with respect to employee
benefits to be provided by ONB or any of its affiliates following consummation
of the transactions contemplated by this Agreement.
* * *
B-8
<PAGE>
IN WITNESS WHEREOF, First Citizens and FUSB have made and entered into
this Agreement as of the day and year first above written and have caused this
Agreement to be executed, attested and delivered by their duly authorized
officers below.
FIRST CITIZENS BANK AND TRUST COMPANY
By: /s/ Dan L. Doan
----------------------------------
Dan L. Doan, Chairman and Chief
Executive Officer
ATTEST:
By: /s/ Kenneth R. Heeke
-------------------------------------
Its: Senior Vice President and Cashier
------------------------------------
FIRST UNITED SAVINGS BANK, F.S.B.
By: /s/ William M. Marley
----------------------------------
William M. Marley, President and
Chief Executive Officer
ATTEST:
By: /s/Donna L. Bouslog
-------------------------------------
Its: Senior Vice President and Secretary
------------------------------------
B-9
<PAGE>
APPENDIX C
__________, 1995
Board of Directors
First United Savings Bank, f.s.b.
One Locust Street
Greencastle, IN 46135
Gentlemen:
You have requested our opinion with respect to the fairness, from a
financial point of view, as of the date hereof, to the holders of common stock,
par value $0.01 per share ("FUSB Common Stock"), of First United Savings Bank,
f.s.b. ("FUSB") of the exchange ratio as set forth in Section 2.01 of the
Amended and Restated Agreement of Affiliation and Merger, effective September
29, 1994 (the "Agreement"), by and among FUSB, Old National Bancorp ("ONB")
First Citizens Bank & Trust Company, a wholly owned subsidiary of ONB and ONB
Interim Federal Savings Bank, whereby issued and outstanding shares of FUSB
Common Stock would be exchanged for a specified number of shares of common
stock, no par value ("ONB Common Stock"), of ONB.
The Agreement and its related Purchase and Assumption Agreement (the "P&A
Agreement") provide for, among other things, the merger (the "Merger") of FUSB
with and into a newly formed savings bank subsidiary of ONB, accomplished
through certain sequential transactions which are more fully described in the
Agreement and the P&A Agreement, occurring immediately prior to the Effective
Date (as defined in the Agreement). Pursuant to the Merger, outstanding shares
of FUSB Common Stock will exchanged for 0.8925 shares of ONB Common Stock, as
set forth in Section 2.01 of the Agreement (the "Exchange Ratio"), subject to
adjustment, if any as set forth in Sections 2.01 (b) and 2.03 of the Agreement.
The terms and conditions of the Merger are more fully set forth in the
Agreement.
McDonald & Company Securities, Inc., as part of its investment banking
business, is customarily engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
We have acted as FUSB's financial advisor in connection with, and have
participated in certain negotiations leading to, the execution of the Agreement.
In connection with rendering our opinion set forth herein, we have among other
things:
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Board of Directors
_________, 1995
Page 2
(i) Reviewed FUSB's Annual Reports to Shareholders and Annual Reports on
Form 10-K for each of the three years in the three year period ended
June 30, 1994, including the audited financial statements contained
therein, as well as FUSB's Quarterly Reports on Form 10-Q for each
of the three month periods ended September 30, 1994, December 31,
1994, and March 31, 1995;
(ii) Reviewed ONB's Annual Reports to Shareholders and Annual Reports on
Form 10-K for each of the three years in the three year period ended
December 31, 1994, including the audited financial statements
contained therein, as well as ONB's Quarterly Reports on Form 10-Q
for each of the three month periods ended March 31, 1995, and June
30, 1995;
(iii) Reviewed certain other public and non-public information, primarily
financial in nature, relating to the respective businesses,
earnings, assets and prospects of FUSB and ONB provided to us or
publicly available;
(iv) Participated in meetings with members of senior management of FUSB
and telephone conferences with members of senior management of ONB
concerning the financial condition, business, assets, financial
forecasts and prospects of the respective companies, as well as
other matters we believe relevant to our inquiry;
(v) Reviewed certain stock market information for FUSB Common Stock and
ONB Common Stock, and compared it with similar information for
certain companies, the securities of which are publicly traded;
(vi) Compared the results of operations and financial condition of FUSB
and ONB with that of certain companies which we deemed to be
relevant for purposes of this opinion;
(vii) Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions which we deemed to be relevant for
purposes of this opinion;
(viii) Reviewed the Agreement and its schedules and exhibits and certain
related documents; and
(ix) Performed such other analyses as we have deemed appropriate.
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<PAGE>
Board of Directors
_________, 1995
Page 3
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information reviewed by us and have relied upon the accuracy and completeness of
the representations and warranties of FUSB and ONB contained in the Agreement.
We have not been engaged to undertake, and have not conducted, an independent
investigation or verification of such matters. We have not been engaged to and
we did not conduct a physical inspection of any of the assets, properties or
facilities of either FUSB or ONB, nor have we made or obtained or been furnished
with any independent evaluation or appraisal of any of such assets, properties
or facilities or any of the liabilities of either FUSB or ONB. With respect to
financial forecasts used in our analysis, we have assumed that such forecasts
have been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of FUSB and ONB as to the future
performance of FUSB and ONB, as the case may be. We express no view as to such
financial forecasts or the assumptions on which they are based. We have also
assumed that all of the conditions to the consummation of the Merger, as set
forth in the Agreement, would be satisfied and that the Merger would be
consummated on a timely basis in the manner contemplated by the Agreement.
We will receive a fee for our services as financial advisors to FUSB, a
portion of which is contingent upon closing of the Merger.
In the ordinary course of business, we may actively trade securities of
FUSB and ONB for our own account and for the accounts of customers and,
accordingly, we may at any time hold a long or short position in such
securities.
This opinion is based on economic and market conditions and other
circumstances existing on, and information made available as of, the date
hereof. In addition, our opinion is, in any event, limited to the fairness, as
of the date hereof, from a financial point of view, of the Exchange Ratio to the
holders of FUSB Common Stock and does not address FUSB's underlying business
decision to effect the Merger or any other terms of the Merger and does not
constitute a recommendation to any FUSB shareholder as to how such shareholder
should vote with respect to the Merger. This opinion does not represent our
opinion as to what the value of FUSB Common Stock or ONB Common Stock may be at
the Effective Date of the Merger or as to the prospects of ONB's business.
This opinion has been prepared solely for the confidential use of the Board
of Directors and senior management of FUSB and will not be reproduced,
summarized, described or referred to or given to any other person without our
prior written consent. Notwithstanding the foregoing, this opinion may be
included in a proxy statement to be mailed to the holders of FUSB Common Stock
and ONB Common Stock in connection with the Merger, provided that this opinion
will be reproduced in such proxy statement in full, and any description of or
reference to us or our actions, or any summary of the opinion in such proxy
statement will be in a form acceptable to us and our counsel.
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<PAGE>
Board of Directors
__________, 1995
Page 4
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio, pursuant to the Agreement, is fair to the
holders of FUSB Common from a financial point of view.
Very truly yours,
/s/ McDonald & Company Securities, Inc.
MCDONALD & COMPANY SECURITIES, INC.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation provide that the Registrant will
indemnify any person who is or was a director, officer or employee of the
Registrant or of any other corporation for which he is or was serving in any
capacity at the request of the Registrant against all liability and expense that
may be incurred in connection with any claim, action, suit or proceeding with
respect to which such director, officer or employee is wholly successful or
acted in good faith in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Registrant or such other corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. A director, officer or employee of the
Registrant is entitled to be indemnified as a matter of right with respect to
those claims, actions, suits or proceedings where he has been wholly successful.
In all other cases, such director, officer or employee will be indemnified only
if the Board of Directors of the Registrant or independent legal counsel finds
that he has met the standards of conduct set forth above.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following Exhibits are being filed as part of this Registration
Statement:
2.01 Amended and Restated Agreement of Affiliation and Merger (included as
Appendix A to Prospectus)
2.02 Purchase and Assumption Agreement (included as Appendix B to
Prospectus)
3(i) Articles of Incorporation of the Registrant (incorporated by
reference to Registrant's Registration Statement on Form S-4, File
No. 33-57207, dated January 22, 1993)
3(ii) By-Laws of the Registrant (incorporated by reference to Registrant's
Registration Statement on Form S-4, File No. 33-80670, dated June 23,
1994)
4 (a) the description of Registrant's common stock contained in its
Current Report on Form 8-K, dated January 6, 1983 (incorporated by
reference thereto), and (b) the description of Registrant's Preferred
Stock Purchase Rights contained in Registrant's Form 8-A, dated March
1, 1990, including the Rights Agreement, dated March 1, 1990, between
the Registrant and Old National Bank in Evansville, as Trustee
(incorporated by reference thereto)
5 Opinion of Krieg DeVault Alexander & Capehart re: legality
8* Opinion of Krieg DeVault Alexander & Capehart re: certain federal
income tax matters
10 Material Contracts (incorporated by reference to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991 and to the Distribution Agreement set forth in Exhibit 1 of the
Registrant's Registration Statement on Form S-3, File No. 33-55222,
dated December 2, 1992)
II-1
<PAGE>
13(ii) FUSB's Annual Report to Shareholders for the fiscal year
ended June 30, 1995
21 Subsidiaries of the Registrant
23.01 Consent of Krieg DeVault Alexander & Capehart (included in Opinion
of Krieg DeVault Alexander & Capehart re: legality at Exhibit 5)
23.02 Consent of Arthur Andersen LLP
23.03* Consent of Ernst & Young, LLP
24.04 Consent of McDonald & Company Securities, Inc.
24 Powers of Attorney
99 Form of Proxy
(b) Financial Data Schedules: not applicable
(c) Opinion of McDonald & Company Securities, Inc. (included as Appendix C to
Prospectus)
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through the use
of a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to paragraph (b)(1) immediately preceding or (ii)
that purports to meet the requirements of Section 10(a)(3) of the Act, and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part
II-2
<PAGE>
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Evansville,
State of Indiana, on August 31, 1995.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
-----------------------
Ronald B. Lankford, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated below as of August 31, 1995.
