<PAGE>
As filed with the Securities and Exchange Commission on
August 12, 1996
- ---------------------------------------------------------------------------
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 35-1539838
------------------------------- ------------------ -------------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
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 $24,213,493 $8,349.48
no par value 1,181,146 shares
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee and calculated as of August 5, 1996, 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>
<PAGE>
[WORKINGMENS CAPITAL HOLDINGS, INC. LETTERHEAD]
________________, 1996
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of Workingmens Capital Holdings, Inc. ("WCHI"), to
be held at the main office of WCHI located at 121 East Kirkwood
Avenue in Bloomington, Indiana, on __________________, 1996, at
____:____ ___.m., local time.
The purpose of the Special Meeting is to consider and vote
upon the Agreement of Affiliation and Merger ("Agreement"), dated
as of April 8, 1996, by and among Old National Bancorp ("ONB"),
ONB Bank, WCHI and Workingmens Federal Savings Bank ("WFSB").
Under the terms of the Agreement, WCHI will merge with and into
ONB, and each outstanding share of WCHI common stock will be
converted into the right to receive 0.64 shares 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 WCHI believes that the proposed
affiliation between ONB and WCHI is in the best interests of the
shareholders of WCHI and the customers and employees of WFSB and
the communities which WFSB 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 Special
Meeting of Shareholders, (ii) a Proxy Statement-Prospectus
containing information about the Special Meeting and the proposed
affiliation, (iii) a proxy card for you to complete, sign, date
and return, and (iv) a postage pre-paid envelope for your use to
return your proxy card to WCHI. We encourage you to read the
enclosed materials carefully and in their entirety.
Whether or not you attend the Special 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 Special
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,
Richard R. Haynes
President and Chief Executive Officer
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
121 East Kirkwood Avenue
Bloomington, Indiana 47408
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on _______________, 1996
To Our Shareholders:
Notice is hereby given that, pursuant to the call of the Board of
Directors, the Special Meeting of Shareholders of Workingmens
Capital Holdings, Inc. ("WCHI") will be held on _____________,
1996, at ____:____ __.m., local time, at the main office of WCHI
located at 121 East Kirkwood Avenue in Bloomington, Indiana.
The purposes of the Special Meeting are:
1. Affiliation with Old National Bancorp. To consider and vote
upon the Agreement of Affiliation and Merger, dated as of
April 8, 1996, among Old National Bancorp, Evansville,
Indiana ("ONB"), ONB Bank, WCHI, and Workingmens Federal
Saving Bank. Under the terms of the Agreement, WCHI will
affiliate with ONB and each outstanding share of WCHI common
stock will be converted into the right to receive 0.64
shares of ONB common stock, subject to adjustment, if any,
as described in the accompanying Proxy Statement-Prospectus;
2. Other Business. To transact such other business which may
properly be presented at the Special Meeting or any
adjournment thereof.
Only shareholders of record at the close of business on
__________________, 1996, will be entitled to notice of, and to
vote at, the Special Meeting and any adjournment thereof.
___________________, 1996
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD R. HAYNES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A MAJORITY
OF THE OUTSTANDING SHARES OF WCHI COMMON STOCK
IS REQUIRED FOR APPROVAL OF THE 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>
<PAGE>
PROSPECTUS
OF
OLD NATIONAL BANCORP
for up to
1,181,146 Shares of Common Stock
(No Par Value)
This Prospectus also constitutes
the Proxy Statement
of
WORKINGMENS CAPITAL HOLDINGS, INC.
for the
Special Meeting of Shareholders
to be held on _________________, 1996
This Proxy Statement-Prospectus ("Proxy Statement")
constitutes the Prospectus of Old National Bancorp ("ONB") with
respect to a maximum of 1,181,146 shares of ONB common stock, no
par value per share ("ONB Common Stock"), being offered to the
shareholders of WCHI in connection with the proposed affiliation
of ONB and WCHI. It also serves as the Proxy Statement of WCHI
in connection with the solicitation of proxies by the Board of
Directors of WCHI for use at the Special Meeting of Shareholders
to be held on ______________, 1996, and at any adjournment
thereof, for the purposes of considering and voting upon (1) a
proposal to approve the Agreement of Affiliation and Merger
("Agreement"), dated as of April 8, 1996, among ONB, ONB Bank,
WCHI and Workingmens Federal Savings Bank ("WFSB"), and (2) any
other business which may properly be presented at the Special
Meeting or any adjournment thereof.
As more fully discussed hereinafter, at the effective time of
the proposed affiliation, WCHI will affiliate with ONB and each
outstanding share of WCHI common stock, no par value per share
("WCHI Common Stock"), will be converted into the right to
receive 0.64 shares of ONB Common Stock ("Exchange Ratio"),
subject to adjustment, if any, in the event of certain changes in
the market price of ONB Common Stock or a recapitalization or
similar transaction involving ONB Common Stock. 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 a majority of the outstanding shares
of WCHI 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 ___________________, 1996.
<PAGE>
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE . . . . . . . . . . . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF SELECTED FINANCIAL DATA . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . .
PROPOSED AFFILIATION . . . . . . . . . . . . . . . . . . .
Description of the Affiliation . . . . . . . . . . . .
Background of and Reasons for the Affiliation . . . .
Opinion of Financial Advisor to WCHI . . . . . . . . .
Recommendation of the Board of Directors . . . . . . .
Exchange of WCHI Common Stock . . . . . . . . . . . .
No Dissenters or Appraisal Rights. . . . . . . . . .
Resale of ONB Common Stock by WCHI Affiliates . . . .
Conditions to Consummation . . . . . . . . . . . . . . . .
Termination . . . . . . . . . . . . . . . . . . . . .
Restrictions Affecting WCHI . . . . . . . . . . . . .
Regulatory Approvals . . . . . . . . . . . . . . . . .
Accounting Treatment for the Affiliation . . . . . . .
Effective Time . . . . . . . . . . . . . . . . . . . .
Management, Personnel and Operations After the Affiliation
Interests of Certain Persons in the Affiliation . . .
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . .
Tax Opinion . . . . . . . . . . . . . . . . . . . . .
Tax Consequences to ONB, ONB Bank, WCHI and WFSB . . .
Tax Consequences to WCHI 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 . . . . . . . . . . . . . . . . . .
Incorporation of Certain Information by Reference . .
<PAGE>
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
DESCRIPTION OF WCHI . . . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . .
Transactions with Certain Related Persons . . . . . .
Incorporation of Certain Information by Reference . .
REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . .
Regulation of ONB and Affiliates . . . . . . . . . . .
Regulation of WCHI . . . . . . . . . . . . . . . . . .
Regulation of WFSB . . . . . . . . . . . . . . . . . .
Capital Adequacy Guidelines . . . . . . . . . . . . .
Branching and Acquisitions . . . . . . . . . . . . . .
Interstate Banking . . . . . . . . . . . . . . . . . .
FDICIA . . . . . . . . . . . . . . . . . . . . . . . .
Deposit Insurance . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . .
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . .
APPENDICES:
A. Agreement of Affiliation and Merger . . . . . . . A-1
B. Fairness Opinion of Trident Financial
Corporation, Inc. . . . . . . . . . . . . . . . . B-1
<PAGE>
<PAGE>
AVAILABLE INFORMATION
ONB and WCHI are subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"),
and in accordance therewith ONB and WCHI file reports, proxy
statements and other information with the Securities and Exchange
Commission ("SEC"). Such reports, proxy statements and other
information filed by ONB and WCHI 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. ONB Common Stock is quoted on the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System and WCHI Common Stock is quoted on the
NASDAQ National Market System. Reports, proxy statements and
other information concerning ONB and WCHI are also 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 the affiliation with WCHI. 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 WCHI has been supplied by WCHI, 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 WCHI MAY BE
REQUESTED FROM RICHARD R. HAYNES, PRESIDENT, WORKINGMENS CAPITAL
HOLDINGS, INC., 121 EAST KIRKWOOD AVENUE, P.O. BOX 2689,
BLOOMINGTON, INDIANA 47402, (812) 332-9465. IN ORDER TO ASSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY
____________________, 1996.
-i-
<PAGE>
<PAGE>
The following documents previously filed by ONB (SEC File
No. 0-10888) and WCHI (SEC File No. 0-18469) with the SEC
pursuant to the Exchange Act are incorporated herein by
reference:
1. ONB's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
2. ONB's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
3. ONB's Annual Report to Shareholders for the fiscal year
ended December 31, 1995.
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. WCHI's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
6. The following information under the captions contained in
the specified pages of WCHI's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995: (a) "Business" on
pages 1 to 29, (b) "Legal Proceedings" on page 29, (c)
"Properties" on page 29; and "Security Ownership of Certain
Beneficial Owners and Management" on page 31.
7. The following information contained in the specified pages
of WCHI's Annual Report for its fiscal year ended December
31, 1995: (a) audited consolidated financial statements of
WCHI, the notes thereto and the Independent Auditor's Report
on pages 13 to 29, (b) Common Stock Data on pages 3 and 12
(under the captions, "Selected Consolidated Financial Data
of Workingmens Capital Holdings, Inc. and Subsidiary" and
"Workingmens Capital Holdings, Inc. Quarterly Results of
Operations"), (c) Selected Consolidated Financial Data of
Workingmens Capital Holdings, Inc. and Subsidiary on page 3,
and (d) Management's Discussion and Analysis of Financial
Condition and Results of Operations on pages 4 through 11.
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 Special 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.
Copies of the Annual Report of WCHI for its fiscal year
ended December 31, 1995 and its Form 10-Q for the fiscal quarter
ended June 30, 1996 accompany this Proxy Statement and are
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 WCHI 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>
<PAGE>
SUMMARY
The following is a brief summary of certain information
contained elsewhere herein and was prepared to assist WCHI
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 SPECIAL MEETING:
Date, Time and Place of _______________, 1996, at ____:____
Special Meeting __.m., local time, at the main office
of WCHI, located at 121 East Kirkwood
Avenue in Bloomington, Indiana.
Purpose of Special Meeting To consider and vote upon the Agreement,
under the terms of which WCHI will merge
with and into ONB. A copy of the
Agreement, which is incorporated herein
by reference, is attached to this Proxy
Statement as Appendix A. See "NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS" and
"GENERAL INFORMATION."
Required Shareholder Vote The affirmative vote, in person or by
on Agreement proxy, of the holders of at least a
majority of the issued and outstanding
shares of WCHI Common Stock is required
for approval of the Agreement. As of
_______________, 1996, members of the
Board of Directors and executive
officers of WCHI beneficially owned in
the aggregate, directly and indirectly,
approximately _________% of the
outstanding shares of WCHI Common Stock,
including shares subject to options
which may be exercised before or
following the Affiliation (as
hereinafter defined). It is expected
that the shares held by members of the
Board of Directors and executive
officers of WCHI will be voted in favor
of the Agreement. See "GENERAL
INFORMATION," "PROPOSED AFFILIATION --
Conditions to Consummation." The
approval of the Agreement by the
shareholders of ONB is not required.
Shares Outstanding and As of _______________, 1996, there were
Entitled to Vote ___________ shares of WCHI Common Stock
issued and outstanding. Shareholders of
WCHI of record at the close of business
on _______________, 1996, are entitled
to notice of, and to vote at, the
Special 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 WCHI, by
written notice delivered to the
Secretary of WCHI or in person at the
Special Meeting. See "GENERAL
INFORMATION."
-iii-
<PAGE>
<PAGE>
THE PARTIES TO THE
AFFILIATION:
As the largest independent bank holding
Old National Bancorp company headquartered in the State of
420 Main Street Indiana, ONB owns and operates 25
Evansville, Indiana 47708 affiliate banks with 120 offices located
(812) 464-1434 in the three state area of Indiana,
Illinois and Kentucky. As of June 30,
1996, ONB had total assets of
approximately $4.93 billion and its
ratio of total capital to risk-adjusted
assets was 15.18%. This capital ratio
is well in excess of applicable
regulatory requirements. See
"DESCRIPTION OF ONB."
ONB is currently analyzing a number of
potential acquisitions. See
"DESCRIPTION OF ONB -- Acquisition
Policy."
Workingmens Capital WCHI is an Indiana corporation operating
Holdings, Inc. as a savings and loan holding company.
121 East Kirkwood Avenue It directly owns one operating
Bloomington, Indiana 47408 subsidiary, WFSB, a federally chartered
(812) 332-9465 savings bank. As of June 30, 1996, WCHI
had total assets of approximately $208.2
million and its ratio of total capital
to risk-adjusted assets was 21.6%. WFSB
owns one corporation, Realty Investment
Service Corporation ("RISC"). RISC's
sole business is the marketing of tax-
deferred annuities as agent for WFSB's
customers. See "DESCRIPTION OF WCHI."
THE AFFILIATION:
Description of the Under the Agreement, the affiliation
Affiliation ("Affiliation") between WCHI and ONB
involves the merger of WCHI with and
into ONB ("Company Merger") and,
followed immediately thereafter, the
merger of WFSB with and into ONB Bank
("Thrift Merger"), with ONB and ONB Bank
as the surviving entities in such
mergers. ONB Bank's name will be
changed to Workingmens/ONB Bank at the
effective time of the Affiliation.
Exchange of WCHI At the effective time of the
Common Stock Affiliation, each outstanding share of
WCHI Common Stock will be converted into
the right to receive 0.64 shares of ONB
Common Stock, subject to adjustment, if
any, in the event of certain changes in
the market price of ONB Common Stock or
a recapitalization or similar
transaction involving ONB Common Stock.
No fractional shares will be issued and
ONB will pay cash for any fractional
share interests resulting from the
Exchange Ratio. Options to acquire
shares of WCHI Common Stock will, by the
-iv-
<PAGE>
<PAGE>
terms of the Agreement, be converted
into options to acquire shares of ONB
Common Stock following consummation of
the Affiliation. The price at which ONB
Common Stock traded on _______________,
1996, as reported by the NASDAQ National
Market System, was $________ per share.
See "PROPOSED AFFILIATION -- Exchange of
WCHI Common Stock."
Reasons for the After careful review and consideration,
Affiliation WCHI's Board of Directors has determined
that the terms of the Affiliation are
fair to, and in the best interest of,
WCHI and its shareholders. WCHI's Board
believes that the Affiliation will
provide significant value to all WCHI
shareholders and, at the same time,
enable holders of WCHI Common Stock to
participate in the expanded
opportunities for growth that the
Affiliation will make possible. WCHI's
Board also determined that the
Affiliation would have a positive, long-
term impact on the customers and
employees of WFSB and the communities it
serves. See "PROPOSED AFFILIATION --
Background of and Reasons for the
Affiliation."
Opinion of WCHI's WCHI has retained Trident Financial
Financial Advisor Corporation ("Trident") as its financial
advisor in the Affiliation. Trident
rendered its preliminary written opinion
to the Board of Directors of WCHI on
April 8, 1996, that as of the date of
such opinion, the Exchange Ratio was
fair, from a financial point of view, to
the holders of WCHI Common Stock. The
opinion was updated and confirmed on
_________________, 1996, a copy of such
opinion is attached hereto as Appendix B
and should be read in its entirety with
respect to the assumptions made and
limitations on reviews undertaken by
Trident, and other matters regarding the
opinion. See "PROPOSED AFFILIATION --
Opinion of Financial Advisor to WCHI."
Recommendation of the The Board of Directors of WCHI has
Board of Directors of unanimously approved the Agreement and
WCHI recommends that WCHI 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
Affiliation subject to certain conditions which
include, among others, (1) approval of
the Agreement by the affirmative vote of
the holders of at least a majority of
the outstanding shares of WCHI Common
Stock, (2) receipt of regulatory
approvals for the Affiliation, and
(3) receipt of an opinion of counsel
with respect to certain federal income
tax matters. See "PROPOSED
AFFILIATION -- Conditions to
Consummation."
-v-
<PAGE>
<PAGE>
Termination of the The Agreement may be terminated before
Affiliation 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 WCHI, which
would result in material adverse change
in ONB, WCHI or WFSB or RISC on a
consolidated basis with WCHI, (2) a
breach of or failure to comply with any
covenant or mutual agreement set forth
in the Agreement by ONB or WCHI, (3) the
commencement or threat of certain
claims, proceedings or litigation, (4) a
material adverse change in any of ONB,
WCHI or WFSB or RISC on a consolidated
basis with WCHI since December 31, 1995,
and (5) the Affiliation not having been
consummated by March 31, 1997. The
parties may also mutually agree to
terminate the Agreement. See "PROPOSED
AFFILIATION -- Termination."
Effective Time of ONB and WCHI anticipate that the
the Affiliation will be completed in the
Affiliation third or fourth calendar quarter of
1996. See "PROPOSED AFFILIATION --
Effective Time."
Management, ONB will be the surviving corporation in
Personnel the Company Merger and, upon
and Operations After consummation thereof, WCHI's separate
the Affiliation corporate existence will cease. ONB
Bank will be the surviving institution
in the Thrift Merger under the name
"Workingmens/ONB Bank" and, upon
consummation thereof, WFSB's separate
corporate existence will cease. The
Directors of ONB serving at the
effective time of the Affiliation will
serve as Directors of ONB following the
effective time of the Affiliation until
otherwise determined by the shareholders
of ONB. The officers of ONB serving at
the effective time will continue to
serve in their respective capacities
until otherwise determined by the Board
of Directors of ONB. The Board of
Directors of ONB Bank following
consummation of the Affiliation will
consist of the members of the Boards of
Directors of WFSB and ONB Bank serving
at the effective time, plus four (4) new
directors to be elected either prior to
or following consummation of the
Affiliation. Richard R. Haynes,
President and Chief Executive Officer of
WFSB, will serve as President and Chief
Executive Officer of ONB Bank following
consummation of the Affiliation. Robert
A. Shaffer, Chairman of WFSB, will serve
as Chairman of ONB Bank following
consummation of the Affiliation.
Following the Affiliation, employees of
WFSB will receive benefits in accordance
with the current policies and employee
benefit plans of ONB, subject to the
continuation of certain of WCHI plans
through December 31st of the year in
which the consummation of the
-vi-
<PAGE>
<PAGE>
Affiliation occurs. See "PROPOSED
AFFILIATION -- Description of the
Affiliation" and "Management, Personnel
and Operations After the Affiliation."
Federal Income Tax ONB and WCHI will receive an opinion of
Consequences to WCHI counsel prior to or as of the effective
Shareholders time which states that, in general, WCHI
shareholders who receive solely ONB
Common Stock in exchange for their
shares of WCHI Common Stock will not
recognize gain or loss as a result of
such share 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' Shareholders of WCHI have no dissenters'
Rights or appraisal rights in connection with
the Affiliation under state law
applicable to WCHI. See "PROPOSED
AFFILIATION -- No Dissenters' or
Appraisal Rights."
Interests of Certain Certain members of management and the
Persons Board of Directors of WCHI have
in the Affiliation interests in the Affiliation that are in
addition to those of WCHI shareholders
generally. See "PROPOSED AFFILIATION --
Interests of Certain Persons in the
Affiliation."
Resale of ONB Certain resale restrictions apply to the
Common Stock sale or transfer of shares of ONB Common
Stock issued to directors and executive
officers and any other affiliates of
WCHI in exchange for their shares of
WCHI Common Stock. See "PROPOSED
AFFILIATION -- Resale of ONB Common
Stock by WCHI Affiliates."
Comparative The current rights of shareholders of
Shareholder ONB and shareholders of WCHI differ in a
Rights number of respects. Upon consummation
of the Affiliation, WCHI 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 may have a
similar effect. See "COMPARISON OF
COMMON STOCK."
Trading Market for Shares of ONB Common Stock are traded on
Common Stock the NASDAQ National Market System. The
closing price of ONB Common Stock as
reported by the NASDAQ National Market
System was $33.25 per share on April 8,
1996, the business day before the
Affiliation was publicly announced, and
was $________ per share on
_______________, 1996.
-vii-
<PAGE>
<PAGE>
Shares of WCHI Common Stock are traded
in the over-the-counter market and are
listed on the NASDAQ National Market
System. The high and low bid prices of
WCHI Common Stock as reported by NASDAQ
were:
- $16.25 per share on April 8, 1996,
the day before the Affiliation was
publicly announced, and
- $______ and $______ per share on
_____________, 1996.
Assuming the Affiliation had been
consummated on ______________, 1996,
WCHI shareholders entitled to receive
ONB Common Stock would have received, in
exchange for all of the shares of WCHI
Common Stock (including shares subject
to options), ________ shares of ONB
Common Stock having an aggregate market
value of approximately $________
million, which represents $________ per
share of WCHI Common Stock (including
cash received in lieu of any fractional
share interest). See "COMPARATIVE PER
SHARE DATA."
-viii-
<PAGE>
<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
The National Bank of Carmi, Carmi, Illinois, which occurred on May 31, 1996.
This information should be read in conjunction with the financial statements
and notes incorporated herein by reference. In the opinion of ONB's
management, the consolidated interim financial information and summaries of
interim selected financial data contain all of the normal and recurring
adjustments necessary to present fairly the financial position of ONB.
<TABLE>
<CAPTION>
Twelve Months ended December 31,
Results of Operations 1995 1994 1993 1992 1991
--------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(Taxable equivalent basis)
Interest income $373,205 $329,297 $323,177 $337,396 $374,540
Interest expense 176,293 137,561 136,170 158,177 208,118
-------- -------- -------- -------- --------
Net interest income 196,912 191,736 187,007 179,219 166,422
Provision for loan losses 7,057 7,682 10,275 11,871 11,885
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 189,855 184,054 176,732 167,348 154,537
Noninterest income 39,435 35,023 33,780 29,343 26,715
Noninterest expense 144,540 144,634 132,598 121,037 115,474
-------- -------- -------- -------- --------
Income before income taxes 84,750 74,443 77,914 75,654 65,778
Income taxes 32,592 27,259 29,061 28,784 24,522
-------- -------- -------- -------- --------
Net income $ 52,158 $ 47,184 $ 48,853 $ 46,870 $ 41,256
======== ======== ======== ======== ========
Year-End Balances
-----------------
Total assets $4,888,686 $4,709,450 $4,558,596 $4,255,078 $4,215,787
Total loans--net of 3,071,760 2,922,302 2,645,985 2,456,661 2,429,431
Total deposits 4,029,587 3,725,512 3,755,725 3,583,842 3,494,128
Shareholders' equity 436,109 416,704 412,263 383,994 360,803
Per Share Data (1)
------------------
Net income - primary $ 2.02 $ 1.78 $ 1.84 $ 1.77 $ 1.54
Net income - fully diluted 1.98 1.74 1.80 1.70 1.50
Cash dividends paid 0.88 0.84 0.72 0.69 0.66
Book value at year-end 17.41 16.11 15.62 14.42 13.56
Selected Performance Ratios (based on averages)
-----------------------------------------------
Return on assets 1.10% 1.03% 1.10% 1.11% 1.00%
Return on equity (3) 12.38 11.18 12.37 12.70 11.95
Equity to assets 8.85 9.22 8.88 8.74 8.39
Primary capital to assets 9.75 10.16 9.76 9.60 9.19
Net charge-offs to average 0.27 0.30 0.27 0.33 0.40
Allowance for loan losses to average 1.42 1.56 1.55 1.48 1.36
</TABLE>
(1) Restated for all stock dividends and stock splits.
(2) Assumes the conversion of ONB's subordinated debentures.
(3) Excludes unrealized gains (losses) on Investment securities.
-ix-
<PAGE>
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- ONB (continued)
(Unaudited -- Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Six Months ended June 30,
-------------------------
Results of Operations 1996 1995
--------------------- ---- ----
<S> <C> <C>
(Taxable equivalent basis)
Interest income $191,485 $181,871
Interest expense 88,529 84,684
-------- --------
Net interest income 102,956 97,187
Provision for loan losses 4,063 2,402
-------- --------
Net interest income after
provision for loan losses 98,893 94,785
Noninterest income 21,313 19,362
Noninterest expense 71,769 72,417
-------- --------
Income before income taxes 48,437 41,730
Income taxes 19,350 15,626
-------- --------
Net income $ 29,087 $ 26,104
======== ========
Period-End Balances
Total assets $4,930,136 $4,745,068
Total loans--net of unearned 3,190,348 3,018,770
Total deposits 3,978,261 3,846,991
Shareholders' equity 421,874 423,096
Per Share Data (1)
Net income - primary $ 1.15 $ 1.00
Net income - fully diluted (2) 1.12 0.98
Cash dividends paid 0.46 0.44
Book value at period-end 16.94 16.44
Selected Performance Ratios
(based on averages)
Return on assets 1.20% 1.11%
Return on equity (3) 13.67 12.36
Equity to assets 8.90 8.88
Primary capital to assets 9.75 9.78
Net charge-offs to average 0.13 0.07
Allowance for loan losses to 1.37 1.46
</TABLE>
(1) Restated for all stock dividends and stock splits.
(2) Assumes the conversion of ONB's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment
-x-
<PAGE>
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA -- WCHI
(Unaudited -- Dollars in Thousands except per share data)
The following summary sets forth selected consolidated financial
information relating to WCHI. This information should be read in conjunction
with the financial statements and notes incorporated herein by reference. In
the opinion of WCHI's management, the consolidated interim financial
information and summaries of interim selected financial data contain all of
the normal and recurring adjustments necessary to present fairly the financial
position of WCHI.
<TABLE>
<CAPTION>
Twelve Months ended
------------------------------------------------
Results of Operations 1995 1994 1993 1992 1991
--------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(Taxable equivalent basis)
Interest income $ 16,000 $ 14,088 $ 13,713 $ 14,008 $ 15,317
Interest expense 10,231 8,596 8,257 8,814 10,218
-------- -------- -------- -------- --------
Net interest income 5,769 5,492 5,456 5,194 5,099
Provision for loan losses 78 72 84 48 39
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 5,691 5,420 5,372 5,146 5,060
Noninterest income 242 180 213 142 121
Noninterest expense 2,761 2,650 2,488 2,414 2,342
-------- -------- -------- -------- --------
Income before income taxes 3,172 2,950 3,097 2,874 2,839
Income taxes 1,209 1,126 1,207 1,129 1,108
-------- -------- -------- -------- --------
Net income $ 1,963 $ 1,824 $ 1,890 $ 1,745 $ 1,731
======== ======== ======== ======== ========
Year-End Balances
-----------------
Total assets $213,254 $204,523 $189,516 $179,082 $169,893
Total loans -
net of unearned income 189,661 181,269 164,278 149,762 141,382
Total deposits 152,141 149,353 143,242 139,197 135,909
Shareholders' equity 25,684 24,152 23,323 22,143 20,857
Per Share Data
--------------
Net income - primary $ 1.11 $ 1.03 $ 1.05 $ 0.97 $ 0.96
Net income - fully diluted 1.11 1.03 1.05 0.97 0.96
Cash dividends paid 0.33 0.29 0.265 0.245 0.21
Book value at year-end 14.45 13.67 13.02 12.25 11.61
Selected Performance Ratios
---------------------------
(based on averages)
Return on assets 0.94% 0.92% 1.01% 1.01% 1.06%
Return on equity 7.85% 7.70% 8.27% 8.07% 8.49%
Equity to assets 12.00% 11.97% 12.23% 12.52% 12.47%
Net charge-offs to
average loans * * 0.02% 0.01% 0.01%
Allowance for loan losses to
average loans 0.18% 0.14% 0.11% 0.10% 0.07%
</TABLE>
* Less than 0.01%
-xi-
<PAGE>
<PAGE>
SUMMARY OF SELECTED FINANCIAL DATA - WCHI (continued)
(Unaudited -- Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Six Months ended June
---------------------
Results of Operations 1996 1995
--------------------- ---- ----
<S> <C> <C>
(Taxable equivalent basis)
Interest income $ 8,084 $ 7,865
Interest expense 5,201 4,926
-------- --------
Net interest income 2,883 2,939
Provision for loan losses 42 36
-------- --------
Net interest income after provision
for loan losses 2,841 2,903
-------- --------
Noninterest income 157 131
Noninterest expense 1,525 1,385
-------- --------
Income before income taxes 1,473 1,649
Income taxes 610 639
-------- --------
Net income $ 863 $ 1,010
======== ========
Period-End Balances
Total assets $208,203 $209,713
Total loans - net of unearned income 183,401 184,148
Total deposits 149,721 154,637
Shareholders' equity 26,459 24,955
Per Share Data
Net income - primary $ 0.48 $ 0.57
Net income - fully diluted 0.47 0.56
Cash dividends paid 0.18 0.16
Book value at period-end 14.63 14.12
Selected Performance Ratios
(based on averages)
Return on assets 0.82% 0.98%
Return on equity 6.60% 8.20%
Equity to assets 12.71% 11.72%
Net charge-offs to average loans * *
Allowance for loan losses to average 0.20% 0.16%
</TABLE>
* Less than 0.01%
-xii-
<PAGE>
<PAGE>
PROSPECTUS PROXY STATEMENT
OF OF
OLD NATIONAL BANCORP WORKINGMENS CAPITAL
HOLDINGS, INC.
----------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS OF
WORKINGMENS CAPITAL HOLDINGS, INC.
TO BE HELD ON _________________, 1996
----------------------------------------------
GENERAL INFORMATION
This Proxy Statement is being furnished to the shareholders of WCHI in
connection with the solicitation by the Board of Directors of WCHI of proxies
for use at the Special Meeting of Shareholders, to be held on _______________,
1996, at ____:____ __.m., local time, at the main office of the WCHI located
at 121 East Kirkwood Avenue in Bloomington, Indiana. This Proxy Statement is
first being mailed to WCHI shareholders on ________________, 1996.
The purposes of the Special Meeting of Shareholders are to (1) consider and
vote upon the Agreement, under the terms of which WCHI will merge with and
into ONB and each outstanding share of WCHI Common Stock will be converted
into the right to receive 0.64 shares of ONB Common Stock, subject to
adjustment, if any, as described hereinafter, and (2) transact such other
business which may properly be presented at the Special Meeting or any
adjournment thereof.
Only holders of WCHI Common Stock of record at the close of business on
_______________, 1996 ("Record Date") are entitled to notice of, and to vote
at, the Special Meeting. There were ____________ shares of WCHI Common Stock
outstanding on the Record Date, which were held of record by approximately
______ shareholders. A majority of outstanding shares of Common Stock of WCHI
entitled to vote, represented in person or by proxy, at the Special Meeting is
necessary for a quorum. Shareholders who abstain, cast broker non-votes or
withhold authority to vote on the Agreement will be deemed present at the
Special Meeting for purposes of determining whether a quorum is present.
The affirmative vote of the holders of at least a majority of the
outstanding shares of WCHI Common Stock is required for approval of the
Agreement, for which matter each share of WCHI Common Stock is entitled to one
vote. In this regard, it is expected that the members of the Board of
Directors and executive officers of WCHI will vote all of their shares of WCHI
Common Stock in favor of the Agreement. As of ____________, 1996, they held
________ shares of WCHI Common Stock as a group, including shares subject to
options which may be exercised before or following the Affiliation, which
represents approximately ________% of the outstanding shares of WCHI Common
Stock.
The cost of soliciting proxies will be borne by WCHI. In addition to use
of the mails, proxies may be solicited personally or by telephone or telegraph
by directors, officers and certain employees of WCHI, none of whom will be
specially compensated for such soliciting.
<PAGE>
<PAGE>
The shares represented by proxies properly signed and returned will be
voted at the Special Meeting as instructed by the shareholders of WCHI giving
the proxies. In the absence of specific instructions to the contrary, proxies
will be voted FOR approval of the Agreement described in this Proxy Statement
and in accordance with the recommendation of the Board of Directors of WCHI
with respect to any other matter which may properly be presented at the
Special Meeting.
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 Special Meeting. Revocation may be made by a
later dated proxy delivered to WCHI, by written notice delivered
to the Secretary of WCHI prior to the Special Meeting, or by
written notice delivereproxy is exercised.
PROPOSED AFFILIATION
At the Special Meeting, shareholders of WCHI 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
Under the terms of the Agreement, WCHI will affiliate with ONB through a
statutory merger of WCHI with and into ONB under the laws of the State of
Indiana and, immediately thereafter, WFSB will merge with and into ONB Bank
under the laws of the United Sates of America. ONB will be the surviving
corporation in the Company Merger and, at the effective time of the Company
Merger, the separate corporate existence of WCHI will cease. ONB Bank will be
the surviving institution in the Thrift Merger under the name "Workingmens
Bank" and, at the effective time of the Thrift Merger, the separate corporate
existence of WFSB will cease.
As of June 30, 1996, WCHI had consolidated assets of $208.2 million,
consolidated deposits of $149.7 million, consolidated shareholders' equity of
$26.5 million and consolidated net earnings for the six month period then
ended of $863,000. Based upon the pro forma financial information included
elsewhere in this Proxy Statement and assuming that the Affiliation had been
consummated on June 30, 1996, WCHI represented as of such date 4.22% of the
consolidated assets of ONB, 3.76% of its consolidated deposits, 6.28% of its
consolidated shareholders' equity and, for the six month period ended June 30,
1996, 2.97% of its consolidated net income. See "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION."
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 currently permitting
-2-
<PAGE>
<PAGE>
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 financial services industry generally have led to further
increases in competition for financial institution services. Compounded by
the significant increase in regulatory burdens over the past decade, these
competitive factors have created an environment in which it is increasingly
difficult for community organizations such as WCHI to achieve the economies of
scale necessary to compete effectively.
After an evaluation of the competitive and regulatory factors described
above and other financial, legal, economic and market considerations, WCHI
engaged Trident in November of 1995, to perform a financial analysis and
valuation of WCHI and to advise WCHI on its strategic alternatives. On
January 11, 1996, Trident advised the Board of Directors of WCHI that WCHI had
a value per share of between $17.00 and $21.00, and discussed with WCHI
potential acquirors to approach regarding a merger or other affiliation. The
Board decided to authorize Trident to contact ONB initially, because of ONB's
recent acquisition of another thrift in Bloomington, Indiana and the fact
that ONB had approached WCHI on several occasions regarding a possible
combination. In January and February, 1996, after ONB signed a
confidentiality agreement, ONB was provided information concerning WCHI and
performed certain due diligence investigations of WCHI and its operations. On
February 26, 1996, ONB provided WCHI with a proposal for an affiliation with
ONB. ONB was advised that the proposal was inadequate and on March 13, 1996,
ONB provided WCHI with a revised proposal. This proposal was above the high
end of the WCHI valuation range which had previously been provided by Trident
to WCHI. Ancluded that this revised proposal was in the best interests of
WCHI, its shareholders, customers, and employees. As a result, the directors
authorized Trident and its legal counsel to proceed with negotiations on
behalf of WCHI for a definitive agreement with ONB. On March 29, 1996, the
Board of Directors of WCHI met to discuss the status of those negotiations and
a draft of the definitive agreement.
On April 8, 1996, the Agreement was approved by both parties and a press
release regarding the execution of the Agreement was issued that evening. At
the April 8, 1996 meeting of the WCHI Board of Directors, Trident rendered its
preliminary written opinion to the Board to the effect that, as of such date,
the Exchange Ratio pursuant to the Affiliation was fair, from a financial
point of view, to the holders of WCHI Common Stock.
After review of regulatory considerations regarding the proposed
transaction, ONB and WCHI determined that it was in the best interests of the
parties to structure the Affiliation through the merger of WCHI with and into
ONB, followed immediately thereafter by the merger of WFSB with and into ONB
Bank. See "PROPOSED AFFILIATION -- Description of the Affiliation."
In determining to pursue the Affiliation, the Board of Directors of WCHI
specifically considered financial, managerial and other information regarding
ONB and its affiliate banks. In particular, the Board of Directors of WCHI
evaluated the respective businesses, financial conditions and future prospects
of WCHI and ONB. The earnings history and stock performance of ONB were
carefully reviewed and discussed with Trident with a view towards the
investment potential for shareholders of WCHI.
-3-
<PAGE>
<PAGE>
Among other items considered in this evaluation were the
prospects of WCHI and ONB, as separate institutions and as
combined; the compatibility of ONB's affiliate bank markets to
those of WCHI; the anticipated tax-free nature of the Affiliation
to WCHI shareholders receiving solely ONB Common Stock in
exchange for their shares of WCHI Common Stock; the timeliness of
a merger given the state of the economy and the stock markets, as
well as anticipated trends in both; applicable regulatory
requirements; relevant price information involving recent
comparable bank acquisitions which occurred in the Midwestern
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 WCHI
shareholders reflects a significant premium for WCHI Common Stock
over the market prices at which such stock had traded in the
weeks prior to the public announcement of the Affiliation on
April 9, 1996; the competitive process undertaken by WCHI with
the assistance of Trident and the expressions of interest made by
other financial institutions; the value implicit in the Exchange
Ratio in relation to the book value and earnings of WCHI and the
dividend rate that WCHI shareholders who become ONB shareholders
would be expected to enjoy as a result of the Affiliation; the
terms of the Agreement; and Trident's fairness opinion.
The Board of Directors of WCHI also considered the impact of
the Affiliation on customers and employees of WFSB 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 WCHI's employees
within ONB or one of its affiliates. The Board of Directors of
WCHI examined ONB's continuing commitment to the communities
served by institutions previously acquired by ONB. Further, from
the standpoint of WFSB's 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 of
WCHI concluded that it was advantaors relative to one another
cannot be precisely determined or stated.
OPINION OF FINANCIAL ADVISOR TO WCHI
WCHI retained Trident to act as its financial advisor and to
render a fairness opinion in connection with the Affiliation. As
part of its engagement, Trident performed a valuation analysis of
WCHI in an acquisition context. On January 11, 1996, Trident
presented its valuation report (the "Valuation Report") to WCHI's
Board of Directors.
On April 8, 1996, Trident met with WCHI's Board of Directors
to review the proposed terms of the Agreement. At that time,
Trident presented a report (the "Affiliation Analysis and Due
Diligence Report") to WCHI's Board of Directors summarizing the
financial terms of the Affiliation and providing updated market
information with respect to thrift mergers and acquisitions.
Trident also compared ONB's offer to the valuation of WCHI set
forth in the Valuation Report and analyzed the advantages and
disadvantages of the Affiliation. Trident further reported on
its financial analysis and on-site due diligence examination of
ONB. In addition, Trident rendered its written preliminary
opinion to WCHI's Board of Directors to the effect that, as of
that date, the consideration to be received by WCHI's
shareholders pursuant to the Agreement was fair to them from a
financial point of view.
-4-
<PAGE>
<PAGE>
Trident delivered its updated written opinion to WCHI's
Board of Directors as of _________________, 1996 stating that, as
of such date, the consideration to be received by the
shareholders of WCHI in the Affiliation is fair from a financial
point of view. Trident has consented to the inclusion of such
opinion and the related disclosure in the Proxy Statement which
will be circulated to WCHI's shareholders.
TRIDENT'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF
WCHI AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT
OF VIEW, OF THE CONSIDERATION TO BE RECEIVED BY WCHI'S
SHAREHOLDERS BASED ON CONDITIONS AS THEY EXISTED AND COULD BE
EVALUATED AS OF THE DATE OF THE OPINION. TRIDENT'S OPINION DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY WCHI SHAREHOLDER AS TO HOW
SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING, NOR DOES
TRIDENT'S OPINION ADDRESS THE UNDERLYING BUSINESS DECISION TO
EFFECT THE AFFILIATION. THIS SUMMARY OF TRIDENT'S OPINION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION, WHICH IS ATTACHED TO THIS PROXY STATEMENT AS Appendix B.
SHAREHOLDERS ARE URGED TO READ TRIDENT'S OPINION IN ITS ENTIRETY
FOR A DESCRIPTION OF THE ASSUMPTIONS MADE AND MATTERS CONSIDERED
AND THE LIMITS ON THE REVIEW UNDERTAKEN IN RENDERING SUCH
OPINION.
In connection with rendering its opinion, Trident reviewed
and analyzed, among other things, the following: (i) the
Agreement; (ii) this Proxy Statement; (iii) certain publicly
available information concerning WCHI, including the audited
financial statements of WCHI for each of the years in the three-
year period ended December 31, 1995 and the unaudited financial
statements of WCHI for the three months ended March 31, 1996;
(iv) certain publicly available information concerning ONB,
including the audited financial statements of ONB for each of the
years in the three-year period ended December 31, 1995 and
unaudited financial statements of ONB for the three months ended
March 31, 1996; (v) certain other internal information, primarily
financial in nature, concerning the business and operations of
WCHI and ONB furnished to Trident by WCHI and ONB for purposes of
Trident's analysis; (vi) certain information with respect to the
pricing and trading of WCHI Common Stock; (vii) certain
information with respect to the pricing and trading of ONB Common
Stock; (viii) certain publicly available information with respect
to other companies that Trident believed to be comparable to WCHI
and ONB and the trading markets for such other companies'
securities; and (ix) certain publicly available information
concerning the nature and terms of other transactions that
Trident considered relevant to its inquiry. Trident also met
with certain officers and employees of WCHI to discuss the
foregoing, as well as other matters which it believed relevant to
its inquiry.
In its review and analysis, and in arriving at its opinion,
Trident assumed and relied upon the accuracy and completeness of
all of the financial and other information provided to it or that
was publicly available and did not attempt independently to
verify any such information. Trident did not conduct a physical
inspection of the properties or facilities of WCHI or ONB, nor
did it make or obtain any independent evaluations or appraisals
of any of such properties or facilities.
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In conducting its analyses and arriving at its opinion as
expressed herein, Trident considered such financial and other
factors as it deemed appropriate under the circumstances
including, among others, the following: (i) the historical and
current financial condition and results of operations of WCHI and
ONB, including interest income, interest expense, net interest
income, net interest margin, interest sensitivity, non-interest
expense, earnings, dividends, book value, return on assets,
return on equity, capitalization, the amount and type of non-
performing assets and the reserve for loan losses; (ii) the
business prospects of WCHI and ONB; (iii) the economies in WCHI's
and ONB's market areas; (iv) the historical and current market
for WCHI Common Stock and ONB Common Stock and for the equity
securities of certain other companies that Trident believed to be
comparable to WCHI and ONB; and (v) the nature and terms of
certain other acquisition transactions that Trident believed to
be relevant. Trident also took into account its assessment of
general economic, market, financial and regulatory conditions and
trends, as well as its knowledge of the financial institutions
industry, its experience in connection with similar transactions,
and its knowledge of securities valuation generally. Trident's
opinion necessarily was based upon conditions in existence and
subject to evaluation on the respective dates of its opinion.
Trident's opinion is, in any event, limited to the fairness, from
a financial point of view, of the consideration to be received by
the holders of WCHI Common Stock in the Affiliation and does not
address WCHI's underlying business decision to effect the
Affiliation.
Trident met with the Board of Directors of WCHI at various
times between January 11, 1996 and April 8, 1996 to present
analyses contained in a series of reports which serve as the
basis for Trident's opinion. Two key reports presented by Trident
were the Valuation Report dated January 11, 1996 and the
Affiliation Analysis and Due Diligence Report dated April 8,
1996. The following is a brief summary of the Valuation Report
presented by Trident to the Board of Directors of WCHI on January
11, 1996:
Financial Analysis of WCHI. Trident examined WCHI's
financial performance for the period December 31, 1990
through September 30, 1995 by analyzing the composition of
its balance sheet, adjusting and normalizing its earnings,
and calculating a variety of operating and financial ratios
for WCHI. Trident also studied the trading of WCHI Common
Stock for the previous twelve months, and compared the
performance of its stock to certain stock indices.
Peer Group Analysis. Trident evaluated WCHI's strengths and
weaknesses by comparing the financial performance of WCHI to
that of the following groups of SAIF-insured, OTS-regulated
thrift institutions: (i) all United States institutions;
(ii) all institutions in the Midwest; (iii) all Indiana
institutions; (iv) all United States institutions with total
assets between $100 million and $300 million; and (v)
Midwest institutions with total assets between $100 million
and $300 million (the "Aggregates"). This analysis compared
a number of WCHI's historical financial ratios to those of
the Aggregates, including but not limited to: (i) the
balance sheet composition as a percentage of total assets at
June 30, 1995; (ii) the loan portfolio as a percentage of
total assets at June 30, 1995; (iii) the investment
portfolio as a percentage of total assets at June 30, 1995;
and (iv) asset quality at June 30, 1995. Trident also
compared WCHI's growth rates between December 31, 1992 and
June 30, 1995, its yields on assets and costs of liabilities
and its income and expense data for 1994 and the six months
ended June 30, 1995 to those of the Aggregates.
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Comparison to Actively-Traded Thrifts. Trident compared
WCHI to the following groups of actively-traded thrifts as
of January 4, 1996: (i) all U.S. thrifts; (ii) U.S. thrifts
with assets between $100 million and $300 million; (iii) all
Midwest thrifts; (iv) all Indiana thrifts; and (v) sixteen
actively-traded thrifts Trident believed were most similar
to WCHI in terms of size, capital structure, profitability
and asset quality. Trident compared WCHI to the
aforementioned groups of actively-traded thrifts on the
basis of its balance sheet, GAAP capital, regulatory
capital, asset quality, loan loss reserves, asset and
deposit growth, return on average assets, return on average
equity, and the components of earnings during the trailing
four quarters. Trident also compared WCHI's pricing ratios
to the pricing ratios for other actively-traded thrifts.
Financial Projections. With input from WCHI's management,
Trident prepared six-year financial projections for WCHI
beginning September 30, 1995. The projections were based
on certain assumptions, including modest asset growth,
modest loan growth, modest deposit growth, a relatively even
interest-rate spread, a flat interest-rate environment, a
$0.04 annual increase in the cash dividend, and a 38.6% tax
rate. These financial projections were used to estimate
WCHI's valuation in an acquisition context at various future
dates, and the resulting returns to shareholders by
continuing to remain an independent financial institution.
Valuation of WCHI. Trident estimated the fair market value
of WCHI in an acquisition context. In valuing WCHI, Trident
considered three different approaches to value: the asset
approach, the income approach and the market approach.
The asset approach considers the market value of a company's
assets and liabilities, as well as any intangible value the
company may have. Trident estimated WCHI's net asset value
by adjusting the carrying value of its assets and
liabilities to reflect current market values (rather than
liquidation values). In addition, the net asset value of
WCHI was adjusted downward based on the estimated one-time
assessment on deposits to recapitalize the Savings
Association Insurance Fund ("SAIF"), the estimated
additional loan loss reserves an acquiror would assume in
its valuation of WCHI, benefit costs and contract
liabilities and estimated transaction and other costs.
Finally, Trident increased WCHI's net asset value for the
assumed exercise of outstanding options to purchase WCHI
Common Stock. Based on the adjustments discussed above,
Trident estimated WCHI's fully-diluted net asset value to be
approximately $24.7 million or $13.93 per share. After
determining WCHI's net asset value, Trident added an
intangible premium to reflect the estimated value of its
customer relationships. According to the asset approach, the
total value of WCHI is the sum of its net asset value and
its intangible value. Based on a branch purchase
methodology and intangible ("core deposit") premiums
observed in the market for thrift acquisitions, as well as
Trident's knowledge of WCHI, Trident applied premiums
between 3% and 6% of core deposits to WCHI's estimated
fully-diluted net asset value. Using the asset approach,
Trident established a reference range of $15.50 to $18.00
per share of WCHI Common Stock.
Trident also used an income approach in its valuation of
WCHI by discounting WCHI's projected future earnings plus
merger cost savings of 30% to 50 % as a result of an assumed
acquisition of WCHI. The projected earnings were discounted
to the present at rates of 13%, 15% and 17%. The discount
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rates chosen were estimates of the required rates of return
for holders or prospective holders of shares of financial
institutions similar to WCHI, based on a number of factors
including prevailing interest rates, the pricing ratios of
publicly traded financial institutions, the financial
condition and operating results of WCHI, as well as
Trident's general knowledge of valuation, the securities
markets, and acquisition values in other mergers of
financial institutions. Trident adjusted the resulting
values to reflect the cost of benefit plans, contract
liabilities, the estimated additional loan loss reserves an
acquiror would assume in its valuation of WCHI and estimated
certain merger-related and other expenses. Using the income
approach, Trident established a reference range of $10.50 to
$13.50 per share of WCHI Common Stock.
In the market approach, Trident analyzed certain median
pricing ratios (e.g., price to book value, price to tangible
book value, price to reported earnings, price to assets, and
the premium paid over tangible book value as a percentage of
core deposits) resulting from selected completed thrift
merger transactions, as well as recently announced pending
transactions. In applying the market approach, Trident
considered the pricing ratios for the following groups of
thrift merger transactions: (i) all pending thrift merger
transactions (57 transactions); (ii) all pending thrift
mergers announced during the 90 days prior to January 3,
1996 (the date of the market data) (20 transactions); (iii)
all pending thrift mergers involving thrifts located in the
Midwest (21 transactions); (iv) all pending thrift mergers
in which the aggregate consideration was between $25 million
and $50 million (8 transactions); (v) all pending thrift
mergers in which the target thrift had assets between $100
million and $300 million (14 transactions); (vi) all pending
thrift mergers in which the target thrift had a return on
assets of between 0.90% and 1.10% (12 transactions); (vii)
all pending thrift mergers in which the target thrift had a
return on equity of between 7% and 9% (9 transactions);
(viii) all pending thrift mergers in which the target thrift
had a tangible equity ratio of between 10% and 14% of assets
(12 transactions); and (ix) all pending thrift mergers in
which the target thrift had a nonperforming assets to assets
ratio of between 0.00% and 0.50% (26 transactions). Trident
also considered the pricing ratios for sixteen pending or
completed thrift merger transactions in which the target
thrift was of similar size and capital structure as WCHI,
and in which the target thrift had similar profitability and
asset quality. Trident then performed a comparison of a
number of financial ratios for WCHI to those of the target
thrift institutions. Based on WCHI's financial condition
and results of operations, as welthe groups of thrift
mergers noted above, Trident chose ranges of pricing ratios
to apply to WCHI. Trident chose price to book value ratios
of 125% to 145%, resulting in per share values of $17.75 to
$20.75; price to tangible book value ratios of 125% to 145%,
resulting in per share values of $17.75 to $20.75; price to
earnings multiples of 16.0 to 20.0 times earnings, resulting
in per share values of $17.75 to $22.25; price to assets
ratios of 16% to 19%, resulting in per share values of
$19.00 to $22.50; and premiums over tangible book value as a
percentage of core deposits of 4.5% to 8.0%, resulting in
per share values of $17.75 to $20.50. Based on these
derived ranges of value, Trident established a reference
range of $18.00 to $21.00 per share using the market
approach.
Trident then reviewed the results from the three approaches,
and after consideration of all relevant facts, reconciled
the acquisition values generated by each approach and
determined a final range of $17.00 to $21.00 per share for
the acquisition value of WCHI. Trident did not apply
specific weights to the three individual approaches, but
rather gave greater consideration to the asset and market
approaches which were tempered by the income approach in
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reconciling the reference ranges and estimating the final
range of value for WCHI.
The following is a brief summary of the Affiliation Analysis and Due
Diligence Report presented to the Board of Directors of WCHI on April 8,
1996:
Summary of Proposed Transaction. Trident presented a
summary of the financial terms of the Affiliation. Trident
also compared the pricing ratios for the Affiliation with
the median pricing ratios for selected groups of pending
thrift mergers and acquisitions. Trident discussed the
advantages and disadvantages of the Affiliation from a
financial point of view.
Review of Due Diligence Examination of ONB. Trident
presented a summary of its on-site due diligence examination
of ONB. ONB's historical balance sheets and income
statements were presented, along with a variety of financial
ratios that analyzed ONB's financial condition and operating
results through December 31, 1995. Trident discussed ONB's
strengths and weaknesses, peer group comparisons,
profitability, dividends, financial condition, loan
portfolio composition, asset quality, loan loss reserve
coverage, stock price, business strategy, growth, ONB's
previous mergers and acquisitions, its banking subsidiaries,
recent regulatory examinations of ONB, recent bank analysts'
reports on ONB, and other issues. Trident reported that
during its investigation, Trident did not discover any
conditions that would prevent it from rendering its fairness
opinion to WCHI's Board of Directors. As discussed above,
Trident relied, without independent verification, upon the
accuracy and completeness of all of the financial and other
information provided by ONB.
ONB's Stock Pricing. Trident examined the trading of
activity of ONB common stock between April 3, 1995 and April
2, 1996, and compared the performance of ONB's stock to
certain stock indices. Trident also compared ONB and the
pricing of its common stock to other regional commercial
banks, commercial banks of a similar size and all actively-
traded commercial banks as of April 2, 1996.
The summaries of Trident's Valuation Report, Affiliation
Analysis and Due Diligence Report, and opinion set forth above
reflect all the material analysis, factors and assumptions
considered by Trident and the material valuation methodologies
used by Trident in arriving at its opinion as to fairness
described above. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial or
summary description. Trident believes that its analyses and the
summary set forth above must be considered as a whole and that
selecting portions of its analyses, without considering all of
the analyses, or all of the above summary, without considering
all factors and analyses, would create an incomplete view of the
processes underlying the analyses set forth in Trident's reports
and its opinion. Therefore, the ranges of valuations resulting
from any single analysis described above should not be taken to
be Trident's view of the actual value of WCHI or the combined
company. In performing its analyses, Trident made numerous
assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which
are beyond the control of WCHI or ONB. The results of the
specific analyses performed by Trident may differ from WCHI's
actual values or actual future results as a result of changing
economic conditions, changes in company strategy and policies, as
well as a number of other factors. Such individual analyses were
prepared to provide valuation guidance solely as part of
Trident's overall valuation analysis and the determination of the
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fairness of the consideration to be received by WCHI's
shareholders, and were provided to WCHI's Board of Directors in
connection with the delivery of Trident's opinion. The analyses
do not purport to be appraisals or to reflect the prices at which
a company might actually be sold or the prices at which any
securities may trade at the present time ornd presentations to
WCHI's Board of Directors were among the many factors taken into
consideration by WCHI's Board of Directors in making its
determination to approve the Agreement.
Trident, as part of its investment banking business, is
continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwriting, and valuations for corporate and other
purposes. Trident has extensive experience with the valuation of
financial institutions. WCHI's Board of Directors selected
Trident as its financial advisor because of its previous
experience with Trident, because Trident is a nationally
recognized investment banking firm specializing in financial
institutions and because of its substantial experience in
transactions similar to the Affiliation. Trident is not
affiliated with either WCHI or ONB.
For its services as financial advisor, WCHI paid Trident a
retainer of $5,000, a fee of $10,000 upon the delivery of the
Valuation Report, and a fee of $25,000 upon execution of the
Agreement. An additional fee equal to (i) 0.75% of the aggregate
value of the Affiliation if such value is less than $41,181,550;
(ii) 0.825% of the aggregate value of the Affiliation if such
value is between $41,181,550 and $45,795,400; or (iii) 0.95% of
the aggregate value if such value is greater than $45,795,400,
less $40,000, will be payable to Trident upon consummation of the
Affiliation (a balance due of approximately $259,000 based on a
share price of $33.75 for ONB Common Stock). WCHI has also
agreed to reimburse Trident for its reasonable out-of-pocket
expenses and to indemnify Trident against certain liabilities,
including certain liabilities under federal securities laws.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF WCHI HAS CAREFULLY CONSIDERED AND
UNANIMOUSLY APPROVED THE AGREEMENT AND UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF WCHI APPROVE THE AGREEMENT.
Certain members of management and the Board of Directors of
WCHI have interests in the Affiliation that are in addition to
those of WCHI shareholders generally. See "PROPOSED
AFFILIATION -- Interests of Certain Persons in the Affiliation"
and " Management, Personnel and Operations After the
Affiliation."
EXCHANGE OF WCHI COMMON STOCK
Under the terms of the Agreement, shareholders of WCHI of
record upon consummation of the Affiliation will be entitled to
receive 0.64 shares of ONB Common Stock in exchange for each
share of WCHI Common Stock held, subject to adjustment if the
Average Price Per Share (as defined below) is above $34.75 or
below $33.00 or in the event of a recapitalization or similar
transaction involving ONB Common Stock. The Agreement may not be
terminated solely due to changes in the Average Price Per Share
of ONB Common Stock. As a result of the occurrence of the events
discussed herein:
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(1) Increase in Average Price Per Share. If the Average
Price Per Share of ONB Common Stock exceeds $34.75,
then the Exchange Ratio will be adjusted such that each
issued and outstanding share of WCHI Common Stock will
be converted into the right to receive such number of
shares of ONB Common Stock determined by dividing
$22.24 by the Average Price Per Share of ONB Common
Stock.
(2) Decrease in Average Price Per Share. If the Average
Price Per Share of ONB Common Stock is less than
$33.00, then the Exchange Ratio will be adjusted such
that each issued and outstanding share of WCHI Common
Stock will be converted into the right to receive such
number of shares of ONB Common Stock determined by
dividing $21.12 by the Average Price Per Share of ONB
Common Stock.
(3) No Adjustment to Exchange Ratio. If the Average Price
Per Share of ONB Common Stock is not less than $33.00
nor more than $34.75, 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 time of the Affiliation.
As of _______________, 1996 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 such
date, the Exchange Ratio would have been adjusted to ________ due
to an increase in the market price of ONB Common Stock, and the
number of shares of ONB Common Stock exchanged in the Affiliation
would have been approximately __________ (including shares of ONB
Common Stock represented by options), with an aggregate market
value of approximately $______ million, or $_______ per share of
WCHI Common Stock. The shares of ONB Common Stock exchanged in
the merger will be newly issued shares of ONB Common Stock.
In connection with the Affiliation, each outstanding option
to purchase shares of WCHI Common Stock (a "Stock Option") held
by Directors and executive officers of WCHI will be deemed to
constitute an option to purchase such number of shares of ONB
Common Stock, rounded to the nearest whole share, as the holder
of such option would have been entitled to receive pursuant to
the Affiliation had the holder exercised the option in full
immediately prior to the effective time of the Affiliation and,
immediately thereafter, exchanged such shares solely for ONB
Common Stock based upon the Exchange Ratio at a price equal to
(A) the aggregate exercise price of WCHI Common Stock otherwise
purchasable pursuant to the option divided by (B) the number of
shares of ONB Common Stock, rounded to the nearest whole share,
deemed purchasable pursuant to the option. Accordingly, such
option shares will be exchanged for options for ONB Common Stock
at the effective time as provided above.
As soon as practicable after the effective time, ONB shall
deliver to each holder of a Stock Option an appropriate notice or
agreement which sets forth such holder's rights pursuant to the
Stock Option, and the agreements evidencing the grants of such
Stock Options shall continue in effect on the same terms and
conditions (subject to the conversion of the Stock Option to
represent shares of ONB Common Stock). ONB may deliver new or
amended agreements which reflect the terms of each Stock Option
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assumed by ONB. With respect to each Stock Option, the optionee
will be solely responsible for any and all tax liability (other
than the employer's one-half share of any employment taxes) which
may be imposed upon the optionee as a result of the conversion of
the Stock Option into options for shares of ONB Common Stock and
as a result of the grant and exercise of such Stock Options.
As soon as practicable after the effective time, ONB will
file with the SEC a registration statement on an appropriate form
with respect to the shares of ONB Common Stock subject to such
options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses with respect thereto) for so long as such Stock
Options remain outstanding.
In the event of a stock split, stock dividend or other
recapitalization, the Exchange Ratio will be adjusted so that
WCHI shareholders will receive, in the aggregate, the same
percentage of the outstanding shares of ONB Common Stock they
would have received if the recapitalization event had not
occurred.
If, before the effective time of the Affiliation, ONB enters
into an agreement with another entity pursuant to which current
shareholders of ONB Common Stock will exchange their shares of
ONB Common Stock for stock of another entity ("Other
Transaction"), then upon consummation of the Other Transaction,
the shareholders of WCHI will be treated as though the
Affiliation had been consummated prior to the Other Transaction
and will be entitled to receive the same per share consideration
as the shareholders of ONB in the Other Transaction. ONB has
agreed to take steps to include provisions in any agreement
relating to an Other Transaction to the foregoing effect.
No fractional shares of ONB Common Stock will be issued to
shareholders of WCHI in connection with the Affiliation. Each
shareholder of WCHI 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 share interest multiplied by the Average Price Per Share
of ONB Common Stock.
After the effective time of the Affiliation, stock
certificates previously representing WCHI Common Stock will
represent only the right to receive shares of ONB Common Stock
and cash for any fractional shares. Following the effective time
of the Affiliation and prior to the surrender by holders of WCHI
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 time of the Affiliation, the
stock transfer books of WCHI will be closed and no transfers of
shares of WCHI Common Stock will thereafter be made. If, after
the effective time, certificates representing shares of WCHI
Common Stock are presented for registration or transfer, they
will be canceled and exchanged for shares of ONB Common Stock.
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 time of the
Affiliation, to each former shareholder of WCHI within ten (10)
business days following the shareholder's delivery to ONB of his
or her certificate(s) representing shares of WCHI Common Stock.
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Instructions as to delivery of WCHI stock certificates to ONB
will be sent to each WCHI shareholder shortly after the effective
time of the Affiliation.
NO DISSENTERS' OR APPRAISAL RIGHTS
In connection with the Affiliation, shareholders of WCHI do
not have the statutory right to dissent and require appraisal of
their shares of WCHI Common Stock and to receive cash instead of
ONB Common Stock in exchange for their shares of WCHI Common
Stock. Indiana law applicable to WCHI excepts transactions from
its dissenters' rights provisions when the stock held by
shareholders is listed on the NASDAQ National Market System as of
the Record Date. WCHI Common Stock meets this test.
Shareholders of WCHI who would otherwise dissent to the
Affiliation may sell their shares of WCHI Common Stock in the
open market at the market price prior to the effective time of
the Affiliation or sell their shares of ONB Common Stock in the
open market at the market price following the effective time.
RESALE OF ONB COMMON STOCK BY WCHI 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 WCHI shareholder who may be
deemed to be an "affiliate" of WCHI 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 WCHI will provide ONB with a
list identifying each affiliate of WCHI. The Agreement also
requires that each WCHI affiliate deliver to ONB within forty-
five days following the date of the Agreement a written agreement
to the effect that such affiliate (i) will not sell, pledge,
transfer, dispose of or otherwise reduce the affiliate's market
risk with respect to the shares of WCHI Common Stock directly or
indirectly owned or held by such person during the thirty (30)
day period prior to the effective time, and (ii) 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
(A) until such time as financial results covering at least thirty
(30) days of combined operations of WCHI and ONB have been
published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies and
(B) 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
affiliates of WCHI 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 WCHI who may be deemed to be affiliates of WCHI 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 a majority of the outstanding
shares of WCHI Common Stock, (2) approval of the Agreement by
ONB, as the sole shareholder of ONB Bank, and by WCHI, as the
sole shareholder of WFSB, (3) receipt by ONB, WCHI, ONB Bank and
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WFSB of all applicable regulatory approvals required for the
Company Merger and the Thrift Merger, (4) receipt of an opinion
of counsel with respect to certain federal income tax matters,
(5) the issuance by Trident of a written fairness opinion stating
that the terms of the Affiliation are fair to the shareholders of
WCHI from a financial point of view and dated as of a date on or
prior to the date hereof and confirmed as of the effective time,
(6) receipt by ONB of certain undertakings from affiliates of
WCHI, (7) receipt by ONB and WCHI of certain officers'
certificates and legal opinions, (8) the accuracy at the
effective time of the Affiliation of representations and
warranties contained in the Agreement and (9) the fulfillment of
certain covenants and mutual agreements set forth in the
Agreement. 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.
See "PROPOSED AFFILIATION -- Resale of ONB Common Stock by WCHI
Affiliates," "-- Regulatory Approvals," "FEDERAL INCOME TAX
CONSEQUENCES" and Appendix A.
TERMINATION
The Agreement may be terminated before consummation of the
Affiliation by either ONB or WCHI (as specified 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 WCHI which has had or could be expected to have, in
the reasonable discretion of ONB, a material adverse effect on
the financial condition, results of operations, business,
prospects, assets or capitalization of WCHI or WFSB, individually
or on a consolidated basis, or RISC on a consolidated basis with
WCHI, or in the number of issued and outstanding shares of WCHI
or its subsidiaries, (2) there has been a misrepresentation or a
breach of any representation or warranty set forth in the
Agreement by ONB which has had or could be expected to have, in
the reasonable discretion of WCHI, a material adverse effect on
the financial condition, results of operations, business, assets
or capitalization of ONB on a consolidated basis, (3) ONB or WCHI
has breached or failed to comply with any covenant or mutual
agreement set forth in the Agreement, (4) consummation of the
Affiliation has become inadvisable or impracticable due to the
commencement or threat of any claim, litigation or proceeding
against ONB, WCHI or any subsidiary of ONB or of WCHI, 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 WCHI, each on a consolidated basis,
(5) there has been a material adverse change in the financial
condition, results of operations, business, prospects, assets or
capitalization of WCHI, WFSB or ONB on a consolidated basis, or
RISC on a consolidated basis with WCHI, as of the effective time
of the Affiliation as compared to that in existence as of
December 31, 1995, (6) ONB's accountants conclude that ONB cannot
utilize the pooling-of-interests method of accounting for the
Affiliation, (7) consummation of the Affiliation has not occurred
by March 31, 1997, or (8) all joinder agreements under the WFSB
Deferred Compensation Plan have not been properly and validly
amended within 45 days of the date of the Agreement. This latter
deadline was extended to _______________ by ONB and as so
extended was met by WCHI. 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.
See Appendix A to this Proxy Statement.
-14-
<PAGE>
<PAGE>
RESTRICTIONS AFFECTING WCHI
The Agreement contains a number of restrictions regarding
the conduct of business of WCHI, WFSB and RISC pending
consummation of the Affiliation. Among other items, WCHI, WFSB
and RISC may not, without the prior written consent of ONB:
(1) change their capital stock accounts, (2) distribute or pay
any dividends, except that WCHI may pay to its shareholders its
normal and customary quarterly cash dividend in an amount not to
exceed $0.10 per share and WFSB may pay cash dividends to WCHI in
the ordinary course of business for payment of reasonable and
necessary business and operating expenses of WCHI and for
expenses incurred in connection with the Affiliation; provided,
however, that no dividend may be paid to shareholders of WCHI
during the quarter in which the Affiliation is consummated if,
during such quarter, WCHI shareholders will become entitled to
receive dividends on their shares of ONB Common Stock received
pursuant to the Agreement, (3) amend their respective Articles of
Incorporation, Charter or By-Laws, (4) carry on their business
other than substantially in the manner as conducted as of the
date of 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 WCHI, WFSB or RISC, except under certain
limited circumstances. See Appendix A to this Proxy Statement.
REGULATORY APPROVALS
The Affiliation requires regulatory approvals before the
Affiliation will become effective: the Thrift Merger requires the
approval of the Office of Thrift Supervision ("OTS"), while the
Company Merger requires the approvals of the Board of Governors
of the Federal Reserve System ("Federal Reserve") under the
federal Bank Holding Company Act of 1956, as amended ("BHC Act"),
and the OTS. Although applied for, such regulatory approvals
have not been obtained as of the date of this Proxy Statement.
Approval of the Affiliation is not to be interpreted as the
opinion of such regulatory authorities that the Affiliation is
favorable to the shareholders of WCHI from a financial point of
view or that such 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 WCHI 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."
In order for the Affiliation to qualify for pooling-of-
interests accounting treatment, among other items, 90% or more of
the outstanding shares of WCHI Common Stock must be exchanged for
ONB Common Stock. See "PROPOSED AFFILIATION -- Termination."
-15-
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<PAGE>
EFFECTIVE TIME
The Affiliation will become effective at the close of
business on the day specified in the articles of merger filed
with the OTS with respect to the Thrift Merger and the Indiana
Secretary of State with respect to the Company Merger. The
effective time will occur at the close of business, Evansville,
Indiana time, 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 imposed in connection with the regulatory
applications filed for approval of the Affiliation.
ONB and WCHI currently anticipate that the Affiliation will
be consummated during the fourth calendar quarter of 1996.
MANAGEMENT, PERSONNEL AND OPERATIONS AFTER THE AFFILIATION
ONB will be the surviving corporation in the Company Merger
and, upon consummation of the Company Merger, the separate
corporate existence of WCHI will cease. Consequently, the
Directors and officers of WCHI will no longer serve in such
capacities after the effective time of the Company Merger. The
Directors of ONB serving at the effective time of the Affiliation
will serve as Directors of ONB following the effective time of
the Affiliation until otherwise determined by the shareholders of
ONB. The officers of ONB serving at the effective time will
continue to serve in their respective capacities until otherwise
determined by the Board of Directors of ONB.
The Directors of WFSB and ONB Bank serving at the effective
time of the Affiliation will be Directors of ONB Bank following
consummation of the Affiliation. Additionally, four (4) new
directors will be elected to the Board of Directors of ONB Bank.