Name Title
---- -----
/s/ JOHN N. ROYSE Chairman of the Board, Director
--------------------------------- and Chief Executive Officer (Chief
John N. Royse Executive Officer)
/s/ STEVE H. PARKER Senior Vice President (Chief
--------------------------------- Financial Officer and Principal
Steve H. Parker Accounting Officer)
DAVID L. BARNING* Director
---------------------------------
David L. Barning
RICHARD J. BOND* Director
---------------------------------
Richard J. Bond
ALAN W. BRAUN* Director
---------------------------------
Alan W. Braun
JOHN J. DAUS, JR.* Director
---------------------------------
John J. Daus, Jr.
WAYNE A. DAVIDSON* Director
---------------------------------
Wayne A. Davidson
LARRY E. DUNIGAN* Director
---------------------------------
Larry E. Dunigan
DAVID E. ECKERLE* Director
---------------------------------
David E. Eckerle
THOMAS B. FLORIDA* Director
---------------------------------
Thomas B. Florida
II-4
<PAGE>
PHELPS L. LAMBERT* Director
---------------------------------
Phelps L. Lambert
RONALD B. LANKFORD* President and Director
---------------------------------
Ronald B. Lankford
LUCIEN H. MEIS* Director
---------------------------------
Lucien H. Meis
DAN W. MITCHELL* Director
---------------------------------
Dan W. Mitchell
MARJORIE Z. SOYUGENC* Director
---------------------------------
Marjorie Z. Soyugenc
CHARLES D. STORMS* Director
---------------------------------
Charles D. Storms
EDWARD T. TURNER, JR.* Director
---------------------------------
Edward T. Turner, Jr.
*By: /s/ JEFFREY L. KNIGHT
-----------------------------------
Attorney-in-Fact
Printed Name: Jeffrey L. Knight
---------------------------
II-5
<PAGE>
EXHIBIT 5
---------
August 31, 1995
Board of Directors
Old National Bancorp
420 Main Street
P.O. Box 718
Evansville, Indiana 47705
RE: Issuance of Shares of Common Stock of Old National Bancorp in
connection with the Affiliation with First United Savings Bank, f.s.b.
Ladies and Gentlemen:
We have represented Old National Bancorp ("ONB") as special counsel in
connection with the preparation and filing of a Registration Statement on Form
S-4 (the "Registration Statement") with the Securities and Exchange Commission
for the purpose of registering shares of ONB's no par value common stock under
the Securities Act of 1933, as amended (the "Shares"). The Shares are proposed
to be issued to shareholders of First United Savings Bank, f.s.b. ("FUSB"),
Greencastle, Indiana, in connection with the affiliation of FUSB with ONB
("Affiliation"), as specified in the Amended and Restated Agreement of
Affiliation and Merger, dated as of September 29, 1994 (the "Agreement"), by and
among ONB, FUSB, First Citizens Bank and Trust Company and ONB Interim Federal
Savings Bank. The Affiliation will be accomplished and the Shares will be
issued pursuant to the specific terms of the Agreement. In connection with this
opinion, we have reviewed and are familiar with ONB's Articles of Incorporation
and By-Laws and such other records, documents and information as we have in our
judgment deemed relevant.
Based upon the foregoing, it is our opinion that if and when the Affiliation
is consummated, the Shares will, when issued to shareholders of FUSB in
accordance with all of the terms and conditions of the Agreement, be legally
issued, fully paid and non-assessable. This opinion is limited to the matters
stated herein, and no opinion is to be implied or may be inferred beyond the
matters expressly stated.
This opinion is addressed to you and is solely for your use in connection with
the Registration Statement, and we assume no professional responsibility to any
other person whatsoever. Accordingly, the opinion expressed herein is not to be
relied upon, utilized or quoted by or delivered or disclosed to, in whole or in
part, any other person, corporation, entity or governmental authority without,
in each instance, the prior written consent of this firm.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference made to us in the Registration Statement and the
Prospectus forming a part thereof under the caption "Legal Opinions". In giving
this consent, we do not thereby admit that we come within the category of
<PAGE>
Board of Directors
August 31, 1995
Page 2
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ KRIEG DeVAULT ALEXANDER & CAPEHART
--------------------------------------
KRIEG DeVAULT ALEXANDER & CAPEHART
<PAGE>
EXHIBIT 13(ii)
--------------
Draft of FUSB's Annual Report to Shareholders for the year ended June 30, 1995
FIRST UNITED SAVINGS BANK AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
AT JUNE 30,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL CONDITION:
Cash $ 878,992 $ 756,129 $ 923,290 $ 1,014,706 $ 1,001,531
Interest-bearing deposits 5,614,245 5,161,337 5,474,824 2,397,691 4,580,437
Investment and mortgage-backed securities 4,252,373 6,196,225 7,697,341 10,861,800 14,657,224
Loans receivable, net 121,593,615 110,900,334 111,765,436 102,010,050 102,621,053
Direct investment in real estate 900,000 1,677,944 3,806,687 4,630,607 5,780,362
Other assets (1) 8,800,485 9,011,667 8,922,439 9,145,992 9,034,743
------------ ------------ ------------ ------------ ------------
Total assets 142,039,710 133,703,636 138,590,017 130,060,846 137,675,350
Deposits 112,343,290 113,248,577 116,902,114 116,090,522 121,798,106
FHLB advances 19,000,000 9,000,000 9,100,000 2,000,000 4,300,000
Other liabilities (2) 1,455,906 1,613,160 1,615,435 1,447,127 1,090,909
------------ ------------ ------------ ------------ ------------
Total liabilities 132,799,196 123,861,737 127,617,549 119,537,649 127,189,015
------------ ------------ ------------ ------------ ------------
Net worth $ 9,240,514 $ 9,841,899 $ 10,972,468 $ 10,523,197 $ 10,486,335
============ ============ ============ ============ ============
Book value per share $ 16.93 $ 18.15 $20.23 $ 19.52 $ 19.46
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Total interest income $ 9,537,512 $ 8,686,589 $ 9,219,921 $ 10,821,579 $ 12,337,901
Total interest expense 5,858,417 5,414,275 6,175,994 7,784,664 9,129,001
------------ ------------ ------------ ------------ ------------
Net interest income 3,679,095 3,272,314 3,043,927 3,036,915 3,208,900
Provision for loan losses 745,774 121,614 89,674 127,391 57,313
------------ ------------ ------------ ------------ ------------
Net interest income after provision for loan losses 2,933,321 3,150,700 2,954,253 2,909,524 3,151,587
Loan origination and other fees 212,230 191,514 181,485 186,409 207,028
(Loss) on sale of investments (35,733) (68,975) (100,780) (35,697) (32,137)
Other income 427,171 477,115 501,833 560,143 329,456
Other expense (3) 4,476,285 5,408,571 2,824,628 3,476,139 3,031,596
------------ ------------ ------------ ------------ ------------
Income (loss) before federal income taxes and
cumulative effect of change in accounting principle (927,048) (1,658,217) 712,163 144,240 624,338
Income tax expense (credit) (277,000) (657,800) 228,500 (14,000) 243,000
------------ ------------ ------------ ------------ ------------
Income (loss) before cumulative effect of change in
accounting principle (650,048) (1,000,417) 483,663 158,240 381,338
Cumulative effect of change in accounting principle -- -- -- 30,400 --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (650,048) $ (1,000,417) $ 483,663 $ 188,640 $ 381,338
============ ============ ============ ============ ============
Earnings (loss) per share $ (1.15) $ (1.84) $ .90 $ .35 $ .71
Cash dividends declared per share $ -- $ .24 $ .20 $ .40 $ .60
OTHER DATA:
Earning assets to interest bearing liabilities 1.02 1.01 .99 .98 .97
Interest rate spread during period 2.61% 2.59% 2.49% 2.49% 2.50%
Net yield on interest-earning assets (4) 2.92% 2.68% 2.52% 2.47% 2.61%
Dividend payout ratio (5) NM NM 22% 114% 85%
Number of full service facilities 3 3 3 3 3
</TABLE>
NM - Not meaningful.
1 Includes stock in FHLB of Indianapolis, real estate owned, premises and
equipment, accrued investment interest receivable, goodwill and miscellaneous
other assets.
2 Includes advance payments by borrowers for taxes and insurance and
miscellaneous other liabilities.
3 Includes charges for declines in net realizable value of direct investments in
real estate and investment securities of $200,000, $2,463,000 and $625,000 in
fiscal 1995, 1994 and 1992, respectively.
4 Net interest income divided by weighted average interest-earning assets.
5 Dividends declared per share divided by net income per share.
-1-
<PAGE>
First United Savings Bank
Management Discussion and Analysis
GENERAL
The principal business of First United Savings Bank, f.s.b. ("First United" or
the "Bank") has always been to accept deposits from the general public and
invest those deposits, together with funds from earnings and borrowings,
primarily in first mortgage loans secured by one-to-four family residential
properties and, to a lesser extent, in multi-family residential and consumer
loans. In the fiscal year ended June 30, 1995, specific steps were taken to
ensure that business will be carried out in the best interests of the Bank's
customers and shareholders.
Effective September 29, 1994, First United entered into an Agreement of
Affiliation and Merger (as amended and restated, the "Agreement") with Old
National Bancorp ("Old National"), pursuant to which a federally chartered
interim savings bank and wholly-owned subsidiary of Old National will be merged
with and into First United (the "Merger"). Immediately prior to the Merger, the
assets and liabilities associated with First United's Greencastle and Danville,
Indiana operations, and shares of its insurance subsidiary, will be transferred
to a commercial bank subsidiary of Old National. Following the Merger, First
United's Bloomington operation will operate as a wholly-owned thrift subsidiary
of Old National and its Greencastle and Danville operations will be conducted as
part of First Citizens Bank and Trust Company. In connection with the Merger,
each issued and outstanding share of First United common stock will be converted
into the right to receive .8925 shares of Old National common stock, subject to
adjustments more particularly described in the Agreement. It is expected that
the Merger will be consummated by the end of 1995.
In the second quarter of fiscal 1995, First United recorded merger charges of
approximately $1,286,000 on a pre-tax basis. These charges included an
additional $500,000 loan loss provision to conform to Old National's loan loss
provisioning policies, a $321,000 liability for professional fees relating to
the pending merger, a reduction in a lease intangible asset value by $131,000, a
liability of $105,000 for anticipated costs to terminate a data processing
contract, and an additional provision of $200,000 relating to the Bank's
investment in the Shorewalk at Geist condominium project. These charges do not
violate any provision of the Agreement.