The identity of these directors will be agreed upon by ONB and
WCHI if they are elected prior to the effective time of the
Affiliation or by ONB and ONB Bank if elected following the
effective time of the Affiliation. Following the effective time
of the Affiliation, ONB, as the sole shareholder of ONB Bank,
will have the ability to elect the Board of Directors of ONB
Bank; however, ONB has agreed with WCHI and WFSB that each former
Director of WCHI will continue as a Director of ONB Bank until
such director has reached the age of seventy (70) years and that
those directors already over the age of seventy (70) and the four
new directors will serve for two (2) years following the
effective time. Robert Shaffer, Chairman of WCHI, will serve as
Chairman of ONB Bank following consummation of the Affiliation,
until the Board of Directors of ONB Bank determines otherwise.
Richard R. Haynes, President and Chief Executive Officer of WCHI,
will be the President and Chief Executive Officer of ONB Bank
following consummation of the Affiliation, until the Board of
Directors of ONB determines otherwise. The remaining officers of
ONB Bank will continue as officers of ONB Bank afthe Board of
Directors of ONB Bank determines otherwise.
In general, employees of WCHI will receive benefits in
accordance with policies of ONB following the Affiliation. In
particular, those persons who are full-time officers or employees
of WCHI as of the effective time of the Affiliation, who continue
as full-time officers or employees of ONB Bank or any other
subsidiary of ONB after the effective time, 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'
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<PAGE>
Savings and Profit Sharing Plan ("ONB Profit Sharing Plan"). In
addition, years of service of an employee of WCHI prior to the
effective time of the Affiliation will be credited to each such
employee for purposes of eligibility to participate 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 Profit
Sharing Plan.
Those employees of WFSB who otherwise meet the eligibility
requirements of the ONB Profit Sharing Plan, based upon their age
and years of service for WCHI, will become participants
thereunder as of the January 1st which coincides with or next
follows the effective time of the discontinuance of contributions
(as described below) to the Financial Institutions Thrift Plan
sponsored by WFSB ("WFSB Thrift Plan"). Those employees of WFSB
who otherwise meet the eligibility requirements of the ONB
Pension Plan, based upon their age and years of service for WCHI
or WFSB, will become participants thereunder on the January 1st
which coincides with or next follows the effective time of the
accrual of benefits (as described below) under the defined
benefit pension plan sponsored by WFSB ("WFSB Retirement Plan").
Those 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.
In connection with effecting the changes from the WCHI
benefit plans to ONB's benefit plans, the accrual of benefits
under the WFSB Retirement Plan and contributions under the WFSB
Thrift Plan will be frozen and terminated, respectively, as of
December 31st in the year of which consummation of the
Affiliation occurs, and all accrued benefits of participants
therein will become fully vested at that time. To the extent
permitted by applicable law and the terms of the plan, benefits
under the WFSB Retirement Plan will be left in trust and payable
at the times and in the amounts provided for under that plan.
Benefits under the WFSB Thrift Plan will be fully vested upon
December 31st of the year in which the effective time occurs. The
account balances of each participant in the WFSB Thrift Plan
shall be held in and remain under the WFSB Thrift Plan and shall
be payable at the time(s) and in the forms provided for under
such plan, to the extent permitted by the WFSB Thrift Plan and
applicable law.
Further, ONB has agreed to cause ONB Bank to assume all
obligations of WFSB under the Director Deferred Compensation
Master Agreement ("WFSB Deferred Compensation Plan") and to keep
such plan in effect, without any amendment which would decrease
the percentage of the directors fees that each director presently
defers pursuant to such plan, for two (2) years following the
effective time of the Affiliation. During such two (2) year
period, ONB also has agreed to cause ONB Bank to increase the
amount deferred under the WFSB Deferred Compensation Plan for
each director of WFSB (other than the four (4) new directors of
WFSB elected pursuant to the Agreement) serving as a director of
ONB Bank by $500 per month over the amounts currently being
deferred each month by each director; provided, however, that
during such two (2) year period in no event shall the aggregate
director's fees and additional deferrals under the WFSB Deferred
Compensation Plan for any director exceed $1,000 per month. The
WFSB Deferred Compensation Plan will be terminated effective
two (2) years after the effective time of the Affiliation. WFSB
has agreed to amend (effective as of the effective time of the
Affiliation) the WFSB Deferred Compensation Plan to provide for
its automatic termination and the termination of all the Director
Deferred Compensation Joinder Agreements thereunder ("Joinder
Agreements") on the date which is two (2) years following the
effective time of the Affiliation. The provisions of such
-17-
<PAGE>
<PAGE>
amendments and the transactions contemplated thereby, including
the distribution of participants' benefits under the WFSB
Deferred Compensation Plan, will contain such terms and
conditions acceptable to ONB and WFSB, including the requirement
that each director who has executed a Joinder Agreement will
execute and deliver an appropriate amendment, effective as of the
effective time of the Affiliation, to provide for the automatic
termination of his Joinder Agreement on the date which is two (2)
years following the effective time of the Affiliation. Within
ten (10) business days of the date the Joinder Agreements are
terminated, Workingmens/ONB Bank will pay to each director, in
the form of a single lump sum in cash, less any applicable
withholdings, the balance of his elective contribution account
accrued under the Joinder Agreement through the date it is
terminated. Each director's elective contribution account will
be credited with interest as provided for by the Joinder
Agreement.
The changes to the WFSB Deferred Compensation Plan discussed
above will enable the Directors of WCHI to receive approximately
the same level of director benefits (including director's fees)
as they are presently receiving from WCHI for two years following
the Affiliation and do not represent an increase in their current
benefits.
Effective as of the effective time of the Affiliation, the
WFSB Director Emeritus Program will be terminated; provided,
however, that within ten (10) calendar days after the termination
of such program, ONB will make, or will cause ONB Bank to make, a
lump sum cash payment to each director of WFSB who had satisfied
the eligibility requirements for benefits under such program as
of the effective time of the Affiliation, and to Richard R.
Haynes, equal to the present value of the benefits payable under
such program as of the effective time of the Affiliation.
Present value is to be calculated based upon an interest rate
equal to the applicable federal rate as defined in Section
1274(d) of the Code, compounded semi-annually as of the effective
date. Based on current rates of interest in effect on the date
hereof, the amounts payable upon termination of the plan to all
participating directors will aggregate approximately $356,919.
INTERESTS OF CERTAIN PERSONS IN THE AFFILIATION
Each of Richard R. Haynes, President and CEO of WFSB, Joseph
A. Walker, Chief Operating Officer of WFSB, Jerry L. Hays, Senior
Vice President of WFSB and R. William Richardson, Jr., Senior
Vice President of WFSB, is a party to an employment agreement
with WFSB (collectively, the "Employment Agreements"). ONB has
agreed to cause the surviving institution in the Thrift Merger to
assume all obligations under the Employment Agreements, as
amended, in accordance with the Agreement, and to guarantee the
surviving institution's obligations under the Employment
Agreements, except as may be otherwise required by any regulatory
agency. Each Employment Agreement is for a term of three (3)
years which term is extended annually for an additional one-year
term to maintain its three-year term if the Board of Directors of
WFSB determines to so extend the Employment Agreement, unless
notice not to extend is properly given by either party to the
Employment Agreement.
Further, ONB has agreed to, or to cause ONB Bank to, provide
extended indemnification to the same extent provided by WCHI and
WFSB at the effective time to Directors or officers of ONB Bank
who previously were Directors or officers of WCHI or any of its
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
time. Indemnification of officers and Directors following the
effective time will be provided to the same extent it is provided to
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<PAGE>
individuals working in similar capacities for ONB or its
subsidiaries. In addition, ONB has agreed for a period of one
year after the effective time to use all reasonable efforts to
cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by WCHI and WFSB with
respect to claims arising from facts or events which occurred
before the effective time of the Affiliation. Following the
effective time, ONB will provide WCHI and WFSB 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.
ONB has agreed to provide health insurance at its cost to
the current Directors of WCHI, and to their dependents at the
Directors' cost, so long as the Directors serve ONB Bank in such
capacity.
ONB has agreed to adopt supplemental retirement plans for
Richard R. Haynes and R. William Richardson, Jr. if such plans
are deemed necessary to assure that such individuals do not have
a reduction in retirement benefits as a result of the Affiliation
and their participation in the ONB Pension Plan and the ONB
Profit Sharing Plan compaution plans.
For other interests of certain persons in the Affiliation,
see "PROPOSED AFFILIATION -- Exchange of WCHI Common Stock" and
"-- Management, Personnel and Operations After the Affiliation."
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 OPINION
ONB and WCHI has requested the law firm of Krieg DeVault
Alexander & Capehart to render an opinion that the Affiliation
constitutes a tax-free reorganization and, with respect to
certain federal income tax consequences of the Affiliation,
substantially to the effect that the mergers to be effected
pursuant to the Affiliation constitute tax-free reorganizations
under the Internal Revenue Code of 1986, as amended ("Code"), to
each party thereto and to the shareholders of WCHI, except with
respect to cash received by WCHI's shareholders in lieu of
fractional share interests of ONB Common Stock.
The opinion rendered by Krieg DeVault Alexander & Capehart
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 WCHI to consummate the Affiliation is conditioned upon
the receipt of an opinion of counsel substantially to the effect
as set forth above.
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TAX CONSEQUENCES TO ONB, ONB BANK, WCHI AND WFSB
The merger of WCHI with and into ONB and the merger of WFSB
with and into ONB Bank constitute statutory mergers under
applicable law. Consequently, based upon the assumption of
certain facts to be stated in the opinion, the merger of WCHI
with and into ONB and the merger of WFSB with and into ONB Bank
should constitute a tax-free organization. As a result, ONB, ONB
Bank, WCHI and WFSB will recognize neither gain nor loss as a
result of the Affiliation for federal income tax purposes.
TAX CONSEQUENCES TO WCHI SHAREHOLDERS
A. WCHI Shareholders Receiving Solely ONB Common Stock
A WCHI shareholder who receives solely ONB Common Stock in
exchange for all of the shares of WCHI Common Stock actually
owned by the shareholder will not recognize any gain or loss upon
such exchange for federal income tax purposes. See paragraph B.
following for a discussion of the tax consequences of the receipt
of cash in lieu of fractional share interests of ONB Common
Stock.
B. Cash Received in Lieu of Fractional Shares
A WCHI 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, subject to the provisions of Section 302 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 WCHI 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
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 April 8, 1996,
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 $33.25 per share. On
____________, 1996, the closing price of ONB Common Stock
reported by the NASDAQ National Market System was $________ per
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share. The following table sets forth, for the periods
indicated, the high and low per share bid 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>
Year Ended December 31 HIGH LOW
---------------------- ---- ---
<S> <C> <C>
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
Third Quarter 34-1/2 34-1/4
Fourth Quarter
1996
----
First Quarter $ 35 $32-3/4
Second Quarter 37 33
Third Quarter
(through __________, 1996)
</TABLE>
Shares of WCHI Common Stock are traded in the over-the-
counter market and share prices are reported by NASDAQ National
Market System under the symbol WCHI. On April 8, 1996, the
business day immediately preceding the public announcement of the
Affiliation, the high and low bid prices of WCHI Common Stock
reported by NASDAQ was $16.25. On _____________, 1996, the high
and low bid prices of WCHI 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 WCHI Common Stock as
reported by NASDAQ, adjusted for all stock splits and stock
dividends (if any).
<TABLE>
<CAPTION>
Year Ended December 31 HIGH LOW
---------------------- ---- ---
1994
----
<S> <C> <C>
First Quarter $ 13-1/8 $12-3/8
Second Quarter 15-1/4 11-7/8
Third Quarter 15-1/8 14-1/8
Fourth Quarter 14-7/8 13
</TABLE>
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<TABLE>
<CAPTION>
1995
----
<S> <C> <C>
First Quarter $ 17 $13
Second Quarter 19 15-1/4
Third Quarter 18 15-3/4
Fourth Quarter 18 16
1996
----
First Quarter $ 18-1/4 $15
Second Quarter 20-1/2 16
Third Quarter
(through ____________, 1996)
</TABLE>
DIVIDENDS
The following table sets forth the per share cash dividends
paid on shares of ONB Common Stock and shares of WCHI Common
Stock since January 1, 1994. All dividends have been adjusted to
give effect to their respective stock dividends and stock splits
(if any).
<TABLE>
<CAPTION>
ONB Common Stock(1) WCHI Common Stock(2)
------------------- --------------------
Year Ended December 31
----------------------
1994
----
<S> <C> <C>
First Quarter $ .22 $ .07
Second Quarter .22 .07
Third Quarter .22 .07
Fourth Quarter .22 .08
1995
----
First Quarter $ .23 $ .08
Second Quarter .23 .08
Third Quarter .23 .08
Fourth Quarter .23 .09
1996
----
First Quarter $ .23 $ .09
Second Quarter .23 .09
</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 per quarter, see
"COMPARISON OF COMMON STOCK -- Dividend Rights."
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(2) The Agreement provides that WCHI shareholders will not
receive in any quarter in which the proposed Affiliation is
consummated a cash dividend from both WCHI and ONB.
Further, the Agreement provides that WCHI may pay its normal
and customary quarterly cash dividend to its shareholders in
an amount not to exceed $0.10 per share of WCHI Common
Stock. See "COMPARISON OF COMMON STOCK -- Dividend Rights."
EXISTING AND PRO FORMA PER SHARE INFORMATION
The following table sets forth certain historical, pro forma
and equivalent information. The data is based on historical
financial statements and the pro forma financial information
included on pages 25 through 31 and has been restated to give
effect to all stock dividends. Equivalent per share data is
calculated by multiplying the pro forma ONB information by the
Exchange Ratio under the Agreement.
<TABLE>
<CAPTION>
As Reported
---------------------------------
Net Cash Book Value at
ONB Income Dividends Period End
- ---------------- ------ --------- -------------
<S> <C> <C> <C>
Six Months Ended
June 30, 1996 1.15 0.46 16.94
Year Ended December 31,
1995 2.02 0.88 17.41
1994 1.78 0.84 16.11
1993 1.84 0.72 15.62
WCHI
- ----------------
Six Months Ended
June 30, 1996 0.48 0.18 14.20
Year Ended December 31,
1995 1.11 0.33 14.45
1994 1.03 0.29 13.67
1993 1.05 0.27 13.02
Net Income
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Six Months Ended
June 30, 1996 1.13 0.72
Year Ended December 31,
1995 2.01 1.29
1994 1.77 1.13
1993 1.84 1.18
</TABLE>
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<TABLE>
<CAPTION>
Cash Dividends
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Pro Forma(1) Equivalent(1)
<S> <C> <C>
Six Months Ended
June 30, 1996 0.46 0.29
Year Ended December 31,
1995 0.88 0.56
1994 0.84 0.54
1993 0.72 0.46
Shareholders' Equity
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Pro Forma(1) Equivalent(1)
As of June 30, 1996 17.20 11.01
As of December 31, 1995 17.41 11.14
</TABLE>
<TABLE>
<CAPTION>
Market Value of Common Stock
-------------------------------------
ONB WCHI
Historical Historical Equivalent(1)
---------- ---------- -------------
<S> <C> <C> <C>
As of April 8, 1996 (2) $33.25 $16.25 $21.28
</TABLE>
(1) Considers the pending merger with WCHI. See "PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION."
(2) Represents the last business day prior to the public
announcement of the Affiliation.
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<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, 1996 and
Pro Forma Condensed Combined Statements of Income for the six
months ended June 30, 1996 and for the years ended December 31,
1995, 1994, and 1993.
The Pro Forma Condensed Combined Statements of Income for
the six months ended June 30, 1996 and the years ended December
31, 1995, 1994, and 1993 is presented giving effect to the
affiliation with The National Bank of Carmi as of January 1 of
each of the years presented.
The pro forma information is based upon historical financial
statements. The Pro Forma Condensed Combined income statements
have been presented using ONB's fiscal year end of December 31
and the most recent interim date. The assumptions give effect to
the Affiliation 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.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited - Dollars in Thousands)
<TABLE>
<CAPTION>
ONB Workingmens Adjustments Pro Forma
--- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $146,326 $1,002 $147,328
Money market investments 14,413 $5,894 20,307
Investment securities 1,438,734 13,239 1,451,973
Loans 3,190,348 183,777 3,374,125
Reserve for loan losses (42,563) (376) (42,939)
Excess cost over assets acquired 13,494 13,494
Other intangibles 998 998
Premises and equipment 75,345 1,362 76,707
Other assets 93,041 3,305 96,346
---------- -------- ----- ----------
$4,930,136 $208,203 $0 $5,138,339
========== ======== ===== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits $3,978,261 $149,721 $4,127,982
Medium term notes 44,000 0 44,000
Subordinated debentures 30,570 0 30,570
Other borrowings 400,143 31,011 431,154
Other liabilities 55,288 1,012 56,300
---------- -------- ----- ----------
Total liabilities 4,508,262 181,744 0 4,690,006
---------- -------- ----- ----------
Common stock 24,908 8,341 (7,184) (a) 26,065
Capital surplus 230,755 0 7,184 (a) 237,939
Retained earnings 170,867 18,262 189,129
Net unrealized gain (4,656) (144) (4,800)
---------- -------- ----- ----------
Total shareholders' equity 421,874 26,459 0 448,333
---------- -------- ----- ----------
$4,930,136 $208,203 $0 $5,138,339
---------- -------- ----- ----------
Outstanding common shares 24,907,786 26,065,286
========== ======== ===== ==========
Shareholders' equity per share 16.94 17.20
========== ======== ===== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
<TABLE>
<CAPTION>
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
<S> <C> <C> <C>
Interest income $184,753 $8,084 $192,837
Interest expense 88,529 5,201 93,730
-------- ------ --------
Net interest income 96,224 2,883 99,107
Provision for loan losses 4,063 42 4,105
-------- ------ --------
Net interest income after
provision for loan losses 92,161 2,841 95,002
Noninterest income 21,313 157 21,470
Noninterest expense 71,769 1,525 73,294
-------- ------ --------
Income (loss) before income
taxes 41,705 1,473 43,178
Provision for income taxes 12,618 610 13,228
-------- ------ --------
Net income (loss) $ 29,087 $ 863 $ 29,950
======== ====== ========
Net income per common share:(b)
Assuming no dilution $ 1.15 $ 1.13
======== ========
Assuming full dilution $ 1.12 $ 1.10
======== ========
Weighted average common
shares outstanding: (b)
Assuming no dilution 25,247,981 26,405,481
========== ==========
Assuming full dilution 26,615,616 27,773,116
========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
<TABLE>
<CAPTION>
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
<S> <C> <C> <C>
Interest income $ 359,972 $ 16,000 $ 375,972
Interest expense 176,293 10,231 186,524
-------- --------- ---------
Net interest income 183,679 5,769 189,448
Provision for loan losses 7,057 78 7,135
-------- --------- ---------
Net interest income after
provision for loan losses 176,622 5,691 182,313
Noninterest income 39,435 241 39,676
Noninterest expense 144,540 2,760 147,300
-------- --------- ---------
Income (loss) before income
taxes 71,517 3,172 74,689
Provision for income taxes 19,359 1,209 20,568
-------- --------- ---------
Net income (loss) $ 52,158 $ 1,963 $ 54,121
======== ========= =========
Net income per common share:(b)
Assuming no dilution $ 2.02 $ 2.01
======== =========
Assuming full dilution $ 1.98 $ 1.96
======== =========
Weighted average common
shares outstanding: (b)
Assuming no dilution 25,758,911 26,916,411
========== ===========
Assuming full dilution 27,166,176 28,323,676
========== ===========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
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>
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
<S> <C> <C> <C>
Interest income $ 316,656 $ 14,088 $ 330,744
Interest expense 137,561 8,596 146,157
--------- --------- ---------
Net interest income 179,095 5,492 184,587
Provision for loan losses 7,682 72 7,754
--------- --------- ---------
Net interest income after
provision for loan losses 171,413 5,420 176,833
Noninterest income 35,023 180 35,203
Noninterest expense 144,634 2,650 147,284
--------- --------- ---------
Income (loss) before income
taxes 61,802 2,950 64,752
Provision for income taxes 14,618 1,126 15,744
--------- --------- ---------
Net income (loss) $ 47,184 $ 1,824 $ 49,008
========= ========= =========
Net income per common share:(b)
Assuming no dilution $ 1.78 $ 1.77
========= =========
Assuming full dilution $ 1.74 $ 1.73
========= =========
Weighted average common
shares outstanding: (b)
Assuming no dilution 26,484,832 27,642,332
========== ==========
Assuming full dilution 28,183,454 29,340,954
========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
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>
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
<S> <C> <C> <C>
Interest income $311,664 $ 13,713 $325,377
Interest expense 136,170 8,257 144,427
-------- --------- --------
Net interest income 175,494 5,456 180,950
Provision for loan losses 10,275 84 10,359
-------- --------- --------
Net interest income after
provision for loan losses 165,219 5,372 170,591
Noninterest income 33,780 213 33,993
Noninterest expense 132,598 2,489 135,087
-------- --------- --------
Income (loss) before income
taxes 66,401 3,096 69,497
Provision for income taxes 17,548 1,206 18,754
-------- --------- --------
Net income (loss) $ 48,853 $ 1,890 $ 50,743
======== ========= ========
Net income per common share:(b)
Assuming no dilution $ 1.84 $ 1.84
======== ========
Assuming full dilution $ 1.80 $ 1.79
======== ========
Weighted average common
shares outstanding: (b)
Assuming no dilution 26,482,703 27,640,203
========== ==========
Assuming full dilution 28,271,146 29,428,646
========== ==========
</TABLE>
See Notes to Pro Forma Financial Information.
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<PAGE>
<PAGE>
OLD NATIONAL BANCORP
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) Exchange of 100% of WCHI for 1,157,500 shares of ONB Common
Stock.
(b) Restated for all stock dividends. Net income per share on a
fully diluted basis assumes the conversion of ONB's
convertible subordinated debentures.
-31-
<PAGE>
<PAGE>
DESCRIPTION OF ONB
BUSINESS
ONB is a multi-bank holding company with 25 affiliate banks
located in the tri-state area comprised of southwestern Indiana
and neighboring portions of Illinois and Kentucky. With total
consolidated assets of $4.93 billion as of June 30, 1996, ONB is
the largest independent bank holding company headquartered in the
State of Indiana. Since 1985, ONB has acquired 35 financial
institutions, 10 of which were combined with existing affiliate
banks, and has increased its banking offices to 120.
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.
Illinois Indiana Kentucky
-------- ------- --------
-The National Bank of -Bank of Western Indiana -City National Bank
Carmi (Covington) (Fulton)
-First National Bank -Citizens National Bank -Farmers Bank & Trust
(Oblong) (Tell City) Company
-Palmer-American National -Clinton State Bank (Henderson)
Bank (Danville) (Clinton) -Farmers Bank & Trust
-Peoples National Bank -Dubois County Bank Company
(Lawrenceville) (Jasper) (Madisonville)
-Security Bank & Trust -First Citizens Bank & Trust -First State Bank
Company (Mt. Carmel) Company (Greencastle) (Greenville)
-First National Bank -Gibson County Bank -Morganfield National
(Harrisburg) (Princeton) Bank
-Merchants National Bank
(Terre Haute)
-Old National Bank (Evansville)
-ONB Bank (Bloomington)
-Orange County Bank (Paoli)
-People's Bank & Trust
Company (Mt. Vernon)
-Rockville National Bank
(Rockville)
-Security Bank & Trust
Company (Vincennes)
-United Southwest Bank
(Washington)
In addition to these affiliate banks, ONB has eight 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>
<PAGE>
operations; Old National Service Corporation provides data
processing services to ONB's affiliate banks and to third
parties; and Consumer Acceptance Corporation is a consumer
finance company. ONB Investment Services, Inc., a subsidiary of
Old National Bank in Evansville and a registered broker/dealer,
provides brokerage services to a number of the customers of ONB's
affiliate banks. ONB's other three (3) non-banking affiliates
include Old National Trust Company, Old National Trust Company --
Illinois and Old National Trust Company -- Kentucky, all of which
provide trust services in their respective states.
On May 31, 1996, ONB completed its acquisition of The
National Bank of Carmi, a national banking association located in
Carmi, Illinois. The acquisition of The National Bank of Carmi
was accomplished pursuant to the merger of The National Bank of
Carmi into an interim subsidiary of ONB and the exchange of
shares of ONB Common Stock for shares of common stock of The
National Bank of Carmi.
ACQUISITION POLICY
ONB anticipates that it will continue its policy of
geographic expansion through consideration of acquisitions of
financial institutions and insurance agencies 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.
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 WCHI
BUSINESS
WCHI, an Indiana corporation, became a unitary savings and
loan holding company upon the conversion of WFSB from a federal
mutual savings and loan institution to a federal stock savings
bank in June, 1990. WCHI and WFSB conduct business from a single
office in Bloomington, Monroe County, Indiana, and WFSB operates
a branch office in Ellettsville, Indiana. WFSB is and
historically has been among the top real estate mortgage lenders
in Monroe County and is one of the largest independent financial
institutions headquartered in Monroe County. WFSB offers a
variety of retail deposit and lending services. WCHI has no
other business activity than being the holding company for WFSB.
WCHI is the sole shareholder of WFSB.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
WCHI 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,
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<PAGE>
<PAGE>
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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning WCHI does not purport
to be complete. For additional information, see the documents
filed by WCHI 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 Federal Reserve under
the 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
Office of the Comptroller of the Currency ("OCC"). The affiliate
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<PAGE>
<PAGE>
banks of ONB 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
Department 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 are supervised and regulated by the Federal
Deposit Insurance Corporation ("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.
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 state of
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 WCHI
WCHI is regulated as a "non-diversified savings and loan
company" within the meaning of the Home Owners' Loan Act, as
amended ("HOLA") and subject to regulatory oversight of the
Director of the OTS. As such, WCHI is registered with the OTS
and thereby subject to OTS regulations, examinations, supervision
and reporting requirements. As a subsidiary of a savings and
loan holding company, WFSB is subject to certain restrictions in
its dealings with WCHI and with other companies affiliated with
WCHI.
HOLA general prohibits a savings and loan company, without
prior approval of the Director of OTS, from (i) acquiring control
of any other savings association or savings and loan holding
company or controlling the assets thereof or (ii) acquiring or
retaining more than 5 percent of the voting shares of a savings
association or holding company thereof which is not a subsidiary.
Additionally, under certain circumstances a savings and loan
holding company is permitted to acquire, with the approval of the
Director of the OTS, up to 15 percent of previously unissued
voting shares of an under-capitalized savings association for
cash without that savings association being deemed controlled by
the holding company. Except with the prior approval of the
Director of the OTS, no director or officer of a savings and loan
holding company or person owning or controlling by proxy or
otherwise more than 25% of such company's stock, may also acquire
control of any savings institution, other than a subsidiary
institution, or any other savings and loan holding company.
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<PAGE>
<PAGE>
WCHI is a unitary savings and loan holding company. There
are generally no restrictions on the permissible business
activities of a unitary savings and loan holding company.
However, if the Director of the OTS determines that there is
reasonable cause to believe that the continuation by a savings
and loan holding company of an activity constitutes a serious
risk to the financial safety, soundness, or stability of its
subsidiary savings association, the Director of the OTS may
impose such restrictions as deemed necessary to address such risk
and limiting (i) payment of dividends by the savings association,
(ii) transactions between the savings association and its
affiliates, and (iii) any activities of the savings association
that might create a serious risk that the liabilities of the
holding company and its affiliates may be imposed on the savings
association.
Notwithstanding the above rules as to permissible business
activities of unitary savings and loan holding companies, if the
savings association subsidiary of such a holding company fails to
meet the Qualified Thrift Lender ("QTL") test, then such unitary
holding company would become subject to the activities
restrictions applicable to multiple holding companies.
(Additional restrictions on securing advances from the FHLB also
apply.) See "REGULATORY CONSIDERATIONS -- Regulation of WFSB,
Qualified Thrift Lender Requirement." At June 30, 1996, WFSB's
asset composition was in excess of that required to qualify WFSB
as a Qualified Thrift Lender.
If WCHI were to acquire control of another savings
institution other than through a merger or other business
combination with WFSB, WCHI would thereupon become a multiple
savings and loan holding company. Except where such acquisition
is pursuant to the authority to approve emergency thrift
acquisitions and where each subsidiary savings association meets
the QTL test, the activities of WCHI and any of its subsidiaries
(other than WFSB) or other subsidiary savings associations)
would thereafter be subject to further restrictions. HOLA
provides that, among other things, no multiple savings and loan
holding company or subsidiary thereof which is not a savings
association shall commence or continue for a limited period of
time after becoming a multiple savings and loan holding company
or subsidiary thereof, any business activity other than
(i) furnishing or performing management services for a subsidiary
savings association, (ii) conducting an insurance agency or
escrow business, (iii) holding, managing, or liquidating assets
owned by or acquired from a subsidiary savings institution,
(iv) holding or managing properties used or occupied by a
subsidiary savings institution, (v) acting as trustee under deeds
of trust, (vi) those activities previously directly authorized by
the FSLIC by regulation as of March 5, 1987, to be engaged in by
multiple holding companies or (vii) those activities authorized
by the FRB as permissible for bank holding companies, unless the
Director of the OTS by regulation prohibits or limits such
activities for savings and loan holding companies. Those
activities described in (vii) above must also be approved by the
Director of the OTS prior to being engaged in by a multiple
holding company.
The Director of the OTS may also approve acquisitions
resulting in the formation of a multiple savings and loan holding
company which controls savings associations in more than one
state, if the multiple savings and loan holding company involved
controls a savings association which operated a home or branch
office in the state of the association to be acquired as of
March 5, 1987, or if the laws of the state in which the
institution to be acquired is located specifically permit
institutions to be acquired by state-chartered institutions or
savings and loan holding companies located in the state where the
acquiring entity is located (or by a holding company that
controls such state-chartered savings institutions). Also, the
Director of the OTS may approve an acquisition resulting in a
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<PAGE>
multiple savings and loan holding company controlling savings
associations in more than one state in the case of certain
emergency thrift acquisitions.
Indiana law permits acquisitions of certain federal and
state SAIF-insured savings associations and their holding
companies ("Savings Associations") located in Indiana, Ohio,
Kentucky, Illinois, and Michigan (the "Region") by other Savings
Associations located in the Region. Savings Associations with
their principal place of business in one of the states in the
Region (other than Indiana) may acquire Savings Associations with
their principal place of business in Indiana if, subject to
certain other conditions, the state of the acquiring association
has reciprocal legislation permitting the acquisition of Savings
Associations and their holding companies in that state by Indiana
Savings Associations. Each of the states in the Region has, at
least to a certain degree, reciprocal legislation. The Indiana
statute also authorizes Indiana Savings Associations to acquire
other Savings Associations in the Region. Following the
acquisition, an acquired Indiana Savings Association and any
other Indiana Savings Association subsidiary owned by the
acquiror must hold no more than 15% of the total Savings
Association deposits in Indiana.
No subsidiary savings association of a savings and loan
holding company may declare or pay a dividend on its permanent or
nonwithdrawable stock unless it first gives the Director of the
OTS 30 days advance notice of such declaration and payment. Any
dividend declared during such period or without giving notice
shall be invalid.
Regulation of WFSB
General. As a Savings Association Insurance Fund
("SAIF")-insured savings association, WFSB is subject to
supervision and regulation by the Director of the OTS, as is ONB
Bank. Following the Affiliation, ONB Bank will continue to be
supervised and regulated by the OTS. Under OTS regulations, WFSB
is required to obtain audits by independent auditors and to be
examined periodically by the Director of the OTS. WFSB 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 HOLA
and, in certain respects, the Federal Deposit Insurance Act, as
amended ("FDI Act").
Qualified Thrift Lender Requirement. In order for WFSB 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. As of June 30, 1996, WFSB's qualified thrift investments
represented 98.57% of its portfolio assets. 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.
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<PAGE>
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 borrowings during the preceding calendar month. As of
June 30, 1996, WFSB's liquid assets represented 7.09% of its net
withdrawable deposits plus short-term borrowings 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 borrowings during the
preceding calendar month. At March 31, 1996, WFSB was in
compliance with these liquidity requirements.
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, 1996, WFSB's loan-to-one-borrower
limitation was approximately $3.8 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,
1996, all of WFSB's loans complied with these limits.
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.
WFSB'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. WFSB's one such
subsidiary is RISC.
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 interstate networks to
diversify their loan portfolio and lines of business. The OTS
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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 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, 1996:
Tier 1 Capital: 13.04%
Total Capital: 15.18%
Leverage Ratio: 8.35%
Depository institution affiliates of ONB and WFSB 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
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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 WFSB exceed the
risk-based capital guidelines as of June 30, 1996. For
additional information pertaining to WCHI's regulatory capital,
see "Liquidity and Capital Resources" under the caption
"Management Discussion and Analysis of Financial Condition and
Results of Operations" contained in WCHI's Annual Report to
Shareholders for the fiscal year ended December 31, 1995.
The OTS has promulgated a rule which sets forth the
methodology for calculating an interest rate risk component to be
incorporated into the OTS regulatory capital rule, although it
has delayed implementation of the rule. Under the rule, only
savings associations with "above normal" interest rate risk
(institutions whose portfolio equity would decline in value by
more than 2% of assets in the event of a hypothetical 200-basis
point move in interest rates) will be required to maintain
additional capital for interest rate risk under the risk-based
capital framework. An institution with an "above normal" level
of exposure will have to maintain additional capital equal to
one-half the difference between its measured interest rate risk
(the most adverse change in the market value of its portfolio
resulting from a 200-basis point move in interest rates divided
by the estimated market value of its assets) and 2%, multiplied
by the market value of its assets. That dollar amount of capital
is in addition to an institution's existing risk-based capital
requirement. The OTS decided to delay implementation of this
rule, pending the testing of an OTS appeals process for certain
institutions subject to capital deductions under the new rule.
However, during this delay, the OTS has stated that it will
continue to closely monitor interest rate risk at individual
institutions and it retains the authority, on a case-by-case
basis, to impose additional capital requirements for individual
institutions with significant interest rate risk.
The OCC, Federal Reserve, and FDIC issued a joint policy
statement providing guidance in sound practices for managing
interest rate risk. This policy statement replaces a prior
proposed policy statement which the agencies had issued regarding
a supervisory homework measure and assessing bank's interest rate
exposure.
The capital requirements described above are minimum
requirements. Higher capital levels will be required by the
federal banking regulators if warranted by the particular
circumstances or risk profiles of individual institutions. For
example, the regulations of both the FDIC and the OCC provide
that additional capital may be required to take adequate account
of the risks posed by concentrations of credit and nontraditional
activities, interest rate risk and the bank's ability to manage
such risks. As of June 30, 1996, none of ONB's affiliate banks
or WFSB had been directed by its primary federal regulator to
maintain capital at a level in excess of the minimum regulatory
requirements.
It is too early to assess the impact, if any, these new
rules and related 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
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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, and Indiana and Illinois have
adopted legislation permitting interstate branching under certain
circumstances.
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.
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 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. 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 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 ("Riegle-Neal"), 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 were permitted to
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, unless the state
opts out of this new legislation before June 1, 1997.
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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, as
permitted under this new statute.
Indiana now permits interstate branching (both de novo and
by acquisition) in accordance with Riegle-Neal subject to certain
conditions. Illinois enacted interstate branching legislation
which will be effective as of June 1, 1997. The Illinois
legislation does not permit de novo branching into Illinois by an
out-of-state bank or the acquisition of a branch in Illinois
without the acquisition of the entire bank. Kentucky has not
adopted legislation pertaining to Riegle-Neal.
An insured bank subsidiary may act as an agent for an
affiliated bank or, subject to certain limitations, a 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 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, generally a leverage ratio 4% or greater
and does not meet the definition of a well-capitalized
institution. 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 cease receipt of deposits from
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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.
On July 10, 1995, the federal banking regulators, including
the FDIC, the OCC and the OTS, published final guidelines
establishing operational and managerial standards to promote the
safety and soundness of federally insured depository
institutions. The guidelines, which took effect on August 9,
1995, establish standards for internal controls, information
systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, and
compensation, fees and benefits. In general, the guidelines
prescribe the goals to be achieved in each area, and each
institution will be responsible for establishing its own
procedures to achieve those goals. If an institution fails to
comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the
institution to submit a plan for achieving and maintaining
compliance. The preamble to the guidelines states that the
agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such
severity that it could threaten the safe and sound operation of
the institution. Failure to submit an acceptable compliance
plan, or failure to adhere to a compliance plan that has been
accepted by the appropriate regulator, would constitute grounds
for further enforcement action. The federal banking agencies
have also published for comment proposed asset quality and
earnings standards which, if adopted, would be added to the
safety and soundness guidelines. This proposal, like the final
guidelines discussed above, would establish the goals to be
achieved with respect to asset quality and earnings, and each
institution would be responsible for establishing its own
procedures to meet such goals.
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. WFSB's
deposits are insured by 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 WFSB 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, WCHI, and WFSB.
The amount each institution pays for FDIC deposit insurance
coverage is determined in accordance with a risk-based assessment
under which all insured depository institutions are placed into
one of nine categories and assessed insurance premiums based upon
their level of capital and supervisory evaluation. Institutions
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classified as well-capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that
are less than adequately capitalized (as defined by the FDIC) and
considered of substantial supervisory concern pay the highest
premium. For the semi-annual assessment period ended June 30,
1996, BIF assessments ranged from nearly 0% (statutory minimum
assessment of $1,000 paid to the BIF) to 0.27% of deposits while
SAIF assessments ranged from 0.23% to 0.31% of deposits. For the
semi-annual assessment period beginning on July 1, 1996, the BIF
and SAIF assessments will remain as provided above. Risk
classification of all insured institutions is made by the FDIC
for each semi-annual assessment period.
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 and its affiliate banks,
WCHI and WFSB, and any decrease could have a positive effect on
the earnings of ONB and its affiliate banks, WCHI and WFSB.
ADDITIONAL MATTERS
In addition to the matters discussed above, ONB's affiliate
banks and WFSB 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
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 are being considered and in the future may
be considered by the United States 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, WCHI and WFSB in particular would be affected
thereby.
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COMPARISON OF COMMON STOCK
The rights of holders of WCHI 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 WCHI shareholders are presently
governed by the laws of the State of Indiana, the state in which
WCHI is incorporated, and by WCHI's Articles of Incorporation and
By-Laws. The rights of WCHI 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 WCHI 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 Articles of Incorporation and By-Laws of
WCHI.
AUTHORIZED BUT UNISSUED SHARES
ONB's Articles of Incorporation currently authorize the
issuance of 50,000,000 shares of ONB Common Stock, of which
approximately 24,907,786 million shares were outstanding as of
June 30, 1996. 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 "COMPARISON OF COMMON STOCK -- Anti-Takeover Provisions --
ONB's Shareholder Rights Plan" below.
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
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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, 1996, ONB had 1,540,053 million shares of ONB
Common Stock reserved for issuance under ONB's dividend
reinvestment and stock purchase plan and 1,339,923 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 44.643 shares per $1,000 principal amount of
debentures (equivalent to a conversion price of approximately
$22.40 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 Articles of Incorporation of WCHI authorizes the
issuance of 5,000,000 shares of WCHI Common Stock, no par value
per share, of which __________ shares were issued and outstanding
as of the Record Date, and options for __________ shares were
outstanding on that date. Following the Affiliation, all of the
outstanding shares of WCHI Common Stock will be cancelled, and
any outstanding options at the effective time will be converted
into options for ONB Common Stock. See "PROPOSED AFFILIATION -
Exchange of WCHI Common Stock."
WCHI has 2,000,000 shares of Preferred Stock, no par value,
authorized, of which none are issued. Such shares are available
to be issued without shareholder approval under the Articles of
Incorporation of WCHI; however, pursuant to the Agreement, WCHI
is restricted in issuing such shares.
PREEMPTIVE RIGHTS
Neither ONB's nor WCHI's shareholders have preemptive rights
to subscribe for any new or additional ONB Common Stock or WCHI
Common Stock, respectively, or other securities. Preemptive
rights may be granted to ONB's and WCHI's shareholders if their
respective Articles of Incorporation are amended accordingly.
DIVIDEND RIGHTS
The holders of ONB Common Stock and WCHI Common Stock are
entitled to dividends and other distributions when, as and if
declared by their respective Boards 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 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
same dividend limitations apply to WCHI shareholders.
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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 in excess of total net profits for the year of
declaration plus retained net profits for the previous two (2)
years may not be declared without approval of the Indiana
Department of Financial Institutions. 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 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 ability of ONB Bank, as a savings association, to pay
dividends to ONB is limited by OTS regulations, as is WFSB. The
OTS regulations impose limitations on capital distributions by
savings associations, including ONB Bank and WFSB. Under the
OTS's rule, a savings institution is classified as a tier 1
institution, a tier 2 institution, or a tier 3 institution,
depending upon 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, ONB Bank and WFSB are each a tier 1 institution.
Dividends paid by ONB's affiliate banks and WFSB may 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 WFSB is
currently subject to such a restriction.
VOTING RIGHTS
The holders of the outstanding shares of ONB Common Stock
and WCHI Common Stock are entitled to one vote per share on all
matters presented for shareholder vote. ONB and WCHI
shareholders do not have cumulative voting rights in the election
of directors. 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 a
shareholder may cast at such election, and a shareholder may cast
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all such votes for one candidate or distribute them among any two
or more candidates. The absence of cumulative voting rights in
the election of Directors may render it more difficult for a
minority shareholder to elect a nominee as a Director.
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 and WCHI'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. Indiana
law permits a corporation in its articles of incorporation to
prescribe a higher shareholder vote for certain amendments to the
articles of incorporation. See "COMPARISON OF COMMON STOCK --
Anti-Takeover Provisions."
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 WCHI's Charter
require a super-majority shareholder vote of eighty percent (80%)
of the outstanding shares of WCHI Common Stock for the amendment
of certain significant provisions.
DISSENTERS' RIGHTS
The holders of WCHI Common Stock and ONB Common Stock
possess no dissenters' rights in connection with the Affiliation.
See "PROPOSED AFFILIATION -- No Dissenters' on Appraisal Rights."
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. Similar liquidation rights
apply to shareholders of WCHI.
ASSESSMENT AND REDEMPTION
Under Indiana law, shares of ONB Common Stock and WCHI
Common Stock are not liable to further assessment. 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
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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. WCHI has similar redemption rights and limitations
under Indiana law.
In addition, ONB must give prior notice to the Federal
Reserve if the consideration to be paid by it for any redemption
or acquisition of its respective shares, when aggregated with the
consideration paid for all redemptions or acquisitions for the
preceding twelve (12) months, equals or exceeds 10% of its
consolidated net worth. This requirement does not, however,
apply to a bank holding company which is deemed to be "well-
capitalized" as defined pursuant to FDICIA (see "Regulatory
Considerations -- FDICIA") and which received a composite rating
of 1 or 2 at its most recent Federal Reserve examination and
which is not the subject of any unresolved supervisory issues.
This requirement does not currently apply to ONB.
ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to ONB and WCHI, 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 or WCHI, respectively. These measures may have the effect
of discouraging certain tender offers for shares of ONB Common
Stock or WCHI 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
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 time of the election. ONB and WCHI are covered by the
business combinations provision of Indiana law, but this law will
not apply to the Affiliation since ONB is not a 10% shareholder
of WCHI.
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
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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. The constitutional validity of the
control share acquisition provisions of Indiana law has in the
past been challenged and has been upheld by the United States
Supreme Court.
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 and WCHI are each subject to the control
share acquisition provision, but such provision will not apply to
the Affiliation because the statute excludes from its coverage
transactions such as the Affiliation.
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, upon
the occurrence of certain events involving a change in control of
ONB, 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 of Evansville, as Trustee,
which is specifically incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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WCHI's Articles of Incorporation.
Directors. Certain provisions in the Articles of
Incorporation and By-Laws of WCHI will impede changes in majority
control of the Board of Directors of WCHI. The Articles of
Incorporation provide that the Board of Directors of WCHI is
divided into three classes, with directors in each class elected
for three-year staggered terms. Therefore, it would take two
annual elections to replace a majority of WCHI's Board.
The Articles of Incorporation also provide that the size of
the Board of Directors shall range between five and fifteen
directors, with the exact number of directors to be fixed from
time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors
of WCHI.
The Articles of Incorporation provide that any vacancy
occurring in the Board of Directors, including a vacancy created
by an increase in the number of directors, shall be filled for
remainder of the unexpired term only by a majority vote of the
directors then in office. Finally, the By-Laws impose certain
notice and information requirements in connection with the
nomination by shareholders of candidates for election to the
Board of Directors or the proposal by shareholders of business to
be acted upon at an annual meeting of shareholders.
The Articles of Incorporation provide that a director or the
entire Board of Directors may be removed only for cause and only
by the affirmative vote of at least 80% of the shares eligible to
vote generally in the election of directors. Removal for "cause"
is limited to the grounds for termination in the OTS regulation
relating to employment contracts of federally-insured savings
associations.
Restrictions on Call of Special Meetings. The Articles of
Incorporation provide that a special meeting of shareholders may
be called only by the Chairman of the Board of WCHI or pursuant
to a resolution adopted by a majority of the total number of
directors of WCHI. Shareholders are not authorized to call a
special meeting.
No Cumulative Voting. The Articles of Incorporation provide
that there shall be no cumulative voting rights in the election
of directors.
Authorization of Preferred Stock. The Articles of
Incorporation authorize 2,000,000 shares of preferred stock,
without par value. WCHI is authorized to issue preferred stock
from time to time in one or more series subject to applicable
provisions of the law, and the Board of Directors is authorized
to fix the designations, powers, preferences and relative
participating, optional and other special rights of such shares,
including voting rights (if any and which could be as a separate
class) and conversion rights. In the event of a proposed merger,
tender offer or other attempt to gain control of WCHI not
approved by the Board of Directors, it might be possible for the
Board of Directors to authorize the issuance of a series of
preferred stock with rights and preferences that would impede the
completion of such a transaction. An effect of the possible
issuance of preferred stock, therefore, may be to deter a future
takeover attempt. The Board of Directors has no present plans or
understanding for the issuance of any preferred stock and does
not intend to issue any preferred stock except on terms which the
Board of Directors deems to be in the best interests of WCHI and
its shareholders.
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Evaluation of Offers. The Articles of Incorporation of WCHI
provide that the Board of Directors of WCHI, when determining to
take or refrain from taking corporate action on any matter,
including making or declining to make any recommendation to
WCHI's shareholders, may, in connection with the exercise of its
judgment in determining what is in the best interest of WCHI, its
subsidiaries and the shareholders of WCHI, give due consideration
to all relevant factors, including, without limitation, the
social and economic effects of acceptance of such offer on WCHI's
customers and WCHI's subsidiaries present and future account
holders, borrowers, employees and suppliers; the effect on the
communities in which WCHI and the Institution operate or are
located; and the effect on the ability of WCHI to fulfill the
objectives of a holding company and of WCHI's subsidiaries or
future financial institution subsidiaries to fulfill the
objectives of a stock savings association under applicable
statutes and regulations. The Articles of Incorporation of WCHI
also authorize the Board of Directors to take certain actions to
encourage a person to negotiate for a change of control of WCHI
or to oppose such a transaction deemed undesirable by the Board
of Directors including the adoption of so-called shareholder
rights plans. By having these standards and provisions in the
Articles of Incorporation of WCHI, the Board of Directors may be
in a stronger position to oppose such a transaction if the Board
concludes that the transaction would not be in the best interest
of WCHI, even if the price offered is significantly greater than
the then market price of any equity security of WCHI.
Procedures for Certain Business Combinations. The Articles
of Incorporation require that certain business combinations
between WCHI (or any majority-owned subsidiary thereof) and a 10%
or greater shareholder either be approved (i) by at least 80% of
the total number of outstanding voting shares of WCHI or (ii) by
a majority of certain directors unaffiliated with such 10% or
greater shareholder or involve consideration per share generally
equal to the higher of (A) the highest amount paid by such 10%
shareholder or its affiliates in acquiring any shares of the WCHI
Common Stock or (B) the "Fair Market Value" (generally, the
highest closing bid paid for the WCHI Common Stock during the
thirty days preceding the date of the announcement of the
proposed business combination or on the date the 10% or greater
shareholder became such, whichever is higher).
Amendments to Articles of Incorporation and By-Laws.
Amendments to the Articles of Incorporation must be approved by a
majority vote of WCHI's Board of Directors and also by a majority
of the outstanding shares of WCHI's voting shares; provided,
however, that approval by at least 80% of the outstanding voting
shares is required for certain provisions (i.e., provisions
relating to number, classification, and removal of directors;
amendment of the By-Laws; call of special shareholder meetings;
criteria for evaluating certain offers; certain business
combinations; and amendments to provisions relating to the
foregoing). The provisions concerning limitations on the
acquisition of shares may be amended only by an 80% vote of
WCHI's outstanding shares unless at least two-thirds of WCHI's
Continuing Directors (directors of WCHI on February 13, 1990, or
directors recommended for appointment or election by a majority
of such directors) approve such amendments in advance of their
submission to a vote of shareholders (in which case only a
majority vote of shareholders is required).
The By-Laws may be amended only by a majority vote of the
actual number of directors of WCHI.
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DIRECTOR LIABILITY
Under Indiana law, a director of ONB or WCHI 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.
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. Under the By-Laws, the
Nominating Committee of the Board of Directors of ONB
("Nominating Committee") is required to submit to the entire
Board of Directors its recommendation of nominees for election as
directors of ONB prior to each annual or special meeting of
shareholders at which directors will be elected.
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
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 special meeting of
shareholders at which directors will be elected.
With respect to WCHI, nominations of persons for election to
the Board of Directors may be made at a meeting of shareholders
by or at the direction of the Board of Directors, by any
nominating committee or person appointed by the Board of
Directors or by any shareholder entitled to vote for the election
of directors at the meeting who complies with the notice
procedure set forth in WCHI's By-Laws.
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 WCHI 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 into 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 into this Proxy Statement in
reliance upon the authority of said firm as experts in auditing
and accounting in giving said report.
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The consolidated financial statements of WCHI as of
December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, have been
incorporated by reference into this Proxy Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
Representatives of KPMG Peat Marwick LLP are not expected to
be at the Special Meeting.
OTHER MATTERS
The Special Meeting is called for the purposes set forth in
the Notice attached to this Proxy Statement. The Board of
Directors of WCHI knows of no other matters for action by
shareholders at the Special 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 WCHI as of the date hereof, which may
properly come before the Special 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 WCHI.
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APPENDIX A
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement"),
dated as of this 8th day of April, 1996, by and among OLD
NATIONAL BANCORP ("ONB"), ONB BANK ("ONB Bank"), WORKINGMENS
CAPITAL HOLDINGS, INC. ("Capital Holdings") and WORKINGMENS
FEDERAL SAVINGS BANK ("WFSB"),
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 ("BHC Act"), with its principal office located
in Evansville, Vanderburgh County, Indiana; and
WHEREAS, ONB Bank is a federally chartered savings bank and
a wholly-owned subsidiary of ONB with its principal office
located in Bloomington, Monroe County, Indiana; and
WHEREAS, Capital Holdings is an Indiana corporation
registered as a savings and loan holding company under the Home
Owners' Loan Act, as amended ("HOLA"), with its principal office
located in Bloomington, Monroe County, Indiana; and
WHEREAS, WFSB is a federally chartered savings bank and a
wholly-owned subsidiary of Capital Holdings with its principal
office located in Bloomington, Monroe County, Indiana; and
WHEREAS, a majority of the Executive Committee of the Board
of Directors of ONB, a majority of the Board of Directors of
Capital Holdings and at least two-thirds (2/3) of the entire
Board of Directors of each of ONB Bank and WFSB 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 sufficiency of which are hereby acknowledged, ONB,
ONB Bank, Capital Holdings and WFSB hereby agree as follows:
SECTION 1
THE MERGERS
1.01. The Company Merger.
(a) General Description. Upon the terms and subject to the
conditions of this Agreement, immediately prior to the Thrift
Merger (as hereinafter defined), Capital Holdings shall be merged
into and under the Articles of Incorporation of ONB ("Company
Merger"). ONB shall survive the Company Merger ("Surviving
Corporation") and shall continue its corporate existence under
the laws of the State of Indiana and pursuant to the provisions
of and with the effect provided in the Indiana Business
Corporation Law, as amended.
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(b) Name, Offices and Management. The name of the
Surviving Corporation shall be "Old National Bancorp" Its
principal office shall be located at 420 Main Street, Evansville,
Indiana 47708. The Board of Directors of the Surviving
Corporation, until such time as their successors have been
elected and have qualified, shall consist of the Board of
Directors of ONB serving at the Effective Time (as hereinafter
defined). The officers of ONB serving at the Effective Time
shall be the officers of the Surviving Corporation until the
Board of Directors of the Surviving Corporation shall determine
otherwise.
(c) Capital Structure. The capital of the Surviving
Corporation shall not be less than the capital of ONB immediately
prior to the Effective Time. The issued and outstanding shares
of common stock of ONB immediately prior to the Effective Time
shall remain issued and outstanding following the Effective Time.
(d) Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of ONB in existence at the Effective
Time shall be the Articles of Incorporation and By-Laws of the
ONB until such Articles of Incorporation and By-Laws shall be
amended as provided by applicable law.
(e) Effect of Company Merger. The effect of the Company
Merger upon consummation thereof shall be as set forth in Indiana
Code Section 23-1-40-6, as amended.
(f) Tax-Free Reorganization. ONB, ONB Bank, Capital
Holdings and WFSB intend for the Company Merger to qualify as a
reorganization within the meaning of Section 368 and related
sections of the Internal 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.
1.02. The Thrift Merger.
(a) General Description. Upon the terms and subject to the
conditions of this Agreement, immediately following the Company
Merger, WFSB shall be merged into and under the Charter of ONB
Bank ("Thrift Merger") (the Thrift Merger and the Company Merger
are hereinafter collectively referred to as the "Mergers"). ONB
Bank shall survive the Thrift Merger ("Surviving Bank") and shall
continue its corporate existence under the laws of the United
States of America and ONB Bank's Charter.
(b) Name, Offices and Management. The name of the
Surviving Bank shall be "Workingmens Bank" until such name may be
changed in accordance with applicable law. The Surviving Bank's
home office shall be located at 121 East Kirkwood Avenue,
Bloomington, Indiana 47404, which is the present home office of
WFSB. As of and following the Effective Time, the home office
and all branch offices of ONB Bank and the sole branch office of
WFSB shall become branch offices of the Surviving Bank.
The Board of Directors of the Surviving Bank, until such
time as their successors have been elected and have qualified,
shall consist of the members of the Boards of Directors of ONB
Bank and WFSB serving at the Effective Time, plus up to four (4)
additional directors (i) to be agreed upon by Capital Holdings
and ONB, if elected by Capital Holdings prior to the Effective
Time or (ii) to be agreed upon by the Surviving Bank and ONB, if
elected by ONB following the Effective Time. Each director of
WFSB serving at the Effective Time (other than the four (4)
additional directors elected pursuant to this Section 1.02(b))
will be elected by ONB as a director of the Surviving Bank until
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such director has reached the age of seventy (70) years, at which
time the director must retire from the Surviving Bank's Board of
Directors. Each director of WFSB serving at the Effective Time
who is over the age of seventy (70) years at the Effective Time
and the four (4) additional directors elected pursuant to this
Section 1.02(b) will be elected by ONB to serve as a director of
the Surviving Bank for a period of two (2) years following the
Effective Time. The four (4) additional directors elected by
Capital Holdings pursuant to this Section 1.02(b) shall not be
entitled to participate in or receive any payments or benefits
under the WFSB Deferred Compensation Plan (as hereinafter
defined), the WFSB Director Emeritus Program (as hereinafter
defined) or any health or hospitalization plan of WFSB. The
President and Chief Executive Officer of the Surviving Bank shall
be Mr. Richard R. Haynes, until the Board of Directors of the
Surviving Bank shall elect a successor to Mr. Haynes. The
Chairman of the Surviving Bank shall be Mr. Robert A. Shaffer,
until the Board of Directors of the Surviving Bank shall elect a
successor to Mr. Shaffer.
(c) Capital Structure. At the Effective Time, the capital
of the Surviving Bank shall not be less than the capital of ONB
Bank immediately prior to the Effective Time. At the Effective
Time, all issued and outstanding shares of capital stock of WFSB
shall be canceled and all issued and outstanding shares of
capital stock of ONB Bank shall be unchanged and shall remain
issued and outstanding. As of and following the Effective Time,
ONB shall continue to hold all of the issued and outstanding
shares of capital stock of ONB Bank, as the Surviving Bank in the
Thrift Merger.
(d) Charter and By-Laws. Except for appropriate amendments
to reflect the name of the Surviving Bank as "Workingmens Bank"
or such other name as may be agreed to prior to the Effective
Time by Capital Holdings and ONB, the Charter and By-Laws of ONB
Bank in existence at the Effective Time shall be the Charter and
By-Laws of the Surviving Bank, until such Charter and By-Laws
shall be further amended as provided by applicable law.
(e) Effect of Thrift Merger. At the Effective Time, title
to all assets, real estate and other property owned by WFSB and
ONB Bank shall vest in the Surviving Bank without reversion or
impairment. At the Effective Time, all liabilities and
obligations of WFSB and ONB Bank shall be assumed by the
Surviving Bank. Such liabilities shall include all of WFSB's
obligations with respect to the liquidation account that was
established at the time WFSB converted from mutual to stock form
of ownership.
(f) Tax-Free Reorganization. ONB, ONB Bank, Capital
Holdings and WFSB intend for the Thrift Merger to qualify as a
reorganization within the meaning of Section 368 and related
sections of the 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
Company Merger becoming effective at the Effective Time, each
issued and outstanding share of Capital Holdings Common Stock (as
defined in Section 4.03(a) hereof) shall be converted into the
right to receive sixty-four one hundredths (0.64) of a share of
ONB common stock ("Exchange Ratio"), subject to adjustment, if
any, as set forth in Sections 2.01(c) and 2.03 hereof.
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(b) The "Average Price Per Share" of ONB common stock shall
be defined 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 Time.
(c) If the Average Price Per Share of ONB common stock is
less than $33.00, then the Exchange Ratio shall be adjusted such
that each share of Capital Holdings Common Stock shall be
converted into the right to receive such number of shares of ONB
common stock equal to the quotient arrived at by dividing (i)
$21.12 by (ii) the Average Price Per Share of ONB common stock,
subject to further adjustment, if any, pursuant to the provisions
of Section 2.03 hereof. If the Average Price Per Share of ONB
common stock is greater than $34.75, then the Exchange Ratio
shall be adjusted such that each issued and outstanding share of
Capital Holdings Common Stock shall be converted into the right
to receive such number of shares of ONB common stock equal to the
quotient arrived at by dividing (i) $22.24 by (ii) the Average
Price Per Share of ONB common stock, subject to further
adjustment, if any, pursuant to the provisions of Section 2.03
hereof. If the Average Price Per Share of ONB common stock is
not less than $33.00 or not greater than $34.75, then there shall
be no adjustment to the Exchange Ratio, other than as
contemplated by Section 2.03 hereof.
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 Capital Holdings who would otherwise have been
entitled to a fraction of a share of ONB common stock shall be
paid in cash following the Effective Time 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
Capital Holdings 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 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. If the Exchange Ratio is
adjusted pursuant to this Section 2.03, then all references to
the Average Price Per Share of ONB common stock in Section
2.01(c) hereof shall also be adjusted to give effect to the stock
dividend, stock split or other recapitalization causing the
Exchange Ratio to be adjusted.
2.04. Distribution of ONB Common Stock and Cash.
(a) Promptly following the Effective Time, ONB shall mail to each
Capital Holdings shareholder a letter of transmittal providing
instructions as to the transmittal to ONB of certificates
representing shares of Capital Holdings 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
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any, shall be made by ONB to each former shareholder of Capital
Holdings within ten (10) business days following delivery to ONB
of the shareholder's certificate(s) representing such
shareholder's shares of Capital Holdings Common Stock accompanied
by a properly completed and executed letter of transmittal, all
in form and substance reasonably satisfactory to ONB and Capital
Holdings.
(c) Following the Effective Time, stock certificates
representing Capital Holdings Common Stock shall be deemed to
evidence ownership of ONB common stock for all corporate purposes
other than the payment of dividends or other distributions. No
dividends or other distributions otherwise payable subsequent to
the Effective Time on shares of ONB common stock shall be paid to
any Capital Holdings shareholder entitled to receive the same
until such shareholder has surrendered to ONB his or her
certificate or certificate(s) representing Capital Holdings
Common Stock in exchange for a certificate representing ONB
common stock. Upon surrender of the certificate(s) representing
shares of Capital Holdings 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 Capital Holdings 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 Capital Holdings Common Stock.
(e) With respect to any certificate for shares of Capital
Holdings Common Stock which has been lost, stolen or destroyed,
ONB shall be authorized to issue its common stock (or to pay cash
as to fractional shares) to the registered owner of such
certificate upon ONB's receipt of an agreement to indemnify ONB
against loss from 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 Capital Holdings shareholder with all other
reasonable requirements of ONB in connection with lost, stolen or
destroyed stock certificates.
2.05. Subsequent Affiliation. If, between the date of
this Agreement and the Effective Time, ONB enters into an
agreement with another corporation, partnership, person or other
entity pursuant to which current shareholders of ONB common stock
will exchange their ONB common stock for stock of another entity
("Other Transaction"), then upon consummation of the Other
Transaction, the shareholders of Capital Holdings shall be
treated as though the Company Merger had been consummated prior
to an Other Transaction and shall be entitled to receive the same
per share consideration as will shareholders of ONB in the Other
Transaction. ONB shall take steps to include provisions in any
such agreement to the foregoing effect.
SECTION 3
DISSENTING SHAREHOLDERS
Shareholders of Capital Holdings are not entitled to
statutory dissenters' rights since Capital Holdings Common Stock
is listed on the NASDAQ National Market System. Capital Holdings
shall take no action which would result in the loss of such
listing on the NASDAQ National Market System prior to the
Effective Time.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF CAPITAL HOLDINGS
Capital Holdings hereby represents and warrants to ONB with
respect to itself, WFSB and Realty Investment Service Corporation
("RISC") as follows:
4.01. Organization and Authority. (a) Capital Holdings is
a corporation duly organized and validly existing under the laws
of the State of Indiana and is a savings and loan holding company
under the HOLA. Capital Holdings 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. Capital
Holdings has no direct subsidiaries and owns directly no voting
stock or equity securities of any corporation, partnership,
association or other entity, other than all of the issued and
outstanding common stock of WFSB. The Capital Holdings Common
Stock is the only class of Capital Holdings stock registered
pursuant to Section 12 the Securities Exchange Act of 1934, as
amended ("1934 Act").
(b) WFSB is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States of America. WFSB 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 of
common stock of the Federal Home Loan Bank of Indianapolis and
except as provided in the Disclosure Schedule, WFSB has no
subsidiaries and owns no voting stock or equity securities of, or
any interest in, any corporation, partnership, association or
other entity. WFSB is subject to primary federal regulatory
supervision and examination by the Office of Thrift Supervision
("OTS").
(c) RISC is an Indiana corporation duly organized and
validly existing under the laws of the State of Indiana. RISC's
sole business is the marketing of tax-deferred annuities as agent
for WFSB's customers. RISC 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. WFSB
owns all of the issued and outstanding shares of capital stock of
RISC. RISC has no subsidiaries and owns no voting stock or
equity securities of or any interest in, any corporation,
partnership, association or other entity. WFSB and RISC are
sometimes hereinafter referred to collectively as the
"Subsidiaries."
4.02. Authorization. (a) Each of Capital Holdings and
WFSB 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 Capital Holdings and WFSB have been duly authorized
and approved by the Board of Directors of Capital Holdings and
WFSB, respectively. The Agreement constitutes a valid and
binding obligation of Capital Holdings and WFSB 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.
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(b) Neither the execution of this Agreement nor
consummation of the Mergers (i) conflicts with or violates
Capital Holdings' Articles of Incorporation or By-Laws or WFSB'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 Mergers 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 Capital Holdings or WFSB is a party or
by which WFSB or Capital Holdings is subject or bound and which
is material to Capital Holdings or WFSB, whether individually or
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
Capital Holdings or WFSB; 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 Capital
Holdings or WFSB is bound or with respect to which Capital
Holdings or WFSB 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 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 Mergers by Capital Holding and WFSB,
respectively.
4.03. Capitalization. (a) The authorized capital stock
of Capital Holdings consists, and at the Effective Time will
consist, of (i) 5,000,000 shares of common stock, no par value
per share, 1,806,560 of which shares are validly issued and
outstanding, which number of issued and outstanding shares of
Capital Holdings Common Stock is subject to increase to a total
of 1,845,540 shares pursuant to the exercise of options
(collectively, the "Stock Options") granted under the Workingmens
Capital Holdings, Inc. Stock Option Plan ("Stock Option Plan") to
purchase an aggregate of 38,980 shares of Capital Holdings Common
Stock (the outstanding shares of common stock of Capital Holdings
are referred to in this Agreement as the "Capital Holdings Common
Stock"), and (ii) 2,000,000 shares of preferred stock, no par
value, none of which shares are issued or outstanding ("Preferred
Stock"). The shares of Capital Holdings Common Stock presently
issued and outstanding have been (and with respect to the shares
of common stock of Capital Holdings to be issued upon exercise of
the Stock Options shall be) duly and validly authorized by all
necessary corporate action of Capital Holdings, are (and with
respect to the shares of common stock of Capital Holdings to be
issued upon exercise of the Stock Options shall be) validly
issued, fully paid and nonassessable and have not been (and with
respect to the shares of common stock of Capital Holdings to be
issued upon exercise of the Stock Options shall not be) issued in
violation of any pre-emptive rights of any present or former
Capital Holdings shareholders. Capital Holdings 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, any shares of
Preferred Stock or any additional shares of Capital Holdings
Common Stock, except for 38,980 shares of Capital Holdings Common
Stock pursuant to the exercise of the Stock Options. As of
December 31, 1995, Capital Holdings had total shareholders
equity of $25,684,519, which consisted of common stock of
$8,066,208, retained earnings of $17,721,628, and net unrealized
depreciation on securities available for sale of $(103,309). A
description of the terms, relative rights, preferences and
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limitations of the Capital Holdings Common Stock and Preferred
Stock is contained in the Articles of Incorporation of Capital
Holdings, 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 WFSB consists, and at
the Effective Time will consist, of 1,000 shares of common stock,
$.01 par value per share, all of which shares are validly
outstanding and issued to Capital Holdings (such issued and
outstanding shares of common stock are referred to in this
Agreement as the "WFSB Common Stock"), and 1,000,000 shares of
preferred stock, $1.00 par value per share, none of which shares
are issued or outstanding ("WFSB Preferred Stock"). Such issued
and outstanding shares of WFSB Common Stock have been duly and
validly authorized by all necessary corporate action of WFSB, 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 WFSB shareholders. All of the issued and outstanding
shares of WFSB Common Stock are owned by Capital Holdings 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. WFSB 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, any shares of WFSB
Preferred Stock or any additional shares of WFSB Common Stock.
As of December 31, 1995, WFSB had total assets of $213,254,491,
total liabilities of $189,008,200 and total capital of
$24,246,291, which capital consisted of common stock of $10,
capital surplus of $7,974,990, undivided profits of $16,374,600,
and unrealized depreciation on securities available for sale of
$(103,309).
(c) The authorized capital stock of RISC consists, and at
the Effective Time will consist, of 1,000 shares of common stock,
no par value per share, 210 of which shares are outstanding and
validly issued to WFSB (such issued and outstanding shares of
common stock are referred to in this Agreement as the "RISC
Common Stock"). The shares of RISC Common Stock have been duly
and validly authorized by all necessary corporate action of RISC,
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 RISC shareholders. All of the shares of RISC Common
Stock are owned by WFSB 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.
RISC 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 RISC Common Stock. As of December 31, 1995,
RISC had total assets of $38,834, total liabilities of $84 and
total capital of $38,750, which capital consisted of common stock
of $21,000, capital surplus of $-0-, and undivided profits of
$17,750.
(d) Except for options to purchase 38,980 shares of Capital
Holdings 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 Capital Holdings by which
Capital Holdings is or may become bound. Capital Holdings does
not have any contractual or other obligation to repurchase,
redeem or otherwise acquire any of its issued and outstanding
shares of Capital Holdings Common Stock. Set forth in the
Disclosure Schedule is a true, accurate and complete (i) copy of
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an incentive stock option agreement and a non-qualified stock
option agreement that are identical in all material respects to
the presently 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, 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 either of 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, Capital
Holdings has no knowledge of any person who beneficially owns 5%
or more of the issued and outstanding shares of Capital Holdings
Common Stock.
4.04. Organizational Documents. The Articles of
Incorporation and By-Laws of Capital Holdings and RISC and the
Charter and By-Laws of WFSB, representing true, accurate and
complete copies of such corporate documents of Capital Holdings,
RISC and WFSB, respectively, 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 Capital Holdings nor either 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 Capital
Holdings and WFSB, whether individually or on a consolidated
basis, or RISC on a consolidated basis with Capital Holdings.
Capital Holdings and each of the Subsidiaries possess and hold
all licenses, franchises, permits, certificates and other
authorizations necessary for the continued conduct of their
respective businesses without interference or interruption, and
such licenses, franchises, permits, certificates and
authorizations held by Capital Holdings or the Subsidiaries are
transferable to Surviving Bank and Surviving Corporation, 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 Capital
Holdings or either of the Subsidiaries 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,
Capital Holdings or either of the Subsidiaries, 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 Capital Holdings or either
of the Subsidiaries as a result of an examination by any
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regulatory agency or body or set forth in any accountant's,
auditor's or other report to Capital Holdings or either of the
Subsidiaries.
(c) All of the existing offices and branches of WFSB have
been legally authorized and established in accordance with all
applicable federal, state and local laws, statutes, regulations,
rules, ordinances, orders, restrictions and requirements. WFSB
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 Capital Holdings or either
of the Subsidiaries in this Agreement or in the Disclosure
Schedule (and any update thereto) and no written report,
statement, list, materials or other written information which has
previously been or which shall be provided subsequent to the date
hereof by any executive officer of Capital Holdings or either of
the Subsidiaries or any of their agents to ONB or any of its
agents in connection with this Agreement, the Mergers, ONB's due
diligence investigation or confidential review of Capital
Holdings and the Subsidiaries or otherwise, including, without
limitation, any written information with respect to Capital
Holdings' and the Subsidiaries' 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 Mergers, 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
Capital Holdings 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 Capital
Holdings or either of the Subsidiaries 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, mediations or
investigations pending or, to the best knowledge of Capital
Holdings and the Subsidiaries after due inquiry, threatened in
any court or before any government agency or authority,
arbitration panel, mediator or otherwise (nor does Capital
Holdings or either of the Subsidiaries have any knowledge of a
basis for any claim, action, suit, proceeding, litigation,
arbitration, mediation or investigation) against, by or affecting
Capital Holdings or either of the Subsidiaries which could have a
material adverse effect on the financial condition, results of
operations, business, assets or capital of Capital Holdings or
either of the Subsidiaries, whether individually or on a
consolidated basis, or RISC on a consolidated basis with Capital
Holdings, or which would prevent the performance of this
Agreement, declare the same unlawful or cause the rescission
hereof.
(b) Neither Capital Holdings 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
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ordinance, or (iii) the subject of any pending or, to the best
knowledge of Capital Holdings and the Subsidiaries, threatened
proceeding by any government regulatory agency or authority
having jurisdiction over their respective businesses, properties
or operations.
4.08. Financial Statements and Reports. Capital
Holdings has delivered to ONB copies of the following financial
statements and reports, including the notes thereto, of Capital
Holdings and the Subsidiaries (collectively, the "Capital
Holdings Financial Statements"):
(a) Consolidated statements of condition as of December 31,
1994 and 1995 and the related statements of earnings and
statements of changes in shareholders' equity of Capital Holdings
as of and for the fiscal years ended December 31, 1993, 1994 and
1995; and
(b) Consolidated statements of cash flows of Capital
Holdings for the fiscal years ended December 31, 1993, 1994 and
1995.
Except as provided in the Disclosure Schedule, the Capital
Holdings Financial Statements are true, accurate and complete in
all material respects and present fairly the consolidated
financial positions of Capital Holdings and WFSB as of and at the
dates shown and the consolidated results of operations for the
periods covered thereby. The Capital Holdings 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 Capital Holdings 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 Capital Holdings 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 Capital Holdings and each of the
Subsidiaries 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 Capital Holdings or
either of the Subsidiaries 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 Capital Holdings and
the Subsidiaries, all land, conditional sales or
installment sales contracts or other title
retention agreements and all agreements for the
purchase of federal funds to which Capital
Holdings or either of the Subsidiaries is a
party;
(iii) All agreements, contracts, leases, licenses, lines
of credit, understandings, commitments or
obligations of Capital Holdings or either of the
Subsidiaries which individually or in the
aggregate:
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(A) involve payment or receipt by Capital Holdings or
either of the Subsidiaries (other than as
disbursements of loan proceeds to customers or
loan payments by customers) of more than $10,000
during any twelve (12) month period;
(B) involve payments based on profits of Capital
Holdings 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 Capital Holdings
or either of the Subsidiaries whose current annual
salary and bonus or incentive compensation from
Capital Holdings or either of the Subsidiaries is
in excess of $50,000, and the profit sharing and
other form of compensation (other than salary)
paid or payable by Capital Holdings or either of
the Subsidiaries to or for the benefit of each
such person for the calendar years ended December
31, 1994 and 1995.
(b) WFSB 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 WFSB under a letter of credit, line of credit, loan
transaction, loan agreement, promissory note or other commitment
of WFSB, in excess of $10,000 individually or in the aggregate,
whether in principal, interest or otherwise, and including all
guarantors of such indebtedness.
(c) To the best knowledge of Capital Holdings and the
Subsidiaries, 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. Capital Holdings and the
Subsidiaries are and, to their best knowledge, all other parties
thereto are in compliance with the provisions thereof, and
Capital Holdings and the Subsidiaries are not and, to their 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 Mergers.
4.10. Absence of Undisclosed Liabilities. Except as set
forth in the Disclosure Schedule, except as provided in the
Capital Holdings 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, neither Capital Holdings 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) Capital Holdings or either
of the Subsidiaries, as the case may be, has good and marketable
title in fee simple absolute to all real property (including,
without limitation, all real property used as bank premises and
all other real estate owned) which is reflected in the Capital
Holdings Financial Statements as of December 31, 1995; good and
marketable title to all personal property reflected in the
Capital Holdings Financial Statements as of December 31, 1995,
other than personal property disposed of in the ordinary course
of business since December 31, 1995; 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 Capital Holdings or either of the
Subsidiaries purports to own or which Capital Holdings or either
of the Subsidiaries uses in their respective businesses; and good
and marketable title to, or right to use by the terms of a valid
and enforceable lease or commitment all other property and assets
acquired and not disposed of or leased, as the case may be, since
December 31, 1995. All of such properties and assets owned by
Capital Holdings and the Subsidiaries are owned free and clear of
all land or conditional sales contracts, mortgages, encumbrances,
liens, pledges, restrictions, security interests, charges, claims
or rights of third parties of any nature except (i) as set forth
in the Disclosure Schedule; (ii) as specifically noted in
reasonable detail in the Capital Holdings 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 Capital Holdings and the Subsidiaries is in material
compliance with all applicable zoning and land use laws.
(b) To the best of their knowledge, Capital Holdings and
each of the Subsidiaries 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, storm water 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 Capital Holdings and
the Subsidiaries, threatened claims, actions or proceedings by
any local municipality, sewage district or other federal, state
or local governmental agency or authority against Capital
Holdings' or either of the Subsidiaries with respect to any of
the Environmental Laws and, to the best of Capital Holdings' and
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the Subsidiaries' 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 Capital Holdings' or either of the Subsidiaries'
business or consummation of the Mergers. To the best of Capital
Holdings' and the Subsidiaries' knowledge, neither Capital
Holdings nor either of the Subsidiaries is 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 any other remedial action under any of the
Environmental Laws.
(c) Neither Capital Holdings nor either of the Subsidiaries
(i) is in default in any respect under any agreements pursuant to
which it leases real or personal property, (ii) has knowledge of
any default under such agreements by any party thereto and (iii)
has 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, WFSB has no loan in excess of $10,000
that has been classified by regulatory examiners or management of
WFSB 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 WFSB and a
list of all loans in excess of $10,000 that WFSB 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 Capital Holdings Financial
Statements as of December 31, 1995 and which have been made,
extended, renewed, restructured, approved, amended or acquired
since December 31, 1995 (i) have been made for good, valuable and
adequate consideration in the ordinary course of business;
(ii) to the best of WFSB'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 WFSB has a security
interest in collateral or a mortgage securing such loans, by
perfected security interests or recorded mortgages naming WFSB 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
Capital Holdings Financial Statements are, in the opinion of
management of WFSB, 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 WFSB, the aggregate loan balances outstanding as of
December 31, 1995, 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 Capital
Holdings Financial Statements as of and for the year ended
December 31, 1995 and none of the investments made by Capital
Holdings or either of the Subsidiaries since December 31, 1995
are subject to any restriction, whether contractual or statutory,
which materially impairs the ability of Capital Holdings or
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either of the Subsidiaries to dispose freely of such investment
at any time. Neither Capital Holdings nor either of the
Subsidiaries is 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 WFSB has any
participation interest or which have been made with or through
another financial institution on a recourse basis against WFSB.
(f) The aggregate amount of WFSB's indebtedness to the
Federal Home Loan Bank of Indianapolis does not, and will not at
the Effective Time, exceed $40 Million.
4.13. Anti-takeover Provisions. Neither Capital
Holdings nor either of the Subsidiaries has a shareholder rights
plan or any other plan, program, agreement or arrangement
involving, restricting, prohibiting or discouraging a change in
control, merger or other combination of Capital Holdings or
either of the Subsidiaries or which may be considered an anti-
takeover mechanism, except for provisions in the Articles of
Incorporation and By-laws of Capital Holdings and in the Stock
Option Plan.
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 Capital Holdings or WFSB; in which Capital Holdings
or either of the Subsidiaries participates as a participating
employer; to which Capital Holdings or either of the Subsidiaries
contributes; with respect to which Capital Holdings or either of
the Subsidiaries 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 "Capital Holdings Plans"): (i) all such
Capital Holdings 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 Code, and the Department of Labor
("Department") and the Treasury Regulations promulgated
thereunder; (ii) all Capital Holdings Plans intended to
constitute tax-qualified plans under the Code have complied, in
form and in operation, since their adoption, or, with respect to
form, 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 with respect to the Tax Reform Act of 1986 have been
timely received from the Internal Revenue Service ("Service")
with respect to each such Capital Holdings 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; (iii) no Capital Holdings Plan (or
its related trust) holds any Capital Holdings Common Stock or any
stock of a related or affiliated person or entity, except as
provided in the Disclosure Schedule; (iv) neither Capital
Holdings nor either of the Subsidiaries has liability to the
Department or the Service with respect to any Capital Holdings
Plan; (v) neither Capital Holdings nor either of the Subsidiaries
has engaged in any transaction that may subject Capital Holdings,
either of the Subsidiaries or any Capital Holdings 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
Capital Holdings Plan; (vii) each Capital Holdings 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 Capital Holdings' and the Subsidiaries'
knowledge, no participant or beneficiary or non-participating
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employee has been denied any benefit due or to become due under
any Capital Holdings Plan or has been misled as to his or her
rights under any Capital Holdings Plan; (ix) all obligations
required to be performed by Capital Holdings or either of the
Subsidiaries under any provision of a Capital Holdings Plan have
been performed by it and it is not in default under or in
violation of any provision of a Capital Holdings 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 Capital Holdings Plan; (xi) there are no actions,
suits, proceedings or claims pending (other than routine claims
for benefits) or, to the best knowledge of Capital Holdings and
either of the Subsidiaries, threatened against Capital Holdings,
either of the Subsidiaries, any Capital Holdings Plan or the
assets of any Capital Holdings Plan; and (xii) with respect to
any Capital Holdings Plan sponsored, participated in or
contributed to by Capital Holdings or either of the Subsidiaries
or with respect to which Capital Holdings or either of the
Subsidiaries is responsible for complying with the reporting and
disclosure requirements of ERISA or the Code, there has been no
violation of the reporting and disclosure requirements imposed
either under ERISA or the Code for which a penalty has been or
may be imposed.
(b) With regard to any Capital Holdings Plan intended to be
a tax-qualified plan under Section 401(a) of the Code, to the
best knowledge of Capital Holdings and the Subsidiaries, no
director, officer, employee or agent of Capital Holdings or
either of the Subsidiaries has engaged in any action or failed to
act in such a manner that, as a result of such action or failure
to act, the Service could revoke or deny that plan's
qualification under the Code or the exemption under
Section 501(a) of the Code for any trust or annuity contract
related to such Plan.
(c) Capital Holdings and the Subsidiaries have 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 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 Capital Holdings and certain employees
and directors of Capital Holdings and the Subsidiaries 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
Capital Holdings' and the Subsidiaries' 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 Capital Holdings or either of the Subsidiaries
for their current or former directors, officers or employees.
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
Capital Holdings or either of the Subsidiaries is entitled to any
benefit under any welfare benefit plans (as defined in
Section 3(1) of ERISA) after termination of employment with
Capital Holdings or either of the Subsidiaries, except that such
individuals may be entitled to continue their group health care
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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 Capital
Holdings or either of the Subsidiaries, in which Capital Holdings
or either of the Subsidiaries participates as a participating
employer or to which Capital Holdings or either of the
Subsidiaries contributes, to the best knowledge of Capital
Holdings and either of the Subsidiaries, no director, officer,
employee or agent of Capital Holdings or either of the
Subsidiaries has engaged in any action or failed to act in such a
manner that, as a result of such action or failure to act, would
cause a tax to be imposed upon Capital Holdings or either of the
Subsidiaries 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 Capital Holdings and the Subsidiaries.
(f) Except as otherwise provided in the Disclosure
Schedule, there are no collective bargaining, employment,
management, consulting, deferred compensation, reimbursement,
indemnity, retirement, early retirement, severance or similar
plans or agreements, commitments or understandings, or any
employee welfare, benefit or retirement plan or agreement,
binding upon Capital Holdings or either of the Subsidiaries 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. Except as otherwise
provided in the Disclosure Schedule with respect to the director
emeritus program of WFSB ("WFSB Director Emeritus Program"), all
accrued obligations and liabilities of Capital Holdings, the
Subsidiaries and the Capital Holdings Plans, 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
Capital Holdings or either of the Subsidiaries (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 Capital Holdings and the Subsidiaries 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 and
agreements; (c) all employment, deferred compensation (whether
funded or unfunded), salary continuation, consulting, retirement,
early retirement, severance, reimbursement or bonus plans or
agreements; (d) all executive and other incentive compensation
plans, programs or agreements; (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 Capital Holdings
or either of the Subsidiaries for their current or former
directors, officers, employees and agents, including, without
limitation, all liabilities and obligations to the Capital
Holdings Plans. All obligations and liabilities of Capital
Holdings and the Subsidiaries, 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 their
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
Capital Holdings and the Subsidiaries in accordance with
generally accepted accounting and actuarial principles applied on
a consistent basis. Except as otherwise provided in the
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Disclosure Schedule with respect to the WFSB Director Emeritus
Program, 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 Capital Holdings Financial
Statements and the books, statements and records of Capital
Holdings and the Subsidiaries.
4.16. Taxes, Returns and Reports. Capital Holdings and
the Subsidiaries have (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 each of them
or any of their 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 Capital Holdings Financial
Statements as of December 31, 1995 is adequate to cover all of
Capital Holdings' and the Subsidiaries' tax liabilities
(including, without limitation, income taxes and franchise fees)
that may become payable in future periods with respect to any
transactions consummated prior to December 31, 1995. Neither
Capital Holdings nor either of the Subsidiaries has, or will
have, any liability for taxes of any nature for or with respect
to the operation of their respective businesses, including the
business of any subsidiary, or ownership of their 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 Capital Holdings Financial Statements (as
hereinafter defined). Neither Capital Holdings nor either of the
Subsidiaries is currently under audit by any state or federal
taxing authority. Except as set forth in the Disclosure
Schedule, no federal, state or local tax returns of Capital
Holdings or either of the Subsidiaries have been audited by any
taxing authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of WFSB are
insured by the Federal Deposit Insurance Corporation in
accordance with the Federal Deposit Insurance Corporation Act, as
amended, and WFSB 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, 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 Capital Holdings or
either of the Subsidiaries on the date hereof or with respect to
which Capital Holdings or either of the Subsidiaries 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
Capital Holdings and the Subsidiaries are in all material
respects complete and correct and accurately reflect the basis
for the respective financial condition, results of operations,
business, assets and capital of Capital Holdings and the
Subsidiaries set forth in the Capital Holdings Financial
Statements.
4.20. Broker's, Finder's or Other Fees. Except for the
reasonable fees of Capital Holdings' and the Subsidiaries'
attorneys, accountants and investment bankers and the printing
and mailing costs relating to the proxy statement pertaining to
the Mergers, all of which will be paid by Capital Holdings prior
to the Effective Time, no agent, broker or other person acting on
behalf of Capital Holdings or either of the Subsidiaries or
acting under any authority of Capital Holdings or either of the
Subsidiaries is or shall be entitled to any commission, broker's
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or finder's fee or any other form of compensation or payment from
any of the parties hereto relating to this Agreement or the
Mergers. A copy of Capital Holdings' agreement with its
investment banker relative to its fees in connection with the
Mergers is set forth in the Disclosure Schedule.
4.21. Interim Events. Except as otherwise permitted
hereunder, since December 31, 1995, neither Capital Holdings nor
either of the Subsidiaries has:
(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 not fully- covered by insurance;
(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 38,980
shares of Capital Holdings 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
(except for 38,980 shares of Capital Holdings Common Stock issued
pursuant to the exercise of the Stock Options) 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;
(e) Granted or agreed to grant any increase in benefits
payable or to become payable under any pension, retirement,
profit-sharing, savings, bonus, deferred compensation, stock or
option plan or agreement; any employee welfare or benefit plan or
arrangement; or any other agreement, commitment or
understanding, to present or former employees, officers or
directors of Capital Holdings or either of the Subsidiaries,
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, entered
into any employment contract, indemnity agreement or any other
agreement or understanding with any officer or employee or
installed any employee benefit plan;
(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) Merged, consolidated or sold shares of capital stock of
WFSB; except for the Mergers, agreed or committed to merge,
consolidate, combine or affiliate with or into any third party;
agreed or committed to sell the substantial assets or any shares
of capital stock of Capital Holdings or either of the
Subsidiaries; or except pursuant to foreclosure actions and
mortgages, liens or security interests securing loans, acquired
or agreed to acquire any securities, equity interest, assets or
business of any third party;
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(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 is not past due and except for pledges
or liens: (i) required to be granted in connection with
acceptance by WFSB of government deposits; or (ii) granted in
connection with repurchase or reverse repurchase agreements; or
(iii) otherwise incurred in the ordinary course of the conduct of
its business;
(k) Canceled, 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 lending of monies, funds or securities, 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 on December 31, 1995,
except as otherwise provided in the Disclosure Schedule.
4.22. Regulatory Filings. Capital Holdings and the
Subsidiaries have filed and will continue to file in a timely
manner all filings and reports 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. Neither Capital Holdings nor either of
the Subsidiaries is in default under or in breach of or, to the
best knowledge of Capital Holdings and the Subsidiaries, alleged
to be in default under or in breach of, any loan or credit
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 Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings.
4.24. No Third Party Options. Except as provided in the
Disclosure Schedule with respect to the options to purchase
38,980 shares of Capital Holdings Common Stock under the 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 Capital Holdings or either of the
Subsidiaries which are binding upon Capital Holdings or either of
the Subsidiaries.
4.25. Disclosure Schedule and Documents. All written
data, documents, materials and information referred to in this
Agreement and delivered by Capital Holdings or either of the
Subsidiaries pursuant to or in connection with the Disclosure
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Schedule are true, accurate and complete in all material respects
as of the date hereof and, with respect to such items delivered
subsequent to the date hereof or with any update to the
Disclosure Schedule, will be true, accurate and complete in all
material respects on the date of delivery thereof.
4.26. Indemnification Agreements. (a) Neither Capital
Holdings nor either of the Subsidiaries is a party to any
indemnification, indemnity or reimbursement agreement, contract,
commitment or understanding to indemnify any present or former
director, officer, employee, shareholder or agent against
liability or hold the same harmless from liability, other than as
expressly provided in the Employment Agreements, the engagement
letter between Capital Holdings and its financial advisor,
Trident Financial Corporation ("Trident"), the Articles of
Incorporation or By-Laws of Capital Holdings or RISC or the
Charter or By-Laws of WFSB.
(b) No claims have been made against or filed with Capital
Holdings or either of the Subsidiaries nor has, to the best
knowledge of Capital Holdings and the Subsidiaries after due
inquiry, any claims been threatened against Capital Holdings or
either of the Subsidiaries, for indemnification against liability
or for reimbursement of any costs or expenses incurred in
connection with any legal or regulatory proceeding by any present
or former director, officer, shareholder, employee or agent of
either Capital Holdings or either of the Subsidiaries.
4.27. Representations and Warranties at the Effective
Time. All representations and warranties of Capital Holdings
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.
4.28. Nonsurvival of Representations and Warranties.
The representations and warranties of Capital Holdings contained
in this Agreement shall expire at the Effective Time, and
thereafter Capital Holdings and the Subsidiaries 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.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF ONB
ONB represents and warrants to Capital Holdings and WFSB
with respect to itself and ONB Bank as follows:
5.01. Organization and Authority. (a) 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. ONB's common stock is registered
pursuant to Section 12, and ONB is subject to the reporting
requirements, of the 1934 Act.
(b) ONB Bank is a federally chartered 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
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leased and to conduct its business in the manner and by the means
utilized as of the date hereof. ONB owns all of the issued and
outstanding shares of capital stock of ONB Bank.
5.02. Authorization. (a) Each of ONB and ONB Bank and
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 ONB Bank have been duly authorized and
approved by the Board of Directors of ONB Bank and by the
Executive Committee of ONB, and will have been approved by the
Board of Directors of ONB prior to April 30, 1996. This
Agreement constitutes a valid and binding obligation of ONB and
ONB Bank 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 Mergers (i) conflicts with or violates ONB's
Articles of Incorporation or By-Laws or ONB 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 Mergers 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 ONB Bank is a party or by which ONB or
ONB Bank 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 ONB 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 ONB or ONB
Bank is bound or with respect to which ONB or ONB 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 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
approval of any governmental agency or body is necessary for
consummation by ONB and ONB Bank of the Mergers.
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 (subject to the last
sentence of this Section), no par value per share, of which
approximately 24,835,361 shares were issued and outstanding as of
February 29, 1996, 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 shareholder 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
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owned by ONB 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, 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 December 31, 1995, ONB had total
shareholders' equity of approximately $428.1 million, which
consisted of common stock of $25.0 million, capital surplus of
$245.4 million, retained earnings of $147.4 million and $10.3
million of net unrealized gain on available for-sale securities.
The Board of Directors of ONB has approved an amendment to ONB's
Articles of Incorporation increasing the number of authorized
shares of common stock to 50,000,000, and such amendment will be
voted upon by shareholders at ONB's 1996 annual meeting of
shareholders to be held on April 18, 1996.
(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 Capital Holdings 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.
5.06. Regulatory Filings. ONB has filed and will
continue to file in a timely manner all required filings and
reports 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
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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,
arbitrations or mediations 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, arbitration
or mediation) 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 Capital Holdings 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,
1993, 1994 and 1995; and
(ii) Consolidated statements of cash flows of ONB for
the years ended December 31, 1993, 1994 and 1995.
(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 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.
5.09. Shares to be Issued in the Company Merger. The
shares of ONB common stock which Capital Holdings shareholders
will be entitled to receive upon consummation of the Company
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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 Mergers is not required.
5.11. Interim Events. Since December 31, 1995, ONB has
not entered into any agreement or contract or incurred any
obligation, commitment or liability which will 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 Mergers. 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 any other remedial
action under any of the Environmental Laws.
5.13. Regulatory Approvals. To the best knowledge of
ONB, there currently are no circumstances that would reasonably
be expected to cause the denial or undue delay of any of the
regulatory approvals required for consummation of the Mergers.
5.14. Representations and Warranties at the Effective
Date. All representations and warranties of ONB 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.
5.15. Nonsurvival of Representations and Warranties.
The representations and warranties of ONB contained in this
Agreement shall expire at the Effective Time and, thereafter, ONB
and ONB Bank and all directors, officers and employees of ONB and
ONB Bank 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 CAPITAL HOLDINGS
Capital Holdings covenants and agrees with ONB, and
covenants and agrees with ONB to cause the Subsidiaries to act,
as follows:
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6.01. Shareholder Approval. (a) Subject to Section
6.06(b) hereof, Capital Holdings shall submit this Agreement to
its shareholders for approval at a meeting to be called and held
in accordance with applicable law and the Articles of
Incorporation and By-Laws of Capital Holdings at a date
reasonably in advance of the Effective Time. Subject to Section
6.06(b) hereof, the Board of Directors of Capital Holdings shall
recommend to Capital Holdings' shareholders that such
shareholders approve this Agreement and the Company Merger and
shall solicit proxies voting in favor of this Agreement from such
shareholders.
(b) Subject to Section 6.06(b) hereof, WFSB shall submit
this Agreement to Capital Holdings, 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
WFSB at a date reasonably in advance of the Effective Time. The
Board of Directors of WFSB shall recommend approval of this
Agreement and the Thrift Merger to Capital Holdings, as the sole
shareholder of WFSB, and Capital Holdings, as the sole
shareholder of WFSB, shall approve this Agreement and the Thrift
Merger.
6.02. Other Approvals and Actions. (a) Capital Holdings
and WFSB shall proceed expeditiously, cooperate fully and use
their 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 Mergers on the
terms and conditions provided in this Agreement at the earliest
possible reasonable date.
(b) Capital Holdings and WFSB shall take all necessary
steps to (i) amend, within forty-five (45) days of the date of
this Agreement, the Stock Option Plan to terminate, effective on
or before the date hereof, any grants thereunder of additional
options to acquire shares of Capital Holdings Common Stock and
(ii) assist ONB in the disposition of the WFSB Retirement Plan
(as hereinafter defined), the WFSB Thrift Plan (as hereinafter
defined), the WFSB Director Emeritus Program, the WFSB Deferred
Compensation Plan (as hereinafter defined) and the Joinder
Agreements (as hereinafter defined) in accordance with Section
7.03 hereof. Capital Holdings shall pay all costs and expenses
associated with the disposition of such plans, to the extent
incurred prior to the Effective Time.
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, neither Capital
Holdings nor either of the Subsidiaries shall, without the prior
written consent of ONB:
(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 or options other than
or in addition to the issued and outstanding
shares of Capital Holdings Common Stock, WFSB
Common Stock or RISC Common Stock as set forth in
Section 4.03 hereof and other than the presently
outstanding options to purchase an aggregate of
38,980 shares of Capital Holdings Common Stock;
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(iii) distribute or pay any dividends on its shares
of common stock, or make any other
distribution to its shareholders, except that
Capital Holdings may pay to its shareholders
its normal and customary quarterly cash
dividend in an amount not to exceed ten cents
($0.10) per share of Capital Holdings Common
Stock for each such dividend until the
Effective Time and except that WFSB may pay
cash dividends to Capital Holdings in the
ordinary course of business in accordance
with past practices for payment of reasonable
and necessary business and operating expenses
of Capital Holdings; provided, however, that
no dividend may be paid to Capital Holdings'
shareholders during the quarterly period in
which the Company Merger is consummated if,
during such period, Capital Holdings'
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;
(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 or enter into any similar transaction not
in the ordinary course of business;
(vi) purchase any assets or securities or assume any
liabilities of any bank or savings and loan
holding company, bank, savings association,
corporation or other entity, except 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 other transaction;
(viii) except for the acquisition or disposition in
the ordinary course of business of other real
estate owned, acquire or dispose of any
property or asset constituting a capital
investment in excess of $5,000 individually
or $10,000 in the aggregate;
(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 Capital Holdings
or either of the Subsidiaries;
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(xi) execute, create, institute, modify, amend or terminate
(except with respect to any amendments to the Capital
Holdings Plans required by law, rule or regulation and
except with respect to the termination of the WFSB Director
Emeritus Program, WFSB Retirement Fund and WFSB Thrift Plan
as described in Section 6.02(b) hereof and as contemplated
by Sections 7.03 and 6.12 hereof and the amendment of the
WFSB Deferred Compensation Plan and the Joinder Agreements
thereto as contemplated by Section 6.02 and 7.03 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 Capital Holdings or either of the
Subsidiaries; 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;
(xii) make any communication, disclosure or filing
concerning the amendments to or disposition
of the Capital Holdings Plans as provided in
Section 7.03 hereof to any employee of
Capitol Holdings or either of the
Subsidiaries or any third party, including
any regulatory authority;
(xiii) modify, amend or institute new employment
policies or practices, or enter into, renew
or extend any employment, indemnity,
reimbursement, consulting, compensation or
severance agreements with respect to any
present or former directors, officers or
employees of Capital Holdings or either of
the Subsidiaries;
(xiv) hire or employ any new or additional
employees of Capital Holdings or either of
the Subsidiaries, except those which are
reasonably necessary for the proper operation
of Capital Holdings' or either of the
Subsidiaries' business;
(xv) amend, modify or restate Capital Holdings' and RISC's
Articles of Incorporation or By-Laws and WFSB's Charter or
By-Laws from those in effect on the date of this Agreement
and as delivered to ONB hereunder;
(xvi) 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 capital stock
of either Capital Holdings, WFSB or RISC or
substantially all of the assets of either
Capital Holdings, WFSB or RISC, or enter into
any agreement or commitment relative to the
foregoing;
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(xvii) fail to continue to make additions to in
accordance with past practices and to
otherwise maintain in all respects WFSB'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;
(xviii) 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;
(xix) issue, or authorize the issuance of, any
securities convertible into or exchangeable
for Capital Holdings Common Stock, WFSB
Common Stock or RISC Common Stock;
(xx) 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 Capital
Holdings Financial Statements or the Subsequent Capital
Holdings 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 Mergers or
the operation of Capital Holdings' and WFSB's business;
(xxi) open, close, move or, in any material
respect, expand, renovate, alter or change
any of its offices or branches;
(xxii) pay or commit to pay any management or
consulting or other similar type of fees,
except for the fees paid to Capital Holdings'
investment banker which shall not exceed in
the aggregate the amount of fees set forth in
the agreement between Capital Holdings and
Trident set forth in the Disclosure Schedule;
(xxiii) 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 Capital Holdings, WFSB or either
of the Subsidiaries which exceed $5,000,
whether individually or in the aggregate, or
that is not in the ordinary course of
business; or
(xxiv) except for the election by Capital Holdings
of four (4) persons to WFSB's Board of
Directors pursuant to Section 1.02(b) hereof,
elect or appoint any director or officer of
Capital Holdings or either of the
Subsidiaries in addition to or other than
those persons who were directors or officers
of Capital Holdings or either of the
Subsidiaries on March 27, 1996.
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(b) Capital Holdings and each of the Subsidiaries 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
Capital Holdings and the Subsidiaries 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, Capital Holdings and
each of the Subsidiaries 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, and
maintain insurance upon such properties and assets in amounts and
kinds comparable to that in effect on the date of this Agreement;
(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. Capital
Holdings shall, on 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 Capital Holdings for purposes of Rule 145
under the 1933 Act. Capital Holdings shall use its best efforts
to cause each director, executive officer and other person who
may be deemed to be such an affiliate of Capital Holdings to
deliver to ONB on or prior to the date which is the earlier of
forty-five (45) days following the date of this Agreement or the
Effective Time, a written agreement, substantially in the form as
attached hereto as Exhibit A, substantially providing that such
person (a) shall not sell, pledge, transfer, dispose of or
otherwise reduce his or her market risk with respect to the
shares of Capital Holdings 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 ONB and Capital Holdings have been published as and
when required and within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, 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 registration under 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),
Capital Holdings and each of the Subsidiaries 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, affiliation,
purchase or sale of substantial assets, sale of shares of common
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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 Capital Holdings or either of the Subsidiaries or to
which Capital Holdings or either of the Subsidiaries may become a
party (all such transactions are hereinafter referred to as
"Acquisition Transactions"). Capital Holdings and the
Subsidiaries shall promptly communicate to ONB the terms of any
proposal or offer which either of them 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, Capital Holdings 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 Capital Holdings promptly upon receipt by ONB of a
letter from Capital Holdings signed by at least a majority of its
Board of Directors then in office indicating that Capital
Holdings has received an unsolicited offer regarding an
Acquisition Transaction which the Board of Directors of Capital
Holdings (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 Capital Holdings when and if ONB shall,
in its sole discretion, determine. This Section 6.06 shall not
authorize Capital Holdings or either of the Subsidiaries or any
of their 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,
neither Capital Holdings nor either of the Subsidiaries shall
issue any press releases or make any other public announcements
or disclosures relating to the Mergers without the prior consent
of ONB, which consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. Capital Holdings
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
agreements, documents, 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 Capital Holdings or WFSB 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 Capital Holdings and the
Subsidiaries. ONB and its respective 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 Capital Holdings and the Subsidiaries and of their
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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 Capital Holdings or either of the
Subsidiaries; 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 Capital Holdings and the Subsidiaries 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 Capital Holdings and the Subsidiaries within sixty
(60) days of the date thereof. Upon request, Capital Holdings
and the Subsidiaries shall furnish ONB or its representatives or
agents, their 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 Capital Holdings or either of the Subsidiaries or
their auditors, accountants or attorneys (provided with respect
to attorneys, such disclosure would not result in the waiver by
Capital Holdings or either of the Subsidiaries of any cl-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 Capital Holdings or either of the Subsidiaries, 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 (whether
conducted before or after the date hereof) shall affect the
representations and warranties made by Capital Holdings or either
of the Subsidiaries herein or the information contained in any
document provided hereunder, and ONB shall be entitled to rely on
such representations, warranties and documents notwithstanding
any such investigation. 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 Capital Holdings' request, returned to
Capital Holdings 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 Capital Holdings Financial Statements.
As soon as available after the date of this Agreement, Capital
Holdings shall deliver to ONB the monthly unaudited consolidated
balance sheets and profit and loss statements of Capital Holdings
prepared for its internal use, Capital Holdings' Forms 10-Q for
each quarterly period and Form 10-K for each fiscal year
completed prior to the Effective Time and all other financial
reports or statements, including the notes thereto, submitted to
regulatory authorities after the date hereof, to the extent
permitted by law (collectively, "Subsequent Capital Holdings
Financial Statements"). The Subsequent Capital Holdings
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 Capital Holdings
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. Neither the terms of Section
7.03 hereof (except as otherwise expressly provided therein) nor
the provision of any employee benefits by ONB or any of its
subsidiaries to employees of Capital Holdings and the
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Subsidiaries shall (i) create any employment contract, agreement
or understanding with or employment rights for, or constitute a
commitment or obligation of employment to, any of the officers or
employees of Capital Holdings and the Subsidiaries 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, however,
that any such change, amendment or termination applies to a broad
class of similarly situated employees and not only to former
employees of Capital Holdings or either of the Subsidiaries.
6.12. Employment Agreement. Prior to the Effective
Time, WFSB shall cause the employment agreements between WFSB and
Richard R. Haynes, Joseph A. Walker, Jerry L. Hays and R. William
Richardson, Jr. (each in the form set forth in the Disclosure
Schedule) (collectively referred to herein as the "Employment
Agreements") to be amended such that the requirement that each
participate in a stock option plan shall be deleted, that each
will receive employee benefits in accordance with ONB's employee
benefit plans and, with respect to Mr. Haynes' Employment
Agreement, that he shall serve as Chairman of the Board of the
Surviving Bank from and after the Effective Time until his
successor is selected. Other than the foregoing amendments, the
Employment Agreements shall not be amended or modified in any
respect, and none of the respective terms of the Employment
Agreements shall be extended.
6.13. Certain Actions. Neither Capital Holdings nor
either of the Subsidiaries shall 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.
6.14. Restructure. Capital Holdings and WFSB
understand, acknowledge and agree that ONB, in its sole
discretion, may change the structure of the transactions
contemplated by this Agreement; provided, however, that any such
change in structure 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 bank to the extent
not honored or assumed by ONB. Capital Holdings and WFSB shall
execute and deliver such amendments, agreements and instruments
and take such further actions as ONB may reasonably request in
connection with any such restructure of the transactions
contemplated by this Agreement.
SECTION 7
COVENANTS OF ONB
ONB covenants and agrees with Capital Holdings, and
covenants and agrees with Capital Holdings to cause ONB Bank to
act, 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 Mergers. ONB shall
file all such applications as soon as practicable after the
execution of this Agreement; provided, however, that ONB shall
use its best efforts to file all applications and other filings
with the appropriate banking regulators within forty-five (45)
days of the date of this Agreement. ONB shall provide to Capital
Holdings' counsel copies of all applications filed and copies of
all material written communications with all state and federal
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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, approvals,
registrations and certificates, to complete all filings and
applications and to satisfy all other requirements prescribed by
law which are necessary for consummation of the Mergers on the
terms and conditions provided in this Agreement at the earliest
possible reasonable date.
(b) So long as this Agreement is submitted to Capital
Holdings' shareholders for a vote thereon, ONB Bank 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 ONB Bank, and the
Board of Directors of ONB Bank shall recommend to its sole
shareholder that such shareholder approve this Agreement and the
Thrift 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 ONB Bank in favor of approval of this Agreement and the
Thrift Merger.
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 Capital
Holdings, prepared for use in connection with the meeting of
shareholders of Capital Holdings 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 the 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
Capital Holdings 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 WFSB 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. Until such time as the employees of WFSB become covered
by the ONB welfare benefit plans, employees of WFSB shall
remain covered by the welfare benefit plans of Capital
Holdings, subject to the terms of such plans.
(b) Eligibility and Vesting. Years of service, as defined in
the applicable ONB employee welfare or pension benefit plan, of
an employee of WFSB prior to the Effective Time shall be
credited, effective as of the date on which such employee
becomes covered by a particular ONB employee welfare or pension
benefit plan, to each such employee eligible for coverage under
Section 7.03(a) hereof for purposes of (i) eligibility under
ONB's employee welfare benefit plans; and (ii) eligibility and
vesting, but not for purposes of benefit accrual or
contributions, under the ONB Employees' Retirement Plan ("ONB
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Pension Plan") and under the ONB Employees' Savings and Profit
Sharing Plan ("ONB Profit Sharing Plan"); provided, however,
that the employees of WFSB shall become covered by ONB's
welfare benefit plans at such time(s) as shall be determined by
ONB in its sole discretion, subject to Section 7.03(a) hereof.
Those officers and employees of WFSB who otherwise meet the
eligibility requirements of the ONB Profit Sharing Plan, based
upon their age and years of service for WFSB, shall become
participants thereunder on the January 1st which coincides with
or next follows the effective date of the disposition of the
WFSB Thrift Plan as described in Section 7.03(e) hereof. Those
employees of WFSB who otherwise meet the eligibility
requirements of the ONB Pension Plan, based upon their age and
years of service for WFSB, shall become participants thereunder
on January 1st which coincides with or next follows the
effective date of the disposition of the WFSB Retirement Plan
as described in Section 7.03(d) hereof. Those officers and
employees of WFSB who do not meet the eligibility requirements
of the ONB Pension Plan or the ONB Profit Sharing Plan on such
date(s) 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) Pre-Existing Conditions. No full-time employee of WFSB
and none of the dependents of any such employee serving as of
the Effective Time shall be subject to any pre-existing
condition exclusions under any of ONB's welfare benefit plans
if such employee or dependent was covered by the corresponding
Capital Holdings welfare benefit plan for more than two hundred
seventy (270) consecutive days immediately preceding the
Effective Time.
(d) Financial Institutions Retirement Fund. The accrual of
participants' benefits under WFSB's Financial Institutions
Retirement Fund ("WFSB Retirement Plan") shall be frozen
effective as of December 31st of the year in which the
Effective Time occurs, and all accrued benefits of participants
in the WFSB Retirement Plan shall thereupon become fully
vested. To the extent permitted by the WFSB Retirement Plan
and applicable law, the accrued benefit of each participant in
the WFSB Retirement Plan shall be held and remain under the
WFSB Retirement Plan and shall be payable at the time(s) and in
the forms provided for under that plan. ONB shall be
responsible for the withdrawal of WFSB from the WFSB Retirement
Plan and for making any required or appropriate application to
the Service for a determination letter to the effect that such
withdrawal does not adversely affect the tax-qualified status
of such plan and for providing any notices to the Pension
Benefit Guaranty Corporation or other governmental entity
regarding the withdrawal. WFSB shall make contributions to the
WFSB Retirement Plan through the date of such withdrawal only
to the extent required to maintain the plan's tax-qualified
status and avoid any federal income taxes or penalties
attributable to the plan's funding status.
(e) Financial Institutions Thrift Plan. All contributions to
WFSB's Financial Institutions Thrift Plan ("WFSB Thrift Plan")
shall be discontinued as of December 31st of the year in which
the Effective Time occurs, and the account balances of all
participants in the WFSB Thrift Plan shall thereupon become
fully vested. To the extent permitted by the WFSB Thrift Plan
and applicable law, the account balance of each participant in
the WFSB Thrift Plan shall be held and remain under the WFSB
Thrift Plan and shall be payable at the time(s) and in the
forms provided for under that plan. ONB shall be responsible
for the withdrawal of WFSB from the WFSB Thrift Plan and for
making any required or appropriate application to the Service
for a determination letter to the effect that the withdrawal
does not adversely affect the tax-qualified status of such
plan. WFSB shall make annual contributions to the WFSB Thrift
Plan through its date of termination at the same rate it made
contributions to such plan for the fiscal year ended December
31, 1995.
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(f) Deferred Compensation Plan and Directors' Fees. ONB
agrees to cause the Surviving Bank to assume all obligations of
WFSB under the Director Deferred Compensation Master Agreement
("WFSB Deferred Compensation Plan") and to keep such plan in
effect without any amendment which would decrease the
percentage of the directors fees that each director presently
defers pursuant to such plan for two (2) years following the
Effective Time. During such two (2) year period, ONB also
agrees to cause the Surviving Bank to increase the amount
deferred under the WFSB Deferred Compensation Plan for each
director of WFSB (other than the four (4) new directors of WFSB
elected pursuant to Section 1.02(b) hereof) serving as a
director of the Surviving Bank by $500 per month over the
amounts deferred each month by each director. Provided,
however, during such two (2) year period, in no event shall the
aggregate directors fees and additional deferrals under the
WFSB Deferred Compensation Plan for any director exceed on that
date $1,000 per month. The WFSB Deferred Compensation Plan
shall be terminated effective two (2) years following the
Effective Time. Within forty-five (45) days of the date of
this Agreement, WFSB agrees to amend (effective as of the
Effective Time) the WFSB Deferred Compensation Plan to provide
for its automatic termination (without the need for any further
action by WFSB) and the termination of all the Director
Deferred Compensation Joinder Agreements thereunder ("Joinder
Agreements") on the date which is two (2) years following the
Effective Time. The provisions of such amendments and the
transactions contemplated thereby, including the distribution
of participants' benefits under the WFSB Deferred Compensation
Plan, shall contain such terms and conditions acceptable to ONB
and WFSB, including, but not limited to, the requirement that
each director who has executed a Joinder Agreement also shall
have executed and delivered an appropriate amendment, within
forty-five (45) days of the date of this Agreement, but
effective as of the Effective Time, to provide for the
automatic termination (without the need for any further action
by each director) of his Joinder Agreement on the date which is
two (2) years following the Effective Time; provided, however,
that the benefit under each Joinder Agreement will begin to be
paid not later than the time specified therein. ONB and WFSB
agree to cooperate in making any amendments to the WFSB
Deferred Compensation Plan required to effectuate the foregoing
provisions of this Section 7.03(f).
(g) Director Emeritus Program. Effective as of the Effective
Time, the WFSB Director Emeritus Program shall be terminated;
provided, however, that within ten (10) calendar days after the
termination of such program, ONB shall make, or shall cause the
Surviving Bank to make, a lump sum cash payment to each
director of WFSB who had satisfied the eligibility requirements
for benefits under such program as of the Effective Time, and
to Richard R. Haynes, equal to the present value of the
benefits payable under such program as of the Effective Time.
For this purpose, present value shall be calculated based upon
an interest rate equal to the applicable federal rate as
defined in Section 1274(d) of the Code, compounded
semi-annually, as of the Effective Time, to such benefits.
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 Mergers
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 Capital
Holdings or either of the Subsidiaries with respect to the
Mergers without the prior consent of Capital Holdings, which
consent shall not be unreasonably withheld.
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7.06. Information, Access Thereto, Confidentiality.
Capital Holdings 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. Capital
Holdings 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 Capital
Holdings 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 Capital
Holdings or its representatives or agents, such financial and
operating data and other information reasonably requested by
Capital Holdings 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
Capital Holdings 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 or agent of ONB participates in such
discussions. No investigation by Capital Holdings (whether
conducted before or after the date hereof) shall affect the
representations and warranties made by ONB or the information
contained in any document provided herein, and Capital Holdings
shall be entitled to rely on such representations, warranties
and documents notwithstanding any such investigation. Any
confidential information or trade secrets received by Capital
Holdings 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 Capital Holdings 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 Capital Holdings which would
be prohibited by law.
7.07. Employment Agreement. Following the Effective Time,
ONB agrees to cause the Surviving Bank to assume all
obligations under the Employment Agreements, as amended
pursuant to Section 6.12 hereof, and to guarantee the Surviving
Bank's obligations thereunder, except as may be otherwise
required by any government regulatory agency.
7.08. Directors. Following the Effective Time, ONB agrees
to cause to be elected as directors of the Surviving Bank those
persons who are serving as directors of WFSB as of the
Effective Time (other than the four (4) additional directors of
WFSB elected pursuant to Section 1.02(b) hereof) until such
director has reached the age of seventy (70) years, at which
time the director must retire from the Surviving Bank's Board.
Each director of WFSB who is over the age of seventy (70) years
at the Effective Time and the four (4) additional directors of
WFSB elected pursuant to Section 1.02(b) hereof will be elected
to serve as a director of the Surviving Bank for a period of
two (2) years following the Effective Time. Thereafter, ONB
shall have no obligation to elect any particular person as a
director of the Surviving Bank.
7.09. Indemnification and Insurance. (a) Indemnification.
From and after the Effective Time, ONB will cause the Surviving
Corporation and the Surviving Bank to assume and honor any
obligations as provided for and permitted by applicable federal
and state law which Capital Holdings or WFSB 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 Capital Holdings or
WFSB or was serving at the request of Capital Holdings or WFSB
as a director or officer of any domestic or foreign
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corporation, joint venture, trust, employee benefit plan or
other enterprise (collectively, the "Indemnitees") arising out
of Capital Holdings' Articles of Incorporation or By-Laws or
WFSB'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
Capital Holdings or WFSB. Indemnification of employees,
officers and directors of Capital Holdings and WFSB for actions
or omissions 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 Capital
Holdings and WFSB (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 WFSB employees or
directors who become officers or directors 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.
7.10. Tax-Free Reorganization. ONB and ONB Bank shall take
no actions on or following the Effective Time which would cause
the Mergers to lose their status as reorganizations described
in Section 368 of the Code.
7.11. Stock Options.
(i) At the Effective Time, the obligations of Capital
Holdings with respect to each outstanding option to
purchase shares of Capital Holdings Common Stock (a
"Stock Option") which was properly granted pursuant
to a stock option agreement executed in accordance
with the Stock Option Plan shall be assumed by ONB as
hereinafter provided. In connection therewith, each
Stock Option shall be deemed to constitute an option
to acquire, on the same terms and conditions as were
applicable under such Stock Option at the Effective
Time, that number of shares of ONB common stock,
rounded to the nearest whole share, as the holder of
such Stock Option would have been entitled to receive
pursuant to the Company Merger had such holder
exercised such option in full immediately prior to
the Effective Time and, immediately thereafter,
exchanged such shares solely for ONB common stock
based upon the Exchange Ratio at a price per share
equal to (A) the aggregate exercise price for Capital
Holdings Common Stock otherwise purchasable pursuant
to such Stock Option divided by (B) the number of
shares of ONB common stock, rounded to the nearest
whole share, deemed purchasable pursuant to such
Stock Option. In no event shall ONB be required to
issue fractional shares of ONB common stock.
(ii) As soon as practicable after the Effective Time, ONB
shall deliver to each holder of a Stock Option an
appropriate notice or agreement which sets forth such
holder's rights pursuant to the Stock Option, and the
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agreements evidencing the grants of such Stock
Options shall continue in effect on the same terms
and conditions (subject to the conversion required by
this Section 7.11 after giving effect to the Company
Merger and the assumption by ONB as set forth above).
Provided, however, to the extent necessary to
effectuate the provisions of this Section 7.11, ONB
may deliver new or amended agreements which reflect
the terms of each Stock Option assumed by ONB. With
respect to each Stock Option, the optionee shall be
solely responsible for any and all tax liability
(other than the employer's one-half share of any
employment taxes) which may be imposed upon the
optionee as a result of the provisions of this
Section 7.11 and as a result of the grant and
exercise of such Stock Options.
(iii) As soon as practicable after the Effective Time,
ONB shall file with the SEC a registration
statement on an appropriate form with respect to
the shares of ONB common stock subject to such
options and shall use its best efforts to
maintain the effectiveness of such registration
statement or registration statements (and
maintain the current status of the prospectus or
prospectuses with respect thereto) for so long
as such options remain outstanding.
7.12. Board Approval. ONB shall present this Agreement to
its Board of Directors for approval at the Board's April, 1996
meeting.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
8.01. ONB. The obligation of ONB and ONB Bank to
consummate the Mergers 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:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of Capital Holdings and WFSB
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
Capital Holdings and WFSB 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
Capital Holdings and WFSB at the Closing (as hereinafter
defined) 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 Capital Holdings 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
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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 Board of Governors of the
Federal Reserve System ("Federal Reserve") and the OTS shall
have authorized and approved or not objected to the Mergers on
terms and conditions reasonably 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 Mergers shall have been
obtained on terms and conditions reasonably satisfactory to
ONB.
(f) Shareholder Approvals. The shareholders of Capital
Holdings and the sole shareholder of ONB Bank and WFSB shall
have approved and adopted this Agreement as required by
applicable law and their respective Charters or Articles of
Incorporation.
(g) Officers' Certificate. Capital Holdings shall have
delivered to ONB 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
Capital Holdings are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the
covenants of Capital Holdings have been complied with from the
date of this Agreement through and as of the Effective Time;
and (iii) Capital Holdings has satisfied and fully complied
with all conditions necessary to make this Agreement effective
as to it.
(h) Tax Matters. Legal counsel to ONB shall have rendered an
opinion to ONB and Capital Holdings, in form and content
reasonably satisfactory to the parties hereto, to the effect
that the Mergers will constitute tax-free reorganizations under
the Code (as described in Sections 1.01(f) and 1.02(e) hereof)
to each party hereto and to the shareholders of Capital
Holdings, except with respect to cash received by WFSB's
shareholders for fractional shares resulting from application
of the Exchange Ratio.
(i) Affiliate Agreements. ONB shall have received (i) from
Capital Holdings a list identifying each affiliate of Capital
Holdings in accordance with Section 6.05 hereof dated as of the
Effective Time and (ii) from each affiliate of Capital Holdings
the agreements dated as of the Effective Time contemplated by
Section 6.05 hereof.
(j) Fairness Opinion. Trident shall have issued its written
fairness opinion stating that the terms of the Company Merger
are fair to the shareholders of Capital Holdings from a
financial point of view. Such written fairness opinion shall
(i) be in form and substance reasonably satisfactory to ONB and
Capital Holdings; (ii) be dated as of a date not later than the
mailing date of the proxy statement-prospectus relating to the
Mergers to be mailed to Capital Holdings' shareholders; (iii)
be included as an exhibit to the proxy statement-prospectus;
and (iv) be updated and confirmed by Trident as of the
Effective Time.
8.02. Capital Holdings. The obligations of Capital
Holdings and WFSB to consummate the Mergers 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 Capital Holdings:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of ONB contained in this
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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. Capital Holdings shall have
received from ONB at the Closing the items and documents, in
form and content reasonably satisfactory to Capital Holdings,
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 Capital Holdings 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 and the OTS
shall have authorized and approved or not objected to the
Mergers. 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 Mergers
shall have been obtained.
(f) Shareholder Approvals. The shareholders of Capital
Holdings and the sole shareholder ONB Bank and WFSB shall have
approved and adopted this Agreement as required by applicable
law and their respective Charters or Articles of Incorporation.
(g) Officers' Certificate. ONB shall have delivered to
Capital Holdings 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. Legal counsel to ONB shall have rendered an
opinion to ONB and Capital Holdings, in form and content
satisfactory to the parties hereto, to the effect that the
Mergers will constitute tax-free reorganizations under the Code
(as described in Sections 1.01(f) and 1.02(e) hereof) to each
party hereto and to the shareholders of Capital Holdings,
except with respect to cash received by Capital Holdings'
shareholders for fractional shares resulting from application
of the Exchange Ratio.
(i) Fairness Opinion. Trident shall have issued its written
fairness opinion stating that the terms of the Company Merger
are fair to the shareholders of Capital Holdings from a
financial point of view. Such written fairness opinion shall
(i) be in form and substance reasonably satisfactory to ONB and
Capital Holdings; (ii) be dated as of a date not later than the
mailing date of the proxy statement-prospectus relating to the
Mergers to be mailed to Capital Holdings' shareholders; (iii)
be included as an exhibit to the proxy statement-prospectus;
and (iv) be updated and confirmed by Trident as of the
Effective Time.
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SECTION 9
TERMINATION OF MERGER
9.01. Manner of Termination. This Agreement and the
Mergers may be terminated at any time prior to the Effective
Time by written notice delivered by ONB to Capital Holdings, or
by Capital Holdings to ONB, as follows:
(a) By ONB or Capital Holdings, if:
(i) the Mergers contemplated by this Agreement have not
been consummated by March 31, 1997; or
(ii) the respective Boards of Directors of ONB and Capital
Holdings mutually agree to terminate this Agreement.
(b) By ONB, if:
(i) ONB's independent auditors determine that either of
the Mergers 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 Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings; or
(iii) there has been a misrepresentation or a breach of any
warranty by or on the part of Capital Holdings 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 Capital Holdings or
WFSB, whether individually or on a consolidated basis, or
RISC on a consolidated basis with Capital Holdings;
provided, however, that in the event of any inaccuracy in
the representations and warranties contained in Section 4.03
hereof relative to the number of issued and outstanding
shares of Capital Holdings Common Stock, WFSB Common Stock,
or RISC Common Stock, 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 Capital Holdings or WFSB; or
(v) ONB shall reasonably determine that either of the
Mergers have become inadvisable or impracticable by
reason of commencement or threat of any claim,
litigation or proceeding against ONB, Capital
Holdings, WFSB, RISC or any subsidiary of ONB, or any
director or officer of any of such entities (A)
relating to this Agreement or the Mergers or (B)
which is likely to have a material adverse effect on
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either of the business, prospects, assets,
capitalization, financial condition or results of
operations of Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings, or of ONB
on a consolidated basis; or
(vi) except as provided in the Disclosure Schedule (but
not including any updates or supplements thereto),
there has been a material adverse change in the
business, prospects, assets, capitalization,
financial condition or results of operations of
Capital Holdings or WFSB, whether individually or on
a consolidated basis, or RISC on a consolidated basis
with Capital Holdings, at the Effective Time as
compared to that in existence as of December 31,
1995; or
(vii) all Joinder Agreements under the WFSB Deferred Compensation
have not been properly and validly amended as provided in
Section 7.03(f) hereof within forty-five (45) days of the
date of this Agreement.
(c) By Capital Holdings, 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 Capital Holdings, 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 at the
Effective Time as compared to that in existence on December
31, 1995.
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, ONB Bank, Capital
Holdings, WFSB 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 MERGERS
Upon the terms and subject to the conditions specified in this
Agreement, the Company Merger shall become effective at the
time specified in the Articles of Merger of Capital Holdings
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with and into ONB as filed with the Indiana Secretary of State
("Effective Time") and the Thrift Merger shall become effective
at the time specified in the Articles of Combination of WFSB
with and into ONB Bank as filed with the OTS. The Effective
Time shall occur not later than the last business day of the
month following (a) the fulfillment of all conditions precedent
to the Mergers 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
Mergers.
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 Mergers ("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
Capital Holdings 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 Mergers;
(iv) copies of the resolutions of the Board of Directors
of ONB and ONB Bank of ONB, as the sole shareholder
of ONB Bank, certified by the President or Secretary
of ONB and ONB Bank, respectively, relative to the
approval of this Agreement and the Mergers; and
(v) such other documents as Capital Holdings or its legal
counsel may reasonably request.
(b) At the Closing, Capital Holdings 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;
(iii) a list of Capital Holdings' shareholders as of
the Effective Time certified by the President
and Secretary of Capital Holdings;
(iv) copies of the resolutions adopted by the Board of
Directors and shareholders of Capital Holdings and
WFSB, certified by the Chairman or President and
Secretary of each, relative to the approval of this
Agreement and the Mergers;
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(v) the list of affiliates of Capital Holdings 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.
The representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the
parties hereto and their successors and assigns, and they shall
not be construed as conferring any rights on any other persons
except as specifically set forth in this Agreement, including,
but not limited to, Sections 1.02(b), 7.03, 7.07, 7.08 and 7.09
hereof.
12.02. Waiver; Amendment. (a) ONB or Capital Holdings may
by an instrument in writing: (i) extend the time for the
performance of or otherwise amend any of the covenants,
conditions or agreements of the other parties 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 parties 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 Mergers. 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 Capital
Holdings, only in a manner that will not materially and
adversely affect the rights of Capital Holdings' 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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If to ONB or ONB Bank: 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 Capital Holdings: with a copy to (which shall not
constitute notice):
Workingmens Capital Holdings, Inc. Barnes & Thornburg
ATTN: Richard R. Haynes, President ATTN: Claudia V. Swhier, Esq.
121 East Kirkwood Avenue 1313 Merchants Bank Building
P. O. Box 2689 11 South Meridian Street
Bloomington, Indiana 47408 Indianapolis, Indiana 46204
Telephone: (812) 332-9465 Telephone: (317) 638-1313
Telecopier: (812) 323-4246 Telecopier: (317) 231-7452
or such substituted address or person as any of them 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,
five (5) 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. Except for certain provisions
regarding the treatment of employees of WFSB contained in a
letter dated April 8, 1996, from ONB to Capital Holdings, this
Agreement supersedes all other prior or contemporaneous
understandings, commitments, representations, negotiations or
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agreements, whether oral or written, among the parties hereto
and thereto relating to the Mergers 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. The parties hereto
agree that each party and its counsel reviewed and revised this
Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of
this Agreement or any amendments or exhibits hereto.
12.09. Expenses. The parties hereto shall each pay their
respective expenses incidental to the Mergers.
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, and the information contained in
the Disclosure Schedule shall be deemed to be representations
and warranties of Capital Holdings.
* * * *
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IN WITNESS WHEREOF, ONB, ONB Bank, Capital Holdings and WFSB
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
WORKINGMENS CAPITAL HOLDINGS, INC.
By: /s/ Richard R. Haynes
----------------------------
Richard R. Haynes, President
ATTEST:
By: /s/ Jerry L. Hayes
------------------------
Jerry L. Hays, Secretary
WORKINGMENS FEDERAL SAVINGS BANK
By: /s/ Richard R. Haynes
----------------------------
Richard R. Haynes, President
and Chief Executive Officer
ATTEST:
By: /s/ Jerry L. Hayes
------------------------
Jerry L. Hays, Secretary
ONB BANK
By: /s/ Dan L. Doan
-------------------------
Dan L. Doan, Chairman and
President
ATTEST:
By: /s/ Jeffrey L. Knight
--------------------------------------
Jeffrey L. Knight, Assistant Secretary
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APPENDIX B
[Form of Opinion]
_________________, 1996
Board of Directors
Workingmens Capital Holdings, Inc.
121 East Kirkwood Avenue
Bloomington, Indiana 47402
Gentlemen:
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of shares of common
stock (the "Workingmens Common Stock"), of Workingmens Capital
Holdings, Inc. ("Workingmens") of the consideration to be
received by such stockholders in the proposed merger (the
"Proposed Merger") of Workingmens with Old National Bancorp
("Old National"), pursuant to the Agreement of Affiliation and
Merger dated April 8, 1996 (the "Agreement").
As more specifically set forth in the Agreement, and
subject to a number of conditions and procedures described in
the Agreement, in the Proposed Merger each of the issued and
outstanding shares of Workingmens Common Stock shall be
converted into 0.64 shares of Old National Common Stock (the
"Exchange Ratio"). All unexercised options for the right to
purchase shares of Workingmens Common Stock shall be converted
into options for the right to purchase shares of Old National
Common Stock using the Exchange Ratio as applicable to the
holders of Workingmens Common Stock.
Trident Financial Corporation ("Trident") is a financial
consulting and investment banking firm experienced in the
valuation of business enterprises with considerable experience
in the valuation of thrift institutions. Since 1975, Trident
has valued in excess of 400 thrift institutions in connection
with mutual-to-stock conversions, mergers and acquisitions, as
well as other transactions. Trident is not affiliated with
Workingmens or Old National.
In connection with rendering our opinion, we have reviewed
and analyzed, among other things, the following: (i) the
Agreement; (ii) certain publicly available information
concerning Workingmens, including the audited financial
statements of Workingmens for each of the years in the three
year period ended December 31, 1995 and unaudited financial
statements for the three months ended March 31, 1996; (iii)
certain publicly available information concerning Old National,
including the audited financial statements of Old National for
each of the years in the three year period ended December 31,
1995 and unaudited financial statements for the three months
ended March 31, 1996; (iv) certain other internal information,
primarily financial in nature, concerning the business and
operations of Workingmens and Old National furnished to us by
Workingmens and Old National for purposes of our analysis; (v)
information with respect to the trading market for Workingmens
Common Stock; (vi) information with respect to the trading
market for Old National Common Stock; (vii) certain publicly
available information with respect to other companies that we
believe to be comparable to Workingmens and Old National and
the trading markets for such other companies' securities; and
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Board of Directors
__________________ , 1996
Page 2
(viii) certain publicly available information concerning the
nature and terms of other transactions that we believe relevant
to our inquiry. We have also met with certain officers and
employees of Workingmens and Old National to discuss the
foregoing as well as other matters we believe relevant to our
inquiry.
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 provided to us or
publicly available. We have not attempted independently to
verify any such information. We have not conducted a physical
inspection of the properties or facilities of Workingmens or
Old National, nor have we made or obtained any independent
evaluations or appraisals of any of such properties or
facilities. We did not specifically evaluate Workingmens' or
Old National's loan portfolio or the adequacy of Workingmens'
or Old National's reserves for possible loan losses.
In conducting our analysis and arriving at our opinion as
expressed herein, we have considered such financial and other
factors as we have deemed appropriate under the circumstances
including, among others, the following: (i) the historical and
current financial condition and results of operations of
Workingmens and Old National, including interest income,
interest expense, net interest income, net interest margin,
interest sensitivity, non-interest expenses, earnings,
dividends, book value, return on assets, return on equity,
capitalization, the amount and type of non-performing assets
and the reserve for loan losses; (ii) the business prospects of
Workingmens and Old National; (iii) the economies in
Workingmens' and Old National's market areas; (iv) the
historical and current market for Workingmens Common Stock and
Old National Common Stock and for the equity securities of
certain other companies that we believe to be comparable to
Workingmens and Old National; and (v) the nature and terms of
certain other acquisition transactions that we believe to be
relevant. We have also taken into account our assessment of
general economic, market, financial and regulatory conditions
and trends, as well as our knowledge of the thrift industry,
our experience in connection with similar transactions, and our
knowledge of securities valuation generally. Our opinion
necessarily is based upon conditions as they exist and can be
evaluated on the date hereof. Our opinion is, in any event,
limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of Workingmens
Common Stock in the Proposed Merger and does not address
Workingmens' underlying business decision to effect the
Proposed Merger.
Based upon and subject to the foregoing, we are of the
opinion that the consideration to be received by the holders of
Workingmens Common Stock in the Proposed Merger is fair, as of
the date hereof, from a financial point of view, to such
holders.
Very truly yours,
TRIDENT FINANCIAL CORPORATION
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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 Agreement of Affiliation and Merger (included as Appendix
A to Prospectus)
3(i) Articles of Incorporation of the Registrant
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
10.01 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)
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10.02 Supplemental Deferred Compensation Plan for Select
Executive Employees of Old National Bancorp and
Subsidiaries, as amended and restated effective as
of July 1, 1994
10.03 Old National Bancorp Pension Restoration Plan,
effective December 1, 1995
10.04 Old National Bancorp Employees' Retirement Plan,
amended and restated May 1, 1996
10.05 Old National Bancorp Executive Short Term Incentive
Plan, effective January 1, 1996
10.06 Severance Agreements
(a) William R. Britt
(b) James A. Risinger
10.07 Old National Bancorp Employees' Savings and Profit
Sharing Plan
(a) First Amendment, effective January 1, 1995
(b) Second Amendment, effective January 1, 1996
13(ii)(a) WCHI's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
13(ii)(b) WCHI's Annual Report to Shareholders for the fiscal
year ended December 31, 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 KPMG Peat Marwick LLP
23.04 Consent of Trident Financial Corporation
24 Powers of Attorney
99 Form of Proxy
(b) Financial Data Schedules: not applicable
(c) Opinion of Trident Financial Corporation (included as
Appendix B to Prospectus)
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
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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 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 time
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.
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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 July 25, 1996.
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
July 25, 1996.
Name Title
---- -----
/s/ JOHN N. ROYSE Chairman of the Board,
------------------------------ Director and Chief
John N. Royse Executive Officer (Chief
Executive Officer)
/s/ STEVE H. PARKER Senior Vice President
------------------------------ (Chief Financial
Steve H. Parker Officer and Principal
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
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THOMAS B. FLORIDA* Director
------------------------------
Thomas B. Florida
PHELPS L. LAMBERT* Director
------------------------------
Phelps L. Lambert
RONALD B. LANKFORD* President and Director
------------------------------
Ronald B. Lankford
LUCIEN H. MEIS* Director
------------------------------
Lucien H. Meis
LOUIS L. MERVIS* Director
------------------------------
Louis L. Mervis
DAN W. MITCHELL* Director
------------------------------
Dan W. Mitchell
MARJORIE Z. SOYUGENC* Director
------------------------------
Marjorie Z. Soyugenc
CHARLES D. STORMS* Director
------------------------------
Charles D. Storms
*By: /s/ JEFFREY L. KNIGHT
------------------------------
Attorney-in-Fact
Printed Name: Jeffrey L. Knight
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EXHIBIT 3(i)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
OLD NATIONAL BANCORP
ARTICLE I
Name
The name of the Corporation is Old National Bancorp.
ARTICLE II
The purposes for which the Corporation is formed are:
Section 1. To acquire control of Old National Bank in
Evansville and to operate as a bank holding company.
Section 2. General Powers. To possess, exercise, and
enjoy all rights, powers and privileges conferred upon bank
holding companies by the Bank Holding Company Act of 1956 as
amended and as hereafter amended or supplemented, and all other
rights and powers authorized by the laws of the State of
Indiana, and the laws of the United States of America
applicable to bank holding companies and the regulations of the
Board of Governors of the Federal Reserve System.
Section 3. To Deal in Real Property. Subject to the
limitations of Section 2 above, to acquire by purchase,
exchange, lease or otherwise, and to hold, own, use, construct,
improve, equip, manage, occupy, mortgage, sell, lease, convey,
exchange or otherwise dispose of, alone or in conjunction with
others, real estate and leaseholds of every kind, character and
description whatsoever and wheresoever situated, and any other
interests therein, including, but without limiting the
generality thereof, buildings, factories, warehouses, offices
and structures of all kinds.
Section 4. Capacity to Act. Subject to limitations of
Section 2 above, to have the capacity to act possessed by
natural persons and to perform such acts as are necessary and
advisable to accomplish the purposes, activities and business
of the Corporation.
Section 5. To Act as Agent. Subject to the
limitations of Section 2 above, to act as agent or
representative for any firm, association, corporation,
partnership, government or person, public or private, with
respect to any activity or business of the Corporation.
Section 6. To Make Contracts and Guarantees. Subject
to the limitations of Section 2 above, to make, execute and
perform, or cancel and rescind, contracts of every kind and
description, including guarantees and contracts of suretyship,
with any firm, association, corporation, partnership,
government or person, public or private.
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Section 7. To Borrow Funds. Subject to the
Limitations of Section 2 above, to borrow moneys for any
activity or business of the Corporation and, from time to time,
without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, notes, trust receipts, and other
negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment thereof, and the
interest thereon, by mortgage, pledge, conveyance, or
assignment in trust of all or any part of the assets of the
Corporation, real, personal or mixed, including contract
rights, whether at the time owned or thereafter acquired, and
to sell, exchange or otherwise dispose of such securities or
other obligations of the Corporation.
Section 8 To Deal in is Own Securities. Subject to
the limitations of Section 2 above, to purchase, take, receive
or otherwise acquire, and to hold, own, pledge, transfer or
otherwise dispose of shares of its own capital stock and other
securities. Purchases of the Corporation's own shares, whether
direct or indirect, may be made without shareholder approval
only to the extent of unreserved and unrestricted earned
surplus available therefor.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue
is perpetual.
ARTICLE IV
Resident Agent and Principal Office
Section 1. Resident Agent. The name and address of the
Corporation's Resident Agent for service of process is Jeffrey
L. Knight, 420 Main Street, Evansville, Indiana 47708.
Section 2 Principal Office. The post office address of
the principal office of the Corporation is 420 Main Street,
Evansville, Indiana 47708.