Since the Bank acquired Fountain Federal Savings Bank, Bloomington, Indiana, in
1988, a great deal of time and energy was devoted to the development and sale of
the Shorewalk condominium project in Indianapolis acquired in the merger. At
the end of fiscal 1994, the Bank decided not to develop the final phase of the
Shorewalk project, reduced its basis in Shorewalk, and placed the land on the
market for sale in undeveloped form. At June 30, 1995, the Bank sold Shorewalk
on contract to an independent third party for a purchase price of $900,000. The
contract requires payment, in advance, on a lot by lot basis as the purchaser
commences development of each lot. In connection with the sale, the Bank
recorded additional charges of $270,000 to reduce the Bank's basis to the sales
price.
As a result of the various charges described above, the Bank incurred a net loss
for fiscal 1995 of $650,000, or $1.15 per share, as compared to a net loss for
in the prior year of $1,000,000, or $1.84 per share. Net interest income before
provision for loan losses and, therefore, before any merger related or Shorewalk
adjustments, was $3,679,000 compared to $3,272,000 in the prior year.
-1-
<PAGE>
ASSET/LIABILITY MANAGEMENT
First United's exposure to interest rate risk is due to the differences in
maturities and volatility of rate-sensitive assets and rate-sensitive
liabilities. The term "rate sensitivity" refers to those assets and liabilities
which are "sensitive" to fluctuations in rates and yields. Savings institutions
have historically operated in a mismatched position with interest-sensitive
liabilities greatly exceeding interest-sensitive assets. In periods of rising
interest rates, an institution in this position would almost certainly
experience lower earnings as interest-sensitive liabilities (deposits and other
borrowings) would reprice upward at a more rapid rate than interest-sensitive
assets (loans and investments). First United has attempted to improve its
matching of rate-sensitive assets and rate-sensitive liabilities by promoting
adjustable rate mortgages, selling all currently originated fixed rate long term
mortgage loans and promoting certificates of deposit with maturities of three
years or longer. The following table shows the Bank's projected interest
sensitivity gap based on loan repayment and deposit decay rates used by the
Federal Home Loan Bank of Indianapolis and based on information reported to the
Office of Thrift Supervision ("OTS") in the June 30, 1995 "Maturity and Rate
Schedule CMR".
<TABLE>
<CAPTION>
MORE MORE
6 THAN THAN
6 MONTHS MONTHS 3 YEARS 5 YEARS MORE
OR LESS THROUGH 1-3 THROUGH THROUGH THAN
1 YEAR YEARS 5 YEARS 10 YEARS 10 YEARS TOTAL
---------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Rate-sensitive assets:
Balloon and
adjustable-rate
mortgage loans $ 16,377 $48,560 $34,701 $ -- $ -- $ -- $ 99,638
Fixed-rate mortgage loans 951 780 3,022 3,101 9,890 5,565 23,309
Other loans 437 809 1,953 453 -- -- 3,652
Cash and investment
securities 8,710 292 369 202 810 363 10,746
-------- ------- ------- ------ ------- ------ --------
26,475 50,441 40,045 3,756 10,700 5,928 137,345
Rate-sensitive liabilities:
Deposits (1) 38,163 17,930 26,721 3,390 1,454 -- 87,658
Borrowings 19,000 -- -- -- -- -- 19,000
-------- ------- ------- ------ ------- ------ --------
57,163 17,930 26,721 3,390 1,454 -- 106,658
-------- ------- ------- ------ ------- ------ --------
Interest sensitivity gap $(30,688) $32,511 $13,324 $ 366 $ 9,246 $5,928 $ 30,687
======== ======= ======= ====== ======= ====== ========
Cumulative difference
between interest-earning
assets and interest-bearing
liabilities $(30,688) $ 1,823 $15,147 $15,513 $24,759 $30,687
Cumulative difference as a
percentage of total assets (22.95)% 1.36% 11.33% 11.60% 18.52% 22.95%
</TABLE>
(1) Excludes $24,685,000 of passbook accounts and negotiable order of
withdrawal (NOW) accounts.
The following table sets forth the dollar amount of all loans due or repricing
after one year from June 30, 1995, which have fixed interest rates and which
have floating or adjustable interest rates. (These amounts do not include
$64,937,000 of balloon and one year adjustable rate mortgages).
<TABLE>
<CAPTION>
FIXED RATE ADJUSTABLE RATE
-----------------------------
<S> <C> <C>
(In Thousands)
Real estate mortgage loans $21,578 $34,701
Other loans $ 2,406 $ --
</TABLE>
In evaluating First United's exposure to interest rate risk, certain
shortcomings inherent in the method of analysis presented in the foregoing table
must be considered. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Additionally, the interest rates
on certain types of assets and liabilities may fluctuate in advance of changes
in market interest rates, while interest rates on other types may lag behind
changes in market rates. Further, certain assets, such as adjustable rate
mortgages, have features which restrict changes in interest rates on a short-
term basis and over the life of the asset. In addition, in the event of a
change in interest rates, prepayment and early withdrawal levels could deviate
significantly from those assumed in calculating the table. Moreover, the
ability of many borrowers to service their debt may decrease in the event of an
interest rate increase. First United considers the anticipated effects of these
various factors in implementing its interest rate risk management objectives.
Management believes that continuation of its efforts to manage the rates,
liquidity and interest rate sensitivity of First United's assets and liabilities
is necessary to generate an acceptable return.
-2-
<PAGE>
INTEREST RATE SPREAD
First United's pre-tax earnings depend primarily on its net interest income, the
difference between the income it receives on its loan portfolio and other
investments and its cost of money consisting of interest paid on deposits and
borrowings. When interest-earning assets approximate or exceed interest-bearing
liabilities, a positive interest rate spread will generate net interest income.
Thrift institutions have traditionally used interest rate spreads as a measure
of net interest income. Another indication of an institution's net interest
income is its "net yield on weighted average interest earnings assets", which is
net interest income divided by weighted average interest-earnings assets.
The following table sets forth the weighted average effective interest rate
earned by First United on its loan and investment portfolios, the weighted
average effective cost of First United's deposits and borrowings, the interest
rate spread of First United and the net yield on weighted average interest-
earning assets of First United on its loan portfolio and investments for the
periods and as of the dates shown. Average balances are based substantially on
daily balances.
<TABLE>
<CAPTION>
AT YEAR ENDED JUNE 30
JUNE 30 ---------------------------
1995 1995 1994 1993
---------------------------------------
<S> <C> <C> <C> <C>
Weighted average effective
interest rate earned on:
Loan portfolio 8.03% 7.68% 7.26% 7.84%
Investment securities 6.00% 4.96% 4.08% 4.92%
Mortgage-backed securities 9.28% 9.01% 8.33% 8.24%
Other interest-earning assets 6.73% 5.46% 3.81% 4.67%
Total interest-earning assets 7.97% 7.56% 7.04% 7.63%
Weighted average effective
interest cost of:
Customer deposits 5.18% 4.66% 4.43% 5.15%
Federal Home Loan Bank advances 6.41% 6.17% 3.63% 3.46%
Total interest-costing liabilities 5.36% 4.95% 4.45% 5.14%
Interest rate spread (1) 2.61% 2.61% 2.59% 2.49%
Net yield on weighted average interest-earnings assets (2) N/A 2.92% 2.68% 2.52%
</TABLE>
(1) Interest rate spread is calculated by subtracting combined weighted average
effective cost from combined weighted average effective interest rate for the
period or at the date indicated.
(2) The net yield on weighted average interest-earning assets is calculated by
dividing net interest income by weighted average interest-earning assets for the
period included.
N/A No net yield figure is presented as of the report date because the
computation of net yield is applicable only over a period rather than at a
specific date.
-3-
<PAGE>
RATE/VOLUME ANALYSIS
The following table describes the extent to which changes in interest rates and
changes in volume of interest-related assets and liabilities have affected the
Bank's interest income and interest expense during the periods indicated. For
each category of interest-earning asset and interest-bearing liability,
information is provided on changes attributable to (1) changes in rate (change
in rate multiplied by old volume), (2) changes in volume (change in volume
multiplied by old rate), and (3) changes in rate volume (change in rate
multiplied by the change in volume), which have been allocated to the change in
rate and the change in volume based upon their respective percentages of the
combined totals. During 1994 and 1993, the Bank capitalized $35,500 and $51,000
of interest expense, respectively, on the construction of the Shorewalk at Geist
condominium project. To facilitate comparability, the resulting decrease in
interest expense is not considered below.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1992 VS. 1993
INCREASE (DECREASE) DUE TO
---------------------------------------
RATE VOLUME TOTAL
---------------------------------------
<S> <C> <C> <C>
Interest income:
Loan portfolio $(1,490,801) $ 424,774 $(1,066,027)
Investment portfolio (43,148) (40,510) (83,658)
Mortgage-backed securities (8,727) (227,054) (235,781)
Other investments (61,925) (154,267) (216,192)
---------------------------------------
Total (1,604,601) 2,943 (1,601,658)
Interest expense on:
Deposits (1,427,225) (308,831) (1,736,056)
Borrowings (11,644) 78,030 66,386
---------------------------------------
Total (1,438,870) (230,800) (1,669,670)
---------------------------------------
Net change in net interest income before provision $ (165,732) $ 233,744 $ 68,012
for loan losses =======================================
</TABLE>
<TABLE>
<CAPTION>
1993 VS. 1994
INCREASE (DECREASE) DUE TO
---------------------------------------
RATE VOLUME TOTAL
---------------------------------------
<S> <C> <C> <C>
Interest income:
Loan portfolio $ (826,838) $ 393,992 $ (432,846)
Investment portfolio (35,694) (32,540) (68,234)
Mortgage-backed securities 167,620 (199,001) (31,381)
Other investments (40,927) 40,056 (871)
---------------------------------------
Total (735,839) 202,507 (533,332)
Interest expense on:
Deposits (854,678) (17,441) (872,119)
Borrowings 4,417 90,483 94,900
Total (850,261) 73,042 (777,219)
---------------------------------------
Net change in net interest income before provision
for loan losses $ 114,422 $ 129,465 $ 243,887
=======================================
</TABLE>
<TABLE>
<CAPTION>
1994 VS. 1995
INCREASE (DECREASE) DUE TO
---------------------------------------
RATE VOLUME TOTAL
---------------------------------------
<S> <C> <C> <C>
Interest income:
Loan portfolio $ 649,384 $ 307,298 $ 956,682
Investment portfolio 32,295 (40,723) (8,428)
Mortgage-backed securities (58,020) (87,411) (145,431)
Other investments 77,847 (29,748) 48,099
---------------------------------------
Total 701,507 149,415 850,922
Interest expense on:
Deposits 865,257 (277,793) 587,464
Borrowings 176,595 246,154 422,749
---------------------------------------
Total 1,041,852 (31,639) 1,010,213
---------------------------------------
Net change in interest income before provision
for loan losses $ (340,345) $ 181,054 $ (159,291)
=======================================
</TABLE>
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
Net Interest Income
-------------------
Interest and fees on loans increased $988,000 from that in 1994. The
fluctuation was caused by a rise in the weighted average loan portfolio yield of
.42%, and by an increase in the average daily balance of loans outstanding of
$4,227,000. Interest income on investments, mortgage-backed securities, and
other interest-bearing assets decreased $137,000 as a result of a .06% increase
in the weighted average yield offset by a decrease in the average daily balance
of $2,370,000. Total interest expense of the Bank increased $444,000 for 1995.