ARTICLE V
Shares of Stock
Section 1. Number. The total number of shares of
capital stock which the Corporation has authority to issue is
52,000,000 shares, all of which shall be divided into two
classes of shares to be designated "Common Stock" and
"Preferred Stock," respectively, as follows:
50,000,000 shares of Common Stock, without par
value; and
2,000,000 shares of Preferred Stock, without par
value.
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Section 2. Terms and Voting Rights of Capital Stock A
statement of the designations, relative rights, preferences,
powers, qualifications, limitations and restrictions granted to
or imposed upon the respective classes of the shares of capital
stock or the holders thereof is as follows:
A. Series A Preferred Stock:
(a) Designation and Amount. The shares of such series
shall be designated as "Series A Preferred Stock"
(the "Series A Preferred Stock") and the number of
shares constituting the Series A Preferred Stock
shall be 200,000. Such number of shares may be
increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall
reduce the number of shares of Series A Preferred
Stock to a number less than the number of shares
then outstanding plus the number of shares
reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon
the conversion of any outstanding securities
issued by the Corporation convertible into Series
A Preferred Stock.
(b) Dividends and Distributions.
(i) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or
any other stock) ranking prior and superior
to the Series A Preferred Stock with respect
to dividends, the holders of shares of Series
A Preferred Stock shall be entitled to
receive, when, as and if declared by the
Board of Directors out of funds legally
available for the purpose, quarterly
dividends payable in cash on the first day of
March, June, September and December in each
year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend
Payment Date after the first issuance of a
share or fraction of a share of Series A
Preferred Stock, in an amount (if any) per
share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to
the provision for adjustment hereinafter set
forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times
the aggregate per share amount (payable in
kind) of all non-cash dividends or other
distributions, other than a dividend payable
in shares of Common Stock, no par value (the
"Common Stock"), of the Corporation or a
subdivision of the outstanding shares of
Common Stock (by reclassification or
otherwise), declared on the Common Stock
since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction
of a share of Series A Preferred Stock. In
the event the Corporation shall at any time
declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or
effect a subdivision or combination or
consolidation of the outstanding shares of
Common Stock (by reclassification or
otherwise than by payment of a dividend in
shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then
in each such case the amount to which holders
of shares of Series A Preferred Stock were
entitled immediately prior to such event
under Clause (b) of the preceding sentence
shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the
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number of shares of Common Stock that were
outstanding immediately after such event and
the denominator of which is the number of
shares of Common Stock that were outstanding
immediately prior to such event.
(ii) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock
as provided in subparagraph (i) of this
Section 2(A)(b) immediately after it declares
a dividend or distribution on the Common
Stock (other than a dividend payable in
shares of Common Stock); provided that, in
the event no dividend or distribution shall
have been declared on the Common Stock during
the period between any Quarterly Dividend
Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend
of $l.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(iii) Dividends due pursuant to subparagraph (i) of this
Section 2(A)(b) shall begin to accrue and be
cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such
shares, unless the date of issue of such shares is
prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of
shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata
on a share-by- share basis among all such shares at
the time outstanding. The Board of Directors may
fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution
declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the
payment thereof.
(c) Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting
rights.
(i) Subject to the provision for adjustment
hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted
to a vote of the shareholders of the
Corporation. In the event the Corporation
shall at any time declare or pay any dividend
on the Common Stock payable in shares of
Common Stock, or effect a subdivision or
combination or consolidation of the
outstanding shares of Common Stock (by
reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into
a greater or lesser number of shares of
Common Stock, then the number of votes per
share to which holders of shares of Series A
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Preferred Stock were entitled immediately
prior to such event shall be adjusted by
multiplying such number by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after
such event and the denominator of which is
the number of shares of Common Stock that
were outstanding immediately prior to such
event.
(ii) Except as otherwise provided herein, in any
Articles of Amendment of the Articles of
Incorporation creating a series of Preferred
Stock or any similar stock, or by law, the
holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and
any other capital stock of the Corporation
having general voting rights shall vote
together as one class on all matters
submitted to a vote of shareholders of the
Corporation.
(iii) Except as set forth herein, or as otherwise provided
by law, holders of Series A Preferred Stock shall
have no voting rights.
(d) Certain Restrictions.
(i) Whenever quarterly dividends or other
dividends or distributions payable on the
Series A Preferred Stock as provided in
Section 2(A)(b) are in arrears, thereafter
and until all accrued and unpaid dividends
and distributions, whether or not declared,
on shares of Series A Preferred Stock
outstanding shall have been paid in full, the
Corporation shall not:
(A) declare or pay dividends, or make any
other distributions, on any shares of
stock ranking junior (either as to
dividends or upon liquidation,
dissolution or winding up) to the Series
A Preferred Stock;
(B) declare or pay dividends, or make any
other distributions, on any shares of
stock ranking on a parity (either as to
dividends or upon liquidation,
dissolution or winding up) with the
Series A Preferred Stock, except
dividends paid ratably on the Series A
Preferred Stock and all such parity
stock on which dividends are payable or
in arrears in proportion to the total
amounts to which the holders of all such
shares are then entitled; or
(C) redeem or purchase or otherwise acquire
for consideration shares of any stock
ranking junior (either as to dividends
or upon liquidation, dissolution or
winding up) to the Series A Preferred
Stock, provided that the Corporation may
at any time redeem, purchase or
otherwise acquire shares of any such
junior stock in exchange for shares of
any stock of the Corporation ranking
junior (as to dividends and upon
dissolution, liquidation or winding up)
to the Series A Preferred Stock.
(ii) The Corporation shall not permit any
subsidiary of the Corporation to purchase or
otherwise acquire for consideration any
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shares of stock of the Corporation unless the
Corporation could, under subparagraph (i) of
this Section 2(A)(d), purchase or otherwise
acquire such shares at such time and in such
manner.
(e) Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the
acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or
in any other Articles of Amendment of the Articles
of Incorporation creating a series of Preferred
Stock or any similar stock or as otherwise
required by law.
(f) Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to
the holders of shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have
received $100.00 per share, plus an amount equal
to accrued and unpaid dividends and distributions
thereon whether or not declared, to the date of
such payment, provided that the holders of Series
A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the
provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be
distributed per share to holders of shares of
Common Stock plus an amount equal to any accrued
and unpaid dividends, or (2) to the holders of
shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock,
except distributions made with the Series A
Preferred Stock and all such parity stock in
proportion to the total amounts to which the
holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding
shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number
of shares of Common Stock then in each such case
the aggregate amount set forth in the preceding
sentence to which holders of shares of Series A
Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such
amount by a faction the numerator of which is the
number of shares of Common Stock outstanding
immediately after such event and the denominator
of which is t were outstanding immediately prior
to such event.
(g) Consolidation, Merger. etc. In case the
Corporation shall enter into any consolidation,
merger, combination or other transaction in which
the shares of Common Stock are exchanged for or
changed into other stock or securities, cash
and/or any other property, then in any such case
each share of Series A Preferred Stock shall at
the same time be similarly exchanged or changed
into an amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind),
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as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In
the event the Corporation shall at any time
declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the
outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock then in
each such case the amount set forth in the
preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately
after such event and the denominator of which is
the number of shares of Common Stock that were
outstanding immediately prior to such event.
(h) No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
(i) Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner
which would materially alter or change the powers,
preferences or special rights of the Series A
Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at
least (two-thirds) of the outstanding shares of
Series A Preferred Stock, voting together as a
single class.
B. Preferred Stock.
Shares of Preferred Stock may be issued from time to
time in one or more additional series. Such shares of
Preferred Stock may be redeemed, purchased or otherwise
acquired by the Corporation, subject to any limitation
or restriction, if any, as is contained in the express
terms of any series, and may be reissued except as
otherwise provided by law.
The Board of Directors is hereby authorized, by
resolution to fix and determine with respect to each
such series of Preferred Stock, the number of shares of
the series, which number may be increased (except where
otherwise provided by the Board of Directors in
creating the series) or decreased (but not below the
number of shares thereof then outstanding), the
relative rights, preferences, dividend rights and
rates, conversion rights, voting rights, redemption
rights, qualifications, limitations, restrictions, and
protective provisions of each such series.
C. Common Stock.
Each share of Common Stock shall be equal to every
other share of Common Stock, and except as otherwise
provided by law or by these Articles of Incorporation
(including the provisions authorizing the Board of
Directors to bestow voting rights on any series of
Preferred Stock), the holders of the outstanding shares
of Common Stock shall have and possess the exclusive
right to notice of shareholders' meetings and to vote
on all matters presented to shareholders and shall be
entitled to one vote for each share of Common Stock
held of record by them on all matters including
elections of directors.
Subject to the rights of any series of Preferred Stock
authorized by the Board of Directors as provided by the
Articles of Incorporation, the holders of the
outstanding shares of Common Stock shall be entitled to
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dividends as and when declared by the Board of
Directors out of funds of the Corporation legally
available for the payment of dividends.
ARTICLE VI
Requirements Prior to Doing Business
The Corporation will not commence business until
consideration of the value of at least $1,000 (one thousand
dollars) has been received for the issuance of shares.
ARTICLE VII
Director(s)
Section 1. Number of Directors. The initial Board of
Directors is composed of 23 members. The number of directors
may be from time to time fixed by the By-Laws of the
Corporation at any number. In the absence of a By-Law fixing
the number of directors, the number shall be 23.
Section 2. Qualifications of Directors. Directors
need not be shareholders of the Corporation.
ARTICLE VIII
Incorporator
The name and post office address of the incorporator of
the Corporation is:
Number and
Name Street or Building City, State & Zip Code
---- ------------------ ----------------------
Robert Carlton 420 Main Street Evansville, Indiana 47708
ARTICLE IX
Provisions for Regulation of Business and
Conduct of Affairs of Corporation
Section 1. Meetings of Shareholders. Meetings of
Shareholders of the Corporation shall be held at such place,
with or without the State of Indiana, as may be specified in
the notices or waivers of notice of such meetings.
Section 2. Meetings of Directors. Meetings of
Directors of the Corporation shall be held at such place,
within or without the State of Indiana, as may be specified in
the notices or waivers of notice of such meetings.
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Section 3. Consideration for Shares. Shares of stock
of the Corporation shall be issued or sold in such manner and
for such amount of consideration as may be fixed from time to
time by the Board of Directors.
Section 4. By-Laws of the Corporation. The Board of
Directors by a majority vote of the actual number of Directors
elected and qualified from time to time shall have the power,
without the assent or vote of the shareholders, to make, alter,
amend or repeal the By-Laws of the Corporation.
The Board of Directors may, by resolution adopted by a
majority of the actual number of Directors elected and
qualified, from time to time, designate from among its members
an executive committee and one or more other committees, each
of which, to the extent provided in the resolution, the
Articles of Incorporation, or the By-Laws, may exercise all of
the authority of the Board of Directors of the Corporation,
including, but not limited to, the authority to issue and sell
or approve any contract to issue and sell, securities or shares
of the Corporation or designate the terms of a series of a
class of securities or shares of the Corporation. The terms
which may be affixed by each such committee include, but are
not limited to, the price, dividend rate, and provisions of
redemption, a sinking fund, conversion, voting, or preferential
rights or other features of securities or class or series of a
class of shares. Each such committee may have full power to
adopt a final resolution which sets forth those terms and to
authorize a statement of such terms to be filed with the
Secretary of State. However, no such committee has the
authority to declare dividends or distributions, amend the
Articles of Incorporation or the By-Laws, approve a plan of
merger or consolidation even if such plan does not require
shareholder approval, reduce earned or capital surplus,
authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board
of Directors, or recommend to the shareholders a voluntary
dissolution of the Corporation or a revocation thereof. No
member of any such committee shall continue to be a member
thereof after he ceases to be a Director of the Corporation.
The calling and holding of meetings of any such committee and
its method of procedure shall be determined by the Board of
Directors. A member of the Board of Directors shall not be
liable for any action taken by any such committee if he is not
a member of that committee and has acted in good faith and in a
manner he reasonably believes is in the best interest of the
Corporation.
Section 5. Consent Action by Shareholders. Any
action required by statute to be taken at a meeting of the
shareholders, or any action which may be taken at a meeting of
the shareholders, may be taken without a meeting if, prior to
such action, a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to
vote with respect to the subject matter thereof, and such
written consent is filed with the minutes of the proceedings of
the shareholders.
Section 6. Consent Action by Directors. Any action
required or permitted to be taken at any meeting of the Board
of Directors or any committee thereof may be taken without a
meeting, if prior to such action a written consent to such
action is signed by all members of the Board of Directors or
such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors
or committee.
Section 7. Interest of Directors in Contracts. Any
contract or other transaction between the Corporation or any
corporation in which this Corporation owns a majority of the
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capital stock shall be valid and binding, notwithstanding that
the directors or officers of this Corporation are identical or
that some or all of the directors or officers, or both, are
also directors or officers of such other corporation.
Any contract or other transaction between the
Corporation and one or more of its directors or members or
employees, or between the Corporation and any firm of which one
or more of its directors are members or employees or in which
they are interested, or between the Corporation and any
corporation or association of which one of more of its
directors are stockholders, members, directors, officers, or
employees or in which they are interested, shall be valid for
all purposes notwithstanding the presence of such director or
directors at the meeting of the Board of Directors of the
Corporation which acts upon, or in reference to, such contract
or transaction and notwithstanding his or their participation
in such action, if the fact of such interest shall be disclosed
or known to the Board of Directors and the Board of Directors
shall authorize, approve and ratify such contract or
transaction by a vote of a majority of the directors present,
such interested director or directors to be counted in
determining whether a quorum is present, but not to be counted
in calculating the majority of such quorum necessary to carry
such vote. This Section shall not be construed to invalidate
any contract or other transaction which would otherwise be
valid under the common and statutory law applicable thereto.
Section 8. Indemnification of Directors, Officers and
Employees. Every person who is or was a director, officer or
employee of this Corporation or of any other corporation for
which he is or was serving in any capacity at the request of
this Corporation shall be indemnified by this Corporation
against any and all liability and expense that may be incurred
by him in connection with or resulting from or arising out of
any claim, action, suit or proceeding, provided that such
person is wholly successful with respect thereto or acted in
good faith in what he reasonably believed to be in or not
opposed to the best interests of this Corporation or such other
corporation, as the case may be, and, in addition, in any
criminal action or proceeding in which he had no reasonable
cause to believe that his conduct was unlawful. As used
herein, "claim, action, suit or proceeding" shall include any
claim, action, suit or proceeding (whether brought by or in the
right of this Corporation or such other corporation or
otherwise), civil, criminal, administrative or investigative,
whether actual or threatened or in connection with an appeal
relating thereto, in which a director, officer or employee of
this Corporation may become involved, as a party or otherwise,
(i) by reason of his being or having been a director,
officer of employee of this corporation or such
other corporation or arising out of his status as
such or
(ii) by reason of any past or future action taken or
not taken by him in any such capacity, whether or
not he continues to be such at the time such
liability or expense is incurred.
The terms "liability" and "expense" shall include, but shall not
be limited to, attorneys' fees and disbursements, amounts of
judgments, fines or penalties, and amounts paid in settlement
by or on behalf of a director, officer or employee, but shall
not in any event include any liability or expenses on account
of profits realized by him in the purchase or sale of
securities of the Corporation in violation of the law. The
termination of any claim, action, suit or proceeding, by
judgment, settlement (whether with or without court approval)
or conviction or upon a plea of guilty or of nolo contendere,
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or its equivalent, shall not create a presumption that a
director, officer or employee did not meet the standards of
conduct set forth in this paragraph.
Any such director, officer or employee who has been
wholly successful with respect to any such claim, action, suit
or proceeding shall be entitled to indemnification as a matter
of right. Except as provided in the preceding sentence, any
indemnification hereunder shall be made only if (i) the Board
of Directors acting by a quorum consisting of Directors who are
not parties to or who have been wholly successful with respect
to such claim, action, suit or proceeding shall find that the
director, officer or employee has met the standards of conduct
set forth in the preceding paragraph; or (ii) independent legal
counsel shall deliver to the Corporation their written opinion
that such director, officer or employee has met such standards
of conduct.
If several claims, issues or matters of action are
involved, any such person may be entitled to indemnifications
as to some matters even though he is not entitled as to other
matters.
The Corporation may advance expenses to or, where
appropriate, may at its expense undertake the defense of any
such director, officer or employee upon receipt of an
undertaking by or on behalf of such person to repay such
expenses if it should ultimately be determined that he is not
entitled to indemnification hereunder.
The provisions of this Section shall be applicable to
claims, actions, suits or proceedings made or commenced after
the adoption hereof, whether arising from acts or omissions to
act during, before or after the adoption hereof.
The rights of indemnification provided hereunder shall
be in addition to any rights to which any person concerned may
otherwise be entitled by contract or as a matter of law and
shall inure to the benefit of the heirs, executors and
administrators of any such person.
The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or was serving at
the request of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or
agent of another corporation against any liability asserted
against him and incurred by him in any capacity or arising out
of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under
the provisions of this Section or otherwise.
Section 9. Distribution Out of Capital Surplus. The
Board of Directors of the Corporation may from time to time
distribute to its shareholders out of the capital surplus of
the Corporation a portion of its assets, in cash or property,
without the assent or vote of the shareholders, provided that
with respect to such a distribution the requirements of The
Indiana General Corporation Act other than shareholder approval
are satisfied.
Section 10. Powers of Directors. In addition to the
powers and the authority granted by these Articles or by
statute expressly conferred, the Board of Directors of the
Corporation is hereby authorized to exercise all powers and to
do all acts and things as may be exercised or done under the
laws of the State of Indiana by a corporation organized and
existing under the provisions of The Indiana General
Corporation Act and not specifically prohibited or limited by
these Articles.
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Section 11. Voting Rights on Business Combinations
The affirmative vote of the holders of not less than eighty
percent (80%) of the outstanding shares of the common stock of
the Corporation shall be required to approve any business
combination (as hereinafter defined) which is not approved and
recommended by the vote of two-thirds (2/3) of the entire Board
of Directors of the Corporation. All other business
combinations will require the affirmative vote of a majority of
the outstanding shares of common stock of the Corporation.
This Section 11 of Article IX shall not be altered, amended or
repealed except by the affirmative vote of the holders of not
less than 80% of the outstanding shares of common stock of the
Corporation, given at a shareholders' meeting duly called for
that purpose, on a proposal adopted and recommended by the vote
of two-thirds (2/3) of the entire Board of Directors of the
Corporation.
A "business combination" as utilized herein and in
Sections 12 and 13 shall include:
(i) Any merger or consolidation of the Corporation
with or into any other corporation.
(ii) Any sale, lease, exchange, or other disposition of
any material part of the assets of the Corporation
or any subsidiary thereof to or with any other
corporation, person, or other entity, or
(iii) any liquidation or dissolution of the Corporation or any
material subsidiary thereof or adoption of any plan with
respect thereto.
Section 12. Consideration of Non-Financial Factors.
In connection with the exercise of its judgment in determining
what is in the best interest of the Corporation and its
shareholders when evaluating a business combination (as defined
in Section 11) or a tender or exchange offer, the Board of
Directors of the Corporation shall, in addition to considering
the adequacy of the amount to be paid in connection with any
such transaction, consider all of the following factors and any
other factors which it deems relevant:
(i) The social and economic effects of the transaction
on the Corporation and its subsidiaries,
employees, depositors, loan and other customers,
creditors and other elements of the communities in
which the Corporation and its subsidiaries operate
or are located;
(ii) The business and financial condition and earnings
prospects of the acquiring person or persons,
including, but not limited to, debt service and
other existing or likely financial obligations of
the acquiring person or persons, and the possible
effect of such conditions upon the Corporation and
its subsidiaries and the other elements of the
communities in which the Corporation and its
subsidiaries operate or are located; and
(iii) The competence, experience, and integrity of the
acquiring person or persons and its or their management.
This Section 12 of Article IX shall not be altered,
amended or repealed except by the affirmative vote of the
holders of not less than eighty percent (80%) of the
outstanding common stock of the Corporation, given at a
shareholders' meeting duly called for that purpose, upon a
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proposal adopted by the vote of two-thirds (2/3) of the entire
Board of Directors of the Corporation.
Section 13. Acquisition of Additional Shares by
Certain Shareholders. Any person, whether an individual,
partnership, corporation, group, or otherwise, who, separately
or in association with one or more persons, acquires 15% of the
then outstanding common stock of the Corporation, in connection
with any further, direct or indirect acquisition in connection
with a tender or exchange offer, open market purchase or
business combination, is required to offer and pay for such
additional shares a consideration which is at least equal to
the highest percent over market value paid to acquire shares of
the Corporation's common stock then held by such person or his
associates. Any purchase of shares of common stock made in
derivation of this Section 13 of Article IX shall be null and
void.
This Section 13 of Article IX shall not be altered,
amended or repealed except by the affirmative vote of the
holders of not less than eighty percent (80%) of the
outstanding common stock of the Corporation, given at a
shareholders' meeting duly called for that purpose, upon a
proposal adopted by the vote of two-thirds (2/3) of the entire
Board of Directors of the Corporation.
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EXHIBIT 5
July 25, 1996
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 Workingmens
Capital Holdings, Inc.
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, under the Securities Act of 1933, as
amended, shares of ONB's no par value common stock. The Shares
are proposed to be issued to shareholders of Workingmens
Capital Holdings, Inc. ("WCHI"), Bloomington, Indiana, in
connection with the affiliation of WCHI with ONB
("Affiliation"), as specified in the Agreement of Affiliation
and Merger, dated as of April 8, 1996 (the "Agreement"), by and
among ONB, ONB Bank, WCHI and Workingmens Federal Savings Bank
(the "Shares"). 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 WCHI 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 persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the Rules and
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Board of Directors
July 25, 1996
Page 2
Regulations of the Securities and Exchange Commission
promulgated thereunder.
Very truly yours,
/s/ KRIEG DeVAULT ALEXANDER & CAPEHART
--------------------------------------
KRIEG DeVAULT ALEXANDER & CAPEHART
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EXHIBIT 8
July 19, 1996
Board of Directors Board of Directors
Old National Bancorp Workingmens Capital Holdings, Inc.
420 Main Street 121 East Kirkwood Avenue
Evansville, Indiana 47708 Bloomington, Indiana 47408
RE: Merger of Workingmens Capital Holdings, Inc. into Old
National Bancorp and the Exchange of Common Stock of
Workingmens Capital Holdings, Inc. and, Immediately
Thereafter, the Merger of Workingmens Federal Savings Bank
into ONB Bank
Ladies and Gentlemen:
The respective Boards of Directors of Old National Bancorp
("ONB") and Workingmens Capital Holdings, Inc. ("Capital
Holdings") have requested our opinion as to certain federal
income tax consequences of a reorganization involving ONB,
Capital Holdings, ONB Bank ("ONB Bank") and Workingmens Federal
Savings Bank ("WFSB").
In summary, the proposed transaction involves the following
transactions in the following order: (1) the merger of Capital
Holdings with and into ONB ("Company Merger"), with ONB as the
surviving entity ("Surviving Company"), and (2) immediately
after the Company Merger, WFSB will merge with and into ONB
Bank ("Thrift Merger"), with ONB Bank as the surviving entity
("Surviving Bank"). The Company Merger and the Thrift Merger
are sometimes herein referred to collectively as the "Mergers."
In consideration of the proposed Company Merger, Capital
Holdings shareholders will receive solely ONB voting common
stock and cash for any fractional share interest of ONB voting
common stock. Upon and after consummation of the proposed
transactions, ONB Bank will continue as a wholly-owned
subsidiary of ONB.
FACTS
In connection with the Company Merger and Thrift Merger, the
following facts have been provided to us, and we have relied
upon them for purposes of this opinion:
A. Old National Bancorp
ONB maintains its principal office at 420 Main Street,
Evansville, Vanderburgh County, Indiana 47708. ONB is a
corporation duly incorporated and existing under the laws of
the State of Indiana and is a registered bank holding company
under the federal Bank Holding Company Act of 1956, as amended.
As of June 30, 1996, ONB had 50,000,000 shares of voting, no
par value, common stock authorized, of which approximately
25,200,000 shares were issued and outstanding. ONB common
stock is traded in the over-the-counter market and stock prices
are reported on the NASDAQ National Market System. No
shareholder of ONB holds five percent (5%) or more of ONB's
outstanding common stock.
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 2
ONB also has 2,000,000 shares of Series A, no par value,
preferred stock authorized. The preferred stock has no stated
dividend rate. No shares of ONB preferred stock have been
issued, and ONB presently has no intent and no commitments to
issue any of such shares. However, during the first fiscal
quarter of 1990, ONB declared and paid a dividend in the form
of rights ("Rights") to purchase shares of its Series A
preferred stock pursuant to a Rights Agreement. One Right was
issued for each outstanding share of ONB common stock.
Subsequent issuances of ONB common stock also included such
Rights. Each Right entitles the holder thereof, upon the
occurrence of certain events involving a change in control of
ONB, to purchase from ONB 1/100 of a share of the Series A
preferred stock at an initial purchase price equal to $60.00,
subject to adjustment. Unless earlier exercised or redeemed,
the Rights will expire at the close of business on March 1,
2000. A Right is transferred automatically with a transfer of
each underlying share of ONB common stock, and future issuances
of ONB common stock will also include such Rights.
ONB maintains its accounting on a calendar year basis, and
computes its income under the accrual method of accounting.
ONB is the parent corporation of an affiliated group of
subsidiaries consisting of twenty-five (25) operating banks,
one insurance company, one realty company, one (1) consumer
finance company, one (1) data processing company and three (3)
national trust companies ("ONB Group"). The ONB Group files a
consolidated federal income tax return and will continue to
file consolidated federal income tax returns after the
effective time of the Mergers.
B. ONB Bank
ONB Bank maintains its principal office at 100 Fountain Square,
Bloomington, Indiana 47404. ONB Bank is a federally chartered
savings bank organized under the laws of the United States of
America. ONB Bank owns one (1) subsidiary that has no
operations, business or assets. All of the issued and
outstanding shares of ONB Bank capital stock are owned by ONB.
ONB Bank maintains its accounting on a calendar year basis, and
computes its income under the accrual method of accounting.
ONB Bank is a subsidiary corporation of ONB. ONB Bank files as
a member of the ONB Group's consolidated federal income tax
return.
C. Workingmens Capital Holdings, Inc.
Capital Holdings maintains its principal office at 121 East
Kirkwood Avenue, Bloomington, Indiana 47404. Capital Holdings
is a corporation duly organized and existing under the laws of
the State of Indiana, and is a savings and loan holding company
under the Home Owners Loan Act, as amended. As of April 8,
1996, Capital Holdings had 5,000,000 shares of voting, no par
value common stock authorized, of which 1,806,560 shares were
issued and outstanding. The number of issued and outstanding
shares of Capital Holdings common stock is subject to increase
to a total of 1,845,540 shares pursuant to the exercise of
options (collectively, the "Stock Options") granted under the
Workingmens Capital Holdings, Inc. Stock Option Plan ("Stock
Option Plan"). Capital Holdings common stock is actively
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 3
traded and stock prices are reported on the NASDAQ National
Market System. As of April 8, 1996, no shareholders held five
percent (5%) or more of Capital Holdings outstanding common
stock.
Capital Holdings also has 2,000,000 shares of no par value
preferred stock authorized. No shares of Capital Holdings
preferred stock have been issued, and Capital Holdings
presently has no plan or intent and no commitments to issue any
of such shares. There are no options, warrants, commitments,
calls, puts, agreements, understandings, arrangements or
subscription rights relating to any shares of Capital Holdings
common stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any
common stock or debt securities of Capital Holdings, by which
Capital Holdings is or may become bound, except for the 38,980
shares of the Capital Holdings Common Stock pursuant to the
exercise of the Stock Options.
Capital Holdings maintains its accounting on a calendar year
basis, and computes its income under the accrual method of
accounting. Capital Holdings is the parent corporation of one
(1) operating savings bank (collectively, the "Capital Holdings
Group"). The Capital Holdings Group files a consolidated
federal income tax return.
D. Workingmens Federal Savings Bank
WFSB maintains its principal office at 121 East Kirkwood
Avenue, Bloomington, Indiana 47404. WFSB is a federally
chartered savings bank organized under the laws of the United
States of America. WFSB owns and operates one (1) subsidiary,
RISC, an Indiana corporation whose sole business is the
marketing of tax-deferred annuities as agent for WFSB s
customers. As of April 8, 1996, WFSB had 1,000 shares of
voting, $.01 par value common stock authorized, issued,
outstanding and held by Capital Holdings. WFSB common stock is
not actively traded and there has never been an established
public trading market for the stock.
WFSB also has 1,000,000 shares of $1.00 par value preferred
stock authorized. No shares of WFSB preferred stock have been
issued, and WFSB presently has no plan or intent and no
commitments to issue any of such shares. There are no options,
warrants, commitments, calls, puts, agreements, understandings,
arrangements or subscription rights relating to any shares of
WFSB common stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any
common stock or debt securities of WFSB, by which WFSB is or
may become bound.
WFSB maintains its accounting on a calendar year basis, and
computes its income under the accrual method of accounting.
WFSB is a subsidiary savings bank of Capital Holdings. WFSB
files as a member of the Capital Holdings Group's consolidated
federal income tax return.
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 4
BUSINESS PURPOSES
The shareholders of ONB and the shareholders of Capital
Holdings desire to reorganize their stock interests to
accomplish the following business objectives:
1. To obtain greater financial and managerial strength for
future growth and to achieve economies of scale and other
operational benefits.
2. To allow ONB, ONB Bank, Capital Holdings and WFSB to
compete more effectively with other financial institutions and
financial services providers and to enable WFSB to provide new
or broader services to its customers.
3. To provide the shareholders of Capital Holdings an
interest in a more widely held enterprise that is potentially
more liquid than Capital Holdings common stock.
4. To allow ONB greater access to the financial services
market in the Bloomington, Indiana area.
PROPOSED TRANSACTION
As used herein, "Code" refers to the Internal Revenue Code of
1986, as amended, and "Regulations" refers to regulations
promulgated thereunder by the Secretary of the Treasury, all as
in effect as of the date of this opinion.
To accomplish the objectives specified above, ONB, ONB Bank,
Capital Holdings and WFSB have entered into an Agreement of
Affiliation and Merger, dated as of April 8, 1996
("Agreement"). Under the terms of the Agreement, the following
transactions will occur:
Transaction 1 - Company Merger. Pursuant to the Agreement, the
Company Merger will involve the merger of Capital Holdings with
and into ONB, with ONB as the surviving bank holding company.
ONB will continue its corporate existence under the laws of the
State of Indiana, and as a registered multi-bank holding
company under the federal Bank Holding Company Act of 1956, as
amended.
On the effective date of the Company Merger, each issued and
outstanding share of Capital Holdings common stock will be
converted into the right to receive solely sixty-four one
hundredths (0.64) of a share of ONB common stock (subject to
certain adjustments as set forth in the Agreement). No
fractional shares of ONB common stock will be issued with
respect to fractional share interests arising from the exchange
ratio specified above. Rather, any shareholder of Capital
Holdings entitled to a fractional share interest of ONB common
stock will receive cash in lieu thereof in an amount equal to
such fraction multiplied by the Average Price Per Share (as
defined in the Agreement) of ONB common stock. The payment of
cash in lieu of fractional share interests of ONB common stock
is solely for the purpose of avoiding the expense and
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 5
inconvenience to ONB of issuing fractional shares and does not
represent separately bargained-for consideration.
No cash or other property, except for ONB common stock and cash
paid in lieu of fractional shares, will be allocated to the
shareholders of Capital Holdings. Shareholders of Capital
Holdings are not entitled to statutory dissenters' rights
because Capital Holdings is listed on NASDAQ National Market
System.
The Agreement has been submitted to the shareholders of Capital
Holdings for approval at a meeting called and held in
accordance with applicable law and the Articles of
Incorporation and By-Laws of Capital Holdings. Approval of the
Company Merger by the shareholders of ONB is not contemplated
or required. The Company Merger requires approval by the
Boards of Directors of ONB and Capital Holdings. The proposed
Company Merger is subject to approval by the Board of Governors
of the Federal Reserve System ("Federal Reserve") and the
Office of Thrift Supervision ("OTS"). The Federal Reserve has
approved the Company Merger. OTS has not yet approved the
Company Merger.
The shares of ONB common stock will, when issued to
shareholders of Capital Holdings in accordance with the
Agreement, be validly issued, fully paid and nonassessable and
registered under the Securities Act of 1933, as amended.
Transaction 2 - Thrift Merger. Pursuant to the Agreement, and
immediately following the Company Merger, WFSB will be merged
with and into ONB Bank pursuant to the federal law of the
United States of America, with ONB Bank as the surviving bank.
ONB Bank shall continue its corporate existence as a federally
chartered savings bank under the laws of the United States of
America. As ONB will own one hundred percent (100%) of the
shares of WFSB common stock after and by virtue of consummation
of the Company Merger, no additional consideration will be
given for the shares of WFSB common stock owned by ONB.
Approval of the Agreement by Capital Holdings as the sole
shareholder of WFSB is required and has not yet been obtained.
Approval of the Agreement by the shareholders of ONB is not
contemplated or required. Approval of the Agreement by ONB as
the sole shareholder of ONB Bank is required and has not yet
been obtained. The Thrift Merger requires approval by the
Boards of Directors of ONB Bank and WFSB. The proposed Thrift
Merger is subject to approval by the Federal Reserve and OTS.
The Federal Reserve has approved the Thrift Merger. OTS has
not yet approved the Thrift Merger.
ASSUMPTIONS
In connection with the Company Merger, we have relied upon the
following assumptions for the purpose of issuing this opinion:
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 6
1. The fair market value of ONB stock and other consideration
received by each Capital Holdings shareholder will be
approximately equal to the fair market value of Capital
Holdings common stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of
Capital Holdings who own five percent (5%) or more of the
shares of Capital Holdings common stock, and there is no plan
or intention on the part of the remaining shareholders of
Capital Holdings, to sell, exchange or otherwise dispose of a
number of shares of ONB common stock received in the Company
Merger that would reduce the Capital Holdings shareholders'
ownership of ONB common stock to a number of shares having a
value, as of the effective time of the Company Merger, of less
than fifty percent (50%) of the value of all of the formerly
outstanding shares of common stock of Capital Holdings as of
the same date. For purposes of this assumption, shares of
Capital Holdings common stock exchanged for cash or other
property, or exchanged for cash in lieu of fractional shares of
ONB common stock will be treated as outstanding Capital
Holdings common stock as of the effective time of the Company
Merger. Moreover, shares of Capital Holdings common stock and
shares of ONB common stock held by Capital Holdings
shareholders and otherwise sold, redeemed or disposed of prior
or subsequent to the effective time of the Company Merger will
be considered in making this assumption.
3. ONB has no plan or intention to reacquire any of its
shares of common stock issued in the Company Merger. ONB may,
however, acquire shares of ONB common stock on a periodic basis
through purchases on an anonymous basis on the open market at
open market prices.
4. ONB has no plan or intention to sell or otherwise dispose
of any of the assets of Capital Holdings acquired in the
Company Merger, except for dispositions made in the ordinary
course of business or transfers described in Section
368(a)(2)(C) of the Code.
5. The liabilities of Capital Holdings assumed by ONB and the
liabilities to which the transferred assets of Capital Holdings
are subject were incurred by Capital Holdings in the ordinary
course of its business.
6. Following the Company Merger, ONB will continue the
historic business of Capital Holdings or use a significant
portion of Capital Holdings historic business assets in a
business.
7. ONB, Capital Holdings and the shareholders of Capital
Holdings will pay their respective expenses, if any, incurred
in connection with the Company Merger.
8. There is no intercorporate indebtedness existing between
Capital Holdings and ONB that was issued, acquired or will be
settled at a discount.
9. No two parties to the Company Merger are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
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<PAGE>
Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 7
10. Capital Holdings is not under the jurisdiction of a court
in a Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
11. The fair market value of the assets of Capital Holdings
transferred to ONB will equal or exceed the sum of the
liabilities assumed by ONB plus the amount of liabilities, if
any, to which the transferred assets are subject.
12. The payment of cash in lieu of fractional shares of ONB
common stock resulting from the Exchange Ratio is solely for
the purpose of avoiding the expense and inconvenience to ONB of
issuing fractional shares of ONB common stock and does not
represent separately bargained-for consideration. The total
cash consideration that will be paid in the Company Merger to
the Capital Holdings shareholders instead of issuing fractional
shares of ONB common stock will not exceed one percent (1%) of
the total consideration that will be issued in the Company
Merger to the Capital Holdings shareholders in exchange for
their shares of Capital Holdings common stock. The fractional
share interest of each Capital Holdings shareholder will be
aggregated, and no Capital Holdings shareholder will receive
cash in an amount equal to or greater than the value of one (1)
full share of ONB common stock.
13. None of the compensation received by any shareholder-
employees of Capital Holdings will be separate consideration
for, or allocable to, any of their shares of Capital Holdings
common stock; none of the shares of ONB common stock received
by any shareholder-employees of Capital Holdings will be
separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any shareholder-
employees of Capital Holdings will be for services actually
rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
14. The shareholders of Capital Holdings (immediately prior to
the Company Merger) receiving shares of ONB common stock will
not own (immediately after the Company Merger) more than fifty
percent (50%) of the fair market value of the common stock of
ONB.
In connection with the Thrift Merger, we have relied upon the
following assumptions for the purpose of issuing this opinion:
15. As ONB owns one hundred percent (100%) of the capital
stock of ONB Bank, no additional ONB Bank capital stock is
being issued or exchanged in the Thrift Merger.
16. There is no plan or intention by the shareholder of WFSB
to sell, exchange or otherwise dispose of a number of shares of
ONB Bank common stock constructively received in the Thrift
Merger that would reduce the WFSB shareholder's ownership of
ONB Bank common stock to a number of shares having a value, as
of the effective time of the Thrift Merger, of less than fifty
percent (50%) of the value of all of the formerly outstanding
shares of common stock of WFSB as of the same date. For
purposes of this assumption, shares of WFSB common stock
exchanged for cash or other property, or exchanged for cash in
lieu of fractional shares of ONB Bank common stock will be
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Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 8
treated as outstanding WFSB common stock as of the effective
time of the Thrift Merger. Moreover, shares of WFSB common
stock and shares of ONB Bank common stock held by the
shareholder of WFSB and otherwise sold, redeemed, or disposed
of prior or subsequent to the effective time of the Thrift
Merger will be considered in making this assumption.
17. ONB Bank has no plan or intention to reacquire any of its
common stock constructively issued in the Thrift Merger.
18. ONB Bank has no plan or intention to sell or otherwise
dispose of any of the assets of WFSB acquired in the
transaction, except for dispositions made in the ordinary
course of business or transfers described in Section
368(a)(2)(C) of the Code.
19. The liabilities of WFSB assumed by ONB Bank and the
liabilities to which the transferred assets of WFSB are subject
were incurred by WFSB in the ordinary course of its business.
20. Following the Thrift Merger, ONB Bank will continue the
historic business of WFSB or use a significant portion of
WFSB's historic business assets in a business.
21. There is no intercorporate indebtedness existing between
ONB and WFSB or between ONB Bank and WFSB that was issued,
acquired or will be settled at a discount.
22. No two parties to the Thrift Merger are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
23. WFSB is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code.
24. The fair market value of the assets of WFSB transferred to
ONB Bank will equal or exceed the sum of the liabilities
assumed by ONB Bank plus the amount of liabilities, if any, to
which the transferred assets are subject.
25. ONB, ONB Bank, WFSB and the shareholders of WFSB will pay
their respective expenses, if any, incurred in connection with
the Thrift Merger.
OPINION
Based solely upon the facts, assumptions and other information
set forth herein, and so long as such facts, assumptions and
other information are true and correct on the date of
consummation of the Company Merger, it is our opinion with
respect to the Company Merger that:
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<PAGE>
Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 9
1. Provided that the merger of Capital Holdings with and into
ONB qualifies as a statutory merger under applicable state
law, the proposed merger will constitute a reorganization
within the meaning of Section 368(a)(1)(A) of the Code.
2. Capital Holdings will recognize no gain or loss upon the
transfer of all of its assets to ONB in exchange for ONB
common stock issued to Capital Holdings shareholders, cash
paid to Capital Holdings shareholders in lieu of
fractional shares of ONB common stock, and the assumption
by ONB of all of Capital Holdings' liabilities.
3. No gain or loss will be recognized by ONB on the receipt
of the assets of Capital Holdings in exchange for ONB
common stock.
4. The shareholders of Capital Holdings will recognize no
gain or loss upon the exchange of their shares of Capital
Holdings common stock solely for shares of ONB common
stock.
Based solely upon the facts, assumptions and other information
set forth herein, and so long as such facts, assumptions and
other information are true and correct on the date of
consummation of the Thrift Merger, it is our opinion with
respect to the Thrift Merger that:
5. Provided that the merger of WFSB with and into ONB Bank
qualifies as a statutory merger under applicable federal
law, the proposed merger will constitute a reorganization
within the meaning of Section 368(a)(1)(A) of the Code.
6. WFSB will recognize no gain or loss on the transfer of all
of its assets to ONB Bank in constructive exchange for ONB
Bank common stock and the assumption by ONB Bank of all of
WFSB's liabilities.
7. ONB Bank will recognize no gain or loss upon the receipt
by ONB Bank of the assets of WFSB in constructive exchange
for ONB Bank common stock.
8. The shareholder of ONB Bank will recognize no gain or loss
upon the constructive exchange of WFSB common stock solely
for ONB Bank common stock.
The opinions expressed herein represent our conclusions as to
the application of existing federal income tax law to the facts
as presented to us relating to the Company Merger and Thrift
Merger, and we give no assurance that changes in such law or
any interpretation thereof will not affect the opinions
expressed by us. Moreover, there can be no assurance that
these opinions will not be challenged by the Internal Revenue
Service or that a court considering the issues will not hold
contrary to such opinions. We express no opinion on the
treatment of the Company Merger and Thrift Merger under the
income tax laws of any state or other taxing jurisdiction. We
assume no obligation to advise you of any changes concerning
the above, whether or not deemed material, which may hereafter
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<PAGE>
Old National Bancorp
Workingmens Capital Holdings, Inc.
July 19, 1996
Page 10
come or be brought to our attention. The opinions expressed
herein are a matter of professional judgment and are not a
guarantee of result.
This opinion letter is addressed to you and is solely for your
use in connection with the Company Merger and Thrift Merger and
your role as members of your respective Boards of Directors.
We assume no professional responsibility to any other person or
entity whatsoever, including, without limitation, any
shareholder of ONB or shareholder of Capital Holdings or WFSB.
Accordingly, the opinions expressed herein are not to be
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, our prior
written consent.
Very truly yours,
\s\ Krieg DeVault Alexander & Capehart
--------------------------------------
KRIEG DeVAULT ALEXANDER & CAPEHART
SS-78672-1
<PAGE>
<PAGE>
EXHIBIT 10.02
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
FOR SELECT EXECUTIVE EMPLOYEES OF
OLD NATIONAL BANCORP AND SUBSIDIARIES
(As Amended and Restated Effective as of July 1, 1994)
<PAGE>
<PAGE>
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
FOR SELECT EXECUTIVE EMPLOYEES OF
OLD NATIONAL BANCORP AND SUBSIDIARIES
TABLE OF CONTENTS
ARTICLE PAGE
INTRODUCTION 1
I. DEFINITIONS 1
1.1 Adjustment 1
1.2 Board 1
1.3 Code 1
1.4 Committee 1
1.5 Compensation 1
1.6 Disability 2
1.7 Effective Date 2
1.8 Employee 2
1.9 Employer 2
1.10 Individual Account 2
1.11 Participant 2
1.12 Participant's Salary Deferral Contributions 2
1.13 Participant's Salary Deferral Contributions Account 2
1.14 Plan 3
1.15 Plan Year 3
1.16 Profit Sharing Plan 3
1.17 Subsidiary 3
1.18 Supplemental Employer Contributions 3
1.19 Supplemental Employer Contributions Account 3
1.20 Supplemental Employer Matching Contributions 3
1.21 Supplemental Employer Matching Contributions Account 3
II. ELIGIBILITY AND PARTICIPATION 4
III. CONTRIBUTIONS AND ALLOCATIONS 4
3.1 Participant Salary Deferral Contributions 4
3.2 Participation Agreement 5
3.3 Supplemental Employer Contributions 6
3.4 Allocation of Adjustments 6
IV. INVESTMENT OF CONTRIBUTIONS 7
4.1 Discretionary Investment 7
4.2 Unsecured Contractual Rights 8
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<PAGE>
V. DISTRIBUTIONS 8
5.1 Time of Payment of Benefits 8
5.2 Method of Payment 8
5.3 Death of the Participant and Beneficiary Designation 9
5.4 Suspension of Distribution on
Insolvency of Employer 10
VI. PLAN ADMINISTRATION 11
6.1 Appointment of the Committee 11
6.2 Powers and Responsibilities of the Committee 11
6.3 Liabilities 12
6.4 Claims Procedure 12
VII. AMENDMENT AND TERMINATION OF THE PLAN 13
7.1 Amendment of the Plan 13
7.2 Termination of the Plan 13
VIII. MISCELLANEOUS 13
8.1 Governing Law 13
8.2 Headings and Gender 13
8.3 Participant's Rights; Acquittance 13
8.4 Spendthrift Clause 13
8.5 Counterparts 14
8.6 No Enlargement of Employment Rights 14
8.7 No Guarantee 14
8.8 Limitations on Liability 14
8.9 Incapacity of Participant or Beneficiary 14
8.10 Corporate Successors 14
SIGNATURES 15
<PAGE>
<PAGE>
INTRODUCTION
Effective July 1, 1994, Old National Bancorp (the
"Employer") adopts the amended and restated Supplemental
Deferred Compensation Plan For Select Executive Employees of
Old National Bancorp and Subsidiaries (the "Plan"), as set
forth herein.
The purpose of this Plan, (which was originally effective
August 1, 1987 and formerly known as the Supplemental Deferred
Compensation Plan for Select Employees of Old National Bancorp
and Participating Employers) is to permit a select group of
management or highly compensated employees of the Employer or
its subsidiaries to elect to defer compensation from the
Employer or receive contributions from the Employer without
regard to the limitations imposed by the Internal Revenue Code
of 1986, as amended, on the benefits which may accrue to such
employees under the Employees' Savings and Profit-Sharing Plan
of Old National Bancorp and the Old National Bancorp Employees'
Retirement Plan. It is the intention of the Employer that the
Plan shall constitute an unfunded arrangement maintained for
the purpose of providing deferred compensation for a select
group of management or highly compensated employees for federal
income tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
Whenever the initial letter of a word or phrase is
capitalized herein, the following words and phrases shall have
the meanings stated below unless a different meaning is plainly
required by the context:
1.1 "Adjustment" means the net increases and decreases in
the combined market values of the subaccounts which comprise
the Individual Account of each Participant. Such increases and
decreases shall include such items as realized or unrealized
investment gains and losses, if any, and investment income, if
any, and may, in the discretion of the Employer, include
expenses properly attributable to administering the Plan.
1.2 "Board" means the Board of Directors of Old National
Bancorp.
1.3 "Code" means the Internal Revenue Code of 1986, as
amended from time to time. References to a section of the Code
shall include that section and any comparable section or
sections of any future legislation that amends, supplements or
supersedes said section.
1.4 "Committee" means the Compensation Committee of the
Board responsible for administering the Plan, as described in
Section 6.2.
1.5 "Compensation" means the Participant's total
compensation from the Employer for a calendar year, other than
qualified or previously qualified deferred compensation that is
currently includable in gross income, plus any salary reduction
Employer contributions made on behalf of the Participant under
a plan which qualifies under Section 401(k) of the Code and/or
Section 125 of the Code. Compensation taken into account for
all purposes under the Plan shall not be limited as provided in
Section 401(a)(17) of the Code.
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<PAGE>
1.6 "Disabled" or "Disability" means the physical or
mental condition arising after the original date of employment
of the Participant which totally and permanently prevents the
Participant from engaging in any occupation or employment for
remuneration or profit, except for the purpose of
rehabilitation not incapatible with a finding of total and
permanent disability. The Committee shall be the sole and
final judge of Disability within the meaning of the Plan, after
consideration of such evidence as it may require, including the
reports of such physician or physicians as it may designate.
1.7 "Effective Date" of the Plan means August 1, 1987;
the effective date of this amended and restated Plan is July 1,
1994.
1.8 "Employee" means any person who is employed by the
Employer or a Subsidiary.
1.9 "Employer" means Old National Bancorp and its
Subsidiaries.
1.10 "Individual Account" means the individual account
maintained for each Participant in accordance with the terms of
the Plan. Such Individual Account is comprised of whichever of
the following sub-accounts are applicable to a particular
Participant: Supplemental Employer Matching Contributions
Account, Supplemental Employer Contributions Account and
Participant Salary Deferral Contributions Account.
1.11 "Participant" means a salaried executive Employee of
the Employer or its Subsidiaries who becomes a Participant
pursuant to the provisions of Article II of the Plan.
1.12 "Participant Salary Deferral Contributions" means
contributions made to the Plan pursuant to Section 3.1 by the
Employer, at the election of the Participant, and at the
discretion of the Employer, in lieu of cash Compensation, under
a Participation Agreement between the Participant and the
Employer. Although the term "contribution" is used herein for
ease of reference, credits to Participants' Individual Accounts
under the Plan are merely credits to a bookkeeping account.
1.13 "Participant Salary Deferral Contributions Account"
means that portion of a Participant's Individual Account
attributable to
(a) Participant Salary Deferral Contributions
allocated to such Participant pursuant to
Section 3.1 and
(b) the Participant's proportionate share,
attributable to his Participant Salary Deferral
Contributions Account, of the Adjustments,
reduced by any distributions from such account
pursuant to Article V.
1.14 "Plan" means the Supplemental Deferred Compensation
For Select Executive Employees of Old National Bancorp and
Subsidiaries.
1.15 "Plan Year" means the twelve (12) month period
beginning January 1 and ended December 31.
1.16 "Profit Sharing Plan" means the Employees' Savings
and Profit-Sharing Plan of Old National Bancorp, as amended
from time to time.
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<PAGE>
1.17 "Subsidiary" or "Subsidiaries" means any corporation
more than fifty percent (50%) of whose total combined voting
stock of all classes is held by the Employer or by another
corporation qualifying as a Subsidiary within this definition.
1.18 "Supplemental Employer Contributions" means
contributions made to the Plan by the Employer for the Plan
Year, at the discretion of the Employer, and allocated to a
Participant's Individual Account. Although the term
"contribution" is used herein for ease of reference, credits to
Participants' Individual Accounts under the Plan are merely
credits to a bookkeeping account.
1.19 "Supplemental Employer Contributions Account" means
that portion of a Participant's Individual Account attributable
to
(a) Supplemental Employer Contributions allocated to
such Participant pursuant to Section 3.3(b) and
(b) the Participant's proportionate share,
attributable to his Supplemental Employer
Contributions Account, of the Adjustments,
reduced by any distributions from such account
pursuant to Article V.
1.20 "Supplemental Employer Matching Contributions" means
contributions made to the Plan by the Employer for the Plan
Year in accordance with the provisions of Section 3.3 and
allocated to a Participant's Individual Account by reason of
the Participant's Salary Deferral Contributions contributed to
the Plan pursuant to Section 3.1(a). Although the term
"contribution" is used herein for ease of reference, credits to
Participants' Individual Accounts under the Plan are merely
credits to a bookkeeping account.
1.21 "Supplemental Employer Matching Contributions
Account" means that portion of a Participant's Individual
Account attributable to
(a) Supplemental Employer Matching Contributions
allocated to such Participant pursuant to
Section 3.3(a) and
(b) the Participant's proportionate share,
attributable to his Supplemental Employer
Matching Contributions Account, of the
Adjustments, reduced by any distributions from
such account pursuant to Article V.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
A member of a select group of management or highly
compensated Employees of the Employer or its Subsidiaries is
eligible to become a Participant in the Plan provided such
Employee is designated as a Participant by the Committee in
writing.
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1 Participant Salary Deferral Contributions.
(a) Amount of Contribution. The Employer shall
credit Participant Salary Deferral Contributions
on behalf of each executive who is a Participant
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under the Plan for the Plan Year, such
percentage (or dollar amount) of such
Participant's Compensation as mutually agreed
upon between the Participant and the Employer
prior to the beginning of each Plan Year.
Provided, however, in the case of a
Participant's initial year of participation
under the Plan, the Participant may elect to
commence Salary Deferral Contributions within
sixty (60) days after the Participant is
designated as a Participant by the Committee;
such election shall commence with respect to
Compensation paid for the first payroll period
which begins after the effective date of the
election. Such percentage (or dollar amount)
shall remain in effect for each Plan Year
thereafter until or unless another percentage
(or dollar amount) is agreed upon by the
Participant and the Employer prior to the
beginning of the applicable Plan Year or until
the Employer notifies the Participant that the
Participant is no longer eligible for
contributions under this Section 3.1.
(b) Limit on Contributions. Subject to the
provisions of subsection (c), the maximum
percentage of a Participant's Compensation that
may be subject to Participant Salary Deferral
Contributions for a Plan Year shall not exceed
fifteen percent (15%) of such Participant's
Compensation for such Plan Year.
(c) Profit Sharing Plan Refunds. In addition to
Participant Salary Deferral Contributions
credited to a Participant's Salary Deferral
Contributions Account for a Plan Year, the
Employer shall also credit, as Participant
Salary Deferral Contributions, an amount equal
to the principal amount, if any, of salary
reduction contributions under the Profit Sharing
Plan, but which would otherwise be refunded to
the Participant pursuant to the requirements of
Sections 401(k)(3) or 402(g) of the Code. Such
amount shall be credited to the Participant's
Salary Deferral Contributions Account as of the
date on which it would have otherwise been
refunded to the Participant and shall be treated
as a Participant Salary Deferral Contribution
for the Plan Year in which refunded, and not for
the Plan Year in which such salary reduction
contributions were made to the Profit Sharing
Plan.
(d) Timing of Contributions. Except for the
principal amount of Participant Salary Deferral
Contributions refunded to a Participant pursuant
to Sections 401(k)(3) or 402(g) of the Code,
Participant Salary Deferral Contributions made
for the benefit of a Participant for any Plan
Year shall be made to the Participant's Salary
Deferral Contributions Account within the time
prescribed for crediting salary reduction
contributions under the Profit Sharing Plan.
3.2 Participation Agreement. As a condition to the
Employer's obligation to credit Participant Salary Deferral
Contributions for the benefit of a Participant pursuant to
Section 3.1, the Participant must execute a Participation
Agreement with the Employer on such forms as shall be
prescribed by the Committee in which it is agreed that the
Employer will withhold payment of a portion of the
Participant's Compensation and shall credit such amount
withheld to the Participant's Individual Account at the times
set forth in the Plan. Except as otherwise provided in Section
3.1(a), in the case of a Participant's initial year of
participation under the Plan, the Participation Agreement for
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any Plan Year must be executed and delivered by the Participant
and the Employer prior to the first day of the Plan Year to
which the Participation Agreement relates.
The Participant's election to defer a portion of his
Compensation each year shall be irrevocable once made, except
that the Committee, in its sole discretion, may waive the
Participant's election to defer Compensation if the Participant
has suffered an unforeseeable emergency which results in a
severe financial hardship. Such waiver shall apply to the
portion of the Plan Year remaining after the Committee's
determination that the Participant has suffered a severe
financial hardship. The effective date of the waiver shall be
fixed by the Committee after application by the Participant
under such procedures as may be fixed by the Committee. The
Participant's application shall include a signed statement of
the facts causing financial hardship and any other facts
required by the Committee in its discretion. For the purposes
of this Section 3.2, an unforeseeable emergency is a severe
financial hardship to a Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a
dependent of the Participant (as defined in IRC Section
152(a)), loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseen circumstances
arising as a result of events beyond the control of the
Participant. The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each
case; however, the Committee shall not grant any waiver of a
Participant's deferral election to the extent that his hardship
may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of Participant's
assets, to the extent liquidation of such assets would not
itself cause severe financial hardship; or (iii) by cessation
of salary deferral contributions under the Profit Sharing Plan.
An unforeseeable emergency shall not include the need to send
the Participant's child to college or the desire to purchase a
home.
3.3 Supplemental Employer Contributions.
(a) Matching Contributions. The Employer shall make
Supplemental Employer Matching Contributions
under the Plan for a Plan Year in an amount
necessary to match each Participant's Salary
Deferral Contributions of up to four percent
(4%) of such Participant's Compensation,
reduced, on a dollar-for-dollar basis, by any
Matching Contributions made with respect to a
Participant's salary deferral Contributions
under the Profit Sharing Plan. The amount of
such contributions shall be equal to a specified
percentage of such Participant's Salary Deferral
Contributions based upon such Participant's
Vesting Years of Service, as determined under
the Profit Sharing Plan, in accordance with the
following schedule:
<TABLE>
<CAPTION>
Matching
Vesting Years Contribution
of Service Percentage
------------- ------------
<S> <C>
0-4 50%
5-9 75%
10 or more 100%
</TABLE>
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(b) Supplemental Employer Contributions. In
addition to any Supplemental Employer Matching
Contributions made to the Plan under subsection
(a), the Employer may, but shall not be required
to, make Supplemental Employer Contributions
under the Plan in such amount and to the
Individual Accounts of such Participants as
shall be determined by the Board, in its sole
discretion.
(c) Timing of Contributions. Supplemental Employer
Matching and Supplemental Employer Contributions
made for the benefit of a Participant for any
Plan Year shall be credited to a Participant's
Supplemental Employer Matching or Supplemental
Employer Contributions Account, as the case may
be, at the same time(s) as matching and
discretionary employer contributions,
respectively, are allocated to Participants'
accounts under the Profit Sharing Plan.
3.4 Allocation of Adjustments.
(a) Individual Account. The Committee shall
establish and maintain an account to be known as
the Individual Account in the name of each
Participant, to which the Committee shall credit
all amounts allocated to each such Participant
pursuant to this Article III. Each Individual
Account shall be comprised of whichever of the
following subaccounts are applicable to a
particular Participant: Supplemental Employer
Matching Contributions Account, Supplemental
Employer Contributions Account and Participant
Salary Deferral Contributions Account.
(b) Determination of Adjustments. Following the
allocations made pursuant to Sections 3.1 and
3.3, the Committee shall determine the
Adjustments for December 31 of the applicable
Plan Year (and, in the event a Participant is
eligible for a distribution as provided in
Article V, for the last day of the month
immediately preceding the month in which the
Participant terminates service for any reason),
and on such other dates as the Committee deems
advisable, by adding together all income
received, and realized and unrealized gains and
losses, and deducting therefrom all taxes,
charges or expenses (unless paid separately by
the Employer in its discretion, outside the
confines of this Plan) and any realized and
unrealized losses since the most recent
allocation of Adjustments to Participants'
Individual Accounts which may have been
sustained.
(c) Allocation of Adjustments. The Adjustments
shall be allocated as of the allocation date
specified in subsection (b) to the Individual
Accounts of Participants who maintain a credit
balance in their Individual Accounts as of such
date in the same proportion that the balance of
each Participant's Individual Account as of such
date bears to the balance of all Individual
Accounts of Participants in the Plan on such
date. Provided, however, if a Participant's
Individual Account is invested separately by the
Employer, the Adjustment shall be allocated as
provided in Section 1.1.
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ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
4.1 Discretionary Investment. Contributions by the
Employer and by Participants hereunder shall be credited to
each Participant's Individual Account and to the applicable
sub-accounts under the Plan as provided in Section 3.4.
Adjustments to Individual Accounts shall be determined as if
amounts credited to such Individual Accounts were invested in
the same manner as the funds held under the Profit Sharing
Plan. Provided, however at the election of the Employer, the
Adjustment to each Participant's Individual Account shall be
determined either (i) as if amounts credited to such Individual
Account were invested in hypothetical investments designated by
the Employer to be used to measure increases or decreases in
the Individual Account over time or (ii) by the earnings on
actual investments made by the Employer under the Plan.
4.2 Unsecured Contractual Rights. The Plan at all times
shall be unfunded and shall constitute a mere promise by the
Employer to make benefit payments in the future.
Notwithstanding any other provision of this Plan, neither a
Participant nor his designated beneficiary shall have any
preferred claim on, or any beneficial ownership interest in,
any assets of the Employer prior to the time benefits are paid
as provided in Article V, including any Compensation deferred
hereunder by the Participant. All rights created under this
Plan shall be mere unsecured contractual rights of the
Participant against the Employer.
ARTICLE V
DISTRIBUTIONS
5.1 Time of Payment of Benefits. All amounts credited to
a Participant's Individual Account, including any Adjustments
credited in accordance with Section 3.4, shall be or commence
to be distributed to or with respect to a Participant (or his
designated beneficiary) on the first day of the second month
next following the date on which a Participant's employment
terminates for any reason other than death. A Participant's
benefits on death shall be distributed at the time prescribed
in Section 5.3. For all purposes under the Plan, a
distributable event with respect to each Participant shall
occur on the earliest of the following dates: (i) the
Participant's death while actively employed, (ii) the date on
which the Committee makes a determination that the Participant
is Disabled or (iii) the effective date, as determined under
the Employer's standard personnel policies, of the
Participant's termination of employment for any other reason.
5.2 Methods of Payment. A Participant's Individual
Account shall be distributed to the Participant or his
designated beneficiary in one the following methods effectively
elected by the Participant in his Participation Agreement:
(a) A single lump sum;
(b) Installments payable at such intervals as shall
be elected by the Participant, over a period not
in excess of ten (10) years; or
(c) A combination of the methods specified in
subsections (a) and (b).
(d) In order to be effective, a Participant's
election of the form(s) in which and time(s) at
which his benefits hereunder shall be
distributed must be made by delivering a
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Participation Agreement or an Amended
Participation Agreement to the Committee not
later than ten (10) days prior to the effective
date of the Participant's termination of
employment for reasons other than Disability or
death. In the case of the Participant's
Disability or death, his Participation Agreement
or Amended Participation Agreement must be
delivered to the Committee prior to the date on
which the Committee determines that the
Participant is Disabled or prior to the date of
his death. The Participant's election of the
form in which benefits hereunder shall be
distributed may be amended by the delivery of an
Amended Participation Agreement to the Committee
prior to the applicable date(s) specified in the
preceding sentence. If the Participant does not
elect a form of distribution or such election is
not timely or properly made, the Employer shall
pay the Participant's entire benefit in the form
of a single lump sum.
(e) In the event a Participant elects to receive his
Individual Account in the form specified in
subsection (b), the Participant must specify in
his written election the frequency of the
installment distributions (e.g., monthly,
semi-annual, annual or the specific dates
thereof) and either the dollar amount or
percentage of his Individual Account to be
distributed in each such installment.
(i) If the Participant specifies that each
installment will be distributed in a dollar
amount, he may elect the same or different
dollar amount for each installment. Any such
election shall provide that the final
installment will consist of the remaining
balance to the credit of the Participant under
his Individual Account.
(ii) If the Participant specifies that each
installment will consist of a percentage of his
Individual Account, such percentage shall be
based upon the balance of the Participant's
Individual Account on the date on which the
installment distributions commence and any such
election shall provide that the final
installment will consist of the remaining
balance to the credit of the Participant under
his Individual Account.
(f) In the event a Participant elects to receive his
Individual Account in the form specified in
subsection (c), the Participant must specify in
his written election the percentage of his
Individual Account which will be distributed in
a single lump sum and the percentage of such
account which will be distributed in
installments.
5.3 Death of the Participant and Beneficiary Designation.
(a) Form and Time of Payment. In the event of a
Participant's death, his entire Individual
Account (or his entire remaining Individual
Account if distribution thereof has commenced)
shall be paid to the Participant's designated
beneficiary in a single lump sum within sixty
(60) days of the date of his death.
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(b) Designation of Beneficiaries. The Participant
may designate a primary and contingent
beneficiary or beneficiaries on forms provided
by the Committee, which for this purpose may
include the Participation Agreement. Such
designation may be changed at any time for any
reason by the Participant. If the Participant
fails to designate a beneficiary, or if such
designation shall for any reason be illegal or
ineffective, or if the designated beneficiary
shall not survive the Participant, his benefits
under the Plan shall be paid: (i) to his
surviving spouse; (ii) if there is no surviving
spouse, to his descendants (including legally
adopted children or their descendants) per
stirpes; (iii) if there is neither a surviving
spouse nor surviving descendants, to the duly
appointed and qualified executor or other
personal representative of the Participant to be
distributed in accordance with the Participant's
will or applicable intestacy law; or (iv) in the
event that there shall be no such representative
duly appointed and qualified within thirty (30)
days after the date of death of the Participant,
then to such persons as, at the date of his
death, would be entitled to share in the
distribution of the Participant's estate under
the provisions of the applicable statute then in
force governing the descent of intestate
property, in the proportions specified in such
statute. The Committee may determine the
identity of the distributees, and in so doing
may act and rely upon any information it may
deem reliable upon reasonable inquiry, and upon
any affidavit, certificate, or other paper
believed by it to be genuine, and upon any
evidence believed by it to be sufficient.
5.4 Suspension of Distributions on Insolvency of
Employer. The Employer shall cease the payment of benefits to
Participants and their beneficiaries if the Employer is
Insolvent. For purposes of the Plan, the Employer shall be
considered "Insolvent" if
(i) it is unable to pay its debts as they become due
or
(ii) it is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
During such period, the Employer shall hold the assets of the
Plan, if any, for the benefit of the Employer's general
creditors. Nothing in this Plan shall in any way diminish any
rights of Participants and their designated beneficiaries as
general creditors of the Employer with respect to benefits due
under the Plan or otherwise. The Employer shall resume the
payment of benefits to Participants or their beneficiaries in
accordance with the preceding provisions of this Article V upon
the termination of its Insolvency. Provided there are
sufficient assets, if the Employer discontinues the payment of
benefits pursuant to this Section 5.4 and subsequently resumes
such payments, the first payment following such discontinuance
shall include the aggregate amount of all payments due to
Participants or their beneficiaries under the terms of the Plan
for the period of such discontinuance.
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ARTICLE VI
PLAN ADMINISTRATION
6.1 Appointment of the Committee. The Compensation
Committee of the Board shall be responsible for administering
the Plan. Except as the Employer shall otherwise expressly
determine, the Committee shall be charged with the full power
and the responsibility for administering the Plan in all its
details. No member of the Committee shall be eligible at any
time while he is a member to also be a Participant.
6.2 Powers and Responsibilities of the Committee.
(a) The Committee shall have all powers necessary to
administer the Plan, including the power to
construe and interpret the Plan documents; to
decide all questions relating to an individual's
eligibility to participate in the Plan; to
determine the amount, manner and timing of any
distribution of benefits or withdrawal under the
Plan; to resolve any claim for benefits in
accordance with Section 6.4, and to appoint or
employ advisors, including legal counsel, to
render advice with respect to any of the
Committee's responsibilities under the Plan. Any
construction, interpretation, or application of
the Plan by the Committee shall be final,
conclusive and binding. All actions by the
Committee shall be taken pursuant to uniform
standards applied to all persons similarly
situated.
(b) Records and Reports. The Committee shall be
responsible for maintaining sufficient records
to determine each Participant's eligibility to
participate in the Plan, and the Compensation of
each Participant for purposes of determining the
amount of contributions that may be made by or
on behalf of the Participant under the Plan.
(c) Rules and Decisions. The Committee may adopt
such rules as it deems necessary, desirable, or
appropriate in the administration of the Plan.
All rules and decisions of the Committee shall
be applied uniformly and consistently to all
Participants in similar circumstances. When
making a determination or calculation, the
Committee shall be entitled to rely upon
information furnished by a Participant or
beneficiary, the Employer or the legal counsel
of the Employer.
(d) Application and Forms for Benefits. The
Committee may require a Participant or
beneficiary to complete and file with it an
application for a benefit, and to furnish all
pertinent information requested by it. The
Committee may rely upon all such information so
furnished to it, including the Participant's or
beneficiary's current mailing address.
6.3 Liabilities. The Committee shall be indemnified and
held harmless by the Employer with respect to any alleged
breach of responsibilities performed or to be performed
hereunder.
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6.4 Claims Procedure.
(a) Filing A Claim. Any Participant or Beneficiary
under the Plan may file a written claim for a
Plan benefit with the Committee or with a person
named by the Committee to receive claims under
the Plan.
(b) Notice of Denial of Claim. In the event of a
denial or limitation of any benefit or payment
due to or requested by any Participant or
beneficiary under the Plan ("claimant"), the
claimant shall be given a written notification
containing specific reasons for the denial or
limitation of his benefit. The written
notification shall contain specific reference to
the pertinent Plan provisions on which the
denial or limitation of his benefit is based.