The average daily balance of customer deposits in 1995 was $6,033,000 lower than
in the prior year and the weighted average rate paid on deposits increased .52%.
The results of the above fluctuations was an increase in net interest income of
$407,000 from the previous year.
-4-
<PAGE>
Provision for Loan Losses
-------------------------
The 1995 provision for loan losses of $746,000 includes an additional $500,000
to conform to Old National's loan loss provising policies. The Bank recorded
charge-offs (net of recoveries) in 1995 totaling $125,000. In the prior year,
the provision for loan losses was $122,000 with net charge-offs of $45,000.
Other Income
------------
Total noninterest income of the Bank increased $16,000 to $616,000 for 1995.
During the current year, the Bank sold loans in the secondary market totaling
$3,194,000 and realized net gains of $12,000 as compared to net gains in the
prior year of $78,000. The Bank actively manages a trading account portfolio
and realized net losses in 1995 of $36,000, as compared to $69,000 in the prior
year, on sales from the trading account as well as a mutual fund.
Other Expense
-------------
During the fourth quarter of 1994, the Bank decided not to develop the final
phase of the Shorewalk project and reduced its carrying value in the project by
$2,463,000 to its estimated fair value based on an independent appraisal. In
the second quarter of fiscal 1995, the Bank recorded an additional charge of
$200,000 based on its internal review of the project. In the fourth quarter of
fiscal 1995, the Bank charged an additional $270,000 to expense in connection
with the sale of the project, on a contract basis, to a local developer.
Excluding Shorewalk charges, the Bank's noninterest expense increased $1,330,000
from 1994 primarily from merger related expenses of $450,000 which are included
in miscellaneous expense in 1995.
The Bank changed from a single-employer pension plan to participation in a
multi-employer plan in 1994. As a result of this change in plans, the Bank was
able to reduce its accrued pension liability to its estimated unfunded accrued
liability which reduced other expense by approximately $152,000 in 1994. Annual
pension expense and additional, merger-related, pension costs increased the
Bank's pension expense by $204,000 in 1995. Increases in data processing costs
over 1994 of $45,000 and an increase in occupancy expense of $106,000 due to a
reduction in the value of a lease intangible asset also contributed to the
change in other expenses.
YEAR ENDED JUNE 30, 1994 COMPARED TO YEAR ENDED JUNE 30, 1993
Net Interest Income
-------------------
Interest and fees on loans decreased $443,000 from that in 1993. The
fluctuation was caused by a decline in the weighted average loan portfolio yield
of .58% which was partially offset by an increase in the average daily balance
of loans outstanding of $5,194,000. Interest income on investments, mortgage-
backed securities, and other interest-bearing assets decreased $100,000 as a
result of a 1.04% decrease in the weighted average yield and a decrease in the
average daily balance of $1,725,000. Total interest expense of the Bank
decreased $762,000 for 1994. The average daily balance of customer deposits in
1994 was $340,000 lower than in the prior year and the weighted average rate
paid on deposits decreased .72%. In addition, the Bank capitalized $35,500 of
interest on the Shorewalk at Geist condominium project in 1994 as compared to
$51,000 in 1993. The results of the above fluctuations was an increase in net
interest income of $228,000 from the previous year.
Provision for Loan Losses
-------------------------
During fiscal 1994, the Bank recorded a provision for loan losses of $122,000
and recorded charge-offs (net of recoveries) totaling $45,000. In the prior
year, net charge-offs totaled $72,000 with a provision for loan losses of
$90,000.
Other Income
------------
Total noninterest income of the Bank increased $17,000 to $600,000 for 1994.
During the current year, the Bank sold loans in the secondary market totaling
$9,802,000 and realized net gains of $78,000 as compared to net gains in the
prior year of $122,000. The Bank actively manages a trading account portfolio
and realized net losses in 1994 of $69,000, as compared to $101,000 in the prior
year, on sales from the trading account as well as a mutual fund.
Other Expense
-------------
During the fourth quarter of fiscal 1994, the Bank decided not to develop the
final phase of the Shorewalk project and reduced its carrying value in the
project by $2,463,000 to its estimated fair value based on an independent
appraisal. Excluding that charge, the Bank's noninterest expense increased
$121,000. Also during the fourth quarter of fiscal 1994, the Bank reached an
agreement with the Homeowners Association at Shorewalk for $115,500 to settle
claims assessed in a previous year. This settlement was accrued and is included
in miscellaneous expenses in 1994.
Prior to 1994, the Bank's defined benefit pension plan was a single-employer
plan sponsored by First United. Effective July 1, 1993, the Bank elected to
participate in a multi-employer plan. As a result of this change in plans, the
Bank was able to reduce its accrued pension liability to its estimated unfunded
accrued liability which reduced other expenses by approximately $152,000 in
1994.
-5-
<PAGE>
The Bank's federal deposit insurance premium in 1994 was $89,000 higher than in
1993 as a result of its secondary reserve credit recapture in the prior year.
The Bank also converted to a new service bureau for data processing services in
1994 which resulted in an increase in data processing costs of $36,000.
The following table sets forth, for the indicated periods, First United's return
on assets, return on equity, and equity-to-assets ratio:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
--------------------------
<S> <C> <C> <C>
Return on assets (net income divided by average total assets) (.48%) (.73%) .36%
Return on equity (net income divided by average total equity) (7.30%) (9.16%) 4.50%
Equity-to-assets ratio (average equity divided by average total assets) 6.56% 8.01% 7.98%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
First United's liquidity, represented by cash and cash equivalents, is a result
of its operating, investing, and financing activities. During the year ended
June 30, 1995, the Bank's liquidity increased $576,000. The major sources of
cash were from financing and operating activities which generated $11,106,000.
Operating activities including proceeds of $3,039,000 from the sale of trading
account assets provided $1,963,000 of cash and financing activities included
additional Federal Home Loan Bank advances of $10,000,000. The major uses of
cash during the year included an increase in total loans of $10,693,000.
Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") and regulatory capital regulations, at June 30, 1995, the Bank was
required to have (i) core capital equal to 3% of adjusted total assets, (ii)
tangible capital equal to 1.5% of adjusted total assets, and (iii) total capital
equal to 8% of risk-weighted assets. The Bank met the fully phased-in risk-
based capital requirement of 8% on July 1, 1995.
The OTS has adopted an interest rate risk component to its risk-based capital
requirements to be effective September 1, 1995. Under the new requirement, if a
Bank's market value of portfolio equity decreases by more than two per cent of
total assets from a 200 basis point change in interest rates, it is deemed to
have excessive interest rate risk. In such cases, the Bank will be required to
reduce its total capital by one half the amount by which the change exceeds two
per cent of total assets. Based on the calculations provided by the OTS, First
United would not be affected by this requirement if it were in effect as of June
30, 1995.
At June 30, 1995, the Bank exceeded all current OTS regulatory capital
requirements as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
Tangible capital $8,113 5.8% of adjusted assets
Required tangible capital 2,094 1.5% of adjusted assets
--------
Excess tangible capital $6,019
========
Core capital $8,431 6.0% of adjusted assets
Required core capital 4,198 3.0% of adjusted assets
--------
Excess core capital $4,233
========
Risk-based capital $9,294 11.4% of risk-based assets
Required risk-based capital 6,527 8.0% of risk-based assets
--------
Excess risk-based capital $2,767
========
IMPACT OF INFLATION
</TABLE>
The consolidated financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting principles.
These principles require the measurement of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation.
The primary assets and liabilities of First United are monetary in nature. As a
result, interest rates have a more significant impact on First United's
performance than the effects of general levels of inflation. Interest rates,
however, do not necessarily move in the same direction or with the same
magnitude as the price of goods and services, since such prices are affected by
inflation. In a period of rapidly rising interest rates, the liquidity and
maturity structure of First United's assets and liabilities are critical to the
maintenance of acceptable performance levels. For a discussion of First
United's efforts to restructure its assets and to reduce its vulnerability to
changes in interest rates, see "Asset/Liability Management."
-6-
<PAGE>
The principal effect of inflation, as distinct from levels of interest rates, on
the Bank's earnings is in the area of other expense. Such expense items as
salaries, employee benefits and occupancy costs may be subject to increases as a
result of inflation. An additional effect of inflation is the possible increase
in dollar value of the collateral securing loans made by the Bank. First United
is unable to determine the extent, if any, to which the properties securing its
loans have appreciated in dollar value due to inflation.
MARKET PRICE AND DIVIDENDS
First United converted from mutual to stock form effective March 27, 1987 (the
"Conversion"). First United's common stock, par value $.01 per share ("Common
Stock"), is quoted on the National Association of Securities Dealers Automated
Quotation system ("NASDAQ") under the symbol "FUSB".
For the past eight fiscal quarters, the high and low bid prices, as reported by
NASDAQ, were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------
9/30/93 12/31/93 3/31/94 6/30/94
-------------------------------------------
<S> <C> <C> <C> <C>
High $15.75 $16.00 $14.50 $20.25
Low 14.75 14.50 13.75 14.00
9/30/94 12/31/94 3/31/95 6/30/95
-------------------------------------------
High $27.00 $27.50 $27.50 $26.75
Low 19.75 26.50 26.75 26.75
</TABLE>
Such over-the-counter quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions. As of June 30, 1995, there were approximately 375 shareholders of
record of the Bank's Common Stock.
The Bank does not have an established policy of paying regular dividends.
During 1994, the Bank paid dividends of $.12 per share in March and June.
First United may adopt a policy of paying additional dividends in the future,
subject to the limitations prescribed by the federal regulations discussed
below, when the board of Directors of the Bank deems it to be appropriate.
Adoption of such a policy will depend on First United's net earnings, financial
position and capital requirements as well as economic conditions and other
factors. Accordingly, no assurance can be given regarding the amount or timing
of future dividend payments, if any.
The Bank may not declare or pay a cash dividend or repurchase any of its capital
stock if the effect thereof would cause the net worth of the Bank to be reduced
below the amount required for the liquidation account. Additionally, dividends
are subject to OTS distribution regulations which limit the amount of cash
dividends which may be declared by savings associations based on capital levels.
-7-
<PAGE>
Consolidated Financial Statements
First United Savings Bank, fsb.
Years ended June 30, 1995 and 1994
with Report of Independent Auditors
<PAGE>
First United Savings Bank, fsb.
Consolidated Financial Statements
Years ended June 30, 1995 and 1994
CONTENTS
Report of Independent Auditors................................................ 1
Consolidated Financial Statements
Consolidated Statements of Condition.......................................... 2
Consolidated Statements of Income............................................. 3
Consolidated Statements of Stockholders' Equity............................... 4
Consolidated Statements of Cash Flows......................................... 5
Notes to Consolidated Financial Statements.................................... 6
<PAGE>
Report of Independent Auditors
To the Stockholders and
Board of Directors
First United Savings Bank
We have audited the accompanying consolidated statements of condition of First
United Savings Bank, fsb. and subsidiaries as of June 30, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended June 30, 1994. These financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First United
Savings Bank, fsb. and subsidiaries at June 30, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1995, in conformity with generally
accepted accounting principles.
August 4, 1995
1
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Consolidated Statements of Condition
<TABLE>
<CAPTION>
JUNE 30
1995 1994
----------------------------
<S> <C> <C>
ASSETS
Cash $ 878,992 $ 756,129
Interest bearing deposits 5,614,245 5,161,337
Trading account assets (cost: 1995, $1,075,223;
1994, $2,599,040) 1,075,223 2,596,652
Investment securities (market value: 1995,
$1,260,748; 1994, $1,259,264) (Note 2) 1,255,064 1,255,071
Mortgage-backed securities (market value: 1995
$2,036,833; 1994, $2,320,984) (Note 2) 1,922,086 2,344,502
Stock in Federal Home Loan Bank of Indianapolis 1,075,400 1,040,200
Loans receivable, net (Note 3) 121,593,615 110,900,334
Direct investment in real estate 900,000 1,677,944
Premises and equipment (Note 4) 1,514,272 1,616,470
Other assets (Note 7) 6,210,813 6,354,997
--------------------------
$142,039,710 $133,703,636
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (Note 5) $112,343,290 $113,248,577
Advance payments by borrowers for taxes
and insurance 351,494 667,005
Federal Home Loan Bank advances (Note 6) 19,000,000 9,000,000
Other liabilities 1,104,412 946,155
--------------------------
132,799,196 123,861,737
Stockholders' equity (Notes 7, 9, and 10)
Preferred Stock, $1 par value; authorized--
2,000,000 shares; none issued -- --
Common Stock, $.01 par value; authorized--
5,000,000 shares; outstanding:
1995, 545,800 shares; 1994, 542,300 shares 5,458 5,423
Additional paid-in capital 4,956,189 4,907,561
Retained earnings--substantially restricted 4,278,867 4,928,915
--------------------------
9,240,514 9,841,899
--------------------------
$142,039,710 $133,703,636
==========================
</TABLE>
See accompanying notes.
2
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
-----------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $8,950,258 $ 7,962,250 $8,395,096
Interest on investments 150,241 158,668 226,902
Interest on mortgage-backed securities 188,811 365,568 396,949
Other interest income 248,202 200,103 200,974
-----------------------------------
Total interest income 9,537,512 8,686,589 9,219,921
Interest expense:
Interest on deposits:
Passbook 493,786 528,778 436,893
MMDA and NOW 640,443 702,674 783,329
Certificates of deposit 4,122,490 4,003,874 4,871,723
-----------------------------------
5,256,719 5,235,326 6,091,945
Interest on Federal Home Loan
Bank advances 601,698 178,949 84,049
-----------------------------------
Total interest expense 5,858,417 5,414,275 6,175,994
-----------------------------------
Net interest income 3,679,095 3,272,314 3,043,927
Provision for loan losses (Note 3) 745,774 121,614 89,674
-----------------------------------
Net interest income after provision
for loan losses 2,933,321 3,150,700 2,954,253
Other income:
Customer fees and charges 212,230 191,514 181,485
Loss on sale of investments and
trading account assets (35,733) (68,975) (100,780)
Gain on sale of loans 12,248 77,904 121,999
Insurance commissions 205,234 183,605 179,653
Increase in cash surrender value
of life insurance policies 41,935 40,954 42,962
Miscellaneous 180,002 174,652 157,219
-----------------------------------
Total other income 615,916 599,654 582,538
Other expense:
Salaries and employee benefits 1,447,926 1,104,905 1,228,478
Net occupancy expense 497,814 391,504 390,770
Federal insurance premium 276,177 267,574 178,500
Data processing 196,067 151,489 114,991
Provision for loss on direct
investment in real estate 200,000 2,463,049 --
Miscellaneous 1,858,301 1,030,050 911,889
-----------------------------------
Total other expense 4,476,285 5,408,571 2,824,628
-----------------------------------
Income (loss) before income taxes (927,048) (1,658,217) 712,163
Income tax expense (credit) (Note 7) (277,000) (657,800) 228,500
-----------------------------------
Net income (loss) $ (650,048) $(1,000,417) $ 483,663
===================================
Earnings (loss) per share $ (1.15) $ (1.84) $ .90
===================================
</TABLE>
See accompanying notes.
3
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED TOTAL
COMMON PAID-IN RETAINED LOSS ON STOCKHOLDERS'
STOCK CAPITAL EARNINGS INVESTMENTS EQUITY
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1992 $5,391 $4,877,093 $ 5,684,280 $(43,567) $10,523,197
Net income for 1993 -- -- 483,663 -- 483,663
Dividends on Common Stock ($.20 per share) -- -- (108,459) -- (108,459)
Exercise of stock option 32 30,468 -- -- 30,500
Net decrease in reserve for unrealized loss on investments -- -- -- 43,567 43,567
-------------------------------------------------------------
BALANCE AT JUNE 30, 1993 5,423 4,907,561 6,059,484 -- 10,972,468
Net loss for 1994 -- -- (1,000,417) -- (1,000,417)
Dividends on Common Stock ($.24 per share) -- -- (130,152) -- (130,152)
-------------------------------------------------------------
BALANCE AT JUNE 30, 1994 5,423 4,907,561 4,928,915 -- 9,841,899
Net loss for 1995 -- -- (650,048) -- (650,048)
Exercise of stock options 35 48,628 -- -- 48,663
-------------------------------------------------------------
BALANCE AT JUNE 30, 1995 $5,458 $4,956,189 $ 4,278,867 $ -- $ 9,240,514
=============================================================
</TABLE>
See accompanying notes.
4
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (650,048) $ (1,000,417) $ 483,663
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 745,774 121,614 89,674
Provisions for loss on direct
investment in real estate
and investment securities 200,000 2,463,049 --
Depreciation and amortization 366,339 110,492 227,133
Deferred federal income taxes (223,000) (803,500) 160,000
Loss on sale of investment
securities -- -- 62,961
Market value adjustment of
trading account assets (2,388) 2,388 (26,686)
Loss on sale of trading
account assets 38,121 66,587 64,505
Purchase of trading account
assets (1,553,227) (11,628,068) (34,548,945)
Proceeds from sales of
trading account assets 3,038,923 11,602,535 34,450,125
Loans originated for sale (3,182,072) (9,770,341) (5,168,992)
Proceeds from sales of loans 3,194,320 9,802,341 5,288,992
(Increase) decrease in other
assets 148,007 631,839 (127,709)
Increase (decrease) in other
liabilities (157,254) (2,275) 168,308
--------------------------------------------
Net cash provided (used) by
operating activities 1,963,495 1,596,244 1,123,029
INVESTING ACTIVITIES:
Purchases of investment
securities -- (89,285) (456,416)
Proceeds from maturities of
investment securities -- 65,000 9,073
Proceeds from sales of
investment securities -- 78,371 1,176,123
Principal collected on
mortgage-backed securities 435,576 1,523,610 2,492,338
Purchase of stock in the
Federal Home Loan Bank
of Indianapolis (35,200) (10,500) (32,900)
Principal collected on loans 28,326,497 27,258,042 25,963,650
Loans originated or purchased (41,468,372) (26,532,099) (36,444,121)
Direct investment in real
estate additions (64,125) (1,389,700) (1,926,867)
Proceeds from sales of direct
investment in real estate 500,219 1,055,394 2,780,787
Other investing activities 1,774,306 (152,036) 467,388
--------------------------------------------
Net cash provided (used) by
investing activities (10,531,099) 1,806,797 (5,970,945)
FINANCING ACTIVITIES:
Net increase (decrease) in NOW,
MMDA and passbook deposits (8,750,390) 2,234,901 3,786,498
Net increase (decrease) in
certificates of deposit 7,845,103 (5,888,438) (2,974,906)
Borrowings under Federal
Home Loan Bank advances 58,500,000 33,500,000 22,100,000
Repayments of Federal Home
Loan Bank advances (48,500,000) (33,600,000) (15,000,000)
Proceeds from issuance of stock 48,662 -- 30,500
Cash dividends -- (130,152) (108,459)
--------------------------------------------
Net cash provided (used) by
financing activities 9,143,375 (3,883,689) 7,833,633
--------------------------------------------
Increase (decrease) in cash
and cash equivalents 575,771 (480,648) 2,985,717
Cash and cash equivalents at
beginning of year 5,917,466 6,398,114 3,412,397
--------------------------------------------
Cash and cash equivalents at
end of year $ 6,493,237 $ 5,917,466 $ 6,398,114
============================================
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 5,827,510 $ 5,400,807 $ 6,195,743
Income taxes $ 31,701 $ 40,200 $ 41,000
</TABLE>
See accompanying notes.