In addition, it shall contain a description of
any other material or information necessary for
the claimant to perfect a claim, and an
explanation of why such material or information
is necessary. The notification shall further
provide appropriate information as to the steps
to be taken if the claimant wishes to submit his
claim for review. This written notification
shall be given to a claimant within ninety (90)
days after receipt of his claim by the Committee
unless special circumstances require an
extension of time for processing the claim. If
such an extension of time for processing is
required, written notice of the extension shall
be furnished to the claimant prior to the
termination of said ninety (90) day period, and
such notice shall indicate the special
circumstances which make the postponement
appropriate.
(c) Right of Review. In the event of a denial or
limitation of his benefit, the claimant or his
duly authorized representative shall be
permitted to review pertinent documents and to
submit to the Committee issues and comments in
writing. In addition, the claimant or his duly
authorized representative may make a written
request for a full and fair review of his claim
and its denial by the Committee; provided,
however, that such written request must be
received by the Committee (or its delegate to
receive such requests) within sixty (60) days
after receipt by the claimant of written
notification of the denial or limitation of the
claim. The sixty (60) day requirement may be
waived by the Committee in appropriate cases.
(d) Decision on Review. A decision shall be
rendered by the Committee within sixty (60) days
after the receipt of the request for review,
provided that where special circumstances
require an extension of time for processing the
decision, it may be postponed on written notice
to the claimant (prior to the expiration of the
initial sixty (60) day period) for an additional
sixty (60) days after the receipt of such
request for review. Any decision by the
Committee shall be furnished to the claimant in
writing and shall set forth the specific reasons
for the decision and the specific Plan
provisions on which the decision is based.
(e) Court Action. No Participant or beneficiary
shall have the right to seek judicial review of
a denial of benefits, or to bring any action in
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any court to enforce a claim for benefits prior
to filing a claim for benefits or exhausting his
rights to review under this Section 6.4.
ARTICLE VII
AMENDMENT AND TERMINATION OF THE PLAN
7.1 Amendment of the Plan. The Employer shall have the
right at any time by action of the Board to modify, alter or
amend the Plan in whole or in part.
7.2 Termination of the Plan. The Employer reserves the
right at any time by action of the Board to terminate the Plan
by resolution of the Board or to reduce or cease contributions
at any time.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. The Plan shall be construed,
regulated and administered according to the laws of the State
of Indiana, except in those areas preempted by the laws of the
United States of America in which case such laws will control.
8.2 Headings and Gender. The headings and subheadings in
the Plan have been inserted for convenience of reference only
and shall not affect the construction of the provisions hereof.
In any necessary construction the masculine shall include the
feminine and the singular the plural, and vice versa.
8.3 Participant's Rights; Acquittance. No Participant
shall acquire any right to be retained in the Employer's employ
by virtue of the Plan, nor, upon his dismissal, or upon his
voluntary termination of employment, shall he have any right or
interest in or to the Plan assets other than as specifically
provided herein.
8.4 Spendthrift Clause. No benefit or interest available
hereunder will be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of the Participant or
the Participant's designated beneficiary, either voluntarily or
involuntarily.
8.5 Counterparts. This Plan may be executed in any
number of counterparts, each of which shall constitute but one
and the same instrument and may be sufficiently evidenced by
any one counterpart.
8.6 No Enlargement of Employment Rights. Nothing
contained in the Plan shall be construed as a contract of
employment between the Employer and any person, nor shall the
Plan be deemed to give any person the right to be retained in
the employ of the Employer or limit the right of the Employer
to employ or discharge any person with or without cause, or to
discipline any Employee.
8.7 No Guarantee. Neither the Committee nor the Employer
in any way guarantees the assets credited by the Plan from loss
or depreciation, nor the payment of any money or other assets
which may be or become due to any person from the Plan. No
Participant shall have any recourse against the Employer or the
Committee if the Plan assets are insufficient to provide
benefits under the Plan.
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8.8 Limitations on Liability. Notwithstanding any of the
preceding provisions of the Plan, none of the Employer, the
Committee and each individual acting as an employee or agent of
any of them shall be liable to any Participant, Employee or
beneficiary for any claim, loss, liability or expense incurred
in connection with the Plan, except when the same shall have
been judicially determined to be due to the gross negligence or
willful misconduct of such person.
8.9 Incapacity of Participant or Beneficiary. If any
person entitled to receive a distribution under the Plan is
physically or mentally incapable of personally receiving and
giving a valid receipt for any payment due (unless prior claim
therefor shall have been made by a duly qualified guardian or
other legal representative), then, unless and until claim
therefor shall have been made by a duly appointed guardian or
other legal representative of such person, the Employer may
provide for such payment or any part thereof to be made to any
other person or institution then contributing toward or
providing for the care and maintenance of such person. Any
such payment shall be a payment for the account of such person
and a complete discharge of any liability of the Employer and
the Plan therefor.
8.10 Corporate Successors. The Plan shall not be
automatically terminated by a transfer or sale of assets of the
Employer or by the merger or consolidation of the Employer into
or with any other corporation or other entity ("Transaction"),
but the Plan shall be continued after the Transaction only if
and to the extent that the transferee, purchaser or successor
entity agrees to continue the Plan. The Employer shall not
agree to a Transaction unless and until the transferee,
purchaser or successor agrees to adopt this Plan and, in
connection therewith, agrees to expressly assume all
obligations and liabilities of the Employer hereunder.
SIGNATURES
IN WITNESS WHEREOF, the Employer has caused this amended
and restated Supplemental Deferred Compensation Plan for Select
Executive Employees of Old National Bancorp and Subsidiaries to
be executed by its officers thereunder duly authorized, this
15th day of December, 1994, but effective as
of July 1, 1994.
OLD NATIONAL BANCORP
By: /s/ ALAN MOUNTS
ALAN MOUNTS
Vice President
Human Resources
ATTEST: [SEAL]
By:
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EXHIBIT 10.03
OLD NATIONAL BANCORP
PENSION RESTORATION PLAN
[EFFECTIVE DECEMBER 1, 1995]
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OLD NATIONAL BANCORP
TABLE OF CONTENTS
ARTICLE SECTION PAGE
I Purpose and Effective Date . . . . . . . . . . . 1
1.01 Title . . . . . . . . . . . . . . . . . . . . . 1
1.02 Purpose . . . . . . . . . . . . . . . . . . . . . 1
1.03 Application of Plan . . . . . . . . . . . . . . . 1
II Definitions and Construction of the Plan Document 2
2.01 Definitions . . . . . . . . . . . . . . . . . . . 2
(a) Beneficiary . . . . . . . . . . . . . . . 2
(b) Committee . . . . . . . . . . . . . . . . 2
(c) Company . . . . . . . . . . . . . . . . . 2
(d) Compensation . . . . . . . . . . . . . . . 2
(e) Disabled . . . . . . . . . . . . . . . . . 2
(f) Employee . . . . . . . . . . . . . . . . . 2
(g) Participant . . . . . . . . . . . . . . . 2
(h) Participation Form . . . . . . . . . . . . 2
(i) Plan . . . . . . . . . . . . . . . . . . . 3
(j) Plan Administrator . . . . . . . . . . . . 3
(k) Plan Year . . . . . . . . . . . . . . . . 3
(l) Qualified Plan . . . . . . . . . . . . . . 3
(m) Termination of Employment . . . . . . . . 3
2.02 Gender and Number . . . . . . . . . . . . . . . . 3
2.03 Titles . . . . . . . . . . . . . . . . . . . . . 3
III Eligibility and Participation . . . . . . . . . . 4
3.01 Eligibility . . . . . . . . . . . . . . . . . . . 4
IV Benefits . . . . . . . . . . . . . . . . . 5
4.01 Amount of Benefit . . . . . . . . . . . . . . . . 5
4.02 Form of Payment . . . . . . . . . . . . . . . . . 5
4.03 Vesting . . . . . . . . . . . . . . . . . . . . . 6
4.04 Death Benefits . . . . . . . . . . . . . . . . . 6
4.05 Funding . . . . . . . . . . . . . . . . . . . . . 6
4.06 Forfeiture . . . . . . . . . . . . . . . . . . . 7
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TABLE OF CONTENTS
(Continued)
ARTICLE SECTION PAGE
V Administration . . . . . . . . . . . . . . . . . 8
5.01 Administration . . . . . . . . . . . . . . . . . 8
5.02 Majority Vote . . . . . . . . . . . . . . . . . . 8
5.03 Finality of Determination . . . . . . . . . . . . 8
5.04 Certificates and Reports . . . . . . . . . . . . 8
5.05 Indemnification and Exculpation . . . . . . . . . 8
5.06 Expenses . . . . . . . . . . . . . . . . . . . . 9
5.07 FICA and Other Taxes . . . . . . . . . . . . . . 9
VI Beneficiary . . . . . . . . . . . . . . . . . . . 10
6.01 Beneficiary Designation . . . . . . . . . . . . . 10
6.02 Proper Beneficiary . . . . . . . . . . . . . . . 10
6.03 Minor or Incompetent Beneficiary . . . . . . . . 10
6.04 No Beneficiary Designation . . . . . . . . . . . 10
VII Claims Procedure . . . . . . . . . . . . . . . . 11
7.01 Written Claim . . . . . . . . . . . . . . . . . . 11
7.02 Denied Claim . . . . . . . . . . . . . . . . . . 11
7.03 Review Procedure . . . . . . . . . . . . . . . . 11
7.04 Committee Review . . . . . . . . . . . . . . . . 11
VIII Nature of Company's Obligation . . . . . . . . . 12
8.01 Company's Obligation . . . . . . . . . . . . . . 12
8.02 Creditor Status . . . . . . . . . . . . . . . . . 12
IX Miscellaneous . . . . . . . . . . . . . . . . . 13
9.01 Written Notice . . . . . . . . . . . . . . . . . 13
9.02 Change of Address . . . . . . . . . . . . . . . . 13
9.03 Merger, Consolidation or Acquisition . . . . . . 13
9.04 Amendment and Termination . . . . . . . . . . . . 13
9.05 Employment . . . . . . . . . . . . . . . . . . . 13
9.06 Non-transferability . . . . . . . . . . . . . . . 13
9.07 Legal Fees . . . . . . . . . . . . . . . . . . . 14
9.08 Tax Withholding . . . . . . . . . . . . . . . . . 14
9.09 Applicable Law . . . . . . . . . . . . . . . . . 14
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ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.01 Title. This Plan shall be known as Old National Bancorp
Pension Restoration Plan (hereinafter referred to as the
"Plan").
1.02 Purpose. The purpose of the Plan is to provide the amount
of the benefit which would otherwise be paid under the
Company's Qualified Plan but which cannot be paid under that
plan on account of the limitation imposed by the Internal
Revenue Code of 1986 on tax-qualified retirement plans. The
Plan constitutes an unfunded "top hat" arrangement under Title
I of ERISA as well as for income tax purposes.
1.03 Application of Plan. The effective date of this Plan
shall be December 1, 1995. The terms of this Plan are
applicable only to employees of the Company who are in the
active employ of the Company on or after the effective date of
the Plan.
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
2.01 Definitions. Unless otherwise indicated, the terms used
in this Plan shall have the same meaning as they have under the
Qualified Plan in effect on the applicable date. Additional
defined terms used in the Plan are set forth below.
(a) Beneficiary. "Beneficiary" shall mean the person or
persons or the estate of a Participant entitled to receive any
benefits under this Plan in the event of the Participant's
death.
(b) Committee. "Committee" means the Compensation
Committee of the Board of Directors.
(c) Company. "Company" shall mean Old National Bancorp
and any subsidiary or affiliated companies that adopt the Plan,
with the Company's approval, for its Employees.
(d) Compensation. "Compensation" shall have the same
meaning as provided in the Qualified Plan (without regard to
any limitations imposed by the Code and without regard to any
deferrals made under the terms of any nonqualified plan
maintained by the Company).
(e) Disabled. "Disabled" shall mean Total and Permanent
Disability under the terms of the Company's long-term
disability plan in effect at the time of such determination of
Disability.
(f) Employee. "Employee" shall mean any member of
management or highly compensated employee who is eligible to
participate in the Plan.
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(g) Participant. "Participant" shall mean an Employee
who has been designated under Section 3.01 as eligible to
participate in the Plan, and whose benefit has not yet been
fully distributed.
(h) Participation Form. "Participation Form" shall mean
the form established from time to time by the Committee that a
Participant completes, signs and returns to the Plan
Administrator to participate under the Plan.
(i) Plan. "Plan" shall mean the Old National Bancorp
Pension Restoration Plan as described in this instrument and as
amended from time to time.
(j) Plan Administrator. "Plan Administrator" shall mean
the Committee.
(k) Plan Year. "Plan Year" shall mean a calendar year.
(l) Qualified Plan. "Qualified Plan" shall mean the Old
National Bancorp Employees Retirement Plan as in effect at the
date of the adoption of this Plan and as amended from time to
time.
(m) Termination of Employment. "Termination of
Employment" or similar expression shall mean the termination of
the Participant's employment as a employee of the Company and
any division, subsidiary or affiliate thereof. A Disabled
Participant shall be deemed to have terminated employment for
purposes of this Plan.
2.02 Gender and Number. Wherever the context so requires,
masculine pronouns include the feminine and singular words
shall include the plural.
2.03 Titles. Titles of the Articles of this Plan are included
for ease of reference only and are not to be used for the
purpose of construing any portion or provision of this Plan
document.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. Eligibility for participation in this Plan
shall be determined by the Committee, in its sole discretion.
All Participants must be a member of a select group of
management or highly-compensated employees of the Company who
are eligible to participate in the Qualified Plan and whose
benefits are reduced on account of the limitations of the Code.
ARTICLE IV
BENEFITS
4.01 Amount of Benefit. The Participant's benefit shall be
paid in the manner and at the time determined in Section 4.02
that is the actuarial equivalent of the benefit determined
under this Section 4.01 using the same factors and assumptions
used to compute the Participant's benefit under the Qualified
Plan. The Participant's benefit shall equal the monthly
benefit payable in the form of a single life annuity commencing
at the Participant's normal retirement date in an amount equal
to the excess, if any, of the amount in (1) over the amount in
(2) where --
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(1) is the amount of the monthly benefit that would be
payable under the Qualified Plan using the definition
of Compensation as provided in this Plan; and
(2) is the amount of the monthly benefit actually payable
under the Qualified Plan.
4.02 Form of Payment. A Participant's benefit shall be
distributed to the Participant or his designated Beneficiary
commencing as soon as practicable after the Participant's
Termination of Employment in one of the following methods
effectively elected by the Participant in his Participation
Form:
(a) A single lump sum;
(b) Monthly installments payable for a term certain of
sixty (60) or one hundred-twenty (120) months as elected by the
Participant.
(c) In order to be effective, a Participant's election of
the form in which his benefit under the Plan shall be
distributed must be made by delivering a Participation Form or
an amended Participation Form to the Committee not later than
ten (10) days prior to the effective date of the Participant's
termination of employment for reasons other than Disability or
death. In the case of the Participant's Disability or death,
his Participation Form or amended Participation Form must be
delivered to the Committee prior to the date on which the
Committee determines that the Participant is Disabled or prior
to the date of his death. The Participant's election of the
form in which benefits under the Plan shall be distributed may
be amended by the delivery of an amended Participation Form to
the Committee prior to the applicable date(s) specified in the
preceding sentence. If the Participant does not elect a form
of distribution or such election is not timely or properly
made, the Company shall pay the Participant's entire benefit in
the form of a single lump sum.
4.03 Vesting. A Participant shall become vested in the benefit
payable under Section 4.01 at the same time that he becomes
vested under the Qualified Plan.
4.04 Death Benefits. No death benefit shall be paid under the
Plan except as provided in paragraph (1) or (2) below:
(1) In the event the Participant's death occurs prior to
the commencement of benefits under Section 4.02, a death
benefit shall be payable to the Participant's Beneficiary if a
death benefit is payable under the terms of the Qualified Plan.
Such death benefit shall be paid in a single lump sum and shall
be computed using the same factors and assumptions used to
compute the applicable death benefit under the Qualified Plan,
except that the amount of the death benefit shall be computed
with respect to the amount of the benefit the Participant
accrues under the Plan.
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(2) In the event the Participant's death occurs after
benefits have commenced, any remaining benefit payments shall
be made to the Participant's Beneficiary over the remaining
installment period elected by the Participant.
4.05 Funding. All amounts paid under this Plan shall be paid
in cash from the general assets of the Company. Benefits shall
be reflected on the accounting records of the Company but shall
not be construed to create, or require the creation of, a
trust, custodial or escrow account. No employee shall have any
right, title, or interest whatever in or to any investment
reserves, accounts, or funds that the Company may purchase,
establish, or accumulate to aid in providing the benefits
described in this plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be
construed to create a trust or a fiduciary relationship of any
kind between the Company and an employee or any other person.
Neither an employee or a beneficiary of an employee shall
acquire any interest greater than that of an unsecured
creditor.
4.06 Forfeiture. Notwithstanding any other provision of the
Plan to the contrary, in the event that the Participant s
employment with the Company is terminated on account of the
Participant's malfeasance or misfeasance, the Participant's
benefit under the Plan shall be immediately forfeited and no
benefit shall be payable hereunder.
ARTICLE V
ADMINISTRATION
5.01 Administration. The Plan shall be administered by the
Compensation Committee. The Compensation Committee may, in its
discretion, delegate authority to perform the day-to-day
administration of the Plan to such officer or officers of the
Company that it determines to be necessary and appropriate.
5.02 Majority Vote. All resolutions or other actions taken by
the Committee shall be by vote of a majority of those present
at a meeting at which a majority of the members are present, or
in writing by all the members at the time in office if they act
without a meeting. Such resolutions or actions shall be
confirmed in writing by a Board resolution.
5.03 Finality of Determination. Subject to the Plan, the
Committee shall, from time to time, establish rules, forms and
procedures for the administration of the Plan. Except as
herein otherwise expressly provided, the Committee shall have
the exclusive right to interpret the Plan and to decide any and
all matters arising thereunder or in connection with the
administration of the Plan, and it shall endeavor to act,
whether by general rules or by particular decisions, so as not
to discriminate in favor of or against any person. The
decisions, actions and records of the Committee shall be
conclusive and binding upon the Company and all persons having
or claiming to have any right or interest in or under the Plan,
and cannot be overruled by a court of law unless arbitrary or
capricious.
5.04 Certificates and Reports. The members of the Committee
and the officers and directors of the Company shall be entitled
to rely on all certificates and reports made by any duly
appointed accountants, and on all opinions given by any duly
appointed legal counsel, which legal counsel may be counsel for
the Company.
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5.05 Indemnification and Exculpation. The Company shall
indemnify and hold harmless each current and former member of
the Committee and each current and former member of the Board
against any and all expenses and liabilities (to the extent not
indemnified under any liability insurance contract or other
indemnification agreement) which the person incurs on account
of any act or failure to act in connection with the good faith
administration of the Plan. Expenses against which a member of
the Committee shall be indemnified hereunder shall include,
without limitation, the amount of any settlement or judgment,
costs, counsel fees, and related charges reasonably incurred in
connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification
shall be in addition to any other rights to which any such
member of the Committee may be entitled as a matter of law, but
shall be conditioned upon the person's notifying the Company of
the claim of liability within 60 days of the notice of that
claim and offering the Company the right to participate in and
control the settlement and defense of the claim.
5.06 Expenses. The expenses of administering the Plan shall be
borne by the Company.
5.07 FICA and Other Taxes. For each Plan Year in which an
Annual Deferral Amount is being withheld or a Company
Contribution becomes vested, the Company shall ratably withhold
from that portion of the Participant's salary that is not being
deferred, the Participant's share of applicable FICA and other
employment taxes.
ARTICLE VI
BENEFICIARY
6.01 Beneficiary Designation. A Participant shall designate a
Beneficiary to receive benefits under the Plan on the
Participation Form provided by the Plan Administrator. If more
than one Beneficiary is named, the share and/or precedence of
each Beneficiary shall be indicated. A Participant shall have
the right to change the Beneficiary by submitting to the Plan
Administrator a new Participation Form.
6.02 Proper Beneficiary. If the Plan Administrator has any
doubt as to the proper Beneficiary to receive payments
hereunder, the Plan Administrator shall have the right to
withhold such payments until the matter is finally adjudicated.
However, any payment made by the Plan Administrator, in good
faith and in accordance with this Plan, shall fully discharge
the Company from all further obligations with respect to that
payment.
6.03 Minor or Incompetent Beneficiary. In making any payments
to or for the benefit of any minor or an incompetent
Beneficiary, the Plan Administrator, in its sole and absolute
discretion, may make a distribution to a legal or natural
guardian or other relative of a minor or court appointed
committee of such incompetent. Alternatively, it may make a
payment to any adult with whom the minor or incompetent
temporarily or permanently resides. The receipt by a guardian,
committee, relative or other person shall be a complete
discharge to the Company. Neither the Company nor the Plan
Administrator shall have any responsibility to see to the
proper application of any payments so made.
6.04 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided in Section 6.01 above, or
if all designated Beneficiaries predecease the Participant or
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die prior to complete distribution of the Participant's
benefits, then the Participant's designated Beneficiary shall
be deemed to be his or her surviving spouse. If the
Participant has no surviving spouse, the benefits remaining
under the Plan to be paid to a Beneficiary shall be payable to
the executor or personal representative of the Participant's
estate.
ARTICLE VII
CLAIMS PROCEDURE
7.01 Written Claim. Benefits shall be paid in accordance with
the provisions of this Plan. The Participant, or a designated
recipient or any other person claiming through the Participant
shall make a written request for benefits under this Plan.
This written claim shall be mailed or delivered to the Plan
Administrator. Such claim shall be reviewed by the Plan
Administrator or a delegate.
7.02 Denied Claim. If the claim is denied, in full or in part,
the Plan Administrator shall provide a written notice within
ninety (90) days setting forth the specific reasons for denial,
and any additional material or information necessary to perfect
the claim, and an explanation of why such material or
information is necessary, and appropriate information and
explanation of the steps to be taken if a review of the denial
is desired.
7.03 Review Procedure. If the claim is denied and a review is
desired, the Participant (or Beneficiary) shall notify the Plan
Administrator in writing within sixty (60) days after receipt
of the written notice of denial. In requesting a review, the
Participant or Beneficiary may request a review of pertinent
documents with regard to the benefits created under this
agreement, may submit any written issues and comments, may
request an extension of time for such written submission of
issues and comments, and may request that a hearing be held,
but the decision to hold a hearing shall be within the sole
discretion of the Committee.
7.04 Committee Review. The decision on the review of the
denied claim shall be rendered by the Committee within sixty
(60) days after the receipt of the request for review (if no
hearing is held) or within sixty (60) days after the hearing if
one is held. The decision shall be written and shall state the
specific reasons for the decision including reference to
specific provisions of this Plan on which the decision is
based.
ARTICLE VIII
NATURE OF COMPANY'S OBLIGATION
8.01 Company's Obligation. The Company's obligations under
this Plan shall be an unfunded and unsecured promise to pay.
The Company shall not be obligated under any circumstances to
fund its financial obligations under this Plan.
8.02 Creditor Status. Any assets which the Company may acquire
or set aside to help cover its financial liabilities are and
must remain general assets of the Company subject to the claims
of its creditors. Neither the Company nor this Plan gives a
Participant or Beneficiary any beneficial ownership interest in
any asset of the Company. All rights of ownership in any such
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assets are and remain in the Company. All Plan Participants
and Beneficiaries shall be unsecured general creditors of the
Company.
ARTICLE IX
MISCELLANEOUS
9.01 Written Notice. Any notice which shall be or may be given
under the Plan shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given
to the Company, such notice shall be addressed to the Plan
Administrator at Old National Bancorp. If notice is to be
given to the Participant, such notice shall be sent to the
Participant's last known address.
9.02 Change of Address. Any party may, from time to time,
change the address to which notices shall be mailed by giving
written notice of such new address.
9.03 Merger, Consolidation or Acquisition. The Plan shall be
binding upon the Company, its assigns, and any successor to the
Company which shall succeed to substantially all of its assets
and business through merger, acquisition or consolidation, and
upon a Participant, a Beneficiary, assigns, heirs, executors
and administrators.
9.04 Amendment and Termination. The Company by action of the
Executive Committee of the Board retains the sole and
unilateral right to terminate, amend, modify, or supplement
this Plan, in whole or part, at any time. However, no Company
action under this right shall reduce the benefit of any
Participant or Beneficiary not yet in payment status or reduce
benefits that are in payment status.
9.05 Employment. This Plan does not provide a contract of
employment between the Company and the Participant, and the
Company reserves the right to terminate the Participant's
employment for any reason, at any time, notwithstanding the
existence of this Plan.
9.06 Non-transferability. Except insofar as prohibited by
applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under
this Plan shall be valid or recognized by the Company. Neither
the Participant, spouse, or designated Beneficiary shall have
any power to hypothecate, mortgage, commute, modify, or
otherwise encumber in advance of any of the benefits payable
hereunder, nor shall any of said benefits be subject to seizure
for the payment of any debts, judgments, alimony maintenance,
owed by the Participant or Beneficiary, or be transferable by
operation of law in the event of bankruptcy, insolvency, or
otherwise.
9.07 Legal Fees. All reasonable legal fees incurred by any
Participant (or former Participant) to successfully enforce
valid rights under this Plan shall be paid by the Company in
addition to sums due under this Plan.
9.08 Tax Withholding. The Company may withhold from a payment
any federal, state, or local taxes required by law to be
withheld with respect to such payment and such sum as the
Company may reasonably estimate as necessary to cover any taxes
for which the Company may be liable and which may be assessed
with regard to such payment.
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9.09 Applicable Law. This Plan shall be governed by the laws
of the State of Indiana.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer on this ________ day of
December, 1995, effective as of the 1st day of December, 1995.
OLD NATIONAL BANCORP
BY \s\ ALLEN R. MOUNTS
-------------------
ALLEN R. MOUNTS
VICE PRESIDENT
HUMAN RESOURCES
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<PAGE>
EXHIBIT 10.04
OLD NATIONAL BANCORP
EMPLOYEES' RETIREMENT PLAN
Amended and Restated
as of
May 1, 1996
<PAGE>
<PAGE>
OLD NATIONAL BANCORP EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS
Page #
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 1
TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Title . . . . . . . . . . . . . 2
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Accrued Benefit . . . . . . . . 3
Section 2.2 Actuarial Equivalent . . . . . . 4
Section 2.3 Actuary . . . . . . . . . . . . 4
Section 2.4 Anniversary Date . . . . . . . . 4
Section 2.5 Annual Earnings . . . . . . . . 5
Section 2.6 Attained Age . . . . . . . . . . 5
Section 2.7 Average Monthly Compensation . . 5
Section 2.8 Average Monthly Earnings . . . . 5
Section 2.9 Beneficiary . . . . . . . . . . 5
Section 2.10 Board of Directors . . . . . . . 6
Section 2.11 Break in Service . . . . . . . . 6
Section 2.12 Code . . . . . . . . . . . . . . 6
Section 2.13 Company . . . . . . . . . . . . 6
Section 2.14 Contingent Beneficiary . . . . . 6
Section 2.15 Covered Compensation . . . . . . 6
Section 2.16 Credited Service . . . . . . . . 7
Section 2.17 Death Benefit . . . . . . . . . 8
Section 2.18 Defined Benefit Plan . . . . . . 8
Section 2.19 Defined Contribution Plan . . . 8
Section 2.20 Disability Payment . . . . . . . 8
Section 2.21 Disability Retirement Date . . . 8
Section 2.22 Disabled Member . . . . . . . . 8
Section 2.23 Early Retirement Age . . . . . . 8
Section 2.24 Early Retirement Date . . . . . 8
Section 2.25 Effective Date . . . . . . . . . 8
Section 2.26 Employee . . . . . . . . . . . . 9
Section 2.27 Employer . . . . . . . . . . . . 9
Section 2.28 Entrance Date . . . . . . . . . 9
Section 2.29 Highly Compensated Employees . . 9
Section 2.30 Hour of Service . . . . . . . 12
Section 2.31 Key Employee . . . . . . . . . 14
Section 2.32 Late Retirement Date . . . . . 15
Section 2.33 Leased Employee . . . . . . . 15
Section 2.34 Limitation Year . . . . . . . 15
Section 2.35 Member . . . . . . . . . . . . 15
Section 2.36 Merged Plan . . . . . . . . . 16
Section 2.37 Monthly Retirement Income . . 16
Section 2.38 Normal Retirement Age . . . . 16
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Section 2.39 Normal Retirement Date . . . . 16
Section 2.40 Original Plan . . . . . . . . 16
Section 2.41 Participating Employer . . . . 16
Section 2.42 Participation Date . . . . . . 16
Section 2.43 Permissive Aggregation Group . 16
Section 2.44 Plan Year . . . . . . . . . . 16
Section 2.45 Prior Plan . . . . . . . . . . 16
Section 2.46 Required Aggregation Group . . 17
Section 2.47 Retired Member . . . . . . . . 17
Section 2.48 Retirement Committee . . . . . 17
Section 2.49 Service . . . . . . . . . . . 17
Section 2.50 Sponsoring Employer . . . . . 18
Section 2.51 Spouse . . . . . . . . . . . . 18
Section 2.52 Statutory Interest Rate . . . 18
Section 2.53 Top Heavy Plan . . . . . . . . 18
Section 2.54 Total and Permanent Disability 19
Section 2.55 Trust Agreement . . . . . . . 19
Section 2.56 Trustee . . . . . . . . . . . 20
Section 2.57 Trust Fund . . . . . . . . . . 20
Section 2.58 Construction . . . . . . . . . 20
MEMBERSHIP IN THE RETIREMENT PLAN . . . . . . . . . . . . . 21
Section 3.1 Eligibility Requirements . . . 21
Section 3.2 Plan Binding . . . . . . . . . 21
MONTHLY RETIREMENT INCOME . . . . . . . . . . . . . . . . . 22
Section 4.1 General . . . . . . . . . . . 22
Section 4.2 Benefit Forms . . . . . . . . 22
Section 4.3 Normal Retirement . . . . . . 24
Section 4.4 Late Retirement . . . . . . . 25
Section 4.5 Early Retirement . . . . . . . 25
Section 4.6 Disability Retirement . . . . 26
Section 4.7 Proof of Entitlement . . . . . 28
Section 4.8 Reemployment . . . . . . . . . 28
Section 4.9 Non-forfeitable Right at Normal
Retirement . . . . . . . . . . . . . . . . . 28
OTHER BENEFITS . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.1 Other Terminations of Employment 29
Section 5.2 Death Benefits . . . . . . . . 30
Section 5.3 Death of Retired or Disabled
Member . . . . . . . . . . . . 31
Section 5.4 Payment to Contingent
Beneficiaries . . . . . . . . . 31
Section 5.5 Lump Sum Distributions . . . . 31
Section 5.6 Benefit Commencement Limitations 32
Section 5.7 Minimum Distribution Rules . . 33
Section 5.8 Required Distribution Periods 33
Section 5.9 Member Directed Rollovers . . 34
THE RETIREMENT COMMITTEE. . . . . . . . . . . . . . . . . . 36
Section 6.1 Appointment . . . . . . . . . 36
Section 6.2 Term of Appointment . . . . . 36
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Section 6.3 Officers and Actions . . . . . 36
Section 6.4 Duties . . . . . . . . . . . . 36
Section 6.5 Claims Procedures . . . . . . 37
Section 6.6 Direction to Trustee . . . . . 38
Section 6.7 Non-discrimination Provision . 38
Section 6.8 Employment of Agents . . . . . 39
Section 6.9 Indemnification . . . . . . . 39
CONTRIBUTIONS BY THE EMPLOYER . . . . . . . . . . . . . . . 40
Section 7.1 Contributions . . . . . . . . 40
Section 7.2 Expenses . . . . . . . . . . . 40
Section 7.3 Actuary . . . . . . . . . . . 40
Section 7.4 Funding Standard Account . . . 40
THE TRUST FUND AND TRUSTEE. . . . . . . . . . . . . . . . . 41
Section 8.1 Trust Agreement . . . . . . . 41
Section 8.2 Trust Fund . . . . . . . . . . 41
Section 8.3 Appointment of Trustee . . . . 41
Section 8.4 Powers of Trustee . . . . . . 41
RESERVATION OF AND LIMITATIONS ON RIGHTS. . . . . . . . . . 42
Section 9.1 Benefits . . . . . . . . . . . 42
Section 9.2 Contributions . . . . . . . . 42
Section 9.3 Members' Rights . . . . . . . 42
Section 9.4 Benefit Offset . . . . . . . . 42
Section 9.5 Spendthrift Clause . . . . . . 43
Section 9.6 Return of Contributions . . . 43
AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.1 Amendment of Plan . . . . . . 44
Section 10.2 Limitations on Right to Amend 44
PERMANENT OR TEMPORARY DISCONTINUANCE OF PLAN . . . . . . . 45
Section 11.1 Termination . . . . . . . . . 45
Section 11.2 Apportionment of Trust Fund . 45
Section 11.3 Allocation of Trust Fund . . . 45
Section 11.4 Expenses . . . . . . . . . . . 46
Section 11.5 Distribution of Trust Fund . . 46
Section 11.6 Restrictions on Distributions 46
Section 11.7 Termination of Signatory
Employer . . . . . . . . . . . . 47
Section 11.8 Non-forfeitability . . . . . . 47
ACTUARY . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.1 Duties . . . . . . . . . . . . 48
Section 12.2 Information . . . . . . . . . 48
Section 12.3 Reliance . . . . . . . . . . . 48
ENTRY AND WITHDRAWAL OF AN EMPLOYER . . . . . . . . . . . . 49
Section 13.1 Entry of Employer . . . . . . 49
Section 13.2 Withdrawal of Employer . . . . 49
<PAGE>
<PAGE>
CHANGE IN EMPLOYMENT. . . . . . . . . . . . . . . . . . . . 51
Section 14.1 Transfer to Signatory Employer 51
Section 14.2 Transfer to Non-signatory
Employer . . . . . . . . . . . . 51
Section 14.3 Transfer from Non-signatory
Employer . . . . . . . . . . . 51
Section 14.4 Resumption of Full Membership 51
Section 14.5 Change in Employment Status . 52
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 53
Section 15.1 Retirement Committee
Interpretation . . . . . . . . 53
Section 15.2 Headings . . . . . . . . . . . 53
Section 15.3 Governing Law . . . . . . . . 53
Section 15.4 Benefits to Minors and
Incompetents . . . . . . . . . 53
Section 15.5 Actuarial Determinations . . . 53
Section 15.6 Copies of Documents . . . . . 54
Section 15.7 Severability . . . . . . . . . 54
Section 15.8 Named Fiduciaries . . . . . . 54
Section 15.9 Allocation of Duties of
Fiduciaries . . . . . . . . . . 54
Section 15.10 Misstatement of Facts . . . . 55
Section 15.11 Limitation on Benefits . . . . 55
Section 15.12 Combined Limitation on Benefits 58
Section 15.13 Corrective Adjustments . . . . 60
Section 15.14 Successor on Merger or
Consolidation . . . . . . . . 60
Section 15.15 Benefits on Merger or
Consolidation . . . . . . . . . 60
Section 15.16 Exclusive Benefit . . . . . . 60
Section 15.17 Unclaimed Benefits . . . . . . 60
TOP HEAVY PROVISIONS. . . . . . . . . . . . . . . . . . . . 61
Section 16.1 Generally . . . . . . . . . . 61
Section 16.2 Vesting . . . . . . . . . . . 61
Section 16.3 Minimum Benefit . . . . . . . 61
Section 16.4 Top Heavy Compensation . . . . 62
Section 16.5 Testing Year . . . . . . . . . 62
Section 16.6 Full Compensation . . . . . . 62
Section 16.7 Top Heavy Service . . . . . . 62
Section 16.8 Combined Limitation on Benefits 62
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 63
APPENDIX APARTICIPATING EMPLOYERS . . . . . . . . . . . . . 64
APPENDIX BPARTICIPATING EMPLOYERS - EARLY RETIREMENT
ELIGIBILITY . . . . . . . . . . . . . . . . . 65
APPENDIX CPARTICIPATING EMPLOYERS - OPTIONAL FORMS
PROVISIONS . . . . . . . . . . . . . . . . . 66
<PAGE>
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APPENDIX DPARTICIPATING EMPLOYERS - NORMAL RETIREMENT
PROVISIONS . . . . . . . . . . . . . . . . . 67
APPENDIX EPARTICIPATING EMPLOYERS - EARLY RETIREMENT
REDUCTIONS . . . . . . . . . . . . . . . . . 68
APPENDIX FPARTICIPATING EMPLOYERS - VESTING PROVISIONS. . . 69
<PAGE>
<PAGE>
INTRODUCTION
Effective January 1, 1945, Old National Bank adopted
the Old National Bank Retirement Plan ("Original Plan") for the
benefit of its eligible employees.
Effective January 1, 1951, Old National Bank amended
and restated the Original Plan as the Old National Bank
Retirement Plan ("1951 Plan").
Effective January 1, 1970, Old National Bank amended
and restated the 1951 Plan as the Old National Bank Retirement
Plan ("1970 Plan").
Effective January 1, 1976, Old National Bank amended
and restated the 1970 Plan as the Old National Bank Retirement
Plan ("1976 Plan").
Effective January 1, 1982, Old National Bank amended
and restated the 1976 Plan as the Old National Bank Retirement
Plan ("1982 Plan").
Effective January 1, 1984, Old National Bank amended
and restated the 1982 Plan as the Old National Bank Retirement
Plan ("1984 Plan").
Effective January 1, 1986, Old National Bancorp
("Sponsoring Employer", formerly Old National Bank) amended and
restated the 1984 Plan as the Old National Bancorp Employees'
Retirement Plan ("1986 Plan").
Effective January 1, 1989, the Sponsoring Employer
amended and restated the 1986 Plan as the Old National Bancorp
Employees' Retirement Plan ("Prior Plan").
Effective May 1, 1996, except as otherwise provided
herein, in order to comply with recent changes in the law and
regulations, the Employer, by action of its Board of Directors,
desires to amend and restate the Prior Plan as the Old National
Bancorp Employees' Retirement Plan ("Plan").
The purpose of this Plan continues to be to provide for
the retirement of Employees of the Employer who become Members
of the Plan, benefits for Totally and Permanently Disabled
Members, and Death Benefits for beneficiaries of deceased
Members, but limited to those who qualify herein in accordance
with the terms and conditions hereinafter set forth.
It is intended that this Plan, together with the Trust
Agreement, meet all the requirements of the Employee Retirement
Income Security Act of 1974, as amended, and the Internal
Revenue Code of 1986, as amended, and the Plan shall be
interpreted, wherever possible, to comply with the terms of the
Act and all formal regulations and rulings issued under such
Act.
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<PAGE>
ARTICLE 1
TITLE
Section 1.1 Title This Plan shall be known as the
Old National Bancorp Employees' Retirement Plan ("Plan").
ARTICLE 2
DEFINITIONS
Section 2.1 Accrued Benefit as of any date shall
mean the benefit determined pursuant to Subsection (a) of this
Section, plus Subsection (b) of this Section, but not less than
Subsection (c) of this Section.
2.1(a) The Member's projected Monthly
Retirement Income at his Normal
Retirement Date, calculated pursuant to
Subsection 4.3(a), subject to Appendix
D, shall be based on the following
assumptions, except as otherwise
provided in Section 4.3:
(1) that the Member's Average Monthly
Earnings, Average Monthly Compensation
and Covered Compensation at date of
calculation would have been his Average
Monthly Earnings, Average Monthly
Compensation and Covered Compensation at
his Normal Retirement Date; and
(2) that his Credited Service would have
continued to accrue at the same rate as
in the Plan Year preceding the Plan Year
in which the calculation is being done
until his Normal Retirement Date.
(3) The amount so determined shall be
multiplied by a fraction, the numerator
of which shall be the Member's Credited
Service as of the date of calculation
and the denominator of which shall be
the Credited Service the Member would
have had at his Normal Retirement Date
assuming he had continued to earn
Credited Service at the same rate at
which he earned Credited Service in the
Plan Year preceding the Plan Year in
which the Accrued Benefit is being
determined.
2.1(b) The Member's Monthly Retirement Income
at his Normal Retirement Date calculated
pursuant to Subsection 4.3(b), subject
to Appendix D, shall be fully accrued at
all times.
2.1(c) Notwithstanding the above, if the
Member's Credited Service includes
periods of employment prior to January
1, 1994, in no event will the Member's
Accrued Benefit as of any date on or
after January 1, 1994 be less than the
sum of (i) and (ii) where (i) is the
Member's Accrued Benefit as of December
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31, 1993, and (ii) is the Member's
Accrued Benefit as of the date of
calculation, calculated in accordance
with the preceding Subsection of this
Section, but with Credited Service
excluding periods of employment prior to
January 1, 1994. In calculating the
benefit in (ii) above, the maximums on
recognized Credited Service in Section
4.3 shall be reduced by Credited Service
earned for periods prior to January 1,
1994.
Section 2.2 Actuarial Equivalent means a benefit of
equivalent value computed on the basis of the following
factors:
Interest - The annual interest rate on 30-year
Treasury securities as specified by the
Internal Revenue Service for the fifth
(5th) month before the first day of the
Plan Year in which the annuity starting
date occurs. The rate shall be
effective for the entire Plan Year in
which the annuity starting date occurs.
Mortality - The mortality table prescribed by the
Secretary of the Treasury based on the
standard table described in Code Section
807(d)(5)(A) used to determine reserves
for group annuity contracts issued on
the date as of with the present value is
being determined, without regard to any
other subparagraph of Code Section
807(d)(5), that is prescribed by the
Internal Revenue Service. For 1995 and
thereafter, until a new table is
prescribed by the Secretary of the
Treasury, the applicable mortality table
is the table prescribed in Revenue
Ruling 95-6.
Notwithstanding the preceding terms of this Section,
for the period beginning on May 1, 1996, and ending on April
30, 1997, the Actuarial Equivalent of a Participant's
retirement income benefit, payable in a lump sum form of
payment, shall be the larger of the amount determined using the
interest rate specified in this Section for the month preceding
the first day of the Plan Year in which occurs the date of
determination, or for the month specified in the first
paragraph of this Section.
Further, in no event will the Actuarial Equivalent of a
benefit, other than a single sum value, calculated on or after
May 1, 1996 be less than the Actuarial Equivalent of the
Accrued Benefit as of April 30, 1996, based on the interest and
mortality assumptions effective prior to May 1, 1996.
Section 2.3 Actuary shall mean a Fellow of the
Society of Actuaries who has been enrolled by the Joint Board
for the Enrollment of Actuaries under Section 3042 of the
Employee Retirement Income Security Act of 1974, or a firm of
actuaries at least one of whose members is a Fellow of the
Society of Actuaries who has been so enrolled. The Actuary
shall be designated by the Sponsoring Employer.
Section 2.4 Anniversary Date shall mean January 1st
in each year.
Section 2.5 Annual Earnings shall mean, in the case
of each Member, as of the date of determination, his basic
compensation (including regular pay, paid hours not worked,
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holiday pay, vacation pay, sick pay, jury duty, bereavement,
short term disability, commissions, overtime, any other amounts
so determined by the Employer, and any amount which would have
otherwise been basic compensation except that a Member is
contributing such amount to a qualified plan under a salary
reduction agreement as provided under Code Section 401(k) and
amounts contributed pursuant to a salary reduction agreement to
a plan provided under Code Section 125) for each Plan Year.
Annual Earnings for any Plan Year in which a Member has
completed fewer than two thousand (2,000) Hours of Service
shall be the amounts which he would have received for personal
services if such Participant had completed two thousand (2,000)
Hours of Service in such Plan Year. Notwithstanding the
preceding, Annual Earnings paid to a Member by an Participating
Employer prior to the Participating Employer's Entrance Date
will not be included in Annual Earnings.
In determining Annual Earnings for a Member,
compensation in excess of one hundred fifty thousand dollars
($150,000) or such other amount as is authorized pursuant to
Code Section 401(a)(17) shall not be recognized.
Section 2.6 Attained Age shall mean, unless clearly
indicated to the contrary, the age of an Employee or Member as
of his last birthday.
Section 2.7 Average Monthly Compensation shall mean
one-thirty sixth (1/36) of the sum of the final three (3)
Annual Earnings amounts preceding the Member's Disability
Retirement Date, Early Retirement Date, Normal Retirement Date,
Late Retirement Date or termination date under Section 5.1
hereof. If a Member has fewer than three (3) Annual Earnings
amounts, Average Monthly Compensation shall be the monthly
average of his actual Annual Earnings amounts.
Section 2.8 Average Monthly Earnings shall mean one-
sixtieth (1/60th) of the sum of the highest five (5)
consecutive Annual Earnings amounts preceding the Member's
Disability Retirement Date, Early Retirement Date, Normal
Retirement Date, Late Retirement Date, or termination date
under Section 5.1 hereof. If the Member has fewer than five
(5) Annual Earnings amounts, Average Monthly Earnings shall be
the monthly average of his actual Annual Earnings amounts.
Section 2.9 Beneficiary shall mean any person or
persons (or a trust) designated by a Member in such form and
manner as the Retirement Committee may prescribe to receive a
Death Benefit, other than a Death Benefit in the form specified
in Section 4.2(c), payable hereunder if such person or persons
survive the Member. This designation may be revoked at any
time in similar manner and form. In the event of the death of
the designated Beneficiary prior to the death of the Member,
the Contingent Beneficiary shall be entitled to receive the
Death Benefit unless the Beneficiary was named pursuant to
Section 4.2(b), in which case the provisions of Section 4.2(b)
shall govern. Notwithstanding the above, a married Member may
not designate a non-spouse Beneficiary without the consent of
his Spouse in the manner stated in Subsection 4.2(c).
Section 2.10 Board of Directors shall mean the Board
of Directors of the Sponsoring Employer unless otherwise
indicated.
Section 2.11 Break in Service shall mean a Plan Year
in which an employee who has been credited with fewer than five
hundred and one (501) Hours of Service.
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Notwithstanding the preceding paragraph and solely to
determine whether a Break in Service has occurred, a Member
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such Member but for such
absence, or in any case in which such Hours of Service cannot
be determined, eight (8) Hours of Service per day of such
absence. In no event, however, shall the Hours of Service
credited pursuant to the immediately preceding sentence exceed
five hundred and one (501). For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
absence (i) by reason of the pregnancy of the Member, (ii) by
reason of a birth of a child of the Member, (iii) by reason of
the placement of a child with the Member in connection with the
adoption of such child by such Member, or (iv) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service
credited under this paragraph shall be credited (i) in the Plan
Year or other applicable computation period in which the
absence begins if the crediting is necessary to prevent a Break
in Service in that period, or (ii) in all other cases, in the
following Plan Year or other applicable computation period.
Section 2.12 Code shall mean the Internal Revenue
Code of 1986, as amended.
Section 2.13 Company shall mean Old National Bancorp
and all of the legal entities which are a part of a controlled
group or affiliated service group with Old National Bancorp
pursuant to the provisions of Code Sections 414(b), (c), (m)
and (o).
Section 2.14 Contingent Beneficiary shall mean the
person or persons (or a trust) duly designated by the Member to
receive a Death Benefit from the Plan in the event the
designated Beneficiary does not survive the Member.
Section 2.15 Covered Compensation shall mean one-
twelfth (1/12) of the average (without indexing) of the taxable
wage bases in effect for each calendar year during the thirty-
five (35) year period ending with the last day of the calendar
year in which the Employee attains (or will attain) social
security retirement age. A thirty-five (35) year period is
used for all individuals regardless of the year of birth of the
individual. In determining an employee's Covered Compensation
for a Plan Year, the taxable wage base for all calendar years
beginning after the first day of the Plan Year is assumed to be
the same as the taxable wage base in effect as of the beginning
of the Plan Year. An Employee's Covered Compensation for a
plan year beginning after the thirty-five (35) year period
applicable under this paragraph is the Employee's Covered
Compensation for the Plan Year during which the thirty-five
(35) year period ends. An Employee's Covered Compensation for
a Plan Year beginning before the thirty-five (35) year period
applicable under this paragraph is one-twelfth (1/12) of the
taxable wage base in effect as of the beginning of the plan
year. Each Member's Covered Compensation will automatically be
adjusted for each Plan Year, provided that no adjustment shall
result in a reduction of the Member's Accrued Benefit in
violation of Code Section 411(d)(6).
Section 2.16 Credited Service shall mean the number
of years for which a Member is given credit in calculating his
Monthly Retirement Income or Death Benefit, as determined
pursuant to the following:
2.16(a) Credited Service prior to January 1, 1976
shall be a Member's period of employment with
an Employer prior to January 1, 1976 through
December 31, 1975.
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2.16(b) Beginning on and after January 1, 1976,
Credited Service shall accrue at the rate of
one (1) year for each Plan Year in which the
Member is credited with at least two thousand
(2,000) Hours of Service. If the Member is
credited with fewer than two thousand (2,000)
Hours of Service in a Plan Year, but at least
one thousand (1,000) Hours of Service, he
shall be granted Credited Service for such
Plan Year based on a ration of the actual
number of Hours of Service to two thousand
(2,000) Hours of Service.
2.16(c) No Credited Service shall accrue prior to the
Entrance Date of the Member's Participating
Employer.
2.16(d) Notwithstanding the above, if an employee
incurs one (1) or more consecutive Breaks in
Service (five (5) or more consecutive Breaks
in Service on and after January 1, 1985), his
Credited Service shall not include any
periods of employment prior to his
consecutive Breaks in Service if (i) said
employee's Employer-provided benefit pursuant
to Section 5.1 was zero immediately prior to
the commencement of his consecutive Breaks in
Service, and (ii) the employee's consecutive
Breaks in Service equal or exceed the
Member's Service prior to the commencement of
his consecutive Breaks in Service. The change
to five (5) consecutive Breaks in Service
effective January 1, 1985, shall not apply to
a series of consecutive Breaks in Service in
progress on January 1, 1985, if the rule
effective prior to January 1, 1985, has
already caused Service prior to the Breaks in
Service to be disregarded immediately prior
to January 1, 1985.
2.16(e) Notwithstanding the above, Credited Service
shall not include any periods of employment
for which a lump sum settlement was made (and
not repaid) pursuant to Section 5.5.
Section 2.17 Death Benefit shall mean any benefit
paid to a Beneficiary or Contingent Beneficiary or other person
at the death of a Member, Disabled Member, or Retired Member,
as provided under the terms of the Plan.
Section 2.18 Defined Benefit Plan shall mean a plan
established and qualified under Code Section 401 or 403, except
to the extent it is or is treated as a Defined Contribution
Plan.
Section 2.19 Defined Contribution Plan shall mean a
plan which is established and qualified under Code Section 401
or 403, which provides for an individual account for each
member therein and for benefits based solely on the amount
contributed to each member's account and any income and
expenses or gains and losses (both realized and unrealized)
which may be allocated to such account.
Section 2.20 Disability Payment shall mean the
Monthly Retirement Income due a Disabled Member.
Section 2.21 Disability Retirement Date shall mean,
in the case of a Member who had been credited with five (5) or
more years of Service, the first day of the month coincident
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with or immediately following the date on which a Member
becomes eligible for (and elects) immediate Disability Payments
hereunder.
Section 2.22 Disabled Member shall mean any Member
who is Totally and Permanently Disabled.
Section 2.23 Early Retirement Age shall mean, except
as provided in Appendix B, the date on which a Member reaches
Attained Age fifty-five (55).
Section 2.24 Early Retirement Date shall mean,
except as provided in Appendix B, in the case of each Member
who has reached his Early Retirement Age and who has been
credited with at least five (5) years of Service, the first day
of the month coincident with or immediately following the later
of (a) the date such Member shall leave the employ of the
Employer in accordance with Section 4.5 hereof, or (b) the date
the Member directs in writing shall be his Early Retirement
Date.
Section 2.25 Effective Date shall mean January 1,
1945, the effective date of the Original Plan. The effective
date of this amended and restated Plan is May 1, 1996, except
as otherwise provided.
Section 2.26 Employee means any person employed by
the Employer, subject to the following:
(1) The term "Employee" shall exclude any person
who is a Leased Employee.
(2) The term "Employee" shall exclude any
employee who is a part of a collective
bargaining unit for which benefits have been
the subject of good faith negotiation unless
and until the Employer and the collective
bargaining unit representative for that unit
through the process of good faith bargaining
agree in writing for coverage hereunder.
When used with an initial lower case letter, the term
"employee" shall mean a person employed by the Employer or the
Company, as the context requires, without regard to the
limitations contained in this Section.
Section 2.27 Employer shall mean Old National Bancorp
its successors and assigns, and any subsidiary or affiliated
companies authorized by the Board of Directors of Old National
Bancorp to participate in this Plan with respect to their
employees, and subject to the provisions of Article 15, any
corporation into which an Employer may be merged or
consolidated or to which all or substantially all of its assets
may be transferred.
Section 2.28 Entrance Date mean the effective date of
an Employers adoption of the Plan as a Participating Employer.
Section 2.29 Highly Compensated Employees will be
determined in accordance with the following:
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2.29(a) Highly Compensated Employee means an employee
who during the determination year, subject to
Subsection (b) of this Section, or the look
back year:
(1) was at any time a five percent (5%)
owner of the Employer;
(2) received compensation from the Company
in excess of $75,000 (or such higher
amount as may be provided under Code
Section 414(q));
(3) received compensation from the Company
in excess of $50,000 (or such higher
amount as may be provided under Code
Section 414(q)) and was in a group
consisting of the top twenty percent
(20%) of the employees of the Company
when ranked on the basis of
compensation; or
(4) was at any time an officer and received
compensation greater than fifty percent
(50%) of the maximum amount under Code
Section 415(b)(1)(A). Not more than
fifty (50) officers (or, if lesser, the
greater of three (3) employees or ten
percent (10%) of the employees) shall be
considered under this subsection as
Highly Compensated. If no officer is
described above, then the highest paid
officer shall be treated as described in
this item (4).
2.29(b) If the employee was not a Highly Compensated
Employee for the look back year, then he
shall not be considered a Highly Compensated
Employee for the determination year unless he
is a five percent (5%) owner of the Employer;
or one of the highest paid one hundred
employees and meets the criteria of clauses
(2), (3) or (4) of Subsection (a) of this
Section.
2.29(c) If the Highly Compensated Employee is a five
percent (5%) owner or one of the ten (10)
most highly compensated employees, then the
compensation and contributions of employees
who are spouses, lineal descendants,
ascendants or spouses of lineal descendants
or ascendants of such Highly Compensated
Employees shall be attributed to the Highly
Compensated Employee and the employees who
are such relatives shall not be considered as
separate employees. In the event that family
aggregation is required, the limitation on
compensation pursuant to Code Section
401(a)(17) will be allocated among family
members by multiplying the limitation by a
fraction, the numerator of which is the
individual family member's compensation and
the denominator of which is the total
compensation of all members of the family
group or in such other manner as provided by
regulation and pronouncements of the Internal
Revenue Service. In the case of family
aggregation for purposes of Code Section
401(a)(17), the term "family member" shall
include only the spouse of the Highly
Compensated Employee and any lineal
descendants of the Highly Compensated
Employee who have not attained age nineteen
(19) before the close of the Plan Year.
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2.29(d) For purposes of determining Highly
Compensated Employees, compensation shall
mean compensation paid by the Company for
purposes of Code Section 415(c)(3) and shall
include amounts deferred pursuant to Code
Sections 125 (flexible benefit plans);
402(g)(3) (elective deferrals); and
402(h)(1)(B) (simplified employee plans).
2.29(e) For purposes of determining the top twenty
percent (20%) of employees and the number of
officers counted as Highly Compensated
Employees, the following employees shall be
excluded:
(1) employees who have not completed six (6)
months of Service,
(2) employees who normally work less than
seventeen and one-half (17-1/2) hours
per week,
(3) employees who normally work during not
more than six (6) months during the Plan
Year,
(4) employees who have not attained age
twenty-one (21),
(5) employees included in a collective
bargaining unit covered by an agreement
with the Company (to the extent
permitted by regulations), and
(6) employees who are non-resident aliens.
2.29(f) A former employee upon reemployment
shall be treated as a Highly Compensated
Employee if (1) such employee was a
Highly Compensated Employee when such
employee separated from Service, or (2),
such employee was a Highly Compensated
Employee at any time after attainment of
age fifty-five (55).
2.29(g) Except as otherwise provided in this Section,
the term "look back year" shall mean the
twelve (12) month period immediately
preceding the determination year.
2.29(h) Except as otherwise provided in this Section
the term "determination year" shall mean the
current plan year.
2.29(i) To the extent permitted by regulations under
Code Section 414(q), the Employer may elect
to make the look back year calculation on the
basis of the calendar year ending with or
within the applicable determination year (or,
in the case of a determination year that is
shorter than twelve (12) months, the calendar
year ending with or within the twelve (12)
month period ending with the end of the
determination year). In such case, the
Employer must make the determination year
calculation on the basis of the period (if
any) by which the applicable determination
year extends beyond such calendar year. If
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the Employer makes the election provided for
in this Subsection, such election must be
made with respect to all plans, entities and
arrangements of the Employer.
2.29(j) The determination of Highly Compensated
Employees shall be determined on a Company
wide basis and shall not be determined on an
Employer by Employer or plan by plan basis.
2.29(k) If the Employer so elects for a year, clause
(2) of Subsection (a) of this Section shall
be applied by substituting fifty thousand
dollars ($50,000) in place of seventy-five
thousand dollars ($75,000), and clause (3) of
Subsection (a) of this Section shall not
apply, provided that:
(1) at all times during such year, the
Employer maintained substantial business
activities and employed employees in at
least two (2) significantly separate
geographic areas, and
(2) The Employer satisfies such other
conditions as may be prescribed by the
Secretary of the Treasury.
2.29(l) The determination of Highly Compensated
Employees shall be governed by Code Section
414(q) and the regulations issued thereunder.
Section 2.30 Hour of Service shall mean any hour for
which an employee is paid or entitled to payment by the Company
during the Plan Year or other applicable computation period (i)
for the performance of duties for the Company; (ii) on account
of a period of time during which no duties are performed,
regardless of whether the employment relationship has
terminated; and (iii) as a result of a back pay award which has
been agreed to or made by the Company (irrespective of
mitigation of damages) to the extent that such hour has not
been previously credited under item (i) or item (ii) preceding.
2.30(a) The number of Hours of Service to be credited
on account of a period of time during which
no duties are performed (including hours
resulting from a back pay award) shall be
determined as follows. If the payment which
is made or due is calculated on the basis of
units of time, the number of Hours of Service
to be credited shall be the number of
regularly scheduled working hours included in
the units of time on the basis of which the
payment is calculated. If an employee does
not have a regular work schedule, the number
of Hours of Service to be credited shall be
calculated on the basis of an eight (8) hour
work day. If the payment which is made or
due is not calculated on the basis of units
of time, the number of Hours of Service to be
credited shall be calculated by dividing the
amount of the payment by the employee's most
recent hourly rate of compensation before the
period during which no duties were performed,
determined as follows:
(1) If the employee's compensation is
determined on the basis of an hourly
rate, such hourly rate shall be the
employee's most recent hourly rate of
compensation.
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(2) If the employee's compensation is
determined on the basis of a fixed rate
for a specified period of time other
than hours, his hourly rate of
compensation shall be his most recent
rate of compensation for the specified
period of time, divided by the number of
hours regularly scheduled for the
performance of duties during such period
of time; if an employee does not have a
regular work schedule, his hourly rate
of compensation shall be calculated on
the basis of an eight (8) hour work day.
(3) If the employee's compensation is not
determined on the basis of a fixed rate
for a specified period of time, his
hourly rate of compensation shall be the
lowest hourly rate paid to employees in
his job classification, or, if no
employees in his job classification have
an hourly rate of compensation, the
minimum non-training wage in effect
under Section 6(a)(1) of the Fair Labor
Standards Act of 1938, as amended.
2.30(b) In no event shall the application of the
terms of Subsection (a) of this Section
result in crediting an employee with a number
of Hours of Service during the period which
is greater than the number of hours regularly
scheduled for the performance of duties. If
an employee has no regular work schedule, the
number of Hours of Service to be credited to
him shall not exceed the number which would
be credited calculated on the basis of an
eight (8) hour work day.
2.30(c) No employee shall be credited with more than
five hundred and one (501) Hours of Service
as a result of the application of Subsection
(a) of this Section for any single continuous
period during which he performs no duties,
regardless of whether such period extends
beyond one (1) Plan Year or other applicable
computation period.
2.30(d) The Plan Year or other applicable computation
period to which Hours of Service shall be
credited shall be determined as follows:
(1) Except as hereinafter provided, Hours of
Service credited in accordance with item
(i) of the first paragraph of this
Section shall be credited in the Plan
Year or other applicable computation
period in which the duties were
performed.
(2) Except as hereinafter provided, Hours of
Service credited in accordance with item
(ii) of the first paragraph of this
Section shall be credited: if
calculated on the basis of units of
time, to the Plan Year or Plan Years or
other applicable computation period in
which the period during which no duties
are performed occurs, beginning with the
first unit of time to which the payment
relates; otherwise, to the Plan Year or
other applicable computation period in
which the period during which no duties
are performed occurs, provided that if
the period during which no duties are
performed extends beyond one (1) Plan
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Year or other applicable computation
period, such Hours of Service shall be
allocated between not more than the
first two (2) Plan Years or other
applicable computation periods on any
reasonable basis consistently applied.
(3) Except as hereinafter provided, Hours of
Service credited in accordance with item
(iii) of the first paragraph of this
Section shall be credited to the Plan
Year or other applicable computation
period to which the award or agreement
for back pay pertains rather than to the
Plan Year or other applicable
computation period in which the award,
agreement, or payment is made.
(4) Hours of Service to be credited to an
employee in connection with a period of
no more than thirty-one (31) days which
extends beyond one (l) Plan Year or
other applicable computation period may
be credited to the first or the second
computation period, provided such
crediting is done on a reasonable and
nondiscriminatory basis.
2.30(e) Nothing in this Section shall be construed to
alter, amend, modify, invalidate, impair or
supersede any law of the United States or any
rule or regulation issued under any such law.
The nature and extent of any credit for Hours
of Service under this Section shall be
determined under such law, including
Department of Labor regulation Section
2530.200b-2.
Section 2.31 Key Employee shall mean any employee,
former employee or beneficiary thereof in an Internal Revenue
Service qualified plan adopted by the Company who at any time
during the applicable Plan Year or any of the four (4)
preceding Plan Years is defined in Subsection (a) through (d)
of this Section.
2.31(a) An officer of the Company having annual
compensation during the Plan Year greater
than fifty percent (50%) of the amount in
effect under Code Section 415(b)(1)(A) for
the calendar year in which such Plan Year
ends;
2.31(b) One (1) of the ten (10) employees having
annual compensation from the Company for a
Plan Year of more than the limitation in
effect under Code Section 415(c)(1)(A) for
the calendar year in which such Plan Year
ends and owning (or considered as owning
within the meaning of Code Section 318) both
more than a one-half percent (1/2%) interest
and the largest interest in the Employer;
2.31(c) A five percent (5%) owner of the Employer; or
2.31(d) A one percent (1%) owner of the Employer
having annual compensation from the Company
for a Plan Year of more than one hundred and
fifty thousand dollars ($150,000).
2.31(e) For purposes of this Section, compensation
has the same meaning as under Code Section
415(c)(3), and in the case of employer
contributions made pursuant to a salary
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reduction agreement, without regard to Code
Section 403(b).
2.31(f) This definition shall be interpreted
consistent with Code Section 416 and rules
and regulations issued thereunder. Further,
such law and regulations shall be controlling
in all determinations under this definition,
inclusive of any provisions and requirements
stated thereunder but hereinabove absent.
Section 2.32 Late Retirement Date shall mean the
first day of any month subsequent to the Member's Normal
Retirement Date coincident with or immediately following the
day the Member terminates employment with his Employer for any
reason other than death.
Section 2.33 Leased Employee shall mean any person
(other than an employee of the recipient) who provides services
to the recipient if such services are provided pursuant to an
agreement between the recipient and any other person ("leasing
organization"), such person has performed such services for the
recipient (or for the recipient and any related persons
determined in accordance with Code Section 414(n)(6)) on a
substantially full-time basis for a period of one (1) year, and
such services are of a type historically performed by employees
in the business field of the recipient employer. A Leased
Employee shall be treated as employed by the Employer for
purposes of calculating Service even if not eligible for
participation in the Plan.
Section 2.34 Limitation Year shall mean the twelve
(12) month period beginning on January 1st and ending on
December 31st.
Section 2.35 Member shall mean any Employee of the
Employer who has become a Member as provided in Article 3
hereof.
Section 2.36 Merged Plan shall mean a plan maintained
by a Participating Employer that is merged into this Plan.
Section 2.37 Monthly Retirement Income shall mean a
monthly income due a Retired Member which shall commence as of
his Disability, Early, Normal or Late Retirement Date, or the
commencement date of benefit payments under Section 5.1 hereof,
and continue for the period indicated in Article 4 hereof.
Section 2.38 Normal Retirement Age shall mean the
later of the date on which a Member reaches Attained Age
sixty-five (65) or the fifth (5th) anniversary of the date the
Member commenced participation in the Plan.
Section 2.39 Normal Retirement Date shall mean,
except as hereinafter provided, the first day of the month
coincident with or immediately following a Member's Normal
Retirement Age.
Section 2.40 Original Plan shall mean the Old
National Bank Retirement Plan as amended immediately prior to
its restatement.
Section 2.41 Participating Employer means an
Employer, which is acquired by the Sponsoring Employer or
subsidiary of the Sponsoring Employer which adopts the Plan
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with the Sponsoring Employer's consent. An acquired entity
shall become a Participating Employer as of January 1
coincident with or next following the acquisition date. For
purposes of this Section, the term "acquired entity" means an
entity in which the Company acquires at least eighty percent
(80%), directly or indirectly, of the outstanding stock or
assets, and the term "acquisition date" shall mean the date on
which the entity becomes an acquired entity as provided in the
definitive agreement between the Company and the acquired
entity. The Participating Employers are listed on Appendix A
which can be updated from time to time by the President or Vice
President of the Sponsoring Employer without action of the
Board.
Section 2.42 Participation Date means the first day
of each calendar month.
Section 2.43 Permissive Aggregation Group shall mean
the Required Aggregation Group and any other plan or plans of
the Company that are not required to be included in the
Required Aggregation Group, but which, if treated as being part
of such group, would not cause such group to fail to meet the
requirements of Code Sections 401(a)(4) and 410.
Section 2.44 Plan Year shall mean the twelve (12)
month period beginning on January 1st and ending on December
31st.
Section 2.45 Prior Plan shall mean the Old National
Bancorp Employees' Retirement Plan as amended immediately prior
to this restatement.
Section 2.46 Required Aggregation Group shall mean
(1) each plan of the Company in which a Key Employee is a
member; (2) each other plan of the Company which enables any
plan in (1) to meet the requirements of Code Section 401(a)(4)
or 410; and (3) each terminated plan maintained by the Company
within the five (5) year period ending on the determination
date for the Plan Year in question which, but for the fact that
it terminated, would meet the criteria of (1) or (2) preceding.
Section 2.47 Retired Member shall mean any Member of
the Plan who has qualified for retirement and who is receiving
a Monthly Retirement Income by direction of the Retirement
Committee.
Section 2.48 Retirement Committee shall mean the
Retirement Committee as provided in Article 6 hereof.
Section 2.49 Service shall mean, as of any date, the
sum of Service under Subsection (a) and (b) of this Section,
subject to the terms of Subsection (c) and (d) of this Section.
2.49(a) Service prior to January 1, 1976, shall be a
Member's period of employment with the
Company from his last hiring date prior to
January 1, 1976 through December 31, 1975.
2.49(b) On and after January 1, 1976, shall be the
total number of Plan Years, during which the
employee has at least one thousand (1,000)
Hours of Service for the Company.
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2.49(c) Effective January 1, 1993, in the case of an
employee who was a participant under a prior
Defined Benefit Plan of a Participating
Employer, Service prior to the first day of
the Plan Year in which the Employer's
Entrance Date occurs shall be determined
pursuant to the terms of the prior plan and
Service on and after the first day of the
Plan Year in which the Employer's Entrance
Date occurs shall be determined pursuant to
the terms of this Plan.
2.49(d) Notwithstanding the above, if an employee
incurs one (1) or more consecutive Breaks in
Service (five (5) or more consecutive Breaks
in Service on and after January 1, 1985), his
Credited Service shall not include any
periods of employment prior to his
consecutive Breaks in Service if (i) said
employee's Employer-provided benefit pursuant
to Section 5.1 was zero immediately prior to
the commencement of his consecutive Breaks in
Service, and (ii) the employee's consecutive
Breaks in Service equal or exceed the
Member's Service prior to the commencement of
his consecutive Breaks in Service. The change
to five (5) consecutive Breaks in Service
effective January 1, 1985, shall not apply to
a series of consecutive Breaks in Service in
progress on January 1, 1985, if the rule
effective prior to January 1, 1985, has
already caused Service prior to the Breaks in
Service to be disregarded immediately prior
to January 1, 1985.