5
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
MERGER AGREEMENT
On September 24, 1994, First United Savings Bank entered into the Amended and
Restated Agreement of Affiliation and Merger with Old National Bankcorp,
Evansville, Indiana ("ONB"). It is expected that this merger will be
consummated by the end of 1995.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of First United
Savings Bank, fsb. ("the Bank") and its wholly owned subsidiaries, Greenmark,
Inc. and Kirkwood Service Corp., Inc. All significant intercompany balances and
transactions have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and interest-bearing deposits.
Interest-bearing deposits are available on demand.
TRADING ACCOUNT ASSETS
Certain investments in mutual funds are held for trading purposes and are stated
at market value.
INVESTMENT AND MORTGAGE-BACKED SECURITIES
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective for fiscal years beginning after December
15, 1993. Under the new rules, debt securities that the Bank has both the
positive intent and ability to hold to maturity are carried at amortized cost.
Debt securities that the Bank does not have the positive intent and ability to
hold to maturity and all marketable equity securities are to be classified as
available-for-sale or trading and carried at fair value. Unrealized holding
gains and losses on securities classified as available-for-sale are to be
carried as a separate component of shareholders' equity. Unrealized holding
gains and losses on securities classified as trading are reported in earnings.
6
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Presently, the Bank classifies its investment and mortgage-backed securities as
held-for-investment. Investment securities are stated at cost adjusted for
amortization of premium and accretion of discount, both of which are computed by
a method that approximates a level yield. Gains or losses on the sale of these
investments are based on the adjusted cost of the specific investment. The Bank
has the ability and intention to hold investment and mortgage-backed securities
to maturity and, therefore, such securities are carried at amortized cost. The
Bank first applied the new rules starting in the first quarter of fiscal 1995.
Application of the new rules did not have an impact on stockholders' equity as
of July 1, 1994.
STOCK IN FEDERAL HOME LOAN BANK OF INDIANAPOLIS
Stock in the Federal Home Loan Bank of Indianapolis is stated at cost. The
amount of stock held is determined by regulation.
LOANS RECEIVABLE
The Bank primarily originates adjustable rate loans and intends to hold such
loans for long-term investment. Accordingly, such loans are carried at cost.
Fixed rate loans originated are generally sold. Fixed rate loans held for sale,
which were immaterial at June 30, 1995, are carried at the lower of cost or
market value.
The Bank has a first mortgage lien on all property on which mortgage,
participation or purchased loans are made. Further, a portion of certain
mortgage loan balances is insured by private or government guaranty insurance
policies. Interest income is computed monthly based upon the principal amount
of the loans outstanding.
REAL ESTATE OWNED AND IN JUDGMENT
Real estate owned and in judgment arises from loan foreclosure or deed in lieu
of foreclosure and is recorded at the lower of cost (the unpaid balance at the
date of acquisition plus foreclosure and other related costs) or fair value.
Subsequent to acquisition, an allowance is recorded for any excess of carrying
value over fair value minus estimated selling costs. Costs of improvements made
to facilitate sale are capitalized; costs of holding the property are charged
to expense.
7
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DIRECT INVESTMENT IN REAL ESTATE
The Bank acts as developer for a condominium project (i.e. Shorewalk at Geist)
in Indianapolis, Indiana which it acquired in connection with the acquisition of
Fountain Federal Savings and Loan Association of Bloomington, Indiana in 1988.
The Bank had an ownership interest in real estate associated with a second
condominium project in Indianapolis also acquired in connection with the merger
but sold this interest effective June 30, 1993. Construction and holding costs
have been capitalized and revenue received has been used to reduce the Bank's
basis in the projects. A valuation allowance of $625,000 was established during
1992. During the quarter ended June 30, 1994, the Bank decided not to develop
the final phase of the Shorewalk project and reduced its carrying value in the
project by $2,463,049 to its estimated fair value based on an independent
appraisal. During the quarter ended December 31, the Bank reduced Shorewalk's
carrying value by an additional $200,000. On June 30, 1995 the Bank sold
Shorewalk on contract to an independent third party. The contract requires
payment, in advance, on lot by lot basis as the purchaser commences development
of each lot.
ALLOWANCE FOR LOAN LOSSES
An allowance for loan losses is maintained at a level management believes
adequate to absorb potential losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based on their evaluation of
the related assets, past experience and current economic and market conditions.
PREMISES AND EQUIPMENT
Premises and equipment is recorded on the basis of cost. Depreciation is
computed on the straight-line method over the estimated useful lives of the
related assets.
EARNINGS PER SHARE
Earnings per share is computed by dividing net income for the period by the
weighted average number of shares outstanding.
8
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. INVESTMENTS
Investment securities consist of the following:
<TABLE>
<CAPTION>
JUNE 30, 1995
------------------------------------------
AMORTIZED GROSS UNREALIZED MARKET
COST GAINS LOSSES VALUE
------------------------------------------
<S> <C> <C> <C> <C>
States and municipalities $ 164,485 $5,684 $ -- $ 170,169
Mutual funds 1,000,000 -- -- 1,000,000
Other 90,579 -- -- 90,579
------------------------------------------
$1,255,064 $5,684 $ -- $1,260,748
==========================================
JUNE 30, 1994
------------------------------------------
AMORTIZED GROSS UNREALIZED MARKET
COST GAINS LOSSES VALUE
------------------------------------------
States and municipalities $ 164,492 $4,193 $ -- $ 168,685
Mutual funds 1,000,000 -- -- 1,000,000
Other 90,579 -- -- 90,579
------------------------------------------
$1,255,071 $4,193 $ -- $1,259,264
==========================================
</TABLE>
The amortized cost and market value of investment securities at June 30, 1995,
by contractual maturity, are as follows:
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
------------------------
<S> <C> <C>
Due within one year $ -- $ --
Due one to five years 114,485 117,034
Due after five years 50,000 53,135
No contractual maturity 1,090,579 1,090,579
------------------------
$1,255,064 $1,260,748
========================
</TABLE>
9
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. INVESTMENTS (CONTINUED)
No realized gains or losses were realized during 1995 and 1994. Accrued
interest receivable on investment securities totaled approximately $3,800 and
$5,300 at June 30, 1995 and 1994, respectively and is included in other assets
in the consolidated statements of condition.
Gross unrealized gains and losses on mortgage-backed securities at June 30,
1995, were approximately $53,000 and $200, respectively. At June 30, 1994,
gross unrealized gains and losses on mortgage-backed securities were
approximately $248,000 and $1,600, respectively. No mortgage-backed securities
were sold during 1994. Accrued interest receivable on mortgage-backed
securities totaled approximately $24,800 and $27,700 at June 30, 1995 and 1994,
respectively, and is included in other assets in the consolidated statements of
condition.
3. LOANS RECEIVABLE
Loans receivable consist of the following:
<TABLE>
<CAPTION>
JUNE 30
1995 1994
----------------------------
<S> <C> <C>
First mortgage loans $122,047,919 $109,976,922
Loans secured by deposit accounts 550,849 523,948
Home improvement loans 142,996 201,833
Education loans 335,089 358,826
Consumer loans 2,622,262 1,473,117
----------------------------
125,699,115 112,534,646
Deduct:
Undisbursed portion of loans in process (2,806,253) (973,344)
Unamortized net loan origination fees (436,247) (418,661)
Allowance for loan losses (863,000) (242,000)
Unearned discounts -- (307)
----------------------------
(4,105,500) (1,634,312)
----------------------------
$121,593,615 $110,900,334
============================
</TABLE>
10
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. LOANS RECEIVABLE (CONTINUED)
The Bank had a loan servicing portfolio as of June 30, 1995, 1994 and 1993 of
$23,260,000, $23,130,000 and $22,105,000, respectively. In 1995, the Bank sold
fixed-rate loans totaling $3,182,072 resulting in a gain of $12,248.
Accrued interest on loans receivable was approximately $665,057 and $605,617 as
of June 30, 1995 and 1994, respectively, and is included in other assets in the
consolidated statements of condition.
As of June 30, 1995, there were outstanding commitments to originate loans of
$4,551,870 of which $1,567,077 are to bear fixed interest rates. In addition,
the Bank had commitments to fund customers' unused lines of credit of $2,815,839
as of June 30, 1995.
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 242,000 $165,000 $147,500
Provision for losses 745,774 121,614 89,674
Charge-offs (136,981) (48,894) (81,821)
Recoveries 12,207 4,280 9,647
--------------------------------
Balance, end of year $ 863,000 $242,000 $165,000
================================
</TABLE>
The Bank's loan portfolio consists generally of loans to individuals and
businesses located in its central Indiana marketplace.
In May 1993, the Financial Accounting Standards Board issued Statement No. 114,
"Accounting by Creditors For Impairment of a Loan." The Bank plans to adopt
this standard on July 1, 1995 and does not expect the adoption to have a
material impact on financial position or results of operations.
11
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. PREMISES AND EQUIPMENT
Premises and equipment consist of the following:
<TABLE>
<CAPTION>
JUNE 30
1995 1994
---------------------------
<S> <C> <C>
Land $ 398,717 $ 398,717
Office buildings 990,074 986,972
Furniture and equipment 852,695 814,992
Leasehold improvements 1,165,214 1,143,227
Automobiles 21,059 21,059
---------------------------
3,427,759 3,364,967
Less accumulated depreciation (1,913,487) (1,748,497)
---------------------------
$ 1,514,272 $ 1,616,470
===========================
</TABLE>
Depreciation expense for the years ended June 30, 1995, 1994 and 1993 was
approximately $164,200, $164,700, and $144,000, respectively.
5. DEPOSITS
Deposits consist of the following:
<TABLE>
<CAPTION>
JUNE 30
1995 1994
-----------------------------------------------------
AVERAGE AVERAGE
INTEREST INTEREST
Type AMOUNT RATE AMOUNT RATE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Passbook accounts $ 12,514,041 3.10% $ 16,551,882 3.11%
Money market deposit accounts (MMDA) 8,421,393 3.53 10,838,593 2.83
Negotiable order of withdrawal (NOW) accounts 12,171,469 2.17 14,476,731 2.63
Certificate accounts (original term):
12 months or less 29,481,237 5.69 28,846,590 3.68
13 - 24 months 3,771,314 5.75 2,533,330 4.19
25 - 36 months 20,758,377 6.22 11,093,176 5.12
37 - 48 months 1,462,018 5.71 2,826,538 6.98
49 months or more 8,970,991 7.49 10,309,036 8.17
Individual retirement accounts 14,650,406 6.65 15,545,388 7.06
Discount on certificates acquired through merger 142,044 227,313
------------ ------------
79,236,386 71,381,371
------------ ------------
$112,343,290 5.22% $113,248,577 4.48%
=====================================================
</TABLE>
12
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. DEPOSITS (CONTINUED)
The average interest rates represent the weighted average interest rate in
effect at the end of the period. Accrued interest payable, which relates
primarily to certificate accounts, totaled approximately $91,000 and $80,000 at
June 30, 1995 and 1994, respectively, and is included in other liabilities in
the consolidated statements of condition. As of June 30, 1995, the Bank held
$17,344,000 of deposits of $100,000 or more.
6. FEDERAL HOME LOAN BANK ADVANCES
The Bank utilized variable rate Federal Home Loan Bank advances at various
periods throughout the year. Advances outstanding as of June 30, 1995 are due in
the first quarter of fiscal 1995, and the interest rate adjusts daily (6.79% at
June 30, 1995). The advances are secured by approximately $32,300,000 of first
mortgage loans.
In addition, the Bank has a $500,000 line of credit with the Federal Home Loan
Bank of Indianapolis which is secured by first mortgage loans. As of June 30,
1995, no amounts were outstanding under this line of credit.
7. INCOME TAXES
The Bank has qualified under provisions of the Internal Revenue Code which
permit it to deduct from taxable income a provision for bad debts which differs
from the provisions for such losses recognized in the consolidated statements of
operations. Accordingly, retained earnings at June 30, 1994 includes income of
approximately $3,448,000, (approximately $1,172,000 of unrecognized deferred tax
liability) for which no provision for federal income taxes has been made. If,
in the future, this portion of retained earnings is used for any purpose other
than to absorb bad debt losses, federal income taxes will be imposed at the then
applicable rates.
13
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. INCOME TAXES (CONTINUED)
The provision for income taxes (credit) consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
--------------------------------------
<S> <C> <C> <C>
Federal:
Current $ -- $ -- $ 5,000
Current tax expense offset by utilization
of tax operating loss carryforwards -- 301,000 --
Deferred (223,000) (803,500) 160,000
--------------------------------------
(223,000) (502,500) 165,000
State (54,000) (155,300) 63,500
--------------------------------------
$(277,000) $(657,800) $228,500
======================================
</TABLE>
A reconciliation of federal income tax expense in the statements of income with
the amounts computed by applying the statutory federal income tax rate to
income before federal income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
--------------------------------------
<S> <C> <C> <C>
Federal income taxes computed at the
statutory rate of 34% $(315,196) $(563,794) $242,135
Add (deduct) the tax effect of:
State taxes 18,446 52,802 (21,590)
Nontaxable interest (11,812) (15,718) (24,634)
Nontaxable purchase accounting adjustments (32,522) (56,612) (32,624)
Expiration of net operating loss carryforward -- 70,497 --
Nondeductible merger costs 117,037 -- --
Other 1,047 10,325 1,713
--------------------------------------
92,196 61,294 (77,135)
--------------------------------------
Federal income taxes (credit) $(223,000) $(502,500) $165,000
======================================
</TABLE>
14
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. INCOME TAXES (CONTINUED)
The components of the Bank's net deferred tax asset included in other assets in
the consolidated statement of condition are as follows:
<TABLE>
<CAPTION>
JUNE 30
1995 1994
-----------------------------
<S> <C> <C>
Deferred tax assets:
Tax operating loss carryforwards $2,038,185 $ 827,168
Reserves for direct investments in real estate -- 1,278,421
Deferred loan fees 185,405 177,931
Allowances for loan losses 293,420 82,280
Deferred compensation 114,294 98,313
Other 122,894 32,763
--------------------------
2,754,198 2,496,876
Deferred tax liabilities:
Depreciation 208,030 192,860
Cash surrender value of life insurance 184,924 167,102
Percentage bad debt deduction 13,054 13,054
Other 23,460 22,445
--------------------------
429,468 395,461
--------------------------
$2,324,730 $2,101,415
==========================
</TABLE>
The principal sources of federal deferred tax expense (credit) include:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
Depreciation $ 12,136 $ 4,350 $ (17,461)
Deferred loan fees and costs (5,979) (4,926) (22,724)
Gain (loss) on sale of investments -- -- 62,372
Realization of (provisions for) loss on
direct investment in real estate and
investment securities 1,022,737 (827,237) 591,413
Tax operating loss (970,233) -- (483,413)
Provision for loan losses (211,140) (26,106) (5,950)
Other (70,521) 50,419 35,763
--------------------------------------
$ (223,000) $ (803,500) $ 160,000
======================================
</TABLE>
15
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. INCOME TAXES (CONTINUED)
The Bank obtained tax operating loss carryforwards from the acquisition of a
savings institution in 1988 and recognized tax operating losses for 1993 and
1995. The remaining tax loss carryforwards at June 30, 1995 of approximately
$5,286,000 expire as follows: 2002-$344,000; 2003-$598,000; 2004-$11,000; 2005-
$9,000; 2008-$1,471,000, and 2010-$2,853,000
8. EMPLOYEE BENEFIT PLANS
The Bank has a defined benefit pension plan covering substantially all of its
employees. Prior to July 1, 1993, these benefits were provided under a separate
plan sponsored by the Bank. Effective July 1, 1993, the Bank elected to
participate in Pentegra, formerly known as the Financial Institutions Retirement
Fund, a multi-employer, industry-sponsored plan. Benefits are based on years of
service and the employee's compensation during employment. The Bank transferred
plan assets to Pentegra and Pentegra assumed plan benefit obligations. The
excess of the benefit obligations assumed by Pentegra over the fair value of the
assets transferred represents an unfunded accrued liability which is to be
funded by the Bank, in addition to normal service cost contributions, over a 15
year period through 2009. At June 30, 1995 and 1994, respectively, the
estimated unfunded accrued liability was approximately $82,500 and $63,000.
Pension expense for 1995 was approximately $102,000. Information regarding the
Bank's portion of Pentegra plan assets and accumulated plan benefits is not
available. According to Pentegra, plan assets exceeded vested benefits as of
July 1, 1994, the date of the most recent actuarial valuation.
In addition to providing pension benefits, the Bank adopted two supplemental
benefit plans during 1987 - one for those employees who have completed ten years
of service to the Bank and another for the Bank's directors. Under these plans,
the participants shall receive additional retirement benefits for the ten years
following retirement (generally age 65). During 1994, the Bank adopted
changes to the plans thereby making them defined contribution plans. The cost
of the benefit was recognized as the required contributions were made.
Previously, the cost of these benefits was being recognized generally over the
remaining years of service to the Bank of each participant utilizing the
"projected unit credit" actuarial method. The Bank recognized expense of
$67,000, $52,000 and $32,000 in 1995, 1994 and 1993, respectively.
16
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. STOCKHOLDERS' EQUITY
In 1986, the Board of Directors adopted a Plan of Conversion to convert the Bank
from a mutual to a stock institution. At the time of the conversion, a
liquidation account was established in an amount equal to the Bank's net worth
as reflected in the latest statement of condition used in its final conversion
offering circular. The liquidation account is maintained for the benefit of
eligible deposit account holders who maintain their deposit accounts in the Bank
after conversion. In the event of a complete liquidation (and only in such
event), each eligible deposit account holder will be entitled to receive a
liquidation distribution from the liquidation account in the amount of the then
current adjusted subaccount balance for deposit accounts then held, before any
liquidation distribution may be made to stockholders. Except for the repurchase
of stock and payment of dividends, the existence of the liquidation account will
not restrict the use or application of net worth. The initial balance of the
liquidation account was $5,267,293.
The Bank may not declare or pay a cash dividend or repurchase any of its capital
stock if the effect thereof would cause the net worth of the Bank to be reduced
below the amount required for the liquidation account. In addition, the Bank
may not declare a dividend in excess of net earnings for the calendar year to
date plus one-half of the amount by which regulatory capital exceeds the fully
phased-in capital requirements imposed by the Office of Thrift Supervision
(OTS).
The Bank is required, pursuant to OTS regulations, to meet various minimum
capital requirements. Following is a reconciliation of net worth, as determined
under generally accepted accounting principles (GAAP net worth), to core
capital, tangible capital and risk-based capital and a comparison of the
respective capital amounts to the minimum balances, and percentages of
regulatory defined assets, required by the OTS at June 30, 1995 (in thousands):
17
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. STOCKHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
ACTUAL REQUIRED
$ % $ % EXCESS
-----------------------------------
<S> <C> <C> <C> <C> <C>
GAAP net worth $9,241
Less non-qualifying deferred tax asset 810
------
Core capital 8,431 6.0% $4,198 3.0% $4,233
=============================
Less intangibles 318
------
Tangible capital $8,113 5.8% $2,094 1.5% $6,019
===================================
Core capital $8,431
Unallocated reserves 863
Less 60% of equity risk investment --
-----------------------------------
Risk-based capital $9,294 11.4% $6,527 8.0% $2,767
===================================
</TABLE>
10. STOCK COMPENSATION PLANS
The Board of Directors of the Bank adopted a stock option plan in connection
with the conversion in 1986 from a mutual to a stock institution. Effective
with the stock conversion, the Board of Directors granted to key officers and
directors options to purchase 21,500 shares of Common Stock at the conversion
price of $10 per share. Options granted have terms of ten years (12,000 shares)
and ten years and one day (9,500 shares) and are exercisable six months after
the date of grant. The plan also provides for each outside director to receive
an additional option to purchase 200 shares of common stock each year at the
date of the annual meeting.
18
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. STOCK COMPENSATION PLANS (CONTINUED)
Options outstanding are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------
<S> <C> <C> <C>
Options outstanding at beginning of year 39,900 25,100 24,900
New options granted -- 14,800 3,600
Options exercised (3,450) -- (3,200)
Options terminated due to retirement -- -- (200)
-----------------------
Options outstanding at end of year 36,450 39,900 25,100
=======================
</TABLE>
As of June 30, 1995, total shares which may be purchased under the plans equals
36,450 with option prices ranging from $5.50 to $16.00.
The Bank also has an Employee Stock Ownership Plan in which substantially all
employees participate. Contributions to this plan are in amounts determined by
the Bank's Board of Directors and were $34,000, $42,000 and $32,000 for the
fiscal years ended June 30, 1995, 1994 and 1993, respectively.
Capital stock reserved for issuance under the above stock plans totaled 79,000
shares at June 30, 1995.