Section 2.50 Sponsoring Employer shall mean Old
National Bancorp.
Section 2.51 Spouse shall mean the legally married
spouse of the Member at the earlier of the Member's date of
death or the date benefits commence to the Member under the
Plan.
Section 2.52 Statutory Interest Rate shall mean an
interest rate equal to (i) one hundred and twenty percent
(120%) of the Federal mid-term rate as in effect under Section
1274 of the Code for the first month of the Plan Year for each
Plan Year through the date on which the determination is being
made, compounded annually and (ii) the rate specified for
determining Actuarial Equivalent for the period beginning with
the determination date and ending on the date in which the
Member attains Normal Retirement Age or his date of severance
of employment, if later, compounded annually.
Section 2.53 Top Heavy Plan shall mean, for Plan
Years beginning after December 31, 1983, any plan under which,
as of any determination date, the present value of the
cumulative accrued benefits under the plan for Key Employees
exceeds sixty percent (60%) of the present value of the
cumulative accrued benefits under the Plan for all employees.
For purposes of this definition, the Subsections of this
Section shall apply. The accrued benefit of any employee other
than a Key Employee shall be determined under the method which
is used for accrual purposes for all plans of the Company, or,
if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the
fractional accrual rule of Code Section 411(b)(1)(C).
2.53(a) If such plan is a Defined Contribution Plan,
the present value of cumulative accrued
benefits shall be deemed to be the market
value of all employee accounts under the
plan, other than voluntary deductible
employee contributions. If such plan is a
Defined Benefit Plan, the present value of
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cumulative accrued benefits shall be the lump
sum present value determined pursuant to
actuarial assumptions adopted by the Employer
for purposes of determining if this Plan is a
Top Heavy Plan. Moreover, the present value
of the cumulative accrued benefits shall be
increased by the amount of all Plan
distributions made with respect to an
Employee during the five (5) year period
ending on the determination date, including
distributions under a terminated plan which
is a part of a Required Aggregation Group.
2.53(b) A plan shall be considered a Top Heavy Plan
for any Plan Year if, on the last day of the
preceding Plan Year (the determination date),
the above criteria were met. For the first
Plan Year that the Plan shall be in effect,
the determination of whether said Plan is a
Top Heavy Plan shall be made as of the last
day of such Plan Year.
2.53(c) Each plan of the Company required to be
included in a Required Aggregation Group
shall be treated as a Top Heavy Plan if such
group is a top heavy group.
2.53(d) With respect to a Member or former Member who
has not performed any service for the
Employer at any time during the five (5) year
period ending on the determination date, and
with respect to a Member or former Member who
was formerly a Key Employee, but who is not a
Key Employee on the determination date, the
present value of the cumulative accrued
benefit for such Member or former Member
shall not be taken into account for the
purposes of determining whether this Plan is
a Top Heavy Plan.
2.53(e) This definition shall be interpreted
consistent with Code Section 416 and rules
and regulations issued thereunder. Further,
such law and regulations shall be controlling
in all determinations under this definition
inclusive of any provisions and requirements
stated thereunder but hereinabove absent.
Section 2.54 Total and Permanent Disability or
Totally and Permanently Disabled shall mean a physical or
mental condition which, in the judgement of the Committee based
on a medical examination by a doctor or clinic appointed by the
Committee, totally and permanently prevents the Member with
five (5) or more years of Service from engaging in any
occupation or employment for remuneration or profits. Total
and Permanent Disability shall exclude disabilities arising
from:
2.54(a) Chronic or excessive use of intoxicants,
drugs or narcotics; or
2.54(b) Intentionally self-inflicted injury or
intentionally self-induced sickness; or
2.54(c) A proven unlawful act or enterprise on the
part of the Member; or
2.54(d) Service in any police or other armed branch
or department of any nation, state or
political subdivision thereof; or
2.54(e) Service in the armed forces of any country.
-16-
<PAGE>
<PAGE>
Section 2.55 Trust Agreement shall mean the agreement
entered into between the Sponsoring Employer and the Trustee
providing for the funding of benefits under this Plan.
Section 2.56 Trustee shall mean the Trustee under the
Trust Agreement.
Section 2.57 Trust Fund shall mean all cash,
securities, life insurance and/or annuity contracts, real
estate, or any other property held by the Trustee pursuant to
the terms of the Trust Agreement, together with income thereon.
Section 2.58 Construction
The words and phrases defined in this Article when used
in this Plan with an initial capital letter shall have the
meanings specified in this Article, unless a different meaning
is clearly required by the context. Any words herein used in
the masculine shall be read and construed in the feminine where
they would so apply. Words in the singular shall be read and
construed as though used in the plural in all cases where they
would so apply.
ARTICLE 3
MEMBERSHIP IN THE RETIREMENT PLAN
Section 3.1 Eligibility Requirements
Each Employee who was covered under the Prior Plan as
of April 30, 1996, shall remain eligible to be covered
hereunder as of May 1, 1996, without further action on his
part. Thereafter, an Employee who is not yet a Member shall
become a Member hereunder on the Participation Date coincident
with or next following the completion of a twelve (12)
consecutive month period during with he is credited with at
least one thousand (1,000) Hours of Service. The first period
shall be the twelve (12) consecutive month period beginning on
the date he completes his first Hour of Service. Thereafter,
the period shall be the Plan Year in which occurs the
anniversary of the date the Employee completes his first Hour
of Service. A terminated Member who later resumes his
employment with the Employer shall become a Member on his
return to the status of an Employee. Each employee shall be
furnished a summary of the Plan when he becomes a Member.
In the case of an Employee who was employed by a
Participating Employer, Hours of Service with the Participating
Employer prior to the Participating Employer's Entrance Date
shall be counted as Hours of Service for purposes of the
eligibility requirements under this Section. Notwithstanding
the foregoing, no Employee of a Participating Employer that is
acquired by the Sponsoring Employer shall become a Member prior
to the January 1st coincident with or next following the
Participating Employer's Entrance Date.
Section 3.2 Plan Binding
Upon becoming a Member, a Member shall be bound then
and thereafter by the terms of this Plan and the Trust
Agreement, including all amendments to the Plan and the Trust
Agreement made in the manner herein authorized.
-17-
<PAGE>
<PAGE>
ARTICLE 4
MONTHLY RETIREMENT INCOME
Section 4.1 General
Monthly Retirement Income payable under the terms of
this Article shall be subject to the restrictions and
limitations of Article 9, Article 11, Article 15, Article 16
and elsewhere in this Plan and shall be paid by the Trustee
only by or at the direction of the Retirement Committee.
Neither the Employer, the Retirement Committee nor the Trustee
shall be under any obligation to pay any Monthly Retirement
Income other than from the Trust Fund.
Section 4.2 Benefit Forms
The basic form of Monthly Retirement Income (to which
the formula indicated in Section 4.3 applies) shall be a
monthly income commencing on the Member's Disability, Early,
Normal or Late Retirement Date or on the date specified in
Section 5.1 and payable in the form specified in Subsection (a)
of this Section. At any time during the election period (which
shall mean the period beginning ninety (90) days immediately
prior to the date upon which Monthly Retirement Income is to
commence under this Section or under Section 5.1 and ending on
that date), the Member may elect in a written application
provided by the Retirement Committee, and with Spouse consent,
if applicable, to receive his Monthly Retirement Income in one
of the alternative forms listed below, which shall each be the
Actuarial Equivalent of the Monthly Retirement Income payable
under the basic form, except as otherwise provided. Any
election under this Section may be revoked and a new election
made at any time prior to the commencement of benefits. Once
benefits have commenced, no further revocation or change shall
be permitted.
4.2(a) Basic Form A monthly income payable for
the Member's lifetime equal to his
benefit under Section 4.3.
4.2(b) Survivor Annuity Form A monthly income
payable for the lifetime of the Member
and continuing thereafter, in an amount
one-half (1/2), two-thirds (2/3), three-
fourths (3/4), or equally as great, as
elected by the Member, to a Beneficiary
designated in writing by the Member.
Should the Beneficiary named by the
Member die prior to the Member's
Disability, Early, Normal or Late
Retirement Date or prior to the date
specified in Section 5.1, the election
shall be void and Monthly Retirement
Income shall be paid under the basic
form unless the Member makes a valid
election of another alternate form of
payment before his benefit begins.
Should the Beneficiary die after Monthly
Retirement Income has commenced to the
Member, no alternate Beneficiary can be
named.
4.2(c) Qualified Joint and Survivor Annuity
Form An immediate annuity in the form
of a monthly income payable for the
lifetime of the Member, with one-half
(1/2) of such amount continuing to the
Member's Spouse, after the Member's
death, for the lifetime of the Spouse.
-18-
<PAGE>
<PAGE>
(1) No less than thirty (30) days and no
more than ninety (90) days prior to the
annuity starting date (or such other
time as provided by regulations or other
pronouncements), each Member shall be
furnished an explanation of the terms
and conditions of the qualified joint
and survivor annuity (which shall be a
benefit payable under the basic form if
the Member is not married), as
specifically applicable to said Member
(and his Spouse, if any); an explanation
of his right to make an election not to
have his benefit distributed in the form
of a qualified joint and survivor
annuity; an explanation of the rights of
his Spouse, if any, to consent to such
election; and an explanation of the
financial effect upon the Member's
benefit of making such election. Such
explanation shall be written in a manner
intended to be understood by the Member
and his Spouse, if any. In the event a
Member requests additional information,
as permitted under the terms of the
notice, commencement of benefits for any
purpose hereunder shall not begin until
at least ninety (90) days following the
Member's receipt of such additional
information unless the Member
specifically elects earlier commencement
and he is otherwise entitled to such
commencement under the terms of the
Plan. Any election to waive the form of
payment in this Subsection and to have
benefits paid in an alternate form
permitted by this Section must be in
writing. The Member's election, and the
Beneficiary named in the election, must
be consented to by the Member's Spouse
unless the Member elects, as an
alternative, the form of payment
described in Section 4.2(b) with his
Spouse as Beneficiary. The Spouse's
consent must be witnessed by a Plan
representative or by a notary public
and, once given, Spouse consent may not
be revoked. If it is established to the
satisfaction of a Plan representative
that Spouse consent cannot be obtained
because there is no Spouse or the Spouse
cannot be located, Spouse consent will
not be required.
(2) In the event that (i) no election is
effectively made and (ii) it is
determined that the Member is married on
the date at which his Monthly Retirement
Income is to commence, the manner of
distribution shall be as provided in
this Subsection. In all other instances
where no election is effectively made,
benefits shall be paid as provided in
Subsection 4.2(a).
4.2(d) Lump Sum Form A lump sum payment to the
Member, but only at his actual date of
retirement equal to the Actuarial
Equivalent of the Monthly Retirement
Income payable under the basic form.
4.2(e) Merged Plans. Unless otherwise provided
in Appendix C, a Member who participated
in a Merged Plan of a Participating
Employer may elect the optional forms
provided under said Merged Plan in
addition to the optional forms otherwise
provided for pursuant to this Section,
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<PAGE>
<PAGE>
but only as to the Member's accrued
benefit under the Merged Plan as of the
date of the merger.
4.2(f) Incidental Death Benefit If the
Member's designated Beneficiary is other
than his Spouse, the form of payment
must comply with the incidental death
benefit requirements of Code Section
401(a)(9) and the regulations
thereunder.
Section 4.3 Normal Retirement
When a Member lives to his Normal Retirement Date and
remains in the employ of the Employer until such date, he shall
be entitled to retire and to receive a Monthly Retirement
Income in an amount calculated by the Actuary and certified to
the Trustee by the Retirement Committee. The amount of the
Member's Monthly Retirement Income under the basic form and
payable on his Normal Retirement Date shall be the amounts
provided in Subsection (a) this Section, plus the amounts
provided in Subsection (b) of this Section, if applicable, but
in no event less than the amount determined under Appendix D,
if applicable.
4.3(a) (i) One and forty-five hundredths of one
percent (1.45%) of Average Monthly
Earnings multiplied by Credited Service
not in excess of ten (10) years of
Credited Service, plus (ii) One and
sixty-five hundredths of one percent
(1.65%) of Average Monthly Earnings
multiplied by Credited Service in excess
of ten (10) years of Credited Service,
but not in excess of twenty (20) years
of Credited Service, plus (iii) One and
ninety-five hundredths of one percent
(1.95%) of Average Monthly Earnings
multiplied by Credited Service in excess
of twenty (20) years of Credited
Service, but not in excess of thirty-
five (35) years of Credited Service,
minus (iv) Fifty-nine hundredths of one
percent (.59%) of Average Monthly
Compensation, to a maximum of one
hundred twenty-five percent (125%) of
Covered Compensation, multiplied by all
years of Credited Service, not to exceed
thirty-five (35) years of Credited
Service.
4.3(b) In the case of a Merged Plan, the
Member's accrued benefit under the
Merged Plan as of the Employer's
Entrance Date.
Section 4.4 Late Retirement
4.4(a) A Member may remain in the employ of the
Employer after his Normal Retirement
Date, in which event no Monthly
Retirement Income shall be paid until
the Member's Late Retirement Date. Upon
the Member's actual retirement on his
Late Retirement Date, the amount of his
Monthly Retirement Income under the
basic form shall be the greater of (i)
an amount computed under Section 4.3 as
of his Late Retirement Date, or (ii) the
Monthly Retirement Income he would have
received had he retired on his Normal
Retirement Date, such amount increased
at the rate of three-fourths of one
percent (3/4 of 1%) for each month
between Normal Retirement Date and his
Late Retirement Date.
-20-
<PAGE>
<PAGE>
4.4(b) Notwithstanding anything in this Section
to the contrary, a Member who is
employed by the Employer after his
Normal Retirement Date may elect to
commence his Monthly Retirement Income
as of his Normal Retirement Date. The
Monthly Retirement Income under this
Subsection, payable pursuant to the
basic form, shall be an amount computed
pursuant to Section 4.3 as of his Normal
Retirement Date. The Member who makes
an election pursuant to this Subsection
shall continue to accrue benefits for
periods of employment after his Normal
Retirement Date. Each year after his
Normal Retirement Date, the Monthly
Retirement Income of a Member who makes
an election under this Subsection shall
be adjusted for additional accruals
since the preceding Plan Year. If a
Member who is employed after his Normal
Retirement Date does not make an
election under this Subsection to
commence his Monthly Retirement Income
at his Normal Retirement Date, his
Monthly Retirement Income will not
commence until his Late Retirement Date.
4.4(c) In the case of a Member who (i)
participated in a Merged Plan of a
Participating Employer and (ii)
continued his employment past his normal
retirement date under the Merged Plan,
the Monthly Retirement Income at his
Late Retirement Date shall not be less
than that determined under such Merged
Plan as of the Entrance Date of such
Participating Employer.
Section 4.5 Early Retirement
4.5(a) Upon written application, a Member may
retire as of an Early Retirement Date.
Commencing at his Early Retirement Date,
such Member shall be entitled to a
Monthly Retirement Income which shall be
equal to his Accrued Benefit as of his
Early Retirement Date multiplied by a
factor determined pursuant to the
following table based on his years and
months of age as of his Early Retirement
Date, interpolated for months.
<TABLE>
<CAPTION>
Age at Early
Retirement Date Factor
--------------- ------
<S> <C>
65 1.0000
64 .9230
63 .8461
62 .7692
61 .7307
60 .6923
59 .6538
58 .6153
57 .5769
56 .5292
55 .4861
</TABLE>
4.5(b) In the case of a Member (i) who
participated in a Merged Plan, (ii) who
has reached his early retirement date
under the Merged Plan as of the day
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<PAGE>
<PAGE>
preceding the Participating Employer's
Entrance Date (iii) and who was an
active participant in the Merged Plan as
of the day preceding the Participating
Employer's Entrance Date, the benefit to
which he is entitled to pursuant to this
Section shall not be less than his
accrued benefit under the Merged plan as
of the day preceding the Participating
Employer's Entrance Date, reduced
actuarially as provided by the terms of
the Merged Plan in effect on the day
preceding the Participating Employers'
Entrance Date unless otherwise provided
in Appendix E.
4.5(c) A Member who terminates employment for
any reason other than Total and
Permanent Disability after meeting the
requirements of this Section and before
reaching his Normal Retirement Date will
be considered to have retired under this
Section.
Section 4.6 Disability Retirement
4.6(a) When a Member shall be determined to be
Totally and Permanently Disabled, the
Retirement Committee shall certify such
fact to the Trustee and the Disabled
Member shall be retired as of his
Disability Retirement Date. In such
event, the Disabled Member's benefits
hereunder shall be deferred until the
later of (i) his Normal Retirement Date,
or (ii) the date he is no longer
entitled to benefits under a long-term
disability program sponsored by the
Employer, in which case such period of
deferral shall be included in both his
Service and his Credited Service for
purposes of calculating his benefits
hereunder. His earnings for such period
shall be conclusively deemed to be equal
to his Monthly Earnings in effect when
the Member last received compensation
from the Employer. The Member's Covered
Compensation immediately prior to his
Disability Retirement Date shall be
deemed to continue during the period the
Member's benefits are deferred
hereunder. If, during the period of
deferral of Disability Payments
hereunder, such Disabled Member was not
also receiving Social Security
disability benefits (except during the
period such Member's application for
Social Security disability benefits was
pending and during the waiting period
required under the Social Security Act
for disability benefits thereunder),
such additional period shall not be
included in his Service and Credited
Service.
4.6(b) Notwithstanding the above, upon becoming
Totally and Permanently Disabled, a
Disabled Member may elect to receive
immediate commencement of Disability
Payments hereunder as of his Disability
Retirement Date, provided he is not
receiving benefits under a long-term
disability program sponsored by the
Employer. If such election is made, the
Disabled Member shall be entitled to a
reduced Monthly Retirement Income,
commencing with his Disability
Retirement Date and payable under the
basic method, in an amount equal to his
Accrued Benefit as of such date
(including credit for any Service and
Credited Service provided above),
reduced in accordance with the factors
in Section 4.5 for each month by which
the commencement date of his Disability
Payments precedes the Member's Normal
-22-
<PAGE>
<PAGE>
Retirement Date for periods between the
Member's Early Retirement Age and his
Normal Retirement Date and based on the
Actuarial Equivalent factors for periods
prior to the Member's Early Retirement
Age.
4.6(c) If such Disabled Member recovers prior
to his Normal Retirement Date, his
Disability Payments, if any, shall be
immediately discontinued. If he returns
to the employ of the Employer within a
reasonable period (as determined
conclusively by the Retirement Committee
under uniform standards consistently
applied), he shall be given credit for
prior Service and Credited Service,
including his period of disablement. If
he does not return to the Employer's
employ within a reasonable period of
time, he shall be deemed terminated as
of his date of recovery, and the
benefits, if any, to which he is
entitled shall be calculated pursuant to
Section 5.1 based on his Attained Age
and Credited Service as of his date of
disablement. In either event the
benefits, if any, which are eventually
payable shall be reduced by the
Actuarial Equivalent of the Disability
Payments actually received hereunder.
Section 4.7 Proof of Entitlement
Each Member entitled to receive benefits under this
Article shall complete such forms and furnish such proofs as
shall be required by the Retirement Committee.
Section 4.8 Reemployment
Notwithstanding anything in this Plan to the contrary,
if a Member who has retired in accordance with Section 4.3,
Section 4.4 or Section 4.5 is reemployed by the Employer, his
Monthly Retirement Income shall continue in pay status during
the period of his reemployment and he shall continue to accrue
benefits under the Plan. Upon his subsequent retirement his
Monthly Retirement Income shall be reduced by the Actuarial
Equivalent of the Monthly Retirement Income he received prior
to subsequent retirement. However, the Monthly Retirement
Income of a Member upon his subsequent retirement shall not be
less than the Monthly Retirement Income the Member was
receiving prior to his subsequent retirement. Death Benefit
protection, if any, during reemployment and thereafter shall be
in accordance with the form of payment of Monthly Retirement
Income in effect for him prior to his reemployment.
Section 4.9 Non-forfeitable Right at Normal
Retirement
A Member who reaches Normal Retirement Age while in the
employ of the Employer shall have a non-forfeitable right, upon
his actual retirement, to receive a Monthly Retirement Income
determined in accordance with Section 4.3 or Section 4.4.
-23-
<PAGE>
<PAGE>
ARTICLE 5
OTHER BENEFITS
Section 5.1 Other Terminations of Employment
5.1(a) When the employment of a Member by the
Employer shall be terminated for any
reason other than death or retirement
(including Early, Normal, Late and
Disability Retirement), either
voluntarily or involuntarily, such
Member shall cease to be an active
Member of the Plan. Subject to the
limitations and restrictions of Article
9, Article 11 Article 15, Article 16 and
elsewhere in this Plan, a Member shall
be entitled at Normal Retirement Date to
receive a Monthly Retirement Income
equal to a percentage of his Accrued
Benefit determined in accordance with
the schedule set forth in Subsection (b)
of this Section.
5.1(b) Except as otherwise provided in
Subsection (d) of this Section, the
schedule referred to in Subsection (a)
of this Section shall be as follows:
<TABLE>
<CAPTION>
Percentage of
Years of Service Accrued Benefits
---------------- ----------------
<S> <C>
Less than 5 years 0%
5 years of more 100%
</TABLE>
5.1(c) Except as otherwise provided in Appendix
F, in the case of a Member (i) who
participated in a Merged Plan, (ii) who
participated in the Merged Plan as of
the day preceding the Participating
Employer's Entrance Date, and (iii) who
had three years of vesting service under
the prior plan, the Member's
nonforfeitable percentage will be
determined under the vesting schedule in
Subsection (b) of this Section or under
the vesting schedule under the prior
plan, whichever is greater.
5.1(d) In lieu of the Monthly Retirement Income
payable at Normal Retirement Date
provided above, a terminated Member who
has become eligible for reduced federal
Social Security old age benefits shall
be entitled at any time after he has
become eligible for reduced federal
Social Security old age benefits to
elect the immediate commencement of
benefits hereunder. Alternatively, in
lieu of receiving the Monthly Retirement
Income payable at the Normal Retirement
Date provided above, a terminated Member
who has been credited with five (5)
years or more of Service at the time of
termination of employment shall be
entitled at any time after reaching
Attained Age fifty-five (55) to elect
the immediate commencement of benefits
hereunder. Commencing on the first day
of the month coincident with or
immediately following either election,
the terminated Member shall be entitled
to a reduced Monthly Retirement Income
which shall be equal to his Accrued
Benefit under this Section as of his
date of termination, such amount reduced
as provided in Section 4.5 for the
-24-
<PAGE>
<PAGE>
months by which the commencement date of
his benefits under this Section precedes
his Normal Retirement Date. Subject to
the provisions of Section 4.2, at any
time prior to the commencement of his
Monthly Retirement Income, a terminated
Member may elect to receive his benefits
in an Actuarially Equivalent alternate
form described in Section 4.2.
Section 5.2 Death Benefits
5.2(a) If an active Member or a former Member
(including a Disabled, terminated or
Retired Member) with a vested Accrued
Benefit should die prior to commencement
of benefits, his Beneficiary shall be
entitled to a Death Benefit. Such Death
Benefit shall be a monthly income,
payable for the life of the Beneficiary,
equal to the Actuarial Equivalent of the
Member's Accrued Benefit determined as
of the first day of the month coincident
with or immediately following his date
of death. The Death Benefit payable
pursuant to this Subsection shall
commence as of the first day of the
month coincident with or otherwise
immediately following the Member's date
of death. In lieu of this monthly
benefit and upon the election of the
Beneficiary, a single sum settlement,
which shall be the Actuarial Equivalent
of the annuity benefit, shall be paid.
5.2(b) The Death Benefit payable to a Spouse
pursuant to Subsection (a) of this
Section shall not be less than the
benefit that would have been payable to
the Spouse if the Member had retired or
terminated pursuant to the appropriate
Section of the Plan on the first day of
the month coincident with or immediately
following his date of death and election
to receive his Monthly Retirement Income
pursuant to Subsection 4.2(c).
5.2(c) In the event of the death of a former
Member after termination of employment
due to retirement, a death benefit shall
be payable to his Beneficiary in an
amount equal to One Thousand Five
Hundred Dollars ($1,500). However, in
the case of an individual who was a
participant in the Peoples National Bank
of Lawrenceville Retirement Plan and who
subsequently terminated employment due
to retirement, upon the death of such
Member, a death benefit shall be payable
to his Beneficiary in an amount equal to
Two Thousand Dollars ($2,000). Either
benefit shall be payable in the form of
a single sum settlement.
Section 5.3 Death of Retired or Disabled Member
When a Retired or Disabled Member who is receiving
benefits hereunder shall die, his Beneficiary (or Spouse, if
Subsection 4.2(c) applies) shall be entitled to any benefits
due under the basic or elected alternate form of payment of his
Monthly Retirement Income. Should the period of guaranteed
payments be exhausted at the death of the Retired or Disabled
Member, no Death Benefit shall be payable.
-25-
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<PAGE>
Section 5.4 Payment to Contingent Beneficiaries
If a Death Benefit (other than one arising under
Subsection 4.2(c), Subsection 4.2(b) or Section 5.2(a) to a
Spouse) is payable under this Article 5, and the designated
Beneficiary has pre-deceased the deceased Member, the Death
Benefit shall be paid to the Contingent Beneficiary. If
neither the Beneficiary nor the Contingent Beneficiary is
living at the time of the death of the Member, the Retirement
Committee shall direct the Trustee to pay the Death Benefit in
a single sum to the estate of the deceased Member. If the
Beneficiary or Contingent Beneficiary is living at the death of
the Member, but such person dies prior to receiving the entire
Death Benefit, the remaining portion of such Death Benefit
shall be paid in a single sum to the estate of such deceased
Beneficiary or Contingent Beneficiary.
Section 5.5 Lump Sum Distributions
5.5(a) If (i) the Actuarial Equivalent of a
terminated or retired Member's vested
Accrued Benefit or the Actuarial
Equivalent of a Death Benefit payable to
a Beneficiary is less than three
thousand five hundred dollars ($3,500),
or (ii) after reviewing the explanation
stated in Subsection 4.2(c) the Member
agrees in writing within ninety
(90) days following termination
of employment (with Spouse consent,
if applicable, obtained in the same form
and manner as in Subsection 4.2(c)), the
Retirement Committee shall direct that
the Actuarial Equivalent of his vested
Accrued Benefit or Death Benefit be paid
within a reasonable time after
termination of employment in a lump sum
to such terminated Member or
Beneficiary. If a Member terminates
with a zero percent (0%) vested
percentage, he shall be deemed to
receive a distribution pursuant to this
Section as of the date of his
termination. If a Member receives or is
deemed to receive a distribution
pursuant to this Section, the non-vested
portion of his Accrued Benefit shall be
forfeited as of the date he receives or
is deemed to receive the distribution.
If the vested Accrued Benefit or Death
Benefit has been more than three
thousand five hundred dollars ($3,500)
at the time of any distribution, the
value of the vested Accrued Benefit or
Death Benefit will be deemed to be more
than three thousand five hundred dollars
($3,500) at the time of any subsequent
distribution for purposes of the consent
requirements of this paragraph.
5.5(b) If such terminated Member is
subsequently reemployed and again
becomes a Member of this Plan, the
calculation of his Accrued Benefit shall
include any periods of employment prior
to his reemployment date only if the
amount of such payment, plus interest,
is repaid to the Trust Fund no later
than the earlier of:
(1) five (5) years after the first date on
which the Member is subsequently
reemployed by the Employer, or
(2) the date the Member incurs five (5)
consecutive Breaks in Service commencing
after the date of the distribution.
-26-
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<PAGE>
5.5(c) The interest rate applicable to amounts
being repaid shall be five percent (5%)
per annum between the date of payment
and the earlier of date of repayment or
January 1st, 1988, and the Statutory
Interest Rate on and after January 1st,
1988. The interest rate applicable to
amounts being repaid shall automatically
be adjusted to reflect any regulations
issued by the Secretary of the Treasury
changing the interest rate for mandatory
contributions under the Employee
Retirement Income Security Act of 1974.
5.5(d) If the amount distributed (plus
interest) is repaid, the Member's
Accrued Benefit shall be based on the
periods of employment as specified
hereinabove. If such terminated Member
is subsequently reemployed and again
becomes a Member of this Plan after
incurring five (5) consecutive Breaks in
Service commencing after the date of the
distribution, he shall not be entitled
to repay, and the calculation of his
Accrued Benefit shall not include any
periods of employment prior to his
reemployment date.
5.5(e) A Member who is entitled to receive a
lump sum distribution in excess of three
thousand five hundred dollars ($3,500)
but is not entitled to the immediate
commencement of Monthly Retirement
Income under any other section of this
Plan shall be entitled to a Monthly
Retirement Income payable in the form of
a qualified joint and survivor annuity
as defined in Section 4.2(c) with
monthly payments beginning on the first
day of the month in which the lump sum
distribution would otherwise have been
made. The Actuarial Equivalent of such
qualified joint and survivor annuity
shall be equal to the lump sum
distribution otherwise payable.
Section 5.6 Benefit Commencement Limitations
Unless the Member otherwise elects, any payment of
benefits to the Member shall begin not later than sixty (60)
days after the close of the Plan Year in which occurs the
latest of:
(1) the Member's reaching Attained Age sixty-five
(65);
(2) the tenth (10th) anniversary of the date the
Employee became a Member; and
(3) termination of service of the Member.
Section 5.7 Minimum Distribution Rules
Effective January 1, 1989, the Accrued Benefit of all
Members must commence no later than April 1 following the
calendar year in which such individual attains age seventy and
one-half (70-1/2) (or such other date as regulations or notices
shall provide) unless such individual has effectively executed
a waiver prior to January 1, 1984, in accordance with the Code
and notices and regulations issued thereunder. However, if a
Member was not a five percent (5%) owner in any Plan Year after
attaining age sixty-five and one-half (65-1/2) and had attained
age seventy and one-half (70-1/2) prior to January 1, 1988,
distributions must commence no later than April 1 following the
calendar year in which the later of termination of employment
or age seventy and one-half (70-1/2) occurs, or the Member
becomes a five percent (5%) owner.
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Notwithstanding anything in this Plan to the contrary,
if a Member is required to commence benefits pursuant to this
Section while remaining employed by the Employer, he shall
continue to accrue benefits under the Plan. Upon his
subsequent retirement, his Monthly Retirement Income shall be
reduced by the Actuarial Equivalent of the Monthly Retirement
Income he received prior to his subsequent retirement;
provided, however, that the reduction shall not result in a
Monthly Retirement Income of less than that which he received
prior to his subsequent retirement.
Section 5.8 Required Distribution Periods
5.8(a) Notwithstanding the forms of payment in
Section 4.2, distributions of benefits
may only be made over one of the
following periods (or a combination
thereof):
(1) the life of the Member;
(2) the life of the Member and a designated
Beneficiary;
(3) a period certain not extending beyond
the life expectancy of the Member; or
(4) a period certain not extending beyond
the joint and last survivor life
expectancy of the Member and a
designated Beneficiary.
5.8(b) Upon the death of the Member, the
following distribution provisions shall
take effect:
(1) If the Member dies after distribution of
his interest has commenced, the
remaining portion of such interest will
continue to be distributed at least as
rapidly as under the method of
distribution in effect prior to the
Member's death.
(2) If the Member dies before distribution
of his interest commences, the Member's
entire interest will be distributed no
later than five (5) years after the
Member's death except to the extent that
an election is made to receive
distributions in accordance with (A) or
(B) below:
(A) If any portion of the Member's
interest is payable to a designated
Beneficiary, distributions may be
made in substantially equal
installments over the life or life
expectancy of the designated
Beneficiary commencing no later
than one (1) year after the
Member's death.
(B) If the designated Beneficiary is
the Member's surviving Spouse, the
date distributions are required to
begin in accordance with (A) above
shall not be earlier than the date
on which the Member would have
attained age seventy and one-half
(70-1/2), and, if the Spouse dies
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before payments begin, subsequent
distributions shall be made as if
the Spouse had been the Member.
Section 5.9 Member Directed Rollovers
5.9(a) This Section applies to distributions
made on or after January 1, 1993.
Notwithstanding any provision of the
plan to the contrary that would
otherwise limit a distributee's election
under this Article, a distributee may
elect, at the time and in the manner
prescribed by the Retirement Committee,
to have any portion of an eligible
rollover distribution paid directly to
an eligible retirement plan specified by
the distributee in a direct rollover.
5.9(b) For purposes of this Section, an
eligible rollover distribution is any
distribution of all or any portion of
the balance to the credit of the
distributee, except that an eligible
rollover distribution does not include:
any distribution that is one of a series
of substantially equal periodic payments
(not less frequently than annually) made
for the life (or life expectancy) of the
distributee or the joint lives (or joint
life expectancies) of the distributee
and the distributee's designated
beneficiary, or for a specified period
of ten (10) years or more; any
distribution to the extent such
distribution is required under Section
401(a)(9) of the Code; and the portion
of any distribution that is not
includible in gross income (determined
without regard to the exclusion for net
unrealized appreciation with respect to
employer securities).
5.9(c) For purposes of this Section, an
eligible retirement plan is an
individual retirement account described
in Section 408(a) of the Code, an
individual retirement annuity described
in Section 408(b) of the Code, an
annuity plan described in Section 403(a)
of the Code, or a qualified trust
described in Section 401(a) of the Code,
that accepts the distributee's eligible
rollover distribution. However, in the
case of an eligible rollover
distribution to the surviving spouse, an
eligible retirement plan is an
individual retirement account or
individual retirement annuity.
For purposes of this Section, a distributee
includes an Employee or former Employee. In
addition, the Employee's or former Employee's
surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the
alternate payee under a qualified domestic
relations order, as defined in Section 414(p)
of the Code, are distributees with regard to
the interest of the spouse or former spouse.
5.9(d) A direct rollover is a payment by the
plan to the eligible retirement plan
specified by the distributee.
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ARTICLE 6
THE RETIREMENT COMMITTEE
Section 6.1 Appointment
The Board of Directors of the Sponsoring Employer shall
appoint three (3) or more persons, who may be an employee or
officer of the Company, to be known as the "Retirement
Committee" to administer the Plan and to keep records of
individual Member benefits. The Sponsoring Employer will
notify the Trustee and the Actuary of the names of the members
of the Retirement Committee and of any changes in membership
that may take place from time to time.
Section 6.2 Term of Appointment
All members of the Retirement Committee shall serve
until their resignation or dismissal by the Board of Directors
of the Sponsoring Employer and vacancies shall be filled in the
same manner as the original appointments. The Board of
Directors of the Sponsoring Employer may dismiss any member of
the Retirement Committee at any time with or without cause. No
compensation shall be paid members of the Retirement Committee
from the Trust Fund for services on such Committee.
Section 6.3 Officers and Actions
Except as otherwise specifically provided in the Plan,
every decision and action of the Retirement Committee shall be
valid if concurred in by a majority of the members then in
office, which concurrence may be had without a formal meeting.
The Retirement Committee shall select a secretary, who may or
may not be a Member of the Plan or a member of the Committee,
and any other officers deemed necessary, and shall adopt rules
governing its procedures not inconsistent herewith. The
Retirement Committee shall keep a permanent record of its
meetings and actions.
Section 6.4 Duties
In accordance with the provisions hereof, the Committee
has been delegated certain administrative functions relating to
the Plan with all powers necessary to enable it properly to
carry out such duties. The Committee shall have no power in
any way to modify, alter, add to or subtract from, any
provisions of the Plan. The Committee shall have the power and
authority in its sole, absolute and uncontrolled discretion to
control and manage the operation and administration of the Plan
and shall have all powers necessary to accomplish these
purposes. The responsibility and authority of the Committee
shall include, but shall not be limited to, (i) determining all
questions relating to the eligibility of employees to
participate; (ii) determining the amount and kind of benefits
payable to any Member, Spouse or Beneficiary; (iii)
establishing and reducing to writing and distributing to any
Member or Beneficiary a claims procedure and administering that
procedure, including the processing and determination of all
appeals thereunder; and (iv) interpreting the provisions of the
Plan including the publication of rules for the regulation of
the Plan as in its sole, absolute and uncontrolled discretion
are deemed necessary or advisable and which are not
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inconsistent with the express terms hereof, the Code or the
Employee Retirement Income Security Act of 1974, as amended.
All disbursements by the Trustee, except for the ordinary
expenses of administration of the Trust Fund or the
reimbursement of reasonable expenses at the direction of the
Sponsoring Employer, as provided herein, shall be made upon,
and in accordance with, the written directions of the
Committee.
Section 6.5 Claims Procedures
6.5(a) Subject to the limitations of the Plan
and of the Trust Agreement, the
Retirement Committee shall from time to
time establish rules for the transaction
of its business and for the
administration of the Plan. Without
limiting the generality of the preceding
sentence, it is specifically provided
that the Retirement Committee shall set
forth in writing, available for
inspection by any interested party, the
procedures to be followed in presenting
claims for benefits under the Plan. The
Retirement Committee shall rely on the
records of the Employer, as certified to
it, with respect to any and all factual
matters dealing with the employment of
an Employee or Member. In case of any
factual dispute hereunder, the
Retirement Committee shall resolve such
dispute giving due weight to all
evidence available to it. The
Retirement Committee shall interpret the
Plan and shall determine all questions
arising in the administration,
interpretation and application of the
Plan. All such determinations shall be
final, conclusive and binding except to
the extent that they are appealed under
the following claims procedure. In the
event that the claim of any person to
all or any part of any payment or
benefit under this Plan shall be denied,
the Retirement Committee shall provide
to the claimant, within ninety (90) days
after receipt of such claim, a written
notice setting forth, in a manner
calculated to be understood by the
claimant:
(1) the specific reason or reasons for the
denial;
(2) specific references to the pertinent
Plan provisions on which the denial is
based;
(3) a description of any additional material
or information necessary for the
claimant to perfect the claim and an
explanation as to why such material or
information is necessary; and
(4) an explanation of the Plan's claim
procedure.
6.5(b) If special circumstances require an
extension of time for processing the
initial claim, a written notice of the
extension and the reason therefor shall
be furnished to the claimant before the
end of the initial ninety (90) day
period. In no event shall such
extension exceed ninety (90) days.
6.5(c) Within sixty (60) days after receipt of
the above material, the claimant shall
have a reasonable opportunity to appeal
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the claim denial to the Retirement
Committee for a full and fair review.
The claimant or his duly authorized
representative may
(1) request a review upon written notice to
the Retirement Committee;
(2) review pertinent documents; and
(3) submit issues and comments in writing.
6.5(d) A decision by the Retirement Committee
will be made not later than sixty (60)
days after receipt of a request for
review, unless special circumstances
require an extension of time for
processing, in which event a decision
should be rendered as soon as possible,
but in no event later than one hundred
and twenty (120) days after such
receipt. The Retirement Committee's
decision on review shall be written and
shall include specific reasons for the
decision, written in a manner calculated
to be understood by the claimant, with
specific references to the pertinent
Plan provisions on which the decision is
based.
Section 6.6 Direction to Trustee
The secretary of the Retirement Committee shall direct
the Trustee in writing to make payments from the Trust Fund to
Members who qualify for such payments hereunder, as certified
to it by the Actuary. Such written order to the Trustee shall
specify the name of the Member, his address, his Social
Security number, and the amount and frequency of such payments.
Section 6.7 Non-discrimination Provision
The Retirement Committee shall not take action or
direct the Trustee to take any action with respect to any of
the benefits provided hereunder or otherwise in pursuance of
the powers conferred herein upon the Retirement Committee which
would be discriminatory in favor of Members or Employees who
are Highly Compensated Employees or which would result in
benefiting one Member, or group of Members, at the expense of
another, or in the application of different rules to
substantially similar sets of facts.
Section 6.8 Employment of Agents
The Retirement Committee may employ such counsel,
accountants, and other agents and otherwise delegate its duties
hereunder as it shall deem advisable. The Sponsoring Employer
shall pay, or cause to be paid from the Trust Fund, the
compensation of such counsel, accountants, and other agents and
any other expenses incurred by the Retirement Committee in the
administration of the Plan and Trust.
Section 6.9 Indemnification
The Employer shall indemnify and hold the Retirement
Committee, and each of its members, harmless from and against
any and all expense, claim, cause of action, or liability it or
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any of them may incur in the administration of the Plan and
Trust, unless such expense, claim, cause of action, or
liability is the result of fraud or willful breach of his or
their fiduciary responsibilities under the Employee Retirement
Income Security Act of 1974.
ARTICLE 7
CONTRIBUTIONS BY THE EMPLOYER
Section 7.1 Contributions
It is the intention of the Employer, but it does not
guarantee to do so, to deposit with the Trustee from time to
time the funds actuarially necessary to provide the benefits
under the Plan, in a manner consistent with the funding
standards mandated by the Employee Retirement Income Security
Act of 1974 and the applicable regulations issued thereunder.
Section 7.2 Expenses
The Sponsoring Employer will pay, or cause to be paid
from the Trust Fund, all expenses of administering this Plan
and the Trust as may be mutually agreed upon from time to time.
Section 7.3 Actuary
The Actuary shall perform periodically an actuarial
valuation of the Plan and Trust Fund and shall certify to the
Sponsoring Employer in writing the results of the valuation.
The Actuary in his actuarial valuation shall apply all gains
arising in the operation of the Plan, including but not
necessarily limited to gains resulting from terminations of
employment of Members prior to qualifying for benefits
hereunder, to reduce the contributions of the Sponsoring
Employer pursuant to the funding method and actuarial tables
then in use.
Section 7.4 Funding Standard Account
The Retirement Committee shall cause the Plan to
establish and maintain a funding standard account so that it
may be determined whether or not the Plan has complied with
minimum funding standards.
ARTICLE 8
THE TRUST FUND AND TRUSTEE
Section 8.1 Trust Agreement
The Sponsoring Employer has entered into a Trust
Agreement with the Trustee to hold the funds necessary to
provide the benefits set forth in this Plan. The Trust
Agreement shall be deemed to form a part of the Plan and all
rights of Members or others under this Plan shall be subject to
the provisions of the Trust Agreement to the extent such
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provisions are not contradicted by specific provisions of this
Plan. The Trust Agreement may contain provisions granting
authority to the Sponsoring Employer to settle the accounts of
the Trustee on behalf of all persons having or claiming an
interest in the Trust Fund.
Section 8.2 Trust Fund
The Trust Fund shall be received, held in Trust, and
disbursed by the Trustee in accordance with the provisions of
the Trust Agreement and the provisions as set forth in this
Plan. No part of the Trust Fund shall be used for or diverted
to purposes other than for the exclusive benefit of Members,
Retired Members, Disabled Members, Spouses, and their
Beneficiaries or Contingent Beneficiaries under this Plan,
prior to the satisfaction of all liabilities hereunder with
respect to them, except as provided in Section 7.2, Section
9.6, and except as provided in Section 11.5 herein at the time
of termination of the Plan and Trust. No person shall have any
interest in or right to the Trust Fund or any part thereof,
except as specifically provided for in this Plan and/or the
Trust Agreement.
Section 8.3 Appointment of Trustee
The Trustee shall at all times be a banking corporation
organized and doing business under the laws of the United
States of America or any state therein, authorized under such
laws to exercise corporate trust powers and subject to
supervision or examination by Federal or State authority. The
Board of Directors of the Sponsoring Employer may remove the
Trustee at any time upon the notice required by the terms of
the Trust Agreement and, upon such removal or upon the
resignation of the Trustee, the Board of Directors of the
Sponsoring Employer shall designate and appoint a successor
Trustee.
Section 8.4 Powers of Trustee
The Trustee shall have such powers to purchase
insurance on the lives of Members, and hold, invest, reinvest,
control, and disburse funds as at that time shall be set forth
in the Trust Agreement.
ARTICLE 9
RESERVATION OF AND LIMITATIONS ON RIGHTS
Section 9.1 Benefits
Although it is the intention of the Employer that this
Plan shall be continued and its contributions made regularly
each year, this Plan is entirely voluntary on the part of the
Employer and the continuance of the Plan and the payments
thereunder are not assumed as a contractual obligation of the
Employer. The Employer does not guarantee or promise to pay or
cause to be paid any of the benefits provided by this Plan.
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Section 9.2 Contributions
The Employer specifically reserves the right, in its
sole and uncontrolled discretion and by official and authorized
act, to modify, suspend, in whole or in part, at any time or
from time to time, and for any period or periods, or to
discontinue at any time, the contributions specified in Article
7 of this Plan.
Section 9.3 Members' Rights
This Plan shall not be deemed to constitute a contract
between the Employer and any Member or to be a consideration or
an inducement for the employment of any Member or employee.
Nothing contained in this Plan shall be deemed to give any
Member or employee the right to be retained in the service of
the Employer or to interfere with the right of the Employer to
discharge any Member or employee at any time regardless of the
effect which such discharge shall have upon him as a Member of
the Plan.
Section 9.4 Benefit Offset
If any Member is, or becomes, or upon proper
application would become, entitled to a pension or other
benefits under any other "qualified" defined benefit pension
plan of which his Employer has borne, or is required to bear,
any part of the cost, the Monthly Retirement Income payable to
such Member under the provisions of this Plan shall be reduced
to reflect the value of such other pension plan to the extent
that credit is granted under both Plans for the same period of
Service. The term "other `qualified' defined benefit pension
plan" shall not include any plan or program under which
benefits are provided wholly or in part by public funds, state
or federal, nor shall it include any "qualified" thrift or
profit sharing plan sponsored by the Employer.
Section 9.5 Spendthrift Clause
None of the benefits under the Plan are subject to the
claims of creditors of Members, Retired Members, Disabled
Members or their beneficiaries and will not be subject to
attachment, garnishment or any other legal process. Neither a
Member, a Retired Member, a Disabled Member nor his
beneficiaries may assign, sell, borrow on or otherwise encumber
any of his beneficial interest in this Trust nor shall any such
benefits be in any manner liable for or subject to the deeds,
contracts, liabilities, engagements, or torts of any Member,
Retired Member, Disabled Member or beneficiary. The preceding
two (2) sentences shall also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect
to a Member pursuant to a domestic relations order, unless such
order is determined by the Retirement Committee to be a
qualified domestic relations order, as defined in Code Section
414(p), or any domestic relations order entered before January
1, 1985, if payment of benefits pursuant to the order has
commenced prior to such date.
Section 9.6 Return of Contributions
It is intended that this Plan shall be approved and
qualified by the Internal Revenue Service as meeting the
requirements of the Code and regulations issued thereunder with
respect to employees' plans and trusts:
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(1) so that contributions so made and the income
of the Trust Fund will not be taxable to
Members as income until received; and
(2) so that the income of the Trust Fund shall be
exempt from federal income tax.
The Employer's contribution under this Plan is
conditioned on it being deductible under Code Section 404. In
the event the Commissioner of Internal Revenue or his delegate
rules that a deduction for all or a part of the Employer's
contribution is not allowed, the Employer will recover, within
one (1) year after the disallowance of such deduction, that
portion or all of its contribution for which no deduction is
allowed. The Employer also reserves the right to recover that
portion or all of any contribution made by a mistake of fact,
provided such recovery is made within one (1) year of the
payment of the contribution to the Trustee.
ARTICLE 10
AMENDMENTS
Section 10.1 Amendment of Plan
The Sponsoring Employer reserves the right, at any time
and from time to time, without consent of Members, active or
retired, Spouses, Beneficiaries, Contingent Beneficiaries or
any person or persons claiming through them, by action of its
Board of Directors, to modify or amend, in whole or in part,
any or all of the provisions of the Plan, including
specifically the right to make any such amendments effective
retroactively if necessary to bring the Plan into conformity
with governmental regulations which must be complied with in
order to make the Plan eligible for tax benefits; provided that
no such modification or amendment shall make it possible for
any part of the assets of the Plan to be used for or diverted
to purposes other than for the exclusive benefit of Members,
Disabled Members and Retired Members and their Beneficiaries,
Spouses and Contingent Beneficiaries under the Plan, prior to
the satisfaction of all liabilities with respect to such
Members, Disabled Members and Retired Members and their
Beneficiaries, Spouses, and Contingent Beneficiaries under the
Plan, except as stated in this Plan.
Section 10.2 Limitations on Right to Amend
No amendment to the Plan (including a change in the
actuarial bases for determining optional or early retirement
benefits) shall be effective to the extent that it has the
effect of decreasing a Member's Accrued Benefit.
Notwithstanding the preceding sentence, a Member's Accrued
Benefit may be reduced to the extent permitted under Code
Section 412(c)(8). For purposes of this paragraph, a Plan
amendment that has the effect of (1) eliminating or reducing an
early retirement benefit or a retirement-type subsidy, or (2)
eliminating an optional form of benefit, with respect to
benefits attributable to Credited Service before the amendment,
shall be treated as reducing Accrued Benefits. In the case of
a retirement-type subsidy, the preceding sentence shall apply
only with respect to a Member who satisfies the pre-amendment
conditions for the subsidy. In general, a retirement-type
subsidy is a subsidy that continues after retirement, but does
not include a qualified disability benefit, a medical benefit,
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a Social Security supplement, a death benefit (including life
insurance), or a plant shutdown benefit (that does not continue
after retirement age). Furthermore, no amendment to the Plan
shall have the effect of decreasing a Member's vested interest
determined without regard to such amendment as of the later of
the date such amendment is adopted, or the date it becomes
effective.
ARTICLE 11
PERMANENT OR TEMPORARY DISCONTINUANCE OF PLAN
Section 11.1 Termination
Each Employer, by action of its Board of Directors, may
suspend its payments to the Trust for any year and may
terminate its participation in this Plan at any time.
Section 11.2 Apportionment of Trust Fund
If an Employer terminates its participation in this
Plan, the Retirement Committee shall direct the Trustee to
compute the value of that portion of the Trust Fund held for
the benefit of Members, Retired Members, qualified terminated
Members, Disabled Members, Spouses, Beneficiaries and
Contingent Beneficiaries otherwise eligible to receive benefits
hereunder attributable to employment with that Employer. The
Retirement Committee, based upon the certification of the
Actuary, shall apportion the amount so valued to all such
Members, Retired Members, qualified terminated Members,
Disabled Members and/or their Beneficiaries, Contingent
Beneficiaries and Spouses in shares as determined in Section
11.3, but subject to the provisions of Section 11.6.
Section 11.3 Allocation of Trust Fund
The value of that portion of the Trust Fund computed
above remaining after providing for that Employer's share of
the expenses of administration of the Plan and Trust shall be
allocated for purposes of paying Monthly Retirement Income,
Disability Payments and Death Benefits in the order of
precedence indicated and in the amounts indicated in Section
4044 of the Employee Retirement Income Security Act of 1974 as
said Section may be amended, according to the principles set
forth in said Section and such other portions of the said Act
as it incorporates by reference. For the purpose of making
such allocation, any regulations issued pursuant to that
Section shall be deemed part of such Section.
The allocation of that portion of the Trust Fund
computed above in accordance with this Section shall be based
on the method of payment of Monthly Retirement Income,
Disability Payments or Death Benefits specified in the Plan.
In the event that the Trust Fund assets on or after the date of
termination are insufficient to fund all benefits within any
class, the benefits of all higher order of precedence shall be
funded, the benefits of all lower order of precedence shall be
unfunded, and the assets remaining shall be allocated among
members of that class on the basis of their respective
actuarial reserves, subject to the provisions of Section 4044
of the Employee Retirement Income Security Act of 1974.
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Section 11.4 Expenses
In the event of failure of an Employer upon termination
of its participation in this Plan to pay or reimburse the
Trustee or the Actuary for the then outstanding charges or
expenses incurred hereunder, the Trustee is empowered to
satisfy such claims by lien upon that portion of the Trust Fund
attributable to that Employer, prior to making any allocation
to Members, Retired Members, Disabled Members, Beneficiaries,
Spouses, and Contingent Beneficiaries of the Plan in accordance
with Section 11.2 and Section 11.3 hereof.
Section 11.5 Distribution of Trust Fund
The application of the Trust Fund on the foregoing
basis shall be calculated by the Actuary and certified to the
Trustee by the Retirement Committee as of the date on which the
Plan terminated. Subject to the restrictions of the Employee
Retirement Income Security Act of 1974, as it may be amended,
when the calculations shall be completed, the interest of each
Member, qualified terminated Member, Retired Member, Disabled
Member, Beneficiary, Spouse, and Contingent Beneficiary shall
continue to be held in the Trust Fund pursuant to the terms of
Section 11.3 hereof, or, at the direction of the Retirement
Committee, the appropriate portion of the Trust Fund shall be
liquidated and each of their interests distributed to them in
conformity with Section 4.2; provided, however, that subject to
the limitations of Section 4044(d)(2) of the Employee
Retirement Income Security Act of 1974, any funds remaining
after the satisfaction of all liabilities to such Members,
qualified terminated Members, Retired Members, Disabled
Members, Beneficiaries, Spouses, and Contingent Beneficiaries
under this Plan due to erroneous actuarial computation shall be
returned to the Employer.
Section 11.6 Restrictions on Distributions
11.6(a) In the event of termination of the Plan, the
benefit of any Highly Compensated Employee
(including a former employee who is a Highly
Compensated Employee) is limited to a benefit
that is nondiscriminatory under Code Section
401(a)(4).
11.6(b) The annual payments of Monthly Retirement
Income on behalf of any restricted Member
shall not exceed the amount that would be
payable as a single life annuity that is the
Actuarial Equivalent of the Member's Accrued
Benefit (other than any social security
supplement), his other benefits (loans in
excess of the amounts set forth in Code
Section 72(p)(2)(A), any periodic income, any
withdrawal values payable to a living
employee, and any death benefit not provided
through insurance on the Member's life) under
the Plan, and any social security supplement
which he is entitled to receive. The term
restricted Member shall mean any Member who
is a Highly Compensated Employee (including a
former employee who is a Highly Compensated
Employee) and who is among the Company's
twenty-five (25) most highly-compensated
employees.
11.6(c) The restrictions of Subsection (b) of this
Section shall not apply if (i) after payment
to or on behalf of such Member of all such
benefits, the value of Plan assets equals or
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exceeds one hundred and ten percent (110%) of
the value of the Plan's current liabilities
as defined in Code Section 412(l)(7), or (ii)
the value of the Member's benefits is less
than one percent (1%) of the value of the
Plan's current liabilities as defined in Code
Section 412(l)(7), or the value of the
Member's benefit does not exceed the amount
described in Code Section 411(a)(11)(A).
Section 11.7 Termination of Signatory Employer
Termination of this Plan by one (1) Employer shall not
affect the Plan as it applies to other signatory Employers and
their Employees.
Section 11.8 Non-forfeitability
Notwithstanding any other provision herein contained
(except the provisions of Section 11.6 hereof), should the Plan
terminate or partially terminate, the rights of all affected
past or present Members to benefits accrued to the date of such
termination or partial termination, to the extent then funded,
or the amounts credited to the Members' accounts, shall be non-
forfeitable. A partial termination shall be deemed to have
occurred in accordance with a determination to that effect by
the Federal regulatory agency (the Department of Treasury, the
Department of Labor, or the Pension Benefit Guaranty
Corporation) having jurisdiction so to determine under the
Employee Retirement Income Security Act of 1974.
ARTICLE 12
ACTUARY
Section 12.1 Duties
The Actuary shall make all actuarial calculations and
perform all duties required of him hereunder. In making an
actuarial valuation of the Plan and Trust from time to time,
the Actuary may rely upon the written statement of the Trustee
concerning the assets in the Trust and shall not be required to
make any independent calculations with respect thereto. The
Actuary shall certify to the Sponsoring Employer in writing the
results of the calculations required of him and the Employer
may rely thereon. In making all calculations hereunder, the
Actuary shall use such actuarial tables as he deems appropriate
but he shall use the same tables in making all his calculations
during a specified period. The Actuary shall employ actuarial
assumptions and methods each of which are reasonable (taking
into account the experience of the Plan and reasonable
expectations) or which, in the aggregate, result in a total
contribution equivalent to that which would be determined if
each such method and assumption were reasonable, and which, in
combination, offer the Actuary's best estimate of anticipated
experience under the Plan. The Actuary may from time to time
change the actuarial tables and other assumptions used by him
hereunder.
Section 12.2 Information
The Sponsoring Employer shall furnish the Actuary such
information on employees, payrolls, and other related data as
the Actuary may require from time to time.
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Section 12.3 Reliance
The Actuary may rely upon any information furnished him
by the Employer or by the Retirement Committee.
ARTICLE 13
ENTRY AND WITHDRAWAL OF AN EMPLOYER
Section 13.1 Entry of Employer
An employer classified by the Board of Directors of the
Sponsoring Employer as a subsidiary or affiliate of any
organization signatory to this Plan may become a party to this
Plan and the Trust Agreement and an Employer hereunder by
delivering to the Retirement Committee a written election on
such form as the Retirement Committee may require. With the
consent of the Retirement Committee, such employer shall become
an Employer hereunder as of an Effective Date approved by said
Retirement Committee and shall be subject to the terms and
provisions of this Plan and the Trust Agreement as then in
effect or thereafter amended.
Section 13.2 Withdrawal of Employer
An Employer hereunder who wishes to withdraw from this
Plan and the Trust Agreement shall deliver to the Retirement
Committee a resolution of its Board of Directors which
indicates the reason or reasons for such withdrawal.
Withdrawal may take place on an Anniversary Date only and
notice thereof to the Retirement Committee must be submitted at
least six (6) months prior to the date the withdrawal is to be
effective unless such time requirement is waived in writing by
the Retirement Committee.
13.2(a) If the withdrawal of an Employer is a part of
the complete termination and dissolution of
the Employer's business or the discontinuance
of the Employer's pension plan without
termination of its business and without the
immediate establishment of a new pension
plan, the provisions of Article 11 hereof
shall apply to such Employer's withdrawal as
if the withdrawal were a part of the complete
termination of this Plan, but the
participation of other Employers hereunder
shall not be affected nor shall the
continuation of the Plan with respect to the
participation therein by other Employers be
affected by such withdrawal of an Employer.
13.2(b) If the withdrawal of an Employer hereunder is
the result of the establishment of a new and
different retirement plan for its employee
which will, immediately upon withdrawal of
the Employer from this Plan, cover employees
of the Employer who are covered by this Plan,
the Retirement Committee, upon being
furnished evidence of the terms of such new
retirement plan and that such new plan has
been approved by the Internal Revenue Service
as qualified under Section 401(a) of the Code
as now in effect or hereafter amended, shall
direct the Actuary and Trustee to establish
such Employer's interest in the value of the
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Trust Fund. The Employer's interest in the
value of the Trust Fund so determined, after
reduction for charges and other expenses
incurred to process the withdrawal of the
Employer, shall be transferred to the trustee
or trustees of the new retirement plan or to
the insurance company which is to hold the
funds of the new retirement plan, whichever
is applicable. The Retirement Committee in
its sole discretion shall have the right to
direct the Trustee to transfer the withdrawal
value of the Employer's interest in the Trust
Fund to the trustee or trustees of the new
retirement plan or to the designated
insurance company in the form of
installments, in cash or in cash and
securities over a period of time not to
exceed six (6) months following the effective
date of the Employer's withdrawal.
13.2(c) The application of the withdrawing Employer's
interest in the Trust Fund pursuant to the
terms of this Section shall constitute a
complete discharge of the responsibility of
remaining Employers, the Retirement Committee
and the Trustee, without any responsibility
on their part collectively or individually to
see to the application thereof.
ARTICLE 14
CHANGE IN EMPLOYMENT
Section 14.1 Transfer to Signatory Employer
A Member who is an employee of an Employer and who
transfers his employment to or otherwise becomes an employee of
another Employer hereunder without breaking his Service shall
continue to be covered by this Plan without interruption. For
actuarial contributions and other purposes of the Plan, he
shall be considered an employee of his former Employer until
the Anniversary Date coincident with or otherwise immediately
following the date as of which his transfer of employment
occurred, after which he shall be considered an employee of his
new Employer for all purposes of the Plan.
Section 14.2 Transfer to Non-signatory Employer
A Member who becomes employed by another employer which
is a subsidiary or affiliate of the Company although not an
Employer as defined herein shall remain covered by this Plan
until the last day of the Plan Year immediately following or
coincident with such transfer of employment. Effective as of
the Anniversary Date following such transfer of employment,
such Member shall become a limited Member of the Plan and
Section 5.1 shall not be applicable. As a limited Member and
so long as he remains in the employ of the Company, he shall
continue to earn Hours of Service for purposes of determining
eligibility for benefits hereunder as if his employer were an
Employer. However, no Credited Service shall be granted for
the period of his limited membership and if such limited Member
terminates employment without again becoming a full Member of
this Plan, his benefits, if any, will be determined on the
basis of his Credited Service at the time of his transfer of
employment. His Average Monthly Earnings and Covered
Compensation will be determined at the time of his transfer of
employment.
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Section 14.3 Transfer from Non-signatory Employer
An Employee who transfers employment from an employer
which is a subsidiary or affiliate of an Employer, but which is
not itself signatory hereto, to an Employer hereunder shall,
for purposes of determining eligibility to participate
hereunder, and for purposes of vesting, but not for purposes of
benefit accrual, receive Hours of Service for his prior periods
of employment with such affiliated or subsidiary employer. The
Employee shall be eligible for membership immediately provided
he satisfies the age and length of employment requirements of
Section 3.1.
Section 14.4 Resumption of Full Membership
A limited Member of this Plan under Section 14.2 who
returns to the employ of an Employer and the status of Employee
hereunder shall again become a full Member of the Plan on the
date of such transfer. A Member of this Plan who is subject to
the terms of this Section shall be entitled to benefits equal
to those retained as a limited Member plus such additional
benefits as he might earn as a full Member again.
Section 14.5 Change in Employment Status
If a Member hereunder ceases to be an Employee due to a
change in employment status, while remaining an employee of an
Employer, he shall cease to accrue Credited Service as of the
date of such change in status and shall become a limited Member
hereunder until such time as he again becomes an Employee as
defined herein. If such limited Member does not again become
an Employee as defined herein prior to his severance of
employment, the amount, if any, of the benefit to which he is
entitled hereunder shall be determined based on his Credited
Service as of the date of change in status, his Attained Age at
date of severance, his Service including his period as a
limited Member, his mode of severance, and his Average Monthly
Earnings and Covered Compensation as of the date of his change
in employment status. If an employee not a Member becomes an
Employee as defined herein due to a change in employment
status, he shall be eligible for membership (i) immediately if
he has already satisfied all of the eligibility requirements of
Section 3.1 except the requirement that he be an Employee, or
(ii) as of the Participation Date following the date he
satisfies the eligibility requirements of Section 3.1.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Retirement Committee Interpretation
Any rules, regulations, or procedures that may be
necessary for the proper administration or functioning of this
Plan that are not covered in this Plan or the Trust Agreement
shall be promulgated and adopted by the Retirement Committee.
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Section 15.2 Headings
Any headings or subheadings in this Plan are inserted
for convenience of reference only and are to be ignored in the
construction of any provisions hereof.
Section 15.3 Governing Law
This Plan shall be construed in accordance with the
laws of the State Of Indiana, except where such laws are
superseded by the Employee Retirement Income Security Act of
1974, in which case such Act shall control.
Section 15.4 Benefits to Minors and Incompetents
In making any distribution to or for the benefit of any
minor or incompetent Beneficiary, the Retirement Committee, in
its sole, absolute and uncontrolled discretion, may, but need
not, order the Trustee to make such distribution to a legal or
natural guardian or other relative of such minor or court-
appointed committee of such incompetent, or to any adult with
whom such minor or incompetent temporarily or permanently
resides, and any such guardian, committee, relative or other
person shall have full authority and discretion to expend such
distribution for the use and benefit of such minor or
incompetent. The receipt of such guardian, committee, relative
or other person shall be a complete discharge to the Trustee,
without any responsibility on its part or on the part of the
Retirement Committee to see to the application thereof.
Section 15.5 Actuarial Determinations
All actuarial determinations necessary in the
administration of this Plan shall be made by the Actuary
employed by the Sponsoring Employer. The Retirement Committee
shall be free to consult the Actuary at any time and neither
the Retirement Committee nor the Sponsoring Employer shall be
liable for the actuarial correctness of any determination made
by the Actuary.
Section 15.6 Copies of Documents
An executed copy of this Plan shall be furnished the
Trustee. An executed copy of this Plan and of the Trust
Agreement shall be furnished the Actuary.
Section 15.7 Severability
In case any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts of this Plan
and this Plan shall be construed and enforced as if such
illegal and invalid provisions had never been inserted herein.
Section 15.8 Named Fiduciaries
For purposes of Part 4 of Title I of the Employee
Retirement Income Security Act of 1974, the Employers, the
Trustee, the Retirement Committee and those parties to whom any
duties are allocated pursuant to Article 6 of the Plan or the
Trust Agreement, as such provisions may hereafter be amended,
shall each be named fiduciaries. All actions by named
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fiduciaries shall be in accordance with the terms of this Plan
and of the Trust insofar as such documents are consistent with
the provisions of Title I of the Employee Retirement Income
Security Act of 1974. Each named fiduciary while discharging
his duties under this Plan shall act solely in the interest of
Members and beneficiaries and for the exclusive purpose of
providing benefits and defraying reasonable administrative
expenses. Each named fiduciary shall discharge his duties
hereunder with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims. Without limiting the generality of the above, it is
specifically provided that the appointment and retention of the
members of the Retirement Committee or of any parties as
investment managers pursuant to the Trust Agreement are duties
of the Sponsoring Employer and the Trustee (whichever is
appropriate) for purposes of this Section.
Section 15.9 Allocation of Duties of Fiduciaries
The Sponsoring Employer shall be responsible for the
administration and management of the Plan except for those
duties hereinafter specifically allocated to the Trustee or the
Retirement Committee. The Trustee shall have exclusive
responsibility for the management and control of the assets of
the Plan (but may, pursuant to the Trust Agreement, delegate
all or a portion of such responsibility). The Retirement
Committee shall have exclusive responsibility for all matters
specifically delegated to it by the Sponsoring Employer in this
Plan. The Sponsoring Employer shall be deemed the
administrator for purposes of the Employee Retirement Income
Security Act of 1974.
Section 15.10 Misstatement of Facts
A misstatement in the age, sex, length of Service, date
of employment or birth, or compensation of a Member, or any
other such matter, shall be corrected when it becomes known
that any such misstatement of fact has occurred.
Section 15.11 Limitation on Benefits
The total annual benefit (as defined hereinafter) of
any Member shall not exceed the limitations set forth in this
Section and its subsections.
15.11(a) For purposes of this Section, the term
"annual benefit" means a benefit payable in
the form of a straight life annuity with no
ancillary benefits, under a plan to which
employees do not contribute and under which
no rollover contributions (as defined in
Sections 402(a)(5), 403(a)(4) and 408(d)(3)
of the Code) are made.
15.11(b) The total annual benefit shall not exceed the
lesser of
(1) ninety thousand dollars ($90,000) or the
specific amount, determined by the
Commissioner of Internal Revenue as of
January 1 of each calendar year,
beginning with calendar year 1988, to
apply to the Plan Year ending with or
within that calendar year, or
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(2) one hundred percent (100%) of the
Member's average compensation for his
high three (3) years (as defined in
Subsection (e) of this Section).
15.11(c) When retirement benefits under this Plan are
payable in any form other than the form
described in Subsection (a) of this Section
or if the Members contribute to the Plan or
make rollover contributions, the
determination as to whether the limitation
described in this Section has been satisfied
shall be made, in accordance with regulations
prescribed by the Secretary of the Treasury
or his delegate, by adjusting such benefit so
that it is equivalent to the benefit
described in Subsection (a) of this Section,
provided that, if the benefit is payable in a
form not subject to the provisions of Code
Section 417(e), it shall be the greater of
the benefit determined using the factors set
forth in Section 2.2, or the benefit
determined using an interest rate of five
percent (5%) per annum and the mortality
table referenced in Section 2.2, and if the
benefit is payable in a form subject to the
provisions of Code Section 417(e), it shall
be the benefit determined using the factors
set forth in Section 2.2. For purposes of
this Subsection, any ancillary benefit which
is not directly related to retirement income
benefits shall not be taken into account; and
that portion of any joint and survivor
annuity which constitutes a qualified joint
and survivor annuity (as defined in Section
417(b) of the Internal Revenue Code) shall
not be taken into account.
15.11(d) If the retirement income benefit under this
Plan begins before the Social Security
retirement age, the determination as to
whether the dollar limitation set forth in
clause (1) of Subsection (b) of this Section
has been satisfied shall be made, in
accordance with regulations and
pronouncements issued by the Secretary of the
Treasury or his delegate, by reducing the
dollar limitation so that such limitation (as
so reduced) equals an annual benefit
(beginning when such retirement income
benefit begins) which is equivalent to a
ninety thousand dollar ($90,000) annual
benefit beginning at Social Security
retirement age. The reductions required by
this paragraph for determining equivalent
maximum benefits which commence between age
sixty-two (62) and the Social Security
retirement age under the Social Security Act
shall be consistent with the reductions
provided by the Social Security Act for
benefits commencing during that period. The
factors used to determine the equivalent
maximum benefit for benefits which commence
prior to age sixty-two (62) shall be the
reductions provided by the Social Security
Act for the period between Social Security
Retirement Age and age sixty-two (62), and
(i) the reduction factors in Section 4.5 to
the extent such factors are applicable for
the period prior to age sixty-two (62), or
(ii) an interest rate of five percent (5%)
and the mortality table specified in Section
2.2, whichever produces the lesser dollar
limitation.