11. LEASES
The Bank leases certain properties used in its operation, including main office
space in Bloomington. The approximate minimum rental commitments for operating
leases, including a renegotiated lease effective July 1, 1995, are as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30
--------------------------------------------------------------
<S> <C>
1996 $ 119,572
1997 116,122
1998 106,522
1999 104,872
2000 and thereafter 1,782,584
----------
$2,229,672
==========
</TABLE>
19
<PAGE>
First United Savings Bank, fsb. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. LOANS TO RELATED PARTIES
Certain directors and officers of the Bank were loan customers in the ordinary
course of business during 1995 and 1994. The aggregate dollar amount of these
loans was $449,000 and $547,000 on June 30, 1995 and 1994, respectively. During
1995, $22,000 of new loans were made and repayments totaled $120,000. All of the
loans were made on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with
unrelated parties.
During 1991, the Bank received a grant from the Federal Home Loan Bank of
Indianapolis, under the Affordable Housing Program, to be used to support below
market financing for twenty rental units to be developed for low-income and/or
disabled families. The Bank originated $415,000 and $85,000 in loans during
1995 and 1994, respectively, to Opportunity Housing, Inc. of Putnam County, a
not-for-profit agency that builds and rents such low-income housing. The
proceeds from the grant are being used to subsidize loans granted to the agency.
Certain officers of the Bank are also directors of Opportunity Housing, Inc.
13. LITIGATION
The Bank is subject to certain legal proceedings and claims which have arisen in
connection with a customer's investment held by the Bank. The liability, if
any, associated with these matters is not determinable at June 30, 1995. It is
the opinion of management that the ultimate resolution of these matters will not
have a materially adverse effect on the Bank's financial position.
20
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
JURISDICTION OF
INCORPORATION OR
NAME OF SUBSIDIARY ORGANIZATION
------------------ ----------------
Old National Bank in Evansville United States of America
The Merchants National Bank of Terre Haute United States of America
First-Citizens Bank & Trust Company Indiana
People's Bank & Trust Company Indiana
The Rockville National Bank United States of America
Clinton State Bank Indiana
Gibson County Bank Indiana
Security Bank & Trust Company Indiana
Farmers Bank & Trust Company Kentucky
The Peoples National Bank in Lawrenceville United States of America
First State Bank of Greenville Kentucky
Morganfield National Bank United States of America
The First National Bank of Harrisburg United States of America
Security Bank & Trust Company Illinois
Farmers Bank & Trust Company Kentucky
United Southwest Bank Indiana
Bank of Western Indiana Indiana
Palmer-American National Bank of Danville United States of America
Dubois County Bank Indiana
Indiana State Bank of Terre Haute Indiana
Orange County Bank United States of America
<PAGE>
The First National Bank of Oblong United States of America
The Citizens National Bank of Tell City United States of America
Indiana Old National Insurance Company Arizona
Old National Realty Company, Inc. Indiana
Old National Service Corporation Indiana
Old National Trust Company Indiana
Old National Trust Company - Illinois Illinois
Old National Trust Company - Kentucky Kentucky
<PAGE>
EXHIBIT 23.01
-------------
CONSENT OF COUNSEL
------------------
The consent of Krieg DeVault Alexander & Capehart is included in its
opinion attached to this Registration Statement as Exhibit 5.
<PAGE>
EXHIBIT 23.02
-------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
August 31, 1995
<PAGE>
EXHIBIT 23.04--CONSENT OF McDONALD & COMPANY SECURITIES, INC.
We consent to the inclusion in this Registration Statement on Form S-4 of
Old National Bancorp of the use of our opinion dated as of the date of the Proxy
Statement, set forth as Appendix C to the Proxy Statement, which is part of this
Registration Statement, and to the summarization thereof in the Proxy Statement
under the caption "Opinion of Financial Advisor to FUSB".
/s/ McDonald & Company Securities, Inc.
McDONALD & COMPANY SECURITIES, INC.
Cleveland, Ohio
August 31, 1995
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ DAVID L. BARNING
--------------------------
DIRECTOR
David L. Barning
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ RICHARD J. BOND
-------------------------
DIRECTOR
Richard J. Bond
-------------------------
Printed Name
Dated: December 15 , 1994
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ ALAN W. BRAUN
-------------------------
DIRECTOR
Alan W. Braun
-------------------------
Printed Name
Dated: December 15 , 1994
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana, (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ JOHN J. DAUS, JR.
--------------------------
DIRECTOR
John J. Daus, Jr.
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Shawnee Bancorp, Inc., an Illinois corporation with its
principal office located in Harrisburg, Illinois, and (ii) FUSB Bancorp, Inc., a
Kentucky corporation with its principal office located in Fulton, Kentucky; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder; and (c) to do, or cause to be done, any and all other acts and
things whatsoever as fully and to all intents and purposes as the undersigned
might or could do in person which any of the above-named attorneys-in-fact and
agents may deem necessary or advisable in the premises and in order to enable
the Company to register its securities under and otherwise comply with the Act
and the rules and regulations promulgated thereunder; hereby approving,
ratifying and confirming all actions heretofore or hereafter lawfully taken, or
caused to be taken, by any of the above-named attorneys-in-fact and agents by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ WAYNE A. DAVIDSON
----------------------------
DIRECTOR
Wayne A. Davidson
----------------------------
Printed Name
Dated: December 15 , 1994
----------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ LARRY E. DUNIGAN
--------------------------
DIRECTOR
Larry E. Dunigan
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ DAVID E. ECKERLE
-------------------------
DIRECTOR
David E. Eckerle
-------------------------
Printed Name
Dated: December 15 , 1994
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ THOMAS B. FLORIDA
--------------------------
DIRECTOR
Thomas B. Florida
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ PHELPS L. LAMBERT
--------------------------
DIRECTOR
Phelps L. Lambert
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ RONALD B. LANKFORD
----------------------------
DIRECTOR
Ronald B. Lankford
----------------------------
Printed Name
Dated: December 15 , 1994
----------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ LUCIEN H. MEIS
--------------------------
DIRECTOR
Lucien H. Meis
--------------------------
Printed Name
Dated: December 15 , 1995
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ DAN W. MITCHELL
--------------------------
DIRECTOR
Dan W. Mitchell
--------------------------
Printed Name
Dated: December 15 , 1994
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as her true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on her behalf and in her name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of the day
and year indicated below.
/S/ MARJORIE Z. SOYUGENC
--------------------------
DIRECTOR
Marjorie Z. Soyugenc
----------------------------------------
Printed Name
Dated: December 15 , 1994
---------------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ CHARLES D. STORMS
------------------------
DIRECTOR
Charles D. Storms
-----------------------------------
Printed Name
Dated: December 15 , 1994
--------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of Old
National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint Steve H. Parker and Jeffrey L. Knight, and each of them
individually, as his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, for and on his behalf and in his name,
place and stead, and in all capacities, (a) to execute registration statements
and all amendments, revisions, supplements, exhibits and other documents in
connection therewith relating to the proposed registration, offering, sale and
issuance of securities of the Company with respect to the Company's acquisition
of control of (i) Oblong Bancshares, Inc., a Delaware corporation with its
principal office located in Oblong, Illinois, and (ii) Citizens National Bank
Corporation, an Indiana corporation with its principal office located in Tell
City, Indiana, and (iii) First United Savings Bank, f.s.b., a federally
chartered savings bank with its principal office located in Greencastle,
Indiana; (b) to file any and all of the foregoing, in substantially the form
which has been presented to me or which any of the above-named attorneys-in-fact
and agents may approve, with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder; and (c) to do, or cause to be done, any and
all other acts and things whatsoever as fully and to all intents and purposes as
the undersigned might or could do in person which any of the above-named
attorneys-in-fact and agents may deem necessary or advisable in the premises and
in order to enable the Company to register its securities under and otherwise
comply with the Act and the rules and regulations promulgated thereunder; hereby
approving, ratifying and confirming all actions heretofore or hereafter lawfully
taken, or caused to be taken, by any of the above-named attorneys-in-fact and
agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the day
and year indicated below.
/S/ EDWARD T. TURNER, JR.
---------------------------
DIRECTOR
Edward T. Turner, Jr.
----------------------------------------
Printed Name
Dated: December 15 , 1994
--------------------------------
<PAGE>
EXHIBIT 99
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PROXY
FIRST UNITED SAVINGS BANK, F.S.B.
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 31, 1995
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ____________________ and
____________________, or either of them, as proxies of the undersigned, each
with full power of substitution and resubstitution, to represent and to vote all
of the shares of common stock of First United Savings Bank, f.s.b. ("FUSB")
which the undersigned beneficially holds of record on September 8, 1995 and
would be entitled to vote at the Annual Meeting of Shareholders of FUSB, to be
held at DePauw University, Memorial Student Union Building, Room 221, 408 Locust
Street, in Greencastle, Indiana, on October 31, 1995, at 2:00 p.m., local time,
and at any adjournments thereof, with all of the powers the undersigned would
possess if personally present, on the matters set forth below.
The Board of Directors of FUSB recommends a vote FOR election as directors
of the nominees listed in Item 1 below and FOR approval and adoption of the
Amended and Restated Agreement of Affiliation and Merger specified in Item 2
below.
1. Election of two directors of FUSB for terms expiring in 1998, subject
to earlier termination as a consequence of the affiliation with Old
National Bancorp ("ONB"):
[_] For all nominees listed below (except as marked to the contrary)
Earl E. Clodfelter
William M. Marley
[_] Withhold authority to vote for all nominees
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
______________________________
Please sign on reverse side (continued on other side)
(continued from other side)
2. Approval and adoption of the Amended and Restated Agreement of
Affiliation and Merger ("Agreement"), dated as of September 29, 1994,
among FUSB, ONB and two of its subsidiaries, pursuant to which FUSB
will affiliate with ONB and each outstanding share of FUSB common
stock will be converted into the right to receive .8925 shares of ONB
common stock, subject to adjustment in event of certain deviations in
the market price of ONB common stock, all as provided for in the
Agreement.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
3. In their discretion, on such other matters as may properly come before
the Annual Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR APPROVAL OF THE AGREEMENT. ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF FUSB. THIS PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
DATED:____________________, 1995 __________________________________________
(Signature of Shareholder)
__________________________________________
(Signature of Shareholder)
Please sign exactly as your name appears
on your stock certificates and on the
label placed to the left. Joint owners
should each sign personally. Trustees,
guardians, executors and others signing in
a representative capacity should indicate
the capacity in which they sign.