15.11(e) For purposes of this Section, a Member's high
three (3) years shall be the period of
consecutive calendar years (not more than
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three (3) during which the Member both was an
active Member in the Plan and had the
greatest aggregate compensation from the
Employer. In the case of a Member who is an
"employee" within the meaning of Section
401(c)(1) of the Code, the preceding sentence
shall be applied by substituting "the
Member's earned income (within the meaning of
Section 401(c)(2) of the Code but determined
without regard to any exclusion under Section
911 of the Code)," for "compensation from the
Employer." Compensation, for purposes of
this Section, shall be determined pursuant to
Code section 415.
15.11(f) Notwithstanding the preceding provisions of
this Section, the benefits payable with
respect to a Member under this Plan shall be
deemed not to exceed the limitation of this
Section if:
(1) the retirement benefits payable with
respect to such Member under this Plan
and under all other Defined Benefit
Plans to which the Employer contributes
do not exceed ten thousand dollars
($10,000) for the applicable Plan Year
and for any prior Plan Year; and
(2) the Employer has not at any time
maintained a Defined Contribution Plan
in which the Member participated.
15.11(g) In the case of an Employee who has fewer than
ten (10) years of participation in the Plan,
the limitation referred to in clause (1) of
Subsection (b) of this Section shall be
multiplied by a fraction, the numerator of
which is the number of years (or part
thereof) of participation in the Plan and the
denominator of which is ten (10).
In the case of an Employee who has fewer than
ten (10) years of employment with the
Employer, the limitation referred to in
clause (2) of Subsection (b) of this Section
(or in Subsection (f) of this Section, if
applicable) shall be multiplied by a
fraction, the numerator of which is the
number of years (or parts thereof) of
employment with the Employer and the
denominator of which is ten (10).
In no event shall this Subsection reduce the
limitation referred to in Subsection (b) of
this Section (or in Subsection (f) of this
Section, if applicable) to an amount less
than one-tenth (1/10) of such limitation
(determined without regard to this
Subsection).
15.11(h) In the case of a Member who is separated from
service with his Employer, the one hundred
percent (100%) limitation in clause (2) of
Subsection (b) of this Section shall be
automatically adjusted to reflect any
regulations issued by the Secretary of the
Treasury pursuant to Section 415(d) of the
Code, concerning cost-of-living adjustments.
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15.11(i) If the retirement income benefit under this
Plan begins after the Social Security
retirement age and is the Actuarial
Equivalent of the Member's normal retirement
benefit, the determination as to whether the
dollar limitation set forth in clause (1) of
Subsection (b) of this Section has been
satisfied shall be made, in accordance with
regulations and pronouncements issued by the
Secretary of the Treasury, by increasing the
dollar limitation so that such limitation (as
so increased) equals an annual benefit
(beginning when such retirement income
benefit begins) which is equivalent to a
ninety thousand dollar ($90,000) annual
benefit beginning at the Social Security
retirement age, using (i) the interest and
mortality rates specified in Section 2.2, or
(ii) the mortality factors specified in
Section 2.2 and an interest rate of five
percent (5%) per annum, compounded annually,
whichever produces the lower dollar limit.
15.11(j) If the Current Accrued Benefit of a Member on
December 31, 1986, exceeds the limitation
referred to in Subsection (b) of this Section
as modified by the applicable provisions of
the other subsections of this Section, then,
with respect to such Member, the limitation
described in clause (1) of Subsection (b) of
this Section shall be equal to such Current
Accrued benefit.
For purposes of this Subsection, "Current
Accrued Benefit" means a Member's Accrued
Benefit determined as if the Member had
separated from service with the Employer as
of December 31, 1986, and expressed as an
annual benefit within the meaning of Code
Section 415(b)(2). In determining the amount
of a Member's Current Accrued Benefit, (1)
any change in the terms and conditions of the
Plan after May 5, 1986, and (2) any cost of
living adjustment occurring after May 5, 1986
shall be disregarded.
15.11(k) This Section is effective as of January 1st,
1987.
Section 15.12 Combined Limitation on Benefits
If a Member is a participant in one or more Defined
Benefit Plans and one or more Defined Contribution Plans
maintained by the Company, the sum of his defined benefit plan
fraction and his defined contribution plan fraction shall not
exceed unity (1.0) during any Limitation Year.
If the sum of the defined benefit plan fraction and the
defined contribution plan fraction would exceed unity (1.0) for
any Limitation Year, the Company shall adjust the rate of
benefit accrual for purposes of a Defined Benefit Plan on
behalf of the Member so that the sum of such fractions shall
not exceed unity (1.0).
For purposes of determining maximum annual additions to
Defined Contribution Plans and maximum annual benefits payable
from Defined Benefit Plans, all Defined Contribution Plans and
all Defined Benefit Plans, whether or not terminated, shall be
combined and treated as one plan.
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15.12(a) The term "defined benefit plan fraction"
shall mean a fraction the numerator of which
is the Member's projected annual benefit (as
defined in the said Defined Benefit Plan)
determined as of the close of the Limitation
Year, and the denominator of which is the
lesser of:
(1) the product of one and twenty-five
hundredths (1.25) multiplied by the
dollar limitation described in clause
(1) of Subsection 15.11(b) for such
Limitation Year; or
(2) the product of one and four-tenths (1.4)
multiplied by the amount, described in
clause (2) of Subsection 15.11(b), which
may be taken into account with respect
to each individual under the Plan for
such Limitation Year.
15.12(b) The term "defined contribution plan fraction"
shall mean a fraction the numerator of which
is the sum of all of the annual additions to
the Member's individual account under the
Defined Contribution Plan as of the close of
the Limitation Year and the denominator of
which is the sum of the lesser of the
following amounts determined for such
Limitation Year and for each prior Limitation
Year of employment with the Company:
(1) the product of one and twenty-five
hundredths (1.25) multiplied by the
dollar limitation in effect in Code
Section 415(c)(1)(A) for such Limitation
Year;
(2) the product of one and four-tenths (1.4)
multiplied by the amount which may be
taken into account pursuant to Code
Section 415(c)(1)(B) with respect to
each individual under the Defined
Contribution Plan for such Limitation
Year. If the Plan satisfied the
applicable requirements of Section 415
of the Code as in effect for all Plan
Years prior to January 1st, 1987, the
numerator of the defined contribution
plan fraction shall be adjusted by
permanently subtracting therefrom an
amount equal to the product of the
amount by which the sum of the defined
benefit plan fraction and the defined
contribution plan fraction exceeds one
(1), times the denominator of the
defined contribution plan fraction as of
December 31, 1986.
15.12(c) The limitation on aggregate benefits from a
Defined Benefit Plan and a Defined
Contribution Plan which is contained in
Section 2004 of the Employee Retirement
Income Security Act of 1974 as amended shall
be complied with by a reduction (if
necessary) in the Member's benefits under
this Defined Benefit Plan before a reduction
in annual additions to any Defined
Contribution Plan.
15.12(d) This Section is effective as of January 1st,
1987.
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Section 15.13 Corrective Adjustments
In the event that as of any Anniversary Date corrective
adjustments are required pursuant to Section 15.11 or Section
15.12, the Member's annual benefit shall be reduced by an
amount, determined by the Actuary, adequate to ensure
compliance with Section 15.11 and Section 15.12.
Section 15.14 Successor on Merger or Consolidation
In the event of a merger or consolidation of the
Employer or transfer of all or substantially all of its assets
to any other corporation, partnership or association, provision
may be made by such successor corporation, partnership or
association at its election for the continuance of this
agreement and the retirement plan created hereunder by such
successor entity. Such successor shall, upon its election to
continue this Plan, be substituted in place of the Employer by
an instrument duly authorizing such substitution and duly
executed by the Employer and its successor. Upon notice of
such substitution accompanied by a certified copy of the
resolutions of the Board of Directors of the Employer and its
successor, authorizing such substitution and delivered to the
Trustee, the Trustee and all Members hereunder shall be
authorized to recognize such successor in the place of the
Employer.
Section 15.15 Benefits on Merger or Consolidation
In the case of any merger or consolidation with or
transfer of assets or liabilities of the Plan to any other
plan, such merger, transfer or consolidation shall, by its
terms, provide that each Member of the Plan would, if the Plan
then terminated, receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater
than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer if
this Plan had then terminated.
Section 15.16 Exclusive Benefit
No Employer shall be entitled to any part of the corpus
or income of the Trust Fund and no part thereof shall be used
for or diverted to purposes other than the exclusive benefit of
the Members and beneficiaries hereunder, except as provided in
Section 7.2, Section 9.6 and Section 11.5 herein at the time of
termination of the Plan and Trust.
Section 15.17 Unclaimed Benefits
If, after diligent effort, a Member or Beneficiary who
is entitled to a distribution cannot be located within a
reasonable period of time after the date such distribution was
to commence, the distributable benefit shall be forfeited. If
the Member or Beneficiary subsequently presents a valid claim
for the benefit to the Retirement Committee, the Retirement
Committee shall cause the benefit, equal to the amount which
was forfeited under this Section, to be restored.
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ARTICLE 16
TOP HEAVY PROVISIONS
Section 16.1 Generally
Notwithstanding anything contained in the Plan to the
contrary, in the event that this Plan when combined with all
other plans required to be aggregated pursuant to Code Section
416(g) is a Top Heavy Plan for any Plan Year, this Section
shall become operative with respect to such Plan Year.
Section 16.2 Vesting
In the event the vesting schedule set forth in Section
5.1 is less liberal than the vesting schedule hereinafter
provided, then such vesting schedule shall be substituted with
the following to the extent that the following is more
favorable:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 2 years 0%
2 but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
Should the Plan cease to be a Top Heavy Plan, the
vesting schedule in Section 5.1 shall be put back into effect.
However, the vested percentage of any Member cannot be
decreased as a result of the return to the prior vesting
schedule and any Member with three (3) or more years of Service
may elect, within the later of (i) sixty (60) days after the
Plan ceases to be a Top Heavy Plan, or (ii) sixty (60) days
after the date the Member is issued written notification of the
change in the vesting schedules, to remain under the special
vesting rules described in this Section.
Section 16.3 Minimum Benefit
For the first Plan Year that the Plan shall be a Top
Heavy Plan, and all future Plan Years during which the Plan is
a Top Heavy Plan, there shall be a minimum accrued benefit
applicable to each Member who earns a year of Credited Service
during the Plan Year equal to two percent (2%) of Top Heavy
Compensation multiplied by the Member's years of Top Heavy
Service up to a maximum of ten (10) years.
Section 16.4 Top Heavy Compensation
"Top Heavy Compensation" means one-twelfth (1/12) of a
Member's average annual Full Compensation during that period of
five (5) consecutive Testing Years for which his aggregate Full
Compensation was the greatest. If he shall have fewer than
five (5) consecutive Testing Years, his Top Heavy Compensation
shall mean his average annual Full Compensation during that
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period containing the largest number of consecutive Testing
Years; provided that, if there shall be more than one such
period, Top Heavy Compensation shall be calculated on the basis
of such period for which such average is the greatest.
Section 16.5 Testing Year
"Testing Year" means a Plan Year which begins prior to
the end of the last Plan Year for which the Plan was a Top
Heavy Plan, but excluding Plan Years beginning before 1984.
Section 16.6 Full Compensation
"Full Compensation" means, for any Employee for any
Plan Year, his compensation (as such term is defined for
purposes of Code Section 415(b)) from the Employer or affiliate
for the calendar year which ends with or within such Plan Year,
limited to one hundred fifty thousand dollars ($150,000) or
such other amount as is authorized pursuant to Code Section
401(a)(17).
Section 16.7 Top Heavy Service
"Top Heavy Service" means a year of Credited Service
for a Plan Year in which the Plan is a Top Heavy Plan, with the
exception that Credited Service for Plan Years beginning prior
to January 1, 1984, shall be excluded.
Section 16.8 Combined Limitation on Benefits
In the event the Plan is a Top Heavy Plan for the Plan
Year, the multiplier of one and twenty-five hundredths (1.25)
in Sections 15.12(a) and 15.12(b) shall be reduced to one (1.0)
unless:
(1) All plans required to be aggregated and any other
plans which may be permissively aggregated
pursuant to Code Section 416(g) are ninety percent
(90%) or less top heavy; and
(2) The minimum accrued benefit referenced in Section
16.3 is modified by substituting for such minimum
accrued benefit a minimum accrued benefit
applicable to all Members equal to the lesser of
three percent (3%) of Top Heavy Compensation
multiplied by the Member's number of years of Top
Heavy Service, or a percentage of the Member's Top
Heavy Compensation equal to at least twenty
percent (20%) and increased by one percent (1%)
for each Plan Year (up to ten percent (10%)) taken
into account under this clause (ii).
* * * * * * * * * * * * *
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SIGNATURES
IN WITNESS WHEREOF, the Sponsoring Employer has caused
the Plan to be executed this 7 th day of August, 1996, but to
be effective May 1, 1996, except as otherwise indicated.
Attest: Old National Bancorp
By: /s/ ALAN MOUNTS
---------------------- ----------------
ALAN MOUNTS
Title: Vice President, Human Resources
-------------------------------
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APPENDIX A
PARTICIPATING EMPLOYERS
Participating Employer Entrance Date
---------------------- -------------
Old National Bank in Evansville January 1,1945
Old National Bancorp April 1, 1986
The Merchants National Bank April 1, 1986
First-Citizens Bank and Trust Company April 1, 1986
Peoples Bank and Trust Company July 1, 1986
The Rockville National Bank September 1, 1986
Clinton State Bank January 1, 1987
Gibson County Bank April 1, 1987
Security Bank & Trust of Vincennes May 1, 1987
Farmers Bank & Trust Co. of
Madisonville, Kentucky January 1, 1988
Peoples National Bank January 1, 1989
Morganfield National Bank January 1, 1990
First National Bank January 1, 1990
First State Bank January 1, 1990
Security Bank & Trust of Mt. Carmel January 1, 1991
Farmer's Bank & Trust Company of Henderson January 1, 1991
Old National Service Corporation January 1, 1991
Palmer American National Bank January 1, 1993
United Southwest Bank January 1, 1993
Citizens State Bank January 1, 1993
Dubois County Bank January 1, 1994
Richardt Insurance Agency, Inc. January 1, 1994
Bank of Western Indiana January 1, 1995
Indiana State Bank January 1, 1995
Orange County Bank January 1, 1995
Old National Trust Company January 1, 1995
Old National Trust Company - Illinois January 1, 1995
Old National Trust Company - Kentucky January 1, 1995
Citizens National Bank January 1, 1996
City National Bancorp, Inc. January 1, 1996
First National Bank of Oblong January 1, 1996
This Appendix reflects Participating Employers with an Entrance
Date on or before January 1, 1996.
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APPENDIX B
PARTICIPATING EMPLOYERS - EARLY RETIREMENT ELIGIBILITY
1. In the case of a Member who was an active participant
in the First Citizens Bank and Trust Company Employees'
Pension Plan as of November 13, 1986, Early Retirement
Date shall be determined without regard to requirement
that the Member be credited with at least five (5)
years of Service.
2. In the case of a Member who was an active participant
in The Merchants National Bank in Terre Haute
Employees' Pension Plan as of October 21, 1986, Early
Retirement Date shall be determined without regard to
requirement that the Member be credited with at least
five (5) years of Service.
3. In the case of a Member who was an active participant
in the Indiana State Bank Employees' Pension Plan as
of December 31, 1994, Early Retirement Date shall be
determined without regard to requirement that the
Member be credited with at least five (5) years of
Service.
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APPENDIX C
PARTICIPATING EMPLOYERS - OPTIONAL FORMS PROVISIONS
1. A Member who was a participant under a Participating
Employer's prior plan that was merged into this Plan
prior to January 1, 1995 may elect such other optional
forms available under the Participating Employer's
prior plan. The additional optional forms under this
item are available as to the Member's entire Accrued
Benefit.
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APPENDIX D
PARTICIPATING EMPLOYERS - NORMAL RETIREMENT PROVISIONS
1. The amount of the Member's Monthly Retirement Income
under the basic form and payable on his Normal
Retirement, in the case of a Member (i) who was age
fifty (50) or over and had completed ten (10) years of
Service as of March 31, 1986, and (ii) who was a
participant in The Merchants National Bank of Terre
Haute Employees' Pension Plan, shall not be less than
the normal retirement benefit (or the accrued benefit
in the case of a Member who terminates his employment
by retirement or otherwise prior to his Normal
Retirement Date) of such Member which would have been
provided under such prior plan had it continued
unchanged based on the provisions of such plan as it
existed immediately prior to March 31, 1986, less the
Actuarial Equivalent of the benefit which would be
provided by the Member's account balance (to the extent
such account balance represents employer contributions
and earnings attributable thereon) under the Employees'
Savings and Profit-Sharing Plan of Old National
Bancorp.
2. The amount of the Member's Monthly Retirement Income
under the basic form and payable on his Normal
Retirement, in the case of a Member who was a
participant in the Gibson County Bank Employees'
Pension Plan as of March 31, 1987, shall not be less
than the normal retirement benefit (or the accrued
benefit in the case of a Member who terminates his
employment by retirement or otherwise prior to his
Normal Retirement Date) of such Member which would have
been provided under such prior plan had it continued
unchanged based on the provisions of such plan as it
existed on March 31, 1987, less the Actuarial
Equivalent of the benefit which would be provided by
the Member's account balance (to the extent such
account balance represents employer contributions and
earnings attributable thereon) under the Employees'
Savings and Profit-Sharing Plan of Old National
Bancorp.
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APPENDIX E
PARTICIPATING EMPLOYERS - EARLY RETIREMENT REDUCTIONS
1. In the case of a Member who has reached his early
retirement date under the Indiana State Bank Employees'
Pension Plan on or before December 31, 1994, and who
was an active participant in the Indiana State Bank
Employees' Pension Plan as of December 31, 1994, the
benefit to which he is entitled pursuant to Section 4.5
shall not be less than his accrued benefit under the
Indiana State Bank Employees' Pension Plan as of
December 31, 1994, reduced by one-one hundred eightieth
(1/180) for each completed month of the first five (5)
years and one-three hundred sixtieth (1/360) for each
completed month of the next five (5) years by which the
date he begins receiving such benefit precedes his
Normal Retirement Date.
2. In the case of a Member who has reached his early
retirement date under the City National Bancorp. Inc.
Employee Retirement Plan on or before December 31,
1995, and who was an active participant in the City
National Bancorp. Inc. Employee Retirement Plan as of
December 31, 1995, the benefit to which he is entitled
pursuant to Section 4.5 shall not be less than his
accrued benefit under the City National Bancorp. Inc.
Employee Retirement Plan as of December 31, 1995,
reduced actuarially as provided in Section 6 of the
City National Bancorp. Inc. Employee Retirement Plan.
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APPENDIX F
PARTICIPATING EMPLOYERS - VESTING PROVISIONS
1. For those Members who were active participants in the
prior plan of Farmers Bank & Trust Co. of Madisonville,
Kentucky as of January 1, 1988, such Member's Accrued
Benefit as of January 1, 1988 shall be nonforfeitable.
Subsequent accruals shall become vested in accordance
with Subsection 5.1(b).
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EXHIBIT 10.05
OLD NATIONAL BANCORP
EXECUTIVE SHORT TERM INCENTIVE PLAN
OVERVIEW
The Executive Short Term Incentive Plan ("Plan") is
designed and implemented effective January 1, 1996 to
motivate key executives, with broad decision-making
responsibility, to achieve high-level predetermined
business/financial performance objectives and to
accomplish significant predetermined individual
performance objectives which support business plans and
goals. The Plan will provide annual cash incentive
payments contingent upon the achievement of these
objectives.
OBJECTIVES
The Old National Bancorp Short Term Incentive Plan is
designed to:
1. Improve executive focus in decision-making on
what is in Old National Bancorp's best
interests.
2. Attract, retain and motivate the highest caliber
of management/executive talent.
3. Support achievement of individual affiliate
annual budgets.
4. Promote profitability, growth and expense
control.
5. Be fair to participants and shareholders.
6. To produce competitive and appropriate levels of
total cash compensation when combined with base
salaries.
ELIGIBILITY
Participation in the Plan is limited to key executives
with Corporate, Regional, Affiliate or Subsidiary
responsibilities who are:
1. Exempt employees at a minimum salary grade 32
and above who have broad decision making
responsibilities within their respective
organizations. Minimum Salary Grade levels for
participation may be set at higher level for
select business units or affiliates as
determined and approved by the Old National
Bancorp Chief Executive Officer.
2. Assigned or transferred to position of greater
or lesser incentive level will have an award
that is pro-rated based on the time (whole
months) employed in each different level.
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3. Employees below the minimum grade level
requirements and whose job duties are increased
prior to July 1 of the Plan year resulting in an
increase in the employee's salary grade level at
or above the minimum requirements, will
participate in the Plan for the current Plan
Year. Employees will not participate in the
Plan if the job duties change after July 1. The
Bancorp Chief Executive Officer and President
are responsible for granting final approval of
any such changes.
4. Have a year-end "acceptable" performance rating
of "3" or higher.
5. Employed for the full Plan year.
BUSINESS/FINANCIAL PERFORMANCE
Net Income Targets will be established for Corporate and
all Affiliate locations at "stretch" levels that represent
significant results. These goals, when achieved, will
produce results ensuring the success of Old National
Bancorp and the accomplishment of its strategic
objectives.
Short Term Incentive payments will be based on Net Income
results that are (plus or minus) 6% from the Net Income
Target. A minimum payout (Threshold) is earned when Net
Income results are 6% less than target. A maximum payout is
earned when Net Income results are +6% of the Net Income
Target. Participants will receive incrementally greater
incentive payments for net income results that are above
Threshold Net Income but below or equal to the Maximum Net
Income.
Corporate and affiliate profitability goals will reflect
Bancorp Management Committee's collective best judgement
regarding market conditions and opportunities.
No incentive award will be payable for a Plan year unless
at least one applicable Threshold Net Income performance
level (Corporate, Regional or Affiliate) or other
financial goal for Non-Income related Affiliates is met.
A. Corporate Targets
Profitability goals will be based on an Annual Net
Income Target. The Corporate Targeted Annual Net
Income will be derived from the Annual Return on
Equity Target established for Restricted Stock (Long
Term Incentive) Plan purposes. Targets are a
"stretch" above the budgeted net income.
The Corporate Return on Equity target will be
approved annually by the Compensation Committee of
Old National Bancorp's Board of Directors.
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B. Affiliate/Subsidiary Targets
1. Banking, Trust, Finance and Insurance Companies:
Profitability goals will be determined during
the annual budget and planning process.
Profitability will be measured by a Net Income
Target as determined by the Bancorp Management
Committee.
2. Old National Service Corporation:
A financial goal will be established that is
related to expense control and the achievement
of key strategic objectives.
PERSONAL PERFORMANCE
Individual performance will be measured in terms of each
participant's achievement of generally three to four key
individual goals, mutually determined in advance with the
participant's immediate supervisor and approval by the
next level of management. These key goals are generally
an outcome of the management objectives identified and
established during the year-end performance evaluations.
Final determination of the individual goal achievement
will be determined at year-end by the supervising manager
using the following rating scale.
CATEGORY OVERALL GOALS ACHIEVED
1. Did not meet goals (Less than 50%)
2. Met minimum goals (50%+)
3. Met most goals (75%+)
4. Met all goals (100%)
Final approval of the supervisor's rating must be granted
by the next level of management.
Guidelines concerning the establishment, approval and
record keeping of Personal Goals will be established and
communicated to Plan participants by the Vice President,
Human Resources, Old National Bancorp.
ESTABLISHING PERFORMANCE GOALS
Financial Objectives will be established by the Bancorp
Management Committee annually considering the following
guidelines:
Incentive Odds of
Level Results Payable Attainment
Threshold Acceptable Modest 80%
Target Very Good Significant 50%
Maximum Outstanding Maximum 20%
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INCENTIVE COMPENSATION LEVELS AND TARGET AWARDS
Corporate Incentive Award payout levels will be
established at levels reflective of Financial Services
Industry compensation practices.
Incentive compensation levels as a percent of base salary
for the current Plan Year are:
Level Positions Threshold Target Maximum
Level 1 Salary Grades 38 and above 15% 30% 45%
Level 2 Salary Grades 32 to 37 10% 20% 30%
Base salary represents the regular salary paid to the
participant during the Plan Year, but excludes all other
forms of compensation, including but not limited to
restricted stock, trust referral fees, relocation
allowances, etc.
PERFORMANCE WEIGHTING
While incentive plans at the corporate and
regional/affiliate levels are similar, there are
differences in the "Performance Weighting" for each
Category. Each Participant will be assigned to only one
Category.
CATEGORY PERFORMANCE WEIGHTING
Corporate 1. Ninety percent (90%) of the incentive award
will be based on overall Corporate Net Income
results.
2. Ten percent (10%) of the incentive award will
be based on the completion of individual
goals.
Affiliate 1. Seventy percent (70%) of the incentive
will be based on Affiliate Net Income
results or other financial measures
for non-income producing
Affiliates/Divisions.
2. Twenty Percent (20%) of the Incentive
Award will be based on the overall
corporate Net Income Results.
3. Ten percent (10%) of the incentive
award will be based on the completion
of Individual Performance Goals.
Regional 1. Sixty Percent (60%) of the incentive
award will be based on aggregate Net
Income results for the Affiliates
assigned to a Regional Executive.
2. Twenty Percent (20%) of the Incentive
Award will be based on overall
corporate Net Income Results.
3. Ten Percent (10%) of the incentive
award will be based on the completion
of Individual Performance Goals.
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OTHER PROVISIONS
Other Short Term Incentive Plans
Participants in the Short Term Incentive Plan are not
eligible for participation in any other "Bankwide" or
"Gainsharing" Short Term Incentive Programs established
for employees who are below a Salary Grade 32.
Retirement and Disability
Participants who retire or are permanently disabled during
the calendar year may receive all or part of their normal
incentive payment, based on the discretion of the Chairman
and CEO (and the Compensation Committee in cases involving
an Old National Bancorp Senior Vice President or above).
In no event, however, will the incentive payment received
be less than the pro-rated amount based on length of
employment during the year. The same consideration will
be granted to the heirs or assigns of a deceased
participant. The pro-rated amount will be based on the
participant's whole months of service completed. For
example, a participant retires on September 20. If
approved, the minimum incentive payment to this
participant is 8/12th of the participant's normal
incentive payment based on financial results for the Plan
Year.
Other Terminations
A Participant who terminates employment for any reason
other than retirement, death or permanent disability
during the calendar year will forfeit the entire annual
incentive payment for that year, unless determined
otherwise by the Chairman and CEO (and the Compensation
Committee in cases involving a Bancorp Senior Vice
President or above).
Retirement and Other Benefit Plans Exclusion
Incentive Awards will not be treated as eligible
compensation for Retirement (Pension) Plan, Profit
Sharing Plan or other Benefit Plan purposes.
ANNUAL INCENTIVE PLAN PAYMENTS
All Plan calculations will be based on calendar year
financial results as reported to the Board of Directors
and subsequently approved by the Old National Bancorp
Compensation Committee.
Annual bonus payments will be paid in cash (through
payroll) to each participant by their respective business
unit as close as possible to within sixty (60) days
following the end of the Plan Year.
PLAN ADMINISTRATION
Administration of the Plan is shared among the following
authorities:
A. Board of Directors Compensation Committee
The Compensation Committee has the ultimate authority
for the Plan and shall annually monitor and approve
the following:
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1. Participation Levels
2. Corporate and Affiliate Financial Targets
3. General Plan Design
4. Short Term Incentive Payments
The Board Compensation Committee reserves the right
to adjust financial (Corporate or Affiliate) targets
and/or payout for significant non-recurring events as
recommended by Management.
B. Bancorp Management Committee will:
1. Recommend incentive award payout ranges for each
level.
2. Recommend annual Corporate and Affiliate Net
Income Targets and other financial objectives as
desired.
C. Vice President, Human Resources (Old National Bancorp) is
responsible for the general administration of the Plan. This
includes, but is not limited to:
1. Record keeping,
2. Goal setting procedures,
3. Periodic progress reports,
4. Processing incentive plan payments, and
5. Reports and/or recommendations to the Management
Committee and Board Compensation Committee concerning
Industry compensation practices.
PLAN AMENDMENT
The Executive Short Term Incentive Plan may at any time or
from time to time be amended, modified, suspended or
terminated by the Compensation Committee of the Board of
Directors, except that no amendments, modification or
termination may adversely affect the Incentive Payments
that were earned as of the end of the Plan year.
APPROVED BY:
------------------------ -------------------------
John N. Royse Ronald B. Lankford
Chairman and CEO President and COO
------------------------ -------------------------
Date Date
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EXHIBIT 10.06(a)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is made as of the 1st day of January,
1996, between OLD NATIONAL BANCORP, an Indiana corporation and
registered bank holding company under the Bank Holding Company
Act of 1956, as amended (the "Company"), and William R. Britt,
Senior Vice President-Northern Regional Executive of the
Company ("Executive").
WITNESSETH:
WHEREAS, the Company desires to assure continuity of its
management, to enable its executives to devote their full
attention to management responsibilities and, when faced with a
possible change in control, to help the Board of Directors
assess options and advise as to the best interest of the
Company and its shareholders without being influenced by the
uncertainties of their own situations, and to demonstrate to
executives the interests of the Company in their well-being and
fair treatment in the event of a change in control; and
WHEREAS, to that end, the Company desires to assure Executive
that he will receive certain benefits in the case of his
termination or a significant change in the terms of his
employment as a result of a change in control of the Company.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Executive agree
as follows:
1. Term
The initial term of this Agreement shall begin on January
1, 1996, and continue for a two (2) year period ending
December 31, 1997, unless terminated as hereinafter
provided. This Agreement shall be subject to an annual
review and may be extended for successive two (2) year
terms by mutual agreement of the parties; provided the
Company shall give the Executive notice of its intent to
renew or not renew this Agreement no later than twelve
(12) months prior to the expiration of the initial term or
any additional term hereunder; and, provided further, if
the Company shall fail to so provide said notice, this
Agreement shall automatically continue for one (1)
additional year.
2. Benefits Upon a Change in Control
a. The Company shall provide Executive with the benefits
set forth in Section 2(c) hereof upon any termination
of Executive's employment by the Company during that
two (2) year period following a change in control (as
defined below) which occurs during the term of this
Agreement for any reason except the following:
(i) Termination for Cause
"Cause" shall be defined as (A) action by
Executive involving willful misconduct or gross
negligence materially injurious to the Company,
(B) the requirement or direction of a federal or
state regulatory agency having jurisdiction over
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the Company, (C) conviction of Executive of the
commission of any criminal offense involving
dishonesty or breach of trust, or (D) any
intentional breach by Executive of a material
term, condition or covenant of this Agreement.
Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for cause
unless there shall have been delivered to
Executive a copy of a notice of termination from
the Company accompanied by a resolution duly
adopted by a majority of the Directors then in
office, finding that in the good faith opinion
of the Directors, the termination of Executive's
employment is for cause, specifying the
particulars thereof in detail, and granting an
opportunity, following a reasonable period of
time, for Executive, together with his counsel,
to be heard before the Board of Directors;
(ii) Disability of the Executive, as determined under
the policies and procedures of the Company as in
effect immediately prior to such change in
control. Termination pursuant to this Section
2(a)(ii) shall not affect any rights which
Executive may have under any disability policy
or program of the Company;
(iii) Voluntary retirement of the Executive in accordance with
policies and procedures of the Company in effect
immediately prior to the change in control; or
(iv) Death of the Executive.
b. The Company shall also provide Executive with the
benefits set forth in Section 2(c) if a change in
control occurs during the term of this Agreement and
Executive terminates his employment during the two
(2) year period following the change in control after
the happening of one or more of the following events:
(i) Without the express written consent of
Executive, the assignment of Executive to any
duties materially inconsistent with his
positions, duties, responsibilities, or status
with the Company immediately prior to the change
in control or a substantial reduction of his
duties or responsibilities, or any removal of
Executive from, or any failure to reelect
Executive to, any positions held by the
Executive prior to the change in control;
(ii) A reduction by the Company in the compensation
or benefits of Executive in effect immediately
prior to the change in control, or any failure
to include Executive in any bonus or benefit
plans as may be offered by the Company from time
to time;
(iii) A requirement that without his consent Executive be
based anywhere other than Evansville, Indiana, except
for required travel pertaining to the Company's business
in accordance with the Company's management practices in
effect prior to a change in control;
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(iv) Any purported termination of Executive's
employment for cause as defined in Section
2(a)(i) above or for disability without grounds;
(v) Any failure of the Company to obtain the
assumption of the obligation to perform this
Agreement by any successor as contemplated in
Section 9(b) hereof; or
(vi) Any material breach by the Company of any of the
provisions of this Agreement or any failure by
the Company to carry out any of its obligations
hereunder.
c. Subject to Sections 2(a) and 2(b) above, the Company
shall pay to Executive the amounts provided in (i)
and (ii) below at the time and in the manner
provided, less any withholding therefrom under
applicable federal, state, or local income tax, other
tax, or social security laws or similar statutes, and
shall provide to Executive the benefits provided in
(iii) below upon termination of his employment with
the Company.
(i) Within thirty (30) days of his date of
termination following a change in control, the
Company shall pay to Executive a lump sum single
payment in cash or cash equivalent funds, equal
to the aggregate of the following:
(a) Executive's base salary, at his then-
effective annual rate, through the date of
termination of his employment plus any
amounts due to Executive under the accrued
vacation program of the Company due to him
through the date of termination; plus
(b) An amount computed by the actuary for Old
National Bancorp Employees' Retirement Plan
(the "Plan") based on the actuarial
assumptions for the Plan and the Plan's
actuarial equivalency determination
procedures as in effect on the date of the
Executive's termination of employment with
the Company, equal to the present value of
the Executive's Accrued Benefit as defined
in the Plan computed as if the Executive
had remained in the employ of the Company
for two (2) years after his termination of
employment and had received the same
compensation from the Company for
determining benefits under the Plan, as
defined in Section 4.01 thereof, being paid
to him at the time of his termination of
employment for that two (2) year period,
and assuming Credited Service as defined in
the Plan continues for that two (2) year
period, minus the present value of the
Executive's Accrued Benefit under the Plan
as computed on the date of termination.
(ii) The Company shall further pay to Executive an
amount equal to two (2) times the average annual
base salary paid to the Executive by the Company
in the three (3) year period prior to the date
of termination in semi-monthly installments each
equal to 1/48th of such amount payable in the
same sequence of semi-monthly payments as
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followed by the Company for the payment of
salary, beginning on the first salary payment
date following the date of termination and
continuing until paid in full. Provided, the
payments hereunder shall be suspended in the
event the Executive secures subsequent
employment in which his semi-monthly salary is
equivalent to or greater than the semi-monthly
payments hereunder. In the event Executive's
semi-monthly salary from his subsequent
employment is less than equivalent to such
payment, the amount of each remaining payment
hereunder shall be reduced to the difference
between the semi-monthly payment under such
subsection and Executive's equivalent
semi-monthly salary from his subsequent
employment. If at any time during this two-year
period Executive is terminated from his
subsequent employment, then full payment
described in this paragraph shall be resumed.
(iii) The Company shall cause to be vested in the Executive's
name those awarded but unearned shares which are held in
the Executive's account in the Old National Bancorp
Restricted Stock Plan.
(iv) In addition, the Company shall maintain in full force
and effect for the continued benefit of the Executive
for two (2) years following the date of termination, all
employee welfare plans (i.e., life and disability
insurance, medical plan, and the spending account) and
programs in which the Executive was entitled to
participate immediately prior to the date of termination
provided that the Executive's continued participation is
possible under the general terms and provisions of such
plans and programs. In the event that the Executive's
participation in any such plan or program is barred or
unavailable, the Company shall arrange to provide the
Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled
to receive under such plans and programs from which his
continued participation is barred or rendered
unavailable. Executive's rights to such benefits shall
be reduced to the extent that Executive is eligible for
comparable benefits supplied by a subsequent employer.
Provided, however, if the aggregate present
value of the above payments which may be
considered a "parachute payment" within the
meaning of Section 280G of the Internal Revenue
Code of 1986, as amended ("Code") shall equal or
exceed three (3) times the Executive's base
amount ("Base Amount"), as such term is defined
in Section 280G of the Code, then such aggregate
payment shall be reduced to the highest payment
which is not three (3) times such Base Amount.
The sole purpose of the limitation imposed by
this provision is to preclude the amount payable
pursuant to this Section 2(c) from being
characterized as an "excess parachute payment"
under Section 280G of the Code. It is the
intention of the parties that this subsection be
interpreted and construed in a manner so as to
allow the greatest dollar payment to Executive
without such payment being classified as an
"excess parachute payment," as such term is
defined by Section 280G of the Code. The
Company and Executive agree that any dispute
under this Section 2(c) of the application of
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the limitation of Section 280G of the Code shall
be resolved by an opinion of competent counsel
selected by and acceptable to the Company and
Executive. Counsel's fee for the opinion
required herein shall be paid by the Company.
d. For the purposes of this Agreement, a "change in
control" shall mean:
(i) any change in Chief Executive Officer of the
Company;
(ii) any merger, consolidation, share exchange, or
other combination or reorganization involving
the Company, irrespective of which party is the
surviving entity, excluding any merger,
consolidation, share exchange, or other
combination involving the Company solely in
connection with the acquisition by the Company
of any subsidiary;
(iii) any sale, lease, exchange, transfer, or
other disposition of all or any substantial
part of the assets of the Company;
(iv) any acquisition or agreement to acquire by any
person or entity, directly or indirectly,
beneficial ownership of twenty-five percent
(25%) or more of the outstanding voting stock of
the Company;
(v) during any period of two (2) consecutive years
during the term hereof, individuals who at the
date of this Agreement constitute the Board of
Directors of the Company cease for any reason to
constitute at least a majority thereof, unless
the election of each Director at the beginning
of such Director's term has been approved by
Directors representing at least two-thirds of
the Directors then in office who were Directors
on the date of this Agreement;
(vi) a majority of the Board of Directors or a
majority of the shareholders of the Company
approve, adopt, agree to recommend, or accept
any agreement, contract, offer, or other
arrangement providing for any of the
transactions described above;
(vii) any series of transactions resulting in any
of the transactions described above; or
(viii) any other set of circumstances which the
Board of Directors deems to constitute a
change in control of the Company.
e. Any termination of Executive's employment for the
reasons set forth in Section 2(a) (except for reason
of Executive's death) or by Executive for the reasons
set forth in Section 2(b) shall be communicated by
written "Notice of Termination" to the other party,
delivered in a manner provided in Section 14 hereof.
Any "Notice of Termination" given by Executive
pursuant to Section 2(b), or given by the Company in
connection with a termination as to which the Company
believes it is not obligated to provide Executive
with the benefits set forth in Section 2(c), shall
indicate the specific provision in this Agreement
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relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a
basis for such termination. "Date of termination"
for the purposes of this Agreement shall mean the
date on which such "Notice of Termination" is given.
3. Payment of Certain Costs of Executive
If a dispute arises regarding a termination of Executive's
employment subsequent to a change in control or the
interpretation or enforcement of this Agreement and
Executive obtains a final judgment in his favor from a
court of competent jurisdiction or his claim is settled by
the Company prior to the rendering of a judgment by such a
court, all legal fees and expenses incurred by Executive
in contesting or disputing any such termination or seeking
to obtain or enforce any right or benefit provided for in
this Agreement or in otherwise pursuing his claim will be
paid by the Company, to the extent permitted by law.
4. Moving Expenses
In the event of a termination of Executive's employment
subsequent to a change in control, Executive shall be
reimbursed by the Company for any moving expenses incurred
by him in relocating to the place of subsequent employment
in the event such cost is not paid by the subsequent
employer. Such expenses shall include reasonable selling
expenses of his residence. Such expenses shall be
reimbursed within thirty (30) days of Executive's
submission of an itemized listing of the same to the
Company.
5. Surrender of Company Records
Upon termination of Executive's employment for any reason,
he shall immediately surrender to the Company all Company
records, notes, documents, forms, manuals, or other
written or printed material, and all copies thereof, in
his possession or control, which pertains to the business
of the Company and which would not be available publicly.
Executive agrees that all of the foregoing shall be and
remain the sole and exclusive property of the Company.
6. Covenant of Confidentiality
Executive shall keep confidential and not improperly
divulge for the benefit of another party or use for his
own benefit, the Company's confidential information
including, but not limited to, business secrets relating
to the Company's finances, operations, and customer lists.
All of the Company's confidential information shall be the
sole and exclusive property of the Company.
7. Termination
This Agreement shall automatically terminate without
notice prior to any change in control if the Executive
shall resign, retire, become permanently and totally
disabled, voluntarily take another position requiring a
substantial portion of his time, or die.
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8. 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.
9. Parties Bound
a. All provisions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto,
their heirs, personal representatives, successors,
and assigns.
b. The Company will require any successor (whether
direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially
all of the business or assets of the Company, by
agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same
extent that the Company would be required to perform
it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the
effectiveness of any such succession shall be deemed
a material breach of this Agreement.
c. If Executive should die while any amounts are payable
to him hereunder, this Agreement shall inure to the
administrators, heirs, distributees, devisees, and
legatees, and all amounts payable hereunder shall
then be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to his
estate.
10. Effect and Modification
This Agreement comprises the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all earlier agreements relating to the subject
matter hereof; provided that this Agreement is not
intended to and shall not be deemed to be in lieu of any
rights, benefits, and privileges to which Executive may be
entitled as an Executive of the Company under any
retirement, pension, profit sharing, stock ownership,
stock option, insurance, or hospital plan, or other plans,
benefits, programs, and policies which may now be in
effect or which may hereafter be adopted. It is
understood that Executive shall have the same rights and
privileges to participate in such plans, benefits,
programs, and policies as any other Executive during his
period of employment. No statement or promise, except as
herein set forth, has been made with respect to the
subject matter of this Agreement. The headings of the
individual sections herein are for convenience only and
shall not be deemed to be a substantive part of this
Agreement. No modification or amendment hereof shall be
effective unless in writing and signed by Executive and
the Company.
11. Non-Waiver
The failure or refusal of either party to enforce all or
any part of, or the waiver by either party of any breach
of this Agreement shall not be a waiver of that party's
continuing or subsequent rights under this Agreement, nor
shall such failure or refusal or waiver have any effect
upon the subsequent enforceability of this Agreement.
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12. Governing Law
This Agreement is being delivered in and shall be governed
by the laws of the State of Indiana.
12. Governing Law
This Agreement is being delivered in and shall be governed
by the laws of the State of Indiana.
13. Notice
Any notice, request, instruction, or other document to be
given hereunder to any party shall be in writing and
delivered by hand, telegram, facsimile transmission,
registered or certified United States mail, return receipt
requested, or other form of receipted delivery, with all
expenses of delivery prepaid, as follows:
If to Executive: If to Company:
William R. Britt Old National Bancorp
264 Trailwood Drive Post Office Box 718
Terre Haute, Indiana 47802 Evansville, Indiana 47705
ATTENTION: Board of Directors
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
EXECUTIVE
\s\ William R. Britt
-------------------------------------------------------------------
William R. Britt, Senior Vice President-Northern Regional Executive
OLD NATIONAL BANCORP
\s\ John N. Royse
---------------------------------------------------
John N. Royse, Chairman and Chief Executive Officer
<PAGE>
<PAGE>
EXHIBIT 10.06(b)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is made as of the 1st day of January,
1996, between OLD NATIONAL BANCORP, an Indiana corporation and
registered bank holding company under the Bank Holding Company
Act of 1956, as amended (the "Company"), and James A. Risinger,
Senior Vice President of the Company ("Executive").
WITNESSETH:
WHEREAS, the Company desires to assure continuity of its
management, to enable its executives to devote their full
attention to management responsibilities and, when faced with a
possible change in control, to help the Board of Directors
assess options and advise as to the best interest of the
Company and its shareholders without being influenced by the
uncertainties of their own situations, and to demonstrate to
executives the interests of the Company in their well-being and
fair treatment in the event of a change in control; and
WHEREAS, to that end, the Company desires to assure Executive
that he will receive certain benefits in the case of his
termination or a significant change in the terms of his
employment as a result of a change in control of the Company.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Executive agree
as follows:
1. Term
The initial term of this Agreement shall begin on January
1, 1996, and continue for a two (2) year period ending
December 31, 1997, unless terminated as hereinafter
provided. This Agreement shall be subject to an annual
review and may be extended for successive two (2) year
terms by mutual agreement of the parties; provided the
Company shall give the Executive notice of its intent to
renew or not renew this Agreement no later than twelve
(12) months prior to the expiration of the initial term or
any additional term hereunder; and, provided further, if
the Company shall fail to so provide said notice, this
Agreement shall automatically continue for one (1)
additional year.
2. Benefits Upon a Change in Control
a. The Company shall provide Executive with the benefits
set forth in Section 2(c) hereof upon any termination
of Executive's employment by the Company during that
two (2) year period following a change in control (as
defined below) which occurs during the term of this
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Agreement for any reason except the following:
(i) Termination for Cause
"Cause" shall be defined as (A) action by
Executive involving willful misconduct or gross
negligence materially injurious to the Company,
(B) the requirement or direction of a federal or
state regulatory agency having jurisdiction over
the Company, (C) conviction of Executive of the
commission of any criminal offense involving
dishonesty or breach of trust, or (D) any
intentional breach by Executive of a material
term, condition or covenant of this Agreement.
Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for cause
unless there shall have been delivered to
Executive a copy of a notice of termination from
the Company accompanied by a resolution duly
adopted by a majority of the Directors then in
office, finding that in the good faith opinion
of the Directors, the termination of Executive's
employment is for cause, specifying the
particulars thereof in detail, and granting an
opportunity, following a reasonable period of
time, for Executive, together with his counsel,
to be heard before the Board of Directors;
(ii) Disability of the Executive, as determined under
the policies and procedures of the Company as in
effect immediately prior to such change in
control. Termination pursuant to this Section
2(a)(ii) shall not affect any rights which
Executive may have under any disability policy
or program of the Company;
(iii) Voluntary retirement of the Executive in
accordance with policies and procedures of
the Company in effect immediately prior to
the change in control; or
(iv) Death of the Executive.
b. The Company shall also provide Executive with the
benefits set forth in Section 2(c) if a change in
control occurs during the term of this Agreement and
Executive terminates his employment during the two
(2) year period following the change in control after
the happening of one or more of the following events:
(i) Without the express written consent of
Executive, the assignment of Executive to any
duties materially inconsistent with his
positions, duties, responsibilities, or status
with the Company immediately prior to the change
in control or a substantial reduction of his
duties or responsibilities, or any removal of
Executive from, or any failure to reelect
Executive to, any positions held by the
Executive prior to the change in control;
(ii) A reduction by the Company in the compensation
or benefits of Executive in effect immediately
prior to the change in control, or any failure
to include Executive in any bonus or benefit
plans as may be offered by the Company from time
to time;
(iii) A requirement that without his consent Executive be
based anywhere other than Evansville, Indiana, except
for required travel pertaining to the Company's business
in accordance with the Company's management practices in
effect prior to a change in control;
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(iv) Any purported termination of Executive's
employment for cause as defined in Section
2(a)(i) above or for disability without grounds;
(v) Any failure of the Company to obtain the
assumption of the obligation to perform this
Agreement by any successor as contemplated in
Section 9(b) hereof; or
(vi) Any material breach by the Company of any of the
provisions of this Agreement or any failure by
the Company to carry out any of its obligations
hereunder.
c. Subject to Sections 2(a) and 2(b) above, the Company
shall pay to Executive the amounts provided in (i)
and (ii) below at the time and in the manner
provided, less any withholding therefrom under
applicable federal, state, or local income tax, other
tax, or social security laws or similar statutes, and
shall provide to Executive the benefits provided in
(iii) below upon termination of his employment with
the Company.
(i) Within thirty (30) days of his date of
termination following a change in control, the
Company shall pay to Executive a lump sum single
payment in cash or cash equivalent funds, equal
to the aggregate of the following:
(a) Executive's base salary, at his then-
effective annual rate, through the date of
termination of his employment plus any
amounts due to Executive under the accrued
vacation program of the Company due to him
through the date of termination; plus
(b) An amount computed by the actuary for Old
National Bancorp Employees' Retirement Plan
(the "Plan") based on the actuarial
assumptions for the Plan and the Plan's
actuarial equivalency determination
procedures as in effect on the date of the
Executive's termination of employment with
the Company, equal to the present value of
the Executive's Accrued Benefit as defined
in the Plan computed as if the Executive
had remained in the employ of the Company
for two (2) years after his termination of
employment and had received the same
compensation from the Company for
determining benefits under the Plan, as
defined in Section 4.01 thereof, being paid
to him at the time of his termination of
employment for that two (2) year period,
and assuming Credited Service as defined in
the Plan continues for that two (2) year
period, minus the present value of the
Executive's Accrued Benefit under the Plan
as computed on the date of termination.
(ii) The Company shall further pay to Executive an
amount equal to two (2) times the average annual
base salary paid to the Executive by the Company
in the three (3) year period prior to the date
of termination in semi-monthly installments each
equal to 1/48th of such amount payable in the
same sequence of semi-monthly payments as
followed by the Company for the payment of
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salary, beginning on the first salary payment
date following the date of termination and
continuing until paid in full. Provided, the
payments hereunder shall be suspended in the
event the Executive secures subsequent
employment in which his semi-monthly salary is
equivalent to or greater than the semi-monthly
payments hereunder. In the event Executive's
semi-monthly salary from his subsequent
employment is less than equivalent to such
payment, the amount of each remaining payment
hereunder shall be reduced to the difference
between the semi-monthly payment under such
subsection and Executive's equivalent
semi-monthly salary from his subsequent
employment. If at any time during this two-year
period Executive is terminated from his
subsequent employment, then full payment
described in this paragraph shall be resumed.
(iii) The Company shall cause to be vested in the Executive's
name those awarded but unearned shares which are held in
the Executive's account in the Old National Bancorp
Restricted Stock Plan.
(iv) In addition, the Company shall maintain in full force
and effect for the continued benefit of the Executive
for two (2) years following the date of termination, all
employee welfare plans (i.e., life and disability
insurance, medical plan, and the spending account) and
programs in which the Executive was entitled to
participate immediately prior to the date of termination
provided that the Executive's continued participation is
possible under the general terms and provisions of such
plans and programs. In the event that the Executive's
participation in any such plan or program is barred or
unavailable, the Company shall arrange to provide the
Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled
to receive under such plans and programs from which his
continued participation is barred or rendered
unavailable. Executive's rights to such benefits shall
be reduced to the extent that Executive is eligible for
comparable benefits supplied by a subsequent employer.
Provided, however, if the aggregate present
value of the above payments which may be
considered a "parachute payment" within the
meaning of Section 280G of the Internal Revenue
Code of 1986, as amended ("Code") shall equal or
exceed three (3) times the Executive's base
amount ("Base Amount"), as such term is defined
in Section 280G of the Code, then such aggregate
payment shall be reduced to the highest payment
which is not three (3) times such Base Amount.
The sole purpose of the limitation imposed by
this provision is to preclude the amount payable
pursuant to this Section 2(c) from being
characterized as an "excess parachute payment"
under Section 280G of the Code. It is the
intention of the parties that this subsection be
interpreted and construed in a manner so as to
allow the greatest dollar payment to Executive
without such payment being classified as an
"excess parachute payment," as such term is
defined by Section 280G of the Code. The
Company and Executive agree that any dispute
under this Section 2(c) of the application of
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the limitation of Section 280G of the Code shall
be resolved by an opinion of competent counsel
selected by and acceptable to the Company and
Executive. Counsel's fee for the opinion
required herein shall be paid by the Company.
d. For the purposes of this Agreement, a "change in
control" shall mean:
(i) any change in Chief Executive Officer of the
Company;
(ii) any merger, consolidation, share exchange, or
other combination or reorganization involving
the Company, irrespective of which party is the
surviving entity, excluding any merger,
consolidation, share exchange, or other
combination involving the Company solely in
connection with the acquisition by the Company
of any subsidiary;
(iii) any sale, lease, exchange, transfer, or
other disposition of all or any substantial
part of the assets of the Company;
(iv) any acquisition or agreement to acquire by any
person or entity, directly or indirectly,
beneficial ownership of twenty-five percent
(25%) or more of the outstanding voting stock of
the Company;
(v) during any period of two (2) consecutive years
during the term hereof, individuals who at the
date of this Agreement constitute the Board of
Directors of the Company cease for any reason to
constitute at least a majority thereof, unless
the election of each Director at the beginning
of such Director's term has been approved by
Directors representing at least two-thirds of
the Directors then in office who were Directors
on the date of this Agreement;
(vi) a majority of the Board of Directors or a
majority of the shareholders of the Company
approve, adopt, agree to recommend, or accept
any agreement, contract, offer, or other
arrangement providing for any of the
transactions described above;
(vii) any series of transactions resulting in any
of the transactions described above; or
(viii) any other set of circumstances which the
Board of Directors deems to constitute a
change in control of the Company.
e. Any termination of Executive's employment for the
reasons set forth in Section 2(a) (except for reason
of Executive's death) or by Executive for the reasons
set forth in Section 2(b) shall be communicated by
written "Notice of Termination" to the other party,
delivered in a manner provided in Section 14 hereof.
Any "Notice of Termination" given by Executive
pursuant to Section 2(b), or given by the Company in
connection with a termination as to which the Company
believes it is not obligated to provide Executive
with the benefits set forth in Section 2(c), shall
indicate the specific provision in this Agreement
relied upon and shall set forth in reasonable detail
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the facts and circumstances claimed to provide a
basis for such termination. "Date of termination"
for the purposes of this Agreement shall mean the
date on which such "Notice of Termination" is given.
3. Payment of Certain Costs of Executive
If a dispute arises regarding a termination of Executive's
employment subsequent to a change in control or the
interpretation or enforcement of this Agreement and
Executive obtains a final judgment in his favor from a
court of competent jurisdiction or his claim is settled by
the Company prior to the rendering of a judgment by such a
court, all legal fees and expenses incurred by Executive
in contesting or disputing any such termination or seeking
to obtain or enforce any right or benefit provided for in
this Agreement or in otherwise pursuing his claim will be
paid by the Company, to the extent permitted by law.
4. Moving Expenses
In the event of a termination of Executive's employment
subsequent to a change in control, Executive shall be
reimbursed by the Company for any moving expenses incurred
by him in relocating to the place of subsequent employment
in the event such cost is not paid by the subsequent
employer. Such expenses shall include reasonable selling
expenses of his residence. Such expenses shall be
reimbursed within thirty (30) days of Executive's
submission of an itemized listing of the same to the
Company.
5. Surrender of Company Records
Upon termination of Executive's employment for any reason,
he shall immediately surrender to the Company all Company
records, notes, documents, forms, manuals, or other
written or printed material, and all copies thereof, in
his possession or control, which pertains to the business
of the Company and which would not be available publicly.
Executive agrees that all of the foregoing shall be and
remain the sole and exclusive property of the Company.
6. Covenant of Confidentiality
Executive shall keep confidential and not improperly
divulge for the benefit of another party or use for his
own benefit, the Company's confidential information
including, but not limited to, business secrets relating
to the Company's finances, operations, and customer lists.
All of the Company's confidential information shall be the
sole and exclusive property of the Company.
7. Termination
This Agreement shall automatically terminate without
notice prior to any change in control if the Executive
shall resign, retire, become permanently and totally
disabled, voluntarily take another position requiring a
substantial portion of his time, or die.
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8. 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.
9. Parties Bound
a. All provisions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto,
their heirs, personal representatives, successors,
and assigns.
b. The Company will require any successor (whether
direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially
all of the business or assets of the Company, by
agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same
extent that the Company would be required to perform
it if no such succession had taken place. Failure of
the Company to obtain such agreement prior to the
effectiveness of any such succession shall be deemed
a material breach of this Agreement.
c. If Executive should die while any amounts are payable
to him hereunder, this Agreement shall inure to the
administrators, heirs, distributees, devisees, and
legatees, and all amounts payable hereunder shall
then be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to his
estate.
10. Effect and Modification
This Agreement comprises the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all earlier agreements relating to the subject
matter hereof; provided that this Agreement is not
intended to and shall not be deemed to be in lieu of any
rights, benefits, and privileges to which Executive may be
entitled as an Executive of the Company under any
retirement, pension, profit sharing, stock ownership,
stock option, insurance, or hospital plan, or other plans,
benefits, programs, and policies which may now be in
effect or which may hereafter be adopted. It is
understood that Executive shall have the same rights and
privileges to participate in such plans, benefits,
programs, and policies as any other Executive during his
period of employment. No statement or promise, except as
herein set forth, has been made with respect to the
subject matter of this Agreement. The headings of the
individual sections herein are for convenience only and
shall not be deemed to be a substantive part of this
Agreement. No modification or amendment hereof shall be
effective unless in writing and signed by Executive and
the Company.
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11. Non-Waiver
The failure or refusal of either party to enforce all or
any part of, or the waiver by either party of any breach
of this Agreement shall not be a waiver of that party's
continuing or subsequent rights under this Agreement, nor
shall such failure or refusal or waiver have any effect
upon the subsequent enforceability of this Agreement.
12. Governing Law
This Agreement is being delivered in and shall be governed
by the laws of the State of Indiana.
13. Notice
Any notice, request, instruction, or other document to be
given hereunder to any party shall be in writing and
delivered by hand, telegram, facsimile transmission,
registered or certified United States mail, return receipt
requested, or other form of receipted delivery, with all
expenses of delivery prepaid, as follows:
If to Executive: If to Company:
James A. Risinger Old National Bancorp
411 Sandlewood Drive Post Office Box 718
Evansville, Indiana 47715 Evansville, Indiana 47705
ATTENTION: Board of Directors
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
EXECUTIVE
\s\ James A. Risinger
----------------------------------------
James A. Risinger, Senior Vice President
OLD NATIONAL BANCORP
\s\ John N. Royse
---------------------------------------------------
John N. Royse, Chairman and Chief Executive Officer
8
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EXHIBIT 10.07(a)
RESOLUTIONS OF THE BOARD OF DIRECTORS
ADOPTING THE
FIRST AMENDMENT TO
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
OF
OLD NATIONAL BANCORP
(As Amended and Restated Effective January 1, 1989)
WHEREAS, the Company maintains the Employees' Savings and Profit
Sharing Plan of Old National Bancorp ("Plan") which became
effective January 1, 1983, and which was last amended in its
entirety effective January 1, 1989;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the power
reserved to the Board by Section 11.01 of the Plan, the Plan
be, and hereby is, amended effective January 1, 1995, in the
following particulars:
1. Section 2.15 is amended to read as follows:
2.15 Employee means any person who is employed by and
receives Plan Compensation from an Employer or any
person employed by the Employer who is on an approved
Leave of Absence, but shall exclude Leased Employees.
2. Section 2.33 is amended to read as follows:
2.33 Plan Compensation means, with respect to each
Participant for the most recent calendar year, his
basic compensation (including regular pay, overtime,
paid hours not worked, holiday pay, vacation pay,
sick pay, jury duty, bereavement, short-term
disability, commissions, any other amounts so
determined by the company, and any amount which would
have otherwise been basic compensation, except that a
Participant is contributing such amount to a
qualified plan under a salary reduction agreement as
provided under Code Section 401(k) and amounts
contributed pursuant to a salary reduction agreement
to a plan provided under Code Section 125) for each
calendar year. For purposes of this Section, only
amounts paid for pay periods ending during the period
in which he is actively participating in the Plan
shall be considered Plan Compensation.
Plan Compensation shall not include any amounts in
excess of $150,000, as adjusted pursuant to Code
Section 401(a)(17).
The family unit of an Employee (including the Highly
Compensated Employee, his/her spouse and any lineal
descendants who have not attained age 19 before the
end of the year), subject to the family aggregation
rules of Code Section 414(q)(6), will be treated as a
single Employee for purposes of the $150,000 limit.
This limit will be prorated among the affected
individuals in proportion to each individual's
compensation as determined under this Section prior
to the application of this limitation.
<PAGE>
<PAGE>
3. New Section 2.45 is added to read as follows:
2.45 Leased Employee means any person (other an employee
of the recipient) who provides services to the
recipient if such services are provided pursuant to
an agreement between the recipient and any other
person ("leasing organization"), such person has
performed such services for the recipient (or for the
recipient and any related persons determined in
accordance with Code Section 414(n)(6)) on a
substantially full-time basis for a period of one
(1) year, and such services are of a type
historically performed by employees in the business
field of the recipient employer.
4. Subsection 3.02(b) is amended to read as follows:
(b) The Participation Date of an Employee who does
not satisfy the eligibility requirements set
forth in Section 3.01 on the Effective Date
shall be the first day of the first month
following the date as of which the foregoing
eligibility requirement was first satisfied, and
contributions shall be calculated beginning with
the first payroll period ending after said date.
5. Section 3.02(d) is amended to read as follows:
(d) Each Employee of a Participating Employer who
was not a participant in a plan maintained by
his Employer prior to such Participating
Employer's Entrance Date, shall become a
participant in this Plan on the first day of the
month coincident with or next following the date
as of which he completes the eligibility
requirements specified in Section 3.01, and
contributions shall be calculated beginning with
the first payroll period ending after said date.
6. Section 5.05 is amended to read as follows:
Allocation of Trust Fund Income and/or Loss. As of each
Allocation Date, Trust Fund income or loss since the last
preceding allocation date shall be allocated to the
Participant Account of each category of Participant
described in Section 3.03. In determining the Trust Fund
income and/or loss, the amount of any segregated Trust
Fund assets shall be disregarded. Any operational or
maintenance expenses of the Plan paid from Trust Fund
assets shall be taken into account in determining Trust
Fund income and/or loss.
After the Trust Fund income or loss has been determined,
it shall be allocated to the Participant Account of each
Participant eligible to receive an allocation in an amount
which bears the same ratio to the total amount of Trust
Fund income or loss as the balance in each affected
Participant Account bears to the sum of the balance in all
affected Participant Accounts, determined as of the
immediately preceding Allocation Date (as reduced by any
distribution of each affected Participant s nonforfeitable
Accrued Benefit during the Plan Year). Additionally, the
Plan Administrator shall give appropriate weight to the
amount of any Salary Reduction Contributions and to the
date as of which any such contributions were made to the
Trust Fund in determining the amount of any Trust Fund
income or loss to be allocated to the Participant Account
of an affected Participant.
2
<PAGE>
<PAGE>
The amount of any segregated Trust Fund assets shall be
allocated any appropriate income or loss, as determined by
the performance of those assets since the immediately
preceding Allocation Date. As of the date that the amount
of any segregated Trust Fund assets becomes finally
distributable to a Participant or Beneficiary, any income
or loss on those segregated assets accumulated since the
immediately preceding Allocation Date shall be allocated
and paid as part of such final distribution.
7. Subsection 6.01(a) is amended to read as follows:
6.01 Retirement Benefit Determination.
(a) A Participant's normal retirement benefit or
disability retirement benefit is the value of
his or her nonforfeitable Accrued Benefit
determined as of the monthly valuation date
coincident with or immediately following the
later of (i) the Participant's Normal Retirement
Date or Disability Retirement Date, whichever is
applicable under the circumstances, or (ii) the
end of the last payroll period following the
dates in (i) for which the Participant is paid.
8. Section 6.05 is amended to read as follows:
6.05 Severance Benefit Determination. A Participant's
severance benefit is the value of his or her
nonforfeitable Accrued Benefit determined as of the
monthly valuation date coincident with or immediately
following the later of (i) the Participant's
Severance Date or (ii) the end of the last payroll
period following the dates in (i) for which the
Participant is paid. The severance benefit shall
include any Salary Reduction Contributions accrued on
behalf of the affected Participant but not yet paid
into the Trust Fund as of the Severance Date, plus
any Trust Fund income or loss allocable determination
date. In the event a Participant is eligible to, and
elects to, defer distribution of his or her benefit
or to receive his or her benefit in the form of
installment payments, his Participation Account will
remain in the Trust Fund and will continue to share
in the allocation of Trust income or loss during the
monthly valuation date preceding his or her
distribution date.
9. Subsection 6.10(a) is amended to read as follows:
6.10 Death Benefit
(a) In the event that a Participant dies prior to
receipt of a normal retirement benefit, a
disability retirement benefit or a severance
benefit, his or her Beneficiary shall be
entitled to a death benefit. The death benefit
is the value of the Participant's nonforfeitable
Accrued Benefit determined as of the monthly
valuation date coincident with or immediately
following the later of (i) his or her date of
death or (ii) the end of the last payroll period
following the dates in (i) for which the
Participant is paid.
3
<PAGE>
<PAGE>
IT IS FURTHER RESOLVED, that the appropriate officers of the
Company be, and they hereby are, severally authorized to take
any action they deem necessary or desirable to effectuate the
foregoing resolutions; and
IT IS FURTHER RESOLVED, that this Amendment shall be evidenced by
copy of these resolutions which are made a part of the minutes
and that a copy hereof is to be promptly delivered to the
Trustee by an officer of the Company; and
IT IS FURTHER RESOLVED, that the appropriate officers of the
Company be, and they hereby are, severally authorized and
empowered, for an on behalf of the Company, to execute,
deliver, and file such documents, certificates and other
writing and to take such additional action as, in their
discretion, may be necessary or appropriate to carry out the
intent and purpose of this and the foregoing resolutions.
4
<PAGE>
<PAGE>
EXHIBIT 10.07(b)
RESOLUTIONS OF THE BOARD OF DIRECTORS
ADOPTING THE SECOND AMENDMENT TO
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
WHEREAS, the Company maintains the Employees' Savings and Profit
Sharing Plan of Old National Bancorp ("Plan") which became
effective January 1, 1983, and which was last amended in its
entirety effective January 1, 1989;
NOW, THEREFORE, IT IS RESOLVED, that, pursuant to the power
reserved to the Board by Section 11.01 of the Plan, the Plan
be, and is hereby, amended effective January 1, 1996 in the
following particulars:
1. New Subsections 3.05(f) and 3.05(g) are added to read as
follows:
(f) Upon written application made in such manner and in
such form as the Administrative Plan Administrator
may specify, a Participant who has attained age
fifty-nine and one-half (59 1/2) shall be permitted to
withdraw a portion or all of the balance of his Prior
Plan Account, determined as of the date of the
request.
(g) Any elective deferrals under a qualified cash or
deferred arrangement (as defined in Section 401(k)),
but not earnings thereon, transferred to a
Participant's Prior Plan Account pursuant to this
Section may be withdrawn on account of hardship
pursuant to Section 6.16. Any rollover
contributions, including earnings as of the date of
transfer, but not including earnings after the date
of transfer, may be withdrawn on account of hardship
pursuant to Section 6.16.
IT IS FURTHER RESOLVED, that this Amendment shall be
evidenced by copy of these resolutions which are made a
part of the minutes and that a copy hereof is to be
promptly delivered to the Trustee by an officer of the
Company.
WHEREAS, the Company has acquired City National
Bancorp, Inc. and the First National Bank of Oblong; and
WHEREAS, City National Bancorp, Inc. sponsors the
City National Bancorp, Inc. Profit Sharing Plan ("City
National Plan"); and
WHEREAS, the First National Bank of Oblong sponsors
the First National Bank of Oblong Retirement Savings Plan
("Oblong Plan"); and
WHEREAS, City National Bancorp, Inc. would like to
merge the City National Plan into the Plan, effective
January 1, 1996; and
WHEREAS, the First National Bank of Oblong would like
to merge the Oblong Plan into the Plan, effective January
1, 1996; and
<PAGE>
<PAGE>
WHEREAS, City National Bancorp, Inc. and the First
National Bank of Oblong have adopted the Plan as
participating employers, effective January 1, 1996,
subject to the approval of the Company;
NOW, THEREFORE, IT IS RESOLVED, that City National
Bancorp, Inc. and the First National Bank of Oblong shall
become participating employees under the Plan, effective
January 1, 1996.
BE IT FURTHER RESOLVED, that the appropriate officers
of the Company be, and they hereby are, severally
authorized to take any action they deem necessary or
desirable to effectuate the foregoing resolutions.
2
<PAGE>
<PAGE>
EXHIBIT 13(ii)(a)
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-18469
WORKINGMENS CAPITAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1791203
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
121 East Kirkwood Avenue, Bloomington, Indiana 47408
(Address of Principal Executive Offices)
(Zip Code)
(812) 332-9465
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of July 19, 1996:
Common Stock, without par value -- 1,808,560 shares outstanding
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
FORM 10-Q
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition
as of June 30, 1996 and December 31, 1995 .............. 1
Consolidated Statements of Earnings for the three months
and six months ended June 30, 1996 and 1995 ............ 2
Consolidated Statement of Shareholders' Equity
for the six months ended June 30, 1996 ................. 3
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and 1995 ........................... 4
Notes to Consolidated Financial Statements ................ 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 6
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ........ 9
Item 6. Exhibits and Reports on Form 8-K ........................... 9
Signatures .......................................................... 10
-i-
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Unaudited and Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ -------------
Assets
<S> <C> <C>
Cash $1,002 $1,298
Interest-bearing deposits 2,021 3,231
Investment securities held to maturity 6,170 3,165
Investment in mutual fund available for sale 3,873 3,894
Mortgage-backed securities held to maturity 4,094 4,550
Mortgage-backed securities available for sale 1,137 1,256
Loans receivable 183,777 189,996
Less allowance for loan losses (376) (335)
-------- --------
Loans receivable, net 183,401 189,661
Accrued interest receivable:
Loans 1,109 1,052
Investment securities and interest-
bearing deposits 129 69
Mortgage-backed securities 36 39
Stock in FHLB of Indianapolis 1,838 1,758
Premises and equipment 1,362 1,371
Real estate owned - -
Prepaid expenses and other assets 2,031 1,910
-------- --------
Total Assets $208,203 $213,254
======== ========
Liabilities and Shareholders' Equity
Deposits $149,721 $152,141
FHLB advances 30,700 34,200
Advances by borrowers for taxes and insurance 311 422
Income taxes 183 89
Deferred income taxes 290 269
Accrued interest on deposits 53 61
Accrued expenses and other liabilities 486 387
Total Liabilities 181,744 187,569
-------- --------
Shareholders' Equity:
Preferred stock, no par value, 2,000,000
shares authorized, none issued - -
Common stock, no par value, shares authorized
of 5,000,000; shares issued and outstanding
of 1,808,560 and 1,777,920 8,341 8,066
Retained earnings - substantially restricted 18,262 17,722
Unrealized loss on securities available for sale (144) (103)
-------- --------
Total Shareholders' Equity 26,459 25,685
-------- --------
Total Liabilities and Shareholders' Equity $208,203 $213,254
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
-1-
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
(Unaudited and Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ---------------------
1996 1995 1996 1995
Interest income:
<S> <C> <C> <C> <C>
Loans receivable $3,665 $3,663 $7,420 $7,245
Mortgage-backed securities 87 104 180 211
Investment securities 141 115 248 236
Interest-bearing deposits 82 61 167 108
Dividends from FHLB 34 34 69 65
----- ----- ----- -----
Total interest income 4,009 3,977 8,084 7,865
----- ----- ----- -----
Interest expense:
Deposits 2,031 2,008 4,105 3,912
FHLB advances 540 517 1,089 1,010
Other 3 2 7 4
Total interest expense 2,574 2,527 5,201 4,926
----- ----- ----- -----
Net interest income 1,435 1,450 2,883 2,939
Provision for loan losses 21 18 42 36
----- ----- ----- -----
Net interest income after
provision for loan losses 1,414 1,432 2,841 2,903
----- ----- ----- -----
Non-interest income:
Fees, service charges, and other 49 49 95 94
Commissions 4 4 20 22
Gain (loss) on sale of REO - 15 - 15
Gain (loss) on sale of loans 11 - 42 -
Gain (loss) on sale of investments - - - -
----- ----- ----- -----
Total non-interest income 64 68 157 131
----- ----- ----- -----
Non-interest expense:
Compensation and employee benefits 354 336 717 675
Occupancy and equipment 86 82 174 165
Federal deposit insurance premium 87 85 174 170
Merger related expenses 71 - 75 -
Other 167 173 385 375
----- ----- ----- -----
Total non-interest expense 765 676 1,525 1,385
----- ----- ----- -----
Earnings before income taxes 713 824 1,473 1,649
Income taxes 309 319 610 639
----- ----- ----- -----
Net earnings $404 $505 $863 $1,010
===== ===== ===== =====
Earnings per common share $0.22 $0.29 $0.48 $0.57
===== ===== ===== =====
Dividends per common share $0.09 $0.08 $0.18 $0.16
===== ===== ===== =====
Weighted average number of
common shares outstanding 1,807,219 1,767,420 1,793,215 1,767,420
</TABLE>
See Notes to Consolidated Financial Statements
-2-
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
AND SUBSIDIARY
Consolidated Statement of Shareholders' Equity
(Unaudited and Dollars in Thousands)
Six Months ended June 30, 1996
<TABLE>
<CAPTION>
Net unrealized
depreciation
Number of on securities Total
Shares Common Retained available Shareholders'
Outstanding Stock Earnings for sale Equity
----------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period 1,777,920 $8,066 $17,722 $(103) $25,685
Net earnings for the period 863 863
Dividends ($0.18 per share) (323) (323)
Issuance of shares of common
stock at $5.00 per share 30,640 153 153
Tax benefit of stock
options exercised 122 122
Change in net unrealized
depreciation on securities (41) (41)
--------- ------ ------- ----- -------
Balance at end of period 1,808,560 $8,341 $18,262 $(144) $26,459
========= ====== ======= ===== =======
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited and Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------
1996 1995
------ -------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $863 $1,010
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Provision for loan losses 42 36
Depreciation 62 66
Deferred Federal income taxes 35 43
Amortization of premiums (discounts), net 19 30
Net (gain) loss on sale of investments - -
Net (gain) loss on sale of REO - (15)
(Increase) decrease in loans held for sale 360 -
(Increase) decrease in other assets (234) (201)
Increase (decrease) in other liabilities 306 52
------ ------
Net cash provided by operating activities 1,453 1,021
------ ------
Cash flows from investing activities:
Proceeds from maturity of investment securities - 3,000
Purchase of investment securities (3,095) (1,125)
Loans funded net of collections 5,859 (2,916)
Proceeds from sale of REO - 135
Mortgage insurance collected on REO - 12
Proceeds from sale of mortgage-backed securities - -
Principal collected on mortgage-backed securities 532 426
Purchase of mortgage-backed securities -
Purchases of premises and equipment (54) (71)
------ ------
Net cash provided (used) by investing activities 3,242 (539)
------ ------
Cash flows from financing activities:
Net increase in deposits (2,420) 5,284
Proceeds from issuance of common stock 153 -
Repurchase of common stock - -
Payments of dividends to common shareholders (323) (282)
Repayments of FHLB Advances (3,500) (10,500)
Borrowings of FHLB advances - 9,500
Increase in advances by borrowers
for taxes and insurance (111) 7
------ ------
Net cash provided (used) by financing activities (6,201) 4,009
------ ------
Net increase (decrease) in cash and cash equivalents (1,506) 4,491
Cash and cash equivalents at beginning of period 4,529 2,205
------ ------
Cash and cash equivalents at end of period $3,023 $6,696
====== ======
Supplemental disclosure of cash flow information:
Interest paid $5,214 $4,916
Income taxes paid $359 $562
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE>
<PAGE>
WORKINGMENS CAPITAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Basis of Presentation
The consolidated financial statements include the accounts of Workingmens
Capital Holdings, Inc. ("WCHI") and its subsidiary. The only direct subsidiary
of WCHI is Workingmens Federal Savings Bank ("WFSB"). A summary of WCHI's
significant accounting policies is set forth in Note 1 of Notes to Consolidated
Financial Statements of WCHI's 1995 Shareholder Annual Report.
The consolidated interim financial statements have been prepared in accordance
with instructions to Form 10-Q, and, therefore, do not include all information
and footnotes normally shown for full annual financial statements.
The consolidated interim financial statements at June 30, 1996 and for the three
months and six months ended June 30, 1996 and 1995 are unaudited, but reflect,
in the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows, and changes in shareholders' equity for
such periods.
Earnings per share is computed by dividing net earnings by the average number of
shares of common stock outstanding during the period. The effects of the
outstanding stock options (for 36,980 shares) are dilutive by less than three
percent.
-5-
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(a) Results of Operations:
Three months ended June 30, 1996 compared to three months ended June 30, 1995:
The net earnings for the three months ended June 30, 1996, were $404,000
compared to $505,000 for the three months ended June 30, 1995, a decrease of
$101,000 or 20.0%.
Net interest income after provision for loan losses decreased $18,000, or
1.3%, from $1,432,000 for the three months ended June 30, 1995, to $1,414,000
for the same period in 1996. Total interest income for the three months ended
June 30, 1996 increased $32,000 compared to the three months ended June 30,
1995. The overall increase in total interest income is attributable to an
increase in volume in excess of a slight decline in interest rates. Total
interest expense for the three months ended June 30, 1996 increased $47,000
compared to the three months ended June 30, 1995. The increase in total interest
expense is attributable both to slight increases in volume and in interest
rates. The interest rate spread for the three months ended June 30, 1996, of
2.11% was down eleven basis points compared to 2.22% for the three months ended
June 30, 1995.
Total non-interest income for the three months ended June 30, 1996, was
$64,000, a decrease of $4,000, or 5.9%, from $68,000 for the three months ended
June 30, 1995. The decrease was due to a $15,000 decrease in gain on the sale of
REO, offset by an $11,000 increase in gain on the sale of loans.
Total non-interest expense for the three months ended June 30, 1996, was
$765,000, an increase of $89,000, or 13.2%, from $676,000 for the three months
ended June 30, 1995. The increase was due to increases in salaries and benefits
of $18,000 and merger related expenses of $71,000. The increase in salaries and
benefits was due to normal annual salary increases as well as the increase in
costs of employee benefits. The merger related expenses were due to cost
incurred in connection with the merger with Old National Bancorp which will be
accounted for under the pooling-of-interests method. The merger is expected to
be completed in the fourth quarter of 1996.
Income taxes decreased $10,000, or 3.1%, from $319,000 for the three months
ended June 30, 1995, to $309,000 for the same period in 1996 due to decreased
taxable income.
Six months ended June 30, 1996 compared to six months ended June 30, 1995:
The net earnings for the six months ended June 30, 1996, were $863,000
compared with $1,010,000 for the six months ended June 30, 1995, a decrease of
$147,000 or 14.6%.
Net interest income after provision for loan losses decreased $62,000, or
2.1%, from $2,903,000 for the six months ended June 30, 1995, to $2,841,000 for
the same period in 1996. Total interest income increased $219,000, or 2.8%, from
$7,865,000 for the six months ended June 30, 1995, to $8,084,000 for the same
period in 1996. The overall increase in total interest income is attributable to
increases in volume and in interest rates. Total interest expense increased
$275,000, or 5.6%, from $4,926,000 for the six months ended June 30, 1995, to
$5,201,000 for the same period in 1996. The increase in total interest expense
is attributable to increases in volume and in interest rates. The interest rate
spread for the six months ended June 30, 1996, of 2.12% was down sixteen basis
points compared to 2.28% for the six months ended June 30, 1995.
Total non-interest income for the six months ended June 30, 1996, was
$157,000, an increase of $26,000, or 19.8%, from $131,000 for the six months
ended June 30, 1995. The increase was due primarily to an increase of $42,000 in
gain on the sale of loans, offset by an decrease of $15,000 in gain on the sale
of REO.
-6-
<PAGE>
<PAGE>
Total non-interest expense for the six months ended June 30, 1996, was
$1,525,000, an increase of $140,000, or 10.1%, from $1,385,000 for the six
months ended June 30, 1995. The increase was primarily due to an increase in
compensation and employee benefits of $42,000 and an increase of $75,000 in
merger related expenses. The increase in compensation and employee benefits was
due to normal annual salary increases as well as the increase in costs of
employee benefits. The merger related expenses were due to cost incurred in
connection with the merger with Old National Bancorp which will be accounted for
under the pooling-of-interests method. The merger is expected to be completed in
the fourth quarter of 1996.
Income taxes decreased $29,000, or 4.5%, from $639,000 for the six months
ended June 30, 1995, to $610,000 for the same period in 1996 due to decreased
taxable income.
(b) Financial Condition:
WCHI's total assets decreased $5.1 million, or 2.4%, to $208.2 million at
June 30, 1996, from $213.3 million at December 31, 1995. Cash, interest bearing
deposits, investment securities, and investment in mutual fund increased $1.5
million, or 12.8%, to $13.1 million at June 30, 1996, from $11.6 million at
December 31, 1995. Loans receivable, net, decreased $6.3 million, or 3.3%, to
$183.4 million at June 30, 1996, from $189.7 million at December 31, 1995.
During the first six months a substantial number of loans originated were
fixed-rate loans which WFSB sold. The cash generated was invested in
interest-bearing deposits. Mortgage-backed securities decreased $575,000, or
9.9%, to $5.2 million at June 30, 1996, from $5.8 million at December 31, 1995.
Deposits decreased $2.4 million, or 1.6%, to $149.7 million at June 30,
1996. FHLB advances decreased $3.5 million, or 10.2%, to $30.7 million at June
30, 1996, from $34.2 million at December 31, 1995, due to repayments of maturing
advances.
WCHI's shareholders' equity increased $774,000, or 3.0%, to $26.5 million at
June 30, 1996, from $25.7 million at December 31, 1995. The increase was
attributable to current period earnings of $863,000 reduced by $323,000 of cash
dividends paid. Additionally, shareholders' equity increased $153,000 from
proceeds from the exercise of stock options and $122,000 from the income tax
benefit of stock options exercised, while the change in net unrealized
depreciation on securities available for sale was a reduction of $41,000.
(c) Liquidity and Capital Resources:
The standard measure of liquidity for savings associations is the ratio of
cash and eligible investments to a certain percentage of net withdrawable
savings and borrowings due within one year. The minimum required ratio is
currently set by the OTS regulation at 5%, of which 1% must be comprised of
short-term investments (i.e., generally with a term of less than one year). At
June 30, 1996, WCHI's liquidity ratio was 7.09%, of which 3.63% was comprised of
short-term investments, each of which is above the regulatory requirement.
Borrowings may be used to compensate for reductions in other sources of
funds such as deposits and to assist in asset liability management. As a member
of the FHLB system, WFSB may borrow from the FHLB of Indianapolis. At June 30,
1996, WFSB had $30.7 million in borrowings from the FHLB of Indianapolis, and
could have borrowed an additional $6.0 million from the FHLB of Indianapolis as
of that date. These borrowings were made to assist WFSB in its asset liability
management and to strengthen WFSB's liquidity position. As of that date, WFSB
had commitments to fund loan originations of approximately $4.8 million, of
which 43.4% were adjustable rate and 56.6% were fixed rate. In the opinion of
management, WFSB has sufficient cash flow and borrowing capacity to meet current
and anticipated funding commitments.
-7-
<PAGE>
<PAGE>
At June 30, 1996, based on the capital standards then in effect, WFSB was in
compliance with the capital requirements mandated by applicable law.
The following is a summary of WFSB's regulatory capital and capital
requirements at June 30, 1996:
Tangible Core Risk-based
capital capital capital
----------- ----------- -----------
Regulatory capital $25,180,000 $25,180,000 $25,556,000
Minimum capital requirement 3,122,000 6,245,000 9,486,000
----------- ----------- -----------
Excess capital $22,058,000 $18,935,000 $16,070,000
=========== =========== ===========
Regulatory capital ratio 12.1% 12.1% 21.6%
=========== =========== ===========
(d) Supplemental Data:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
1996 1995 1996 1995
---- ---- ---- -----
<S> <C> <C> <C> <C>
Interest rate spread ..................... 2.11% 2.22% 2.12% 2.28%
Net yield on interest-earning assets ..... 2.78% 2.86% 2.79% 2.90%
Return on average assets ................. 0.77% 0.98% 0.82% 0.98%
Return on average equity ................. 6.12% 8.13% 6.60% 8.20%
</TABLE>
At June 30,
----------------------
1996 1995
------- --------
Non-performing assets to total assets .... 0.32% 0.12%
Book value per share ..................... $14.63 $14.12
-8-
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 16, 1996, WCHI held its annual meeting of shareholders, the
results of which follow:
Report of proxies received and shares voted April 16, 1996.
Total Voted % of Total
--------- --------- ----------
Number of shares 1,778,480 1,588,886 89.34%
Election of Directors
<TABLE>
<CAPTION>
Director Expiration of Against or Broker
Nominees Term as Director For Withheld Abstain Non-votes
- ------------------ ---------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Richard R. Haynes 1999 1,574,031 14,855 -0- -0-
J. H. McCutchen 1999 1,568,031 20,855 -0- -0-
David Rogers 1999 1,569,831 19,055 -0- -0-
Directors
Continuing in Office
Robert H. Shaffer 1997
Joseph A. Walker 1997
William E. Benckart 1998
Robert J. Wetnight 1998
</TABLE>
Approval and ratification of the appointment of KPMG Peat Marwick as
auditors for the year ending December 31, 1996.
Against or Broker
For Withheld Abstain Non-votes
---------- -------- ------- ---------
1,564,487 7,012 17,387 -0-
Item 6. Exhibits and Reports on Form 8-K
a) Not applicable.
b) The Registrant filed a Form 8-K dated April 8, 1996 which disclosed
an Agreement of Affiliation and Merger among Old National Bancorp,
ONB Bank, Workingmens Capital Holdings, Inc., and Workingmens
Federal Savings Bank.
-9-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DATE: July 19, 1996 /s/ Richard R. Haynes
---------------------------------
Richard R. Haynes, President
DATE: July 19, 1996 /s/ Joseph A. Walker
---------------------------------
Joseph A. Walker, Vice President/
Treasurer
-10-
<PAGE>
<PAGE>
EXHIBIT 13(ii)(b)
TABLE OF
CONTENTS
Page
President's Message to Shareholders ......................... 2
Selected Consolidated Financial Data ........................ 3
Management's Discussion and Analysis ........................ 4
Quarterly Results of Operations ............................. 12
Independent Auditors' Report ................................ 13
Consolidated Statements of Financial Condition .............. 14
Consolidated Statements of Earnings ......................... 15
Consolidated Statements of Shareholders' Equity ............. 16
Consolidated Statements of Cash Flows ....................... 17
Notes to Consolidated Financial Statements .................. 18
Shareholder Information ..................................... 30
Directors and Officers ...................................... 31
DESCRIPTION OF BUSINESS
Workingmens Capital Holdings, Inc. ("WCHI"), an Indiana corporation,
became a unitary savings and loan holding company upon the conversion of
Workingmens Federal Savings Bank ("WFSB") from a federal mutual savings
and loan institution to a federal stock savings bank in June, 1990. WCHI
and WFSB conduct business from a single office in Bloomington, Monroe
County, Indiana, and WFSB operates a branch office in Ellettsville,
Indiana. WFSB is and historically has been among the top real estate
mortgage lenders in Monroe County and is one of the largest independent
financial institutions headquartered in Monroe County. WFSB offers a
variety of retail deposit and lending services. WCHI has no other
business activity than being the holding company for WFSB. WCHI is the
sole shareholder of WFSB.
<PAGE>
<PAGE>
TO OUR
SHAREHOLDERS
On behalf of your directors, I am pleased to report that in WFSB's
110th year of operation we have not wavered from our commitment to home
mortgage lending and to providing a safe place to invest money.
WCHI's assets grew to $213.3 million at December 31, 1995, up from
$204.5 million at December 31, 1994. Net earnings for the year ended
December 31, 1995 were $1,963,000 compared to $1,824,000 for the year
ended December 31, 1994.
We believe our continued success is attributable to our commitment to
financing predominately single-family homes and other real estate loans
in our market area. Residential mortgages accounted for approximately
90% of our assets at December 31, 1995. During 1995, WFSB closed $44.6
million in new loans which was down from the previous year largely due
to the decreasing number of refinancings in the rising interest rate
environment. However, the overall loan portfolio grew $8.4 million in
1995.
In addition to making a substantial number of loans during 1995, we
preserved the high quality of our loan portfolio. Nonperforming assets
as a percentage of total assets was only .09% as of December 31, 1995.
Savings deposits grew to $152.1 million as of December 31, 1995, an
increase of $2.8 million over year end 1994. Competition for insured
deposits in our market area has been intense, and we believe it will
remain so during 1996.
As of December 31, 1995, WCHI's capital increased to $25.7 million
which represents a capital-to-assets ratio of 12.04%. Book value
increased to $14.45 per share compared to $13.67 as of December 31,
1994.
During 1995, we continued our commitment to improve efficiency and to
maintain low operating expenses. Evidence of our cost control strategy
is the ratio of operating expenses to average assets which was 1.3% for
the year.
The financial industry is dramatically influenced by change:
consolidation, interstate banking, broader services, regulatory
differences and aggressive new competitors.
Among the uncertainties facing Workingmens this year is the
regulatory change within the Federal Deposit Insurance
Corporation/Savings Association Insurance Fund ("SAIF"). At the present
time, the FDIC insurance premiums of healthy commercial banks are only
four cents per $100 in deposits per year, while healthy savings banks
continue to pay 23 cents per $100 in deposits per year. To correct this
inequity, Congress is considering legislation to recapitalize the SAIF
and to eliminate the significant premium disparity between commercial
banks and savings banks. Congress proposes that SAIF-insured
institutions pay a one-time assessment of approximately 85 cents per
$100 in deposits and then reduce SAIF insurance premiums to that paid by
commercial banks thereafter. The one-time charge, due sometime in 1996,
would be approximately $1,275,000 based on deposits of $150 million as
of March 31, 1995, the date stipulated in the latest proposed
legislation. This legislation, if enacted as currently proposed, would
impact earnings this year, but should have the effect of reducing
deposit premiums and thereby increasing earnings' potential going
forward.
Despite challenges such as this, we remain convinced that Workingmens
delivers high quality service which will serve our customers and
shareholders well in this ever-changing environment.
With the help of our dedicated directors, officers and employees, we
will continue to build our 110-year history of success and reputation as
a premier provider of financial services.
RICHARD R. HAYNES
Richard R. Haynes
President
2
<PAGE>
<PAGE>
SELECTED
CONSOLIDATED
FINANCIAL
DATA OF
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in Thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Statement of
Financial Condition Data:
Total assets ...................... $213,254 $204,523 $189,516 $179,082 $169,893
Loans receivable, net ............. 189,661 181,269 164,278 149,762 141,382
Mortgage-backed securities ........ 5,807 6,698 7,605 9,806 5,082
Cash and interest-bearing deposits 4,529 2,205 3,005 2,295 9,446
Investments ....................... 8,817 9,975 10,555 14,629 11,395
Deposits .......................... 152,141 149,353 143,242 139,197 135,909
FHLB advances ..................... 34,200 29,700 21,700 16,350 11,850
Common stock ...................... 8,066 8,007 8,116 8,167 8,027
Retained earnings-substantially
restricted ...................... 17,618 16,145 15,207 13,976 12,830
Book value per share .............. $ 14.45 $ 13.67 $ 13.02 $ 12.25 $ 11.61
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in Thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Operating Results:
Total interest income ............ $ 16,000 $ 14,088 $ 13,713 $ 14,008 $ 15,317
Total interest expense ........... 10,231 8,596 8,257 8,814 10,218
-------- -------- -------- -------- --------
Net interest income .............. 5,769 5,492 5,456 5,194 5,099
Provision for loan losses ........ 78 72 84 48 39
-------- -------- -------- -------- --------
Net interest income after provision
for loan losses ................ 5,691 5,420 5,372 5,146 5,060
-------- -------- -------- -------- --------
Total non-interest income ........ 242 180 213 142 121
Total non-interest expense ....... 2,761 2,650 2,488 2,414 2,342
-------- -------- -------- -------- --------
Earnings before income taxes ..... 3,172 2,950 3,097 2,874 2,839
Income taxes ..................... 1,209 1,126 1,207 1,129 1,108
-------- -------- -------- -------- --------
Net earnings ..................... 1,963 1,824 1,890 1,745 1,731
======== ======== ======== ======== ========
Per share:
Net earnings ................... $ 1.11 $ 1.03 $ 1.05 $ .97 $ .96
Cash dividends ................. $ .33 $ .29 $ .265 $ .245 $ .21
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE TEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Supplemental Data:
Interest rate spread during period ....... 2.17% 2.26% 2.39% 2.40% 2.34%
Net yield on interest-earning assets (1) . 2.82 2.82 2.98 3.08% 3.19
Return on assets (2) ..................... 0.94 0.92 1.01 1.01% 1.06
Return on equity (3) ..................... 7.85 7.70 8.27 8.07% 8.49
Equity-to-assets (4) ..................... 12.00 11.97 12.23 12.52% 12.47
Average interest-earning assets to
average interest-bearing liabilities ... 112.97 112.82% 112.95% 112.98% 113.17
Nonperforming assets to total assets (5) . 0.09 0.11% 0.11% 0.21 0.12
Operating expenses to average assets (6) . 1.32 1.34% 1.33% 1.40 1.43
One year cumulative interest-rate
gap to total assets (5) ................ (6.61) (4.16) 1.68% 3.80% (1.98)
Dividend payout ratio (7) ................ 29.80 28.15% 25.17% 25.41% 21.82
___________________________
</TABLE>
(1) Net interest income divided by average interest-earning assets.
(2) Net earnings divided by average total assets.
(3) Net earnings divided by average total equity.
(4) Average total equity divided by average total assets.
(5) At end of period.
(6) Other expense less state taxes divided by average total assets.
(7) Dividends paid divided by net earnings.
3
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
GENERAL
WCHI was formed as part of the conversion of Workingmens Federal
Savings and Loan Association from a federal mutual savings and loan
association to a federal stock savings bank known as Workingmens Federal
Savings Bank which was completed on June 7, 1990 (the "Conversion").
WCHI has no other business activity other than being the holding company
for WFSB.
The principal business of savings institutions, including WFSB, has
historically consisted of attracting deposits from the general public
and making loans secured by first mortgage liens on residential and
other real estate. WFSB and the entire savings institution industry are
significantly affected by prevailing economic conditions as well as by
government policies and regulations concerning, among other things,
monetary and fiscal affairs, housing and financial institutions. Deposit
flows are influenced by a number of factors, including interest rates
paid on money market funds and other competing investments, account
maturities and level of personal income and savings. Lending activities
are influenced by, among other things, the demand for and supply of
housing lenders and the availability and cost of funds. Sources of funds
for lending activities include deposits, amortization and prepayments of
loan principal, proceeds from sales of loans, borrowings, and funds
provided from operations.
WFSB's earnings in recent years have been affected by fundamental
changes that have occurred in the regulatory, economic, and competitive
environment in which savings institutions operate. As is the case with
most savings institutions, WFSB's earnings are primarily dependent upon
its net interest income. Interest income is a function of the balances
of loans and investments outstanding during a given period and the yield
earned on such loans and investments. Interest expense is a function of
the amount of deposits and borrowings outstanding during the period and
the rates paid on such deposits and borrowings. Net interest income is
the difference between the interest income and interest expense. Net
interest income increased from $5.1 million for the year ended December
31, 1991 to $5.8 million for the year ended December 31, 1995.
ASSET/LIABILITY MANAGEMENT
WFSB, like other savings institutions, is subject to interest rate
risk to the degree that its interest-bearing liabilities, primarily
deposits and borrowings with short- and medium-term maturities, mature
or reprice more rapidly, or on a different basis, than its
interest-earning assets. While having liabilities that mature or reprice
more frequently on average than assets will be beneficial in times of
declining interest rates, such an asset/liability structure will result
in lower net income or net losses during periods of rising interest
rates, unless offset by other factors such as non-interest income.
Therefore, a key element of WCHI's long-term strategic plan is to
protect net earnings from changes in interest rates by reducing the
maturity or repricing mismatch between its interest-earning assets and
rate-sensitive liabilities.
Principal elements of this strategy include the origination of
residential mortgage loans with adjustable interest rates, the
maintenance of assets in investments with short to medium terms, and
increasing the origination of consumer-related loans. For example,
WFSB's loans and mortgage-backed securities included approximately $83.8
million, or 42.3%, of adjustable-rate loans at December 31, 1995. At
that same date, WFSB's interest-bearing deposits in other institutions
and investment securities with terms of five years or less amounted to
$10.3 million, and its portfolio of consumer-related loans was $6.5
million.
As a result of these efforts, WFSB has maintained its one year
Interest-Rate Gap at between plus or minus 7.0% at each year end since
December 31, 1991. For 1995, WFSB targeted a one year Interest-Rate Gap
of plus or minus 10.0%. WFSB's one year Interest-Rate Gap as of December
31, 1995, was a negative 6.61%. A negative Interest-Rate Gap leaves
WFSB's earnings vulnerable to periods of rising interest rates because
during such periods the interest expense paid on liabilities will
generally increase more rapidly than the interest income earned on
assets. Conversely, in a falling interest rate environment, the total
expense paid on liabilities will generally decrease more rapidly than
the interest income earned on assets. A positive Interest-Rate Gap will
have the opposite effect. WFSB's management believes that its
Interest-Rate Gap in recent periods has generally been maintained within
an acceptable range in view of the prevailing interest rate environment.
4
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
AVERAGE BALANCES AND INTEREST
The following table presents for the periods indicated the average
monthly balances of each category of interest-earning assets and
interest-bearing liabilities, and the interest earned or paid on such
amounts. Management believes that the use of month-end average balances
instead of daily average balances has not caused any material difference
in the information presented.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------
1995 1994 1993
---------------------- ---------------------- ----------------------
Average Interest Average Interest Average Interest
Balance Earned/Paid Balance Earned/Paid Balance Earned/Paid
------- ----------- ------- ----------- ------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net (1) .. $185,232 $14,775 $172,680 $12,924 $159,837 $12,323
Mortgage-backed
securities ............... 6,225 409 7,148 440 8,839 570
Investment securities ...... 7,305 450 8,442 471 10,948 616
Other interest-earning
assets (2) ............... 6,149 366 6,303 253 3,378 204
-------- ------- -------- ------- -------- -------
Total interest-earning
assets ............... 204,911 16,000 194,573 14,088 183,002 13,713
-------- ------- -------- ------- -------- -------
Interest-bearing liabilities:
Passbook accounts .......... 13,470 408 17,499 528 14,841 449
NOW and money market
accounts ................. 14,209 460 16,071 420 18,386 519
Certificates of deposit .... $123,837 7,269 112,445 5,841 109,259 5,895
-------- ------- -------- ------- -------- -------
Total deposits ........... 151,516 8,137 146,015 $ 6,789 142,486 $ 6,863
Borrowings ................. 29,867 2,094 26,454 $ 1,807 19,533 $ 1,394
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities ............ $181,383 10,231 172,469 $ 8,596 162,019 $ 8,257
-------- ------- -------- ------- -------- -------
Net interest-earning assets .. $ 23,528 $ 22,104 $ 20,983
======== ======== ========
Net interest income .......... $ 5,769 $ 5,492 $ 5,456
======= ======= =======
Average interest-earning assets
to average interest-bearing
liabilities ................ 112.97% 112.82% 112.95%
======== ======== ========
___________________________
</TABLE>
(1) Average balances include non-accrual loans.
(2) Other interest-earning assets consist of interest-bearing
deposits in other institutions, short-term investments and stock
in the FHLB of Indianapolis.
5
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
Interest Rate Spread
WFSB's results of operations have been determined primarily by net
interest income and, to a lesser extent, fee income, miscellaneous
income and general and administrative expenses. Net interest income is
determined by the interest rate spread between the yields earned on its
interest-earning assets and the rates paid on interest-bearing
liabilities and by the relative amounts of interest-earning assets and
interest-bearing liabilities.
The following table sets forth the weighted average effective
interest rate earned on loan and investment portfolios, the weighted
average effective cost of deposits and borrowings, the interest rate
spread, and the net yield on weighted average interest-earning assets
for the periods and as of the date shown. Average balances are based on
average month-end balances.
<TABLE>
<CAPTION>
At
December 31, Year Ended December 31,
-----------------------
1995 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average interest rate earned on:
Loans receivable, net .................... 8.00% 7.98% 7.48% 7.71%
Mortgage-backed securities ............... 6.35 6.56 6.16 6.45
Investment securities .................... 6.15 6.16 5.57 5.62
Other interest-earning assets (1) ........ 6.13 5.97 4.02 6.05
Total interest-earning assets .......... 7.85 7.81 7.24 7.49
Weighted average interest rate cost of:
Passbook accounts ........................ 3.00 3.03 3.02 3.02
NOW and money market accounts ............ 3.47 3.24 2.61 2.83
Certificates of deposit .................. 6.01 5.87 5.19 5.40
Total deposits ........................... 5.53 5.37 4.65 4.82
Borrowings ............................... 6.85 7.01 6.83 7.14
Total interest-bearing liabilities ..... 5.77 5.64 4.98 5.10
Interest rate spread (2) ................... 2.08 2.17 2.26 2.39
Net yield on weighted average interest-
earning assets (3) ....................... N/A 2.82 2.82 2.98
</TABLE>
___________________________
(1) Other interest-earning assets consist of interest-bearing
deposits in other institutions, short-term investments and stock
in the Federal Home Loan Bank of Indianapolis.
(2) Interest rate spread is calculated by subtracting combined
weighted average interest rate cost from combined weighted
average interest rate earned for the period indicated. Interest
rate spread figures must be considered in light of the
relationship between the amounts of interest-earning assets and
interest-bearing liabilities. Since interest-earning assets
exceeded interest-bearing liabilities for each of the three
years shown above, a positive interest rate spread resulted in
net interest income.
(3) 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 indicated. A net yield
figure is not presented at December 31, 1995, because the
computation of net yield is applicable only over a period rather
than at a specific date.
6
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
The following table describes the extent to which changes in interest
rates and changes in volume of interest-related assets and liabilities
have affected interest income and expense during the periods indicated.
For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1)
changes in rate (changes in rate multiplied by old volume) and (2)
changes in volume (changes in volume multiplied by old rate). Changes
attributable to both rate and volume that can not be segregated have
been allocated proportionally to the change due to volume and the change
due to rate.
<TABLE>
<CAPTION>
Increase (Decrease) in Net Interest Income
------------------------------------------
Total
Net Due to Due to
Change Rate Volume
------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C>
Year ended December 31, 1995 compared to
year ended December 31, 1994
Interest-earning assets:
Loans receivable $1,851 $ 880 $ 971
Mortgage-backed securities (32) 28 (60)
Investment securities (21) 46 (67)
Other interest-earning assets 114 120 (6)
------ ------ ------
Total $1,912 $1,074 $ 838
====== ====== ======
Interest-bearing liabilities:
Passbook accounts $ (120) $ 2 $ (122)
NOW and money market accounts 40 92 (52)
Certificates of deposit 1,428 803 625
Borrowings 287 49 238
------ ------ ------
Total $1,635 $ 946 $ 689
====== ====== ======
Change in net interest income $ 277
Year ended December 31, 1994 compared
to year ended December 31, 1993
Interest-earning assets:
Loans receivable $ 601 $ (369) $ 970
Mortgage-backed securities (130) (25) (105)
Investment securities (145) (5) (140)
Other interest-earning assets 49 (85) 134
------ ------ ------
Total $ 375 $ (484) $ 859
====== ====== ======
Interest-bearing liabilities:
Passbook accounts $ 80 $ (1) $ 81
NOW and money market accounts (99) (37) (62)
Certificates of deposit (54) (223) 169
Borrowings 412 (62) 474
------ ------ ------
Total $ 339 $ (323) $ 662
====== ====== ======
Change in net interest income $ 36
======
</TABLE>
7
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994:
General. Net earnings for the year ended December 31, 1995, were $2.0
million, compared with $1.8 million for the year ended December 31,
1994, an increase of $139,000, or 7.6%. The increase in net earnings was
due to (i) an increase in net interest income after provision for loan
losses of $271,000 and (ii) an increase in total non-interest income of
$62,000. The increase in net earnings was offset by (i) an increase in
total non-interest expense of $111,000 and (ii) an increase in income
taxes of $83,000.
Asset size during 1995 increased compared to 1994. Total assets at
December 31, 1995, were $213.3 million as compared to $204.5 million at
December 31, 1994, an increase of $8.7 million, or 4.3%. The increase in
assets was primarily due to (i) an increase in loans receivable of $8.4
million, or 4.6%, from $181.3 million in 1994 to $189.7 million in 1995
and (ii) an increase in cash, interest-bearing deposits and investments
of $1.2 million, or 9.6%, from $12.2 million in 1994 to $13.3 million in
1995. The increase in assets was offset by a decrease in mortgage-backed
securities of $891,000, or 13.3% from $6.7 million in 1994 to $5.8
million in 1995.
Deposits increased $2.8 million, or 1.9%, from $149.4 million in 1994
to $152.1 million in 1995. Federal Home Loan Bank ("FHLB") advances
increased $4.5 million, or 15.2%, from $29.7 million in 1994 to $34.2
million in 1995. The additional advances were used for asset/liability
management in conjunction with fixed-rate loan production and for cash
flow purposes.
Loans funded net of collections in 1995 were $8.0 million and
exceeded deposit growth by $5.0 million. WFSB funded this loan growth by
an increase in FHLB advances of $4.5 million.
Shareholders' equity increased $1.5 million, or 6.3%, from $24.2
million in 1994 to $25.7 million in 1995. The increase was due to
current period earnings of $2.0 million reduced by $585,000 of cash
dividends paid. Additionally, shareholders' equity increased $96,000 due
to a reduction of the unrealized loss on securities available for sale,
$53,000 from proceeds from the exercise of stock options and $6,000 from
the income tax benefit of stock options exercised.
Interest Income. Total interest income for 1995 was $16.0 million
compared with $14.1 million in 1994, an increase of $1.9 million, or
13.6%. The increase predominantly resulted from an increase of $1.9
million, or 14.3%, in interest income from loans receivable from $12.9
million in 1994 to $14.8 million in 1995. The increase in interest
income from loans receivable resulted from a $971,000 increase
attributed to higher average balances and a $880,000 increase resulting
from a higher yield on loans. The increase in interest income from loans
receivable was offset by a decrease of (i) $32,000 in interest income
from mortgage-backed securities and (ii) $21,000 in interest income from
investment securities. The decrease in interest income from both
mortgage-backed securities and investment securities was the result of
lower average balance over an increase in yield. The weighted average
interest rate on interest-earning assets increased from 7.24% for 1994
to 7.81% for 1995.
Interest Expense. Interest expense for 1995 totaled $10.2 million, an
increase of $1.6 million, or 19.0%, compared with $8.6 million in 1994.
The increase was primarily the result of an increase of (i) $1.4
million, or 24.4%, in interest expense for certificates of deposits from
$5.8 million in 1994 to $7.3 million in 1995 and (ii) $287,000, or
15.9%, in interest expense for borrowings from $1.8 million in 1994 to
$2.1 million in 1995. The increase in interest expense from both
certificates of deposit and borrowings was the result of higher average
balances as well as an increase in rate. The weighted average interest
rate on interest-bearing liabilities increased from 4.98% for 1994 to
5.64% for 1995.
Provision for Loan Losses. The provision for loan losses was $78,000
for 1995 compared to $72,000 in 1994, an increase of $6,000, or 8.3%.
The 1995 provision exceeded net charge-offs of $1,000. Management
believes that this low level of net charge-offs is a result of its
underwriting guidelines and generally strong local economy. Also the
1995 provision resulted in an allowance for loan losses of $335,000 at
December 31, 1995, an amount management believes adequate to absorb
anticipated future loan losses.
Non-Interest Income. Total non-interest income for 1995 was $242,000
compared to $180,000 in 1994 resulting in a $62,000, or 34.4% increase.
The increase was primarily due to (i) a $17,000 gain on the sale of REO
in 1995 compared with a $3,000 loss in 1994 and (ii) a $10,000 gain on
the sale of loans originated for sale during 1995 compared to a $35,000
loss in 1994.
8
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
Non-Interest Expense. Non-interest expense increased $111,000, or
4.2%, from $2.7 million in 1994 to $2.8 million in 1995. Compensation
and employee benefits increased from $1.3 million in 1994 to $1.4
million in 1995, an increase of $67,000, or 5.1%. These increases in
compensation and employee benefits were due to normal annual salary
increases, as well as increases in costs of employee benefits. Federal
deposit insurance premiums increased from $331,000 in 1994 to $345,000
in 1995, an increase of $13,000, or 4.0%. Other non-interest expense
increased from $660,000 in 1994 to $694,000 in 1995, an increase of
$35,000, or 5.2%.
Income Taxes. Income taxes increased $83,000, or 7.4%, from $1.1
million in 1994 to $1.2 million in 1995.
YEAR ENDED DECEMBER 31, 1994, COMPARED TO YEAR ENDED DECEMBER 31, 1993:
General. Net earnings for the year ended December 31, 1994, were $1.8
million, compared with $1.9 million for the year ended December 31,
1993, a decrease of $66,000, or 3.5%. The decrease in net earnings was
primarily due to (i) a decrease in total non-interest income of $33,000
and (ii) an increase in total non-interest expense of $162,000. The
decrease in net earnings was partially offset by (i) an increase in net
interest income after provision for loan losses of $48,000 and (ii) a
decrease in income taxes of $80,000.
Asset size during 1994 increased compared to 1993. Total assets at
December 31, 1994, were $204.5 million as compared to $189.5 million at
December 31, 1993, an increase of $15.0 million, or 7.9%. The increase
in assets was primarily due to an increase in loans receivable of $17.0
million, or 10.3%, from $164.3 million in 1993 to $181.3 million in
1994. The increase in loans was offset by (i) a decrease in cash,
interest-bearing deposits and investments of $1.4 million, or 10.2%,
from $13.6 million in 1993 to $12.2 million in 1994 and (ii) a decrease
in mortgage-backed securities of $907,000, or 11.9%, from $7.6 million
in 1993 to $6.7 million in 1994.
Deposits increased $6.1 million, or 4.3%, from $143.2 million in 1993
to $149.4 million in 1994. Federal Home Loan Bank ("FHLB") advances
increased $8.0 million, or 36.9%, from $21.7 million in 1993 to $29.7
million in 1994. The additional advances were used for asset/liability
management in conjunction with fixed-rate loan production and for cash
flow purposes.
Loans funded net of collections in 1994 were $17.5 million and
exceeded deposit growth by $11.4 million. WFSB funded loan growth by an
increase in FHLB advances of $8.0 million and a decrease in its
liquidity position.
Shareholders' equity increased $829,000, or 3.6%, from $23.3 million
in 1993 to $24.2 million in 1994. The increase was due to current period
earnings of $1.8 million reduced by $513,000 of cash dividends paid,
unrealized depreciation on investment available for sale of $181,000 and
by $301,000 to repurchase 24,000 shares of common stock. On August 12,
1994, WCHI approved a two-for-one stock split of its common stock for
shareholders of record as of September 30, 1994. A total of 883,710
shares of common stock were issued in connection with the split. All
share and per share amounts have been restated to retroactively reflect
the stock split.
Interest Income. Total interest income for 1994 was $14.1 million
compared with $13.7 million in 1993, an increase of $375,000, or 2.7%.
The increase predominately resulted from an increase of $601,000, or
4.9%, in interest income from loans receivable from $12.3 million in
1993 to $12.9 million in 1994. The increase in interest income from
loans receivable resulted from a $970,000 increase attributed to higher
average balances offset by a $369,000 decrease resulting from a lower
yield on loans. The increase in interest income from loans receivable
was partially offset by a decrease of (i) $130,000 in interest income
from mortgage-backed securities and (ii) $145,000 in interest income
from investment securities. The decrease in interest income from both
mortgage-backed securities and investment securities was the result of
both a decline in yields and lower average balances. The weighted
average interest rate on interest-earning assets decreased from 7.49%
for 1993 to 7.24% for 1994.
Interest Expense. Interest expense for 1994 totaled $8.6 million, an
increase of $339,000, or 4.1%, compared with $8.3 million in 1993. The
increase was predominately the result of an increase of $412,000, or
29.6%, in interest expense for borrowings from $1.4 million in 1993 to
$1.8 million in 1994. The interest expense for borrowings resulted from
a $474,000 increase attributed to higher average balances offset by a
$62,000 decrease resulting from lower rates paid on borrowings. The
weighted average interest rate on interest-bearing liabilities decreased
from 5.10% for 1993 to 4.98% for 1994.
9
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
Provision for Loan Losses. The provision for loan losses was $72,000
for 1994 as compared to $84,000 in 1993, a decrease of $12,000, or
14.0%. The 1994 provision exceeded net charge-offs of $3,000. Management
believes that this low level of net charge-offs is a result of its
underwriting guidelines and generally strong local economy. Also the
1994 provision resulted in an allowance for loan losses of $258,000 at
December 31, 1994, an amount management believes adequate to absorb
anticipated future loan losses.
Non-Interest Income. Total non-interest income for 1994 was $180,000
compared to $213,000 in 1993 resulting in a $33,000, or 15.3% decrease.
The decrease was primarily due to a loss of $35,000 on sale of loans
originated for sale during 1994 as compared to a gain of $49,000 from
sale of loans originated for sale during 1993. This decrease of $84,000
from loan sales was partially offset by an increase of $60,000 from
fees, service charges and other non-interest income.
Non-Interest Expense. Non-interest expense increased $161,000, or
6.5%, from $2.5 million in 1993 to $2.7 million in 1994. Compensation
and employee benefits increased from $1.2 million in 1993 to $1.3
million in 1994, an increase of $100,000, or 8.2%. The increase in
salaries and benefits was due to normal annual salary increases, as well
as the increase in costs of employee benefits. Federal deposit insurance
premiums increased from $260,000 in 1993 to $331,000 in 1994, an
increase of $71,000, or 27.4%. The increase in deposit insurance was due
to a lack of a secondary reserve offset in 1994. WFSB's Secondary
Reserve offset for 1993 was approximately $61,200, all of which was used
during the first six months of 1993.
Income Taxes. Income taxes decreased $80,000, or 6.6%, from $1.2
million in 1993 to $1.1 million in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The standard measure of liquidity for the savings institution
industry is the ratio of cash and eligible investments to a certain
percentage of net withdrawable savings and borrowings due within one
year. The minimum required ratio is currently set by OTS regulation at
5%, of which 1% must be comprised of short-term investments (i.e.,
generally with a term of less than one year). At December 31, 1995,
WFSB's liquidity ratio was 5.76%, of which 3.49% was comprised of
short-term investments. Management believes that this liquidity level,
both on a short-term and a long-term basis, is sufficient for liquidity
needs.
Historically, WFSB has maintained its liquid assets that qualify for
purposes of the OTS liquidity regulations above the minimum requirements
imposed by such regulations and at a level believed by management
adequate to meet requirements of normal daily activities, funding loan
originations, repayment of maturing debt, and potential deposit
outflows. Cash flow projections are regularly reviewed by management and
updated to assure that adequate liquidity is maintained. Cash for
liquidity purposes is generated through the maturity of investment
securities, loan prepayments and repayments, increases in deposits and
may be generated through increases in FHLB advances. Loan payments are a
relatively stable source of funds, while deposit flows are influenced
significantly by the level of interest rates and general money market
conditions.
Borrowings may be used to compensate for reductions in other sources
of funds such as deposits and to assist in asset/liability management.
As a member of the FHLB System, WFSB may borrow from the FHLB of
Indianapolis. At December 31, 1995, WFSB had $34.2 million in borrowings
from the FHLB of Indianapolis, and could have borrowed an additional
$1.0 million from the FHLB of Indianapolis as of that date. These
borrowings were made to assist WFSB in its asset/liability management
and to strengthen WFSB's liquidity position. As of that date, WFSB had
commitments to fund loan originations of approximately $3.2 million, of
which 48.2% were adjustable rate and 51.8% were fixed rate. In the
opinion of management, WFSB has sufficient cash flow and borrowing
capacity to meet current and anticipated funding commitments.
10
<PAGE>
<PAGE>
MANAGEMENT'S
DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS OF
OPERATIONS
(CONTINUED)
Pursuant to Office of Thrift Supervision ("OTS") capital regulations
savings associations must currently meet a 1.5% tangible capital
requirement, a 3% leverage ratio (or core capital) requirement, and a
total risk-based capital to risk-weighted assets ratio of 8%. WFSB is
classified as "well capitalized" under OTS regulations, the highest
classification.
The following is a summary of WFSB's regulatory capital and capital
requirements at December 31, 1995:
<TABLE>
<CAPTION>
Tangible Core Risk-based
capital capital capital
-------- ------- ----------
(Dollars in Thousands)
<S> <C> <C> <C>
Regulatory capital $24,244 $24,244 $24,578
Minimum capital requirement $ 3,198 $ 6,396 $ 9,454
------- ------- -------
Excess capital $21,046 $17,848 $15,124
======= ======= =======
Regulatory capital ratio 11.4% 11.4% 20.8%
======= ======= =======
</TABLE>
IMPACT OF INFLATION
The audited consolidated financial statements 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 savings institutions such as
WFSB are monetary in nature. As a result, interest rates have a more
significant impact on WFSB'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 structures of
WFSB's assets and liabilities are critical to the maintenance of
acceptable performance levels. For a discussion of WFSB's efforts to
restructure its assets and to reduce its vulnerability to changes in
interest rates, see "- Asset/Liability Management."
The principal effect of inflation, as distinct from levels of
interest rates, on earnings is in the area of other expense. Such
expense items as employee compensation, employee benefits, and occupancy
and equipment costs may be subject to increases as a result of
inflation. An additional effect of inflation is the possible increase in
the dollar value of the collateral securing loans made by WFSB. WCHI is
unable to determine the extent, if any, to which properties securing
WFSB loans have appreciated in dollar value due to inflation.
CURRENT ACCOUNTING ISSUES
Statement of Financial Accounting Standards No. 121 ("SFAS 121"),
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, is effective for fiscal years beginning after
December 15, 1995. This statement establishes accounting standards for
the impairment of long-lived assets, certain liabilities, certain
intangibles and goodwill. Management does not believe the adoption of
SFAS 121 will have a material effect on the financial position or
results of operations of the Holding Company.
Statement of Financial Accounting Standards No. 122 ("SFAS 122"),
Accounting for Mortgage Servicing Rights - an Amendment of FASB
Statement No. 65, is effective for fiscal years beginning after December
15, 1995. This statement specifies conditions under which mortgage
servicing rights should be accounted for separately from the underlying
mortgage loans. Management does not believe the adoption of SFAS 122
will have a material effect on the financial position or results of
operations of the Holding Company.
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
Accounting for Stock-Based Compensation, is effective for fiscal years
beginning after December 15, 1995. This statement establishes a fair
value based method for accounting for stock-based compensation. The
Holding Company will have the option of continuing the existing
intrinsic value based method or adopting the new method. If the
intrinsic valued based method is used, disclosures are required showing
the effects of the fair value based method. Management has not yet
determined which method will be used, but management does not believe
the adoption of SFAS 123 will have a material effect on the financial
position or results of operations of the Holding Company.
11
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
QUARTERLY
RESULTS OF
OPERATIONS
The following table presents certain selected unaudited data relating
to results of operations for the three-month periods ending on the dates
indicated. Because this data reflects for quarterly periods only, it may
not be representative of the results of operations calculated annually.
This data has not been examined by independent accountants, but
reflects, in the opinion of management of WCHI, all adjustments
necessary for a fair presentation of the results of operations for the
periods presented.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------
December 31, September 30, June 30, March 31,
1995 1995 1995 1995
------------ ------------- -------- ---------
Fiscal 1995 (Dollars in Thousands)
<S> <C> <C> <C> <C>
Total interest income $4,093 $4,043 $3,977 $3,887
Total interest expense 2,670 2,635 2,527 2,399
------ ------ ------ ------
Net interest income 1,423 1,408 1,450 1,488
Provision for loan losses 21 21 18 18
------ ------ ------ ------
Net interest income after
provision for loan losses 1,402 1,387 1,432 1,470
Total non-interest income 53 57 68 64
Total non-interest expense 714 662 676 709
------ ------ ------ ------
Earnings before income taxes 741 782 824 825
Income taxes 287 283 319 320
------ ------ ------ ------
Net earnings $ 454 $ 499 $ 505 $ 505
====== ====== ====== ======
Earnings per common share $ .26 $ .28 $ .29 $ .29
Dividends per common share $ .09 $ .08 $ .08 $ .08
Stock bid price range (1):
High $18 $18 $19 $17
Low $16 $15 3/4 $15 1/4 $13
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------
December 31, September 30, June 30, March 31,
1994 1994 1994 1994
------------ ------------- -------- ---------
Fiscal 1994 (Dollars in Thousands)
<S> <C> <C> <C> <C>
Total interest income $3,740 $3,578 $3,422 $3,348
Total interest expense 2,321 2,190 2,057 2,028
------ ------ ------ ------
Net interest income 1,419 1,388 1,365 1,320
Provision for loan losses 18 18 18 18
------ ------ ------ ------
Net interest income after
provision for loan losses 1,401 1,370 1,347 1,302
Total non-interest income 53 53 39 35
Total non-interest expense 702 631 651 666
------ ------ ------ ------
Earnings before income taxes 752 792 735 671
Income taxes 291 298 281 256
------ ------ ------ ------
Net earnings $ 461 $ 494 $ 454 $ 415
====== ====== ====== ======
Earnings per common share $ .26 $ .28 $ 26 $ .23
Dividends per common share $ .08 $ .07 $ .07 $ .07
Stock bid price range (1)
High $14 7/8 $15 1/8 $15 1/4 $13 1/8
Low $13 $14 1/8 $11 7/8 $12 3/8
</TABLE>
___________________________
(1) The common stock of Workingmens Capital Holdings, Inc., is traded
on the National Association Securities Dealers Automated Quotation
System, National Market System, under the Symbol "WCHI."
12
<PAGE>
<PAGE>
INDEPENDENT
AUDITOR'S
REPORT
The Board of Directors
Workingmens Capital Holdings, Inc.:
We have audited the accompanying consolidated statements of financial
condition of Workingmens Capital Holdings, Inc. and subsidiary as of
December 31, 1995 and 1994, and the related consolidated statements of
earnings, shareholders' equity, and cash flows for each of the years in
the three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Workingmens Capital Holdings, Inc. and subsidiary at December 31,
1995 and 1994, and the results of their operations and their cash flows
for each of the years in the three-year period ended December 31, 1995,
in conformity with generally accepted accounting principles.
As discussed in note 1 to the financial statements, Workingmens
Capital Holdings, Inc. adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standard
No. 115, Accounting for Certain Investments in Debt and Equity
Securities, in 1994.
KPMG PEAT MARWICK LLP
Indianapolis, Indiana
January 26, 1996
13
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF
FINANCIAL CONDITION
FOR THE YEARS ENDED
DECEMBER 31, 1995
AND 1994
<TABLE>
<CAPTION>
Assets 1995 1994
- ------ ------------ ------------
<S> <C> <C>
Cash and cash equivalents:
Cash $ 1,297,780 $ 918,123
Interest-bearing deposits 3,231,181 1,287,171
4,528,961 2,205,294
Investment securities held to maturity, at cost (market
value of $3,201,275 and $4,481,251) (notes 2 and 9) 3,165,453 4,541,177
------------ ------------
Mortgage-backed securities held to maturity,
at cost (market value of $4,579,219 and $6,306,257)
(notes 3 and 9) 4,550,405 6,698,068
Investment in mutual fund available for sale, at market
value (cost of $4,000,000) (note 4) 3,893,547 3,801,131
Mortgage-backed securities available for sale (note 4) 1,256,433 -
Loans receivable, net (notes 5, 6 and 9) 189,661,196 181,268,786
Accrued interest receivable:
Loans 1,052,391 918,478
Investment securities 68,508 78,923
Mortgage-backed securities 39,183 41,777
Stock in FHLB of Indianapolis (note 9) 1,758,200 1,632,600
Premises and equipment, net (note 7) 1,370,619 1,358,001
Real estate owned - 156,495
Prepaid expenses and other assets (note 11) 1,909,595 1,822,566
------------ ------------
$213,254,491 $204,523,296
------------ ------------
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits (note 8) $152,141,187 $149,352,703
FHLB advances (note 9) 34,200,000 29,700,000
Advances by borrowers for taxes and insurance 421,762 684,910
Income taxes (note 10) 89,260 50,961
Deferred income taxes (note 10) 269,074 211,822
Accrued interest on deposits 61,206 52,034
Accrued expenses and other liabilities 387,483 318,952
------------ ------------
Total liabilities 187,569,972 180,371,382
------------ ------------
Shareholders' equity (notes 10, 11 and 12):
Preferred stock, no par value, 2,000,000
shares authorized, none issued - -
Common stock, no par value, shares authorized
of 5,000,000; shares issued and outstanding
of 1,777,920 and 1,767,420 8,066,200 8,007,313
Retained earnings-substantially restricted 17,721,628 16,343,470
Net unrealized depreciation on securities
available for sale (note 4) (103,309) (198,869)
------------ ------------
Total shareholders' equity 25,684,519 24,151,914
------------ ------------
Commitments (note 5)
$213,254,491 $204,523,296
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF
EARNINGS
FOR THE YEARS ENDED
DECEMBER 31, 1995,
1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Loans receivable ............................. $14,775,087 $12,923,680 $12,323,212
Mortgage-backed securities ................... 408,623 440,328 570,348
Investment securities ........................ 449,686 470,617 615,488
Interest-bearing deposits .................... 230,903 160,693 79,356
Dividends from FHLB .......................... 135,996 92,542 124,909
----------- ----------- -----------
Total interest income ...................... 16,000,295 14,087,860 13,713,313
----------- ----------- -----------
Interest expense:
Deposits (note 8) ............................ 8,137,291 6,788,908 6,862,841
FHLB advances ................................ 2,084,435 1,802,069 1,393,676
Other ........................................ 9,533 4,548 499
----------- ----------- -----------
Total interest expense ..................... 10,231,259 8,595,525 8,257,016
----------- ----------- -----------
Net interest income ........................ 5,769,036 5,492,335 5,456,297
Provision for loan losses (note 6) ............. 78,000 72,250 84,000
----------- ----------- -----------
Net interest income after
provision for loan losses .................. 5,691,036 5,420,085 5,372,297
----------- ----------- -----------
Non-interest income:
Fees, service charges and other .............. 184,106 181,656 121,834
Commissions .................................. 30,760 32,589 42,321
Gain (loss) on sale of real estate owned ..... 17,038 (2,633) -
Gain (loss) on sale of loans ................. 9,995 (34,767) 48,866
Gain on sale of mortgage-backed securities ... - 3,557 -
----------- ----------- -----------
Total non-interest income .................. 241,899 $ 180,402 213,021
----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits ........... 1,388,840 1,321,919 1,222,087
Occupancy and equipment ...................... 332,567 337,182 339,325
Federal deposit insurance premium ............ 344,768 331,426 260,166
Other ........................................ 694,297 659,772 667,315
----------- ----------- -----------
Total non-interest expense ................. 2,760,472 2,650,299 2,488,893
----------- ----------- -----------
Earnings before income taxes ................... 3,172,463 $ 2,950,188 3,096,425
Income taxes (note 10) ......................... 1,209,351 1,126,499 1,206,609
----------- ----------- -----------
Net earnings ............................... $ 1,963,112 $ 1,823,689 $ 1,889,816
=========== =========== ===========
Earnings per share (note 1) .................... $ 1.11 $ 1.03 $ 1.05
=========== =========== ===========
Weighted average number of common shares
outstanding .................................. 1,771,817 1,773,535 $ 1,797,210
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF
SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31, 1995,
1994 AND 1993
<TABLE>
<CAPTION>
Net unrealized
depreciation Total
Common Retained on securities shareholders'
stock earnings available for sale equity
------ -------- ------------------ -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $8,166,500 $13,979,691 $ (3,099) $22,143,092
Issuance of 8,000 shares of
common stock at
$5.00 per share (note 11) ........ 40,000 - - 40,000
Repurchase and retirement of
24,280 shares of common stock
at $11.475 per share ............. (109,793) (168,830) - (278,623)
Tax benefit of stock options
exercised (note 10) .............. 19,338 - - 19,338
Change in net unrealized
appreciation on securities ....... - - (15,055) (15,055)
Net earnings for 1993 .............. - 1,889,816 - 1,889,816
Dividends ($.265 per share) ........ - (475,636) - (475,636)
---------- ----------- --------- -----------
Balance at December 31, 1993 ......... 8,116,045 15,225,041 (18,154) 23,322,932
Repurchase and retirement of
24,000 shares of common
stock at $12.525 per share ....... (108,732) (191,868) - (300,600)
Change in net unrealized
depreciation on securities ....... - - (180,715) (180,715)
Net earnings for 1994 .............. - 1,823,689 - 1,823,689
Dividends ($.29 per share) ......... - (513,392) - (513,392)
---------- ----------- --------- -----------
Balance at December 31, 1994 ......... 8,007,313 16,343,470 (198,869) 24,151,914
Issuance of 10,500 shares of
common stock at
$5.00 per share (note 11) ........ 52,500 - - 52,500
Tax benefit of stock options
exercised (note 10) .............. 6,387 - - 6,387
Change in net unrealized
depreciation on securities ....... - - 95,560 95,560
Net earnings for 1995 .............. - 1,963,112 - 1,963,112
Dividends ($.33 per share) ......... - (584,954) - (584,954)
---------- ----------- --------- -----------
Balance at December 31, 1995 ......... $8,066,200 $17,721,628 $(103,309) $25,684,519
========== =========== ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF
CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 1995,
1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,963,112 $ 1,823,689 $ 1,889,816
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 78,000 72,250 84,000
Depreciation 127,725 143,025 134,055
Deferred income taxes 60,427 43,476 (48,494)
Amortization of premiums (discounts), net 43,549 90,344 204,170
Net gain on sale of mortgage-backed
securities - (3,557) -
Net (gain) loss on sale of real estate owned (17,038) 2,633 -
(Increase) decrease in loans held for sale (459,750) 325,451 (284,771)
(Increase) decrease in other assets (207,931) (197,446) 78,933
Increase (decrease) in other liabilities 122,389 (11,691) (87,009)
----------- ----------- -----------
Net cash provided by operating activities 1,710,483 2,288,174 1,970,700
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of investment securities 3,000,000 2,000,000 5,000,000
Purchase of investment securities (1,778,647) (1,657,751) (1,100,600)
Loans funded net of collections (8,010,660) (17,544,865) (14,358,434)
Purchase of single premium life
insurance policies - - (1,570,699)
Proceeds from sale of real estate owned 173,533 40,378 -
Proceeds from sale of mortgage-backed securities - 298,279 -
Principal collected on mortgage-backed securities 876,419 1,590,110 2,155,500
Purchase of mortgage-backed securities - (1,010,910) -
Purchase of premises and equipment (140,343) (135,169) (81,299)
----------- ----------- -----------
Net cash used by investing activities (5,879,698) (16,419,928) (9,955,532)
----------- ----------- -----------
Cash flows from financing activities:
Net increase in deposits 2,788,484 6,110,673 4,045,449
Repayments of FHLB advances (17,000,000) (9,000,000) (11,150,000)
Borrowings of FHLB advances 21,500,000 17,000,000 16,500,000
Payments of dividends to common shareholders (584,954) (513,392) (475,636)
Proceeds from issuance of common stock 52,500 - 40,000
Repurchase of common stock - (300,600) (278,623)
Increase in advances by borrowers for
taxes and insurance (263,148) 35,522 13,986
----------- ----------- -----------
Net cash provided by financing
activities 6,492,882 13,332,203 8,695,176
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents 2,323,667 (799,551) 710,344
Cash and cash equivalents at beginning of year 2,205,294 3,004,845 2,294,501
----------- ----------- -----------
Cash and cash equivalents at end of year $ 4,528,961 $ 2,205,294 $ 3,004,845
=========== =========== ===========
Supplemental disclosure of cash flow information:
Interest paid $10,202,614 $ 8,549,576 $ 8,264,489
=========== =========== ===========
Income taxes paid $ 1,109,476 $ 1,183,000 $ 1,263,000
=========== =========== ===========
Transfer of loans to real estate owned $ - $ 156,495 $ 42,772
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1995,
1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation-The consolidated financial statements include
the accounts of Workingmens Capital Holdings, Inc. ("WCHI") and its
wholly-owned subsidiary Workingmens Federal Savings Bank ("WFSB"),
formerly Workingmens Federal Savings and Loan Association (the
"Association").
WFSB offers a variety of retail deposit and lending services through
its office and banking centers in Bloomington and Ellettsville, Indiana.
WFSB is subject to competition from other financial institutions and is
regulated by certain federal agencies and undergoes periodic
examinations by those regulatory authorities.
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statement of financial condition and revenues and
expenses for the period. Actual results could differ from those
estimates.
Investment and Mortgage-Backed Securities Held to Maturity and Available
for Sale-On January 1, 1994, WCHI adopted Financial Accounting Standard
No. 115 ("FAS 115"), Accounting for Certain Investments in Debt and
Equity Securities. Prior to adoption of FAS 115, all securities were
carried at amortized cost (cost adjusted for amortization of premiums or
accretion of discounts), because management had the intent and ability
to hold them for the foreseeable future. Upon adoption of FAS 115,
securities were classified by management as available for sale or held
to maturity. The adoption of FAS 115 in 1994 had no effect on net
earnings or the statement of financial condition since the only
available-for-sale securities was an investment in an adjustable-rate
mortgage-backed mutual fund which was already recorded at market value.
The net unrealized depreciation on securities available for sale is
reflected separately as a component of shareholders' equity in the
consolidated statement of financial condition.
The securities classified as available for sale are securities that
WCHI intends to hold for an indefinite period of time, but not
necessarily until maturity, and include securities that management might
use as part of its asset-liability strategy, or that may be sold in
response to changes in interest rates, changes in prepayment risk, the
need to increase regulatory capital or other similar factors, and which
are carried at market value. Gains and losses are computed on a specific
identification basis. Securities classified as held to maturity are
securities that WCHI has both the ability and positive intent to hold to
maturity and are carried at cost adjusted for amortization of premium or
accretion of discount.
Real Estate Owned-Real estate owned, comprised of real estate acquired
in the settlement of loans, is recorded at the lower of cost (the unpaid
principal balance at the date of acquisition plus foreclosure and other
related costs) or fair value.
Loans Receivable-Loans receivable are considered long-term investments
and, accordingly, are carried at historical cost. WFSB has a mortgage
lien on all real estate on which mortgage, participation or purchased
loans are made. Substantially all loan originations are secured by
mortgages on property in Monroe County, Indiana. Interest receivable is
accrued only if deemed collectible. Generally, WFSB's policy is not to
accrue interest on loans delinquent over 90 days. Such interest
ultimately collected is credited to income in the period received.
Non-refundable fees and certain direct loan origination costs are being
deferred and the net amount is amortized over the contractual lives of
the related loans as an adjustment of the yield.
Allowance for Loan Losses-The allowance for loan losses is provided for
estimated losses on loans when any significant and permanent decline in
values occur. In estimating possible losses consideration is given to
delinquencies, value of collateral and other factors which in
management's opinion should be considered in estimating possible losses.
Management believes the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans,
future additions to the allowance may be necessary based on changes in
economic conditions and borrower circumstances. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review WFSB's allowance for loan losses. Such agencies may
require WFSB to recognize additions to the allowance based on their
judgment about information available to them at the time of their
examination.
18
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
As of January 1, 1995, WFSB adopted Statement of Financial Accounting
Standard No. 114, Accounting by Creditor for Impairment of a Loan. Under
this standard, loans considered to be impaired are reduced to the
present value of expected future cash flows or to fair value of
collateral by allocating a portion of the allowance for loan losses to
such loans. If these allocations cause the allowance for loan losses to
require an increase, allocations are considered in relation to the
overall adequacy of the allowance for loan losses and subsequent
adjustments to the loss provision. Adopting this standard did not have
an impact on the 1995 consolidated financial statements.
Loans Held for Sale-Fixed-rate first mortgage loans which meet certain
defined criteria are sold with servicing retained. First mortgage loans
held for sale are carried at the lower of cost or estimated market value
using the specific identification method. Gains and losses on loan sales
and valuation adjustments are charged or credited to gain (loss) on sale
of loans.
Premises and Equipment-Premises and equipment are carried at cost less
accumulated depreciation. Depreciation is provided on a straight-line
basis over the estimated useful lives of the related assets.
FHLB Stock-Federal law requires a member institution of the Federal Home
Loan Bank System to hold common stock of its district FHLB according to
a predetermined formula. This investment is stated at cost and may be
pledged to secure FHLB advances.
Income Taxes-WCHI and its wholly-owned subsidiary file consolidated
income tax returns. Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Cash and Cash Equivalents-For purposes of reporting cash flows, WCHI
considers cash on hand and at banks and interest-bearing deposits
maturing within 90 days to be cash equivalents.
Earnings Per Share-Earnings per share is computed by dividing net
earnings by the average number of shares of common stock outstanding
during the period. The effects of outstanding stock options are not
included in the calculation as they are dilutive by less than three
percent.
Reclassifications-Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform to the 1995 presentation.
(2) INVESTMENT SECURITIES HELD TO MATURITY
The amortized cost and estimated market values of investment securities
held to maturity at December 31, are as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------
Amortized Unrealized Unrealized Market
cost gains losses value
---------- ------- ------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury and
government agencies $3,165,453 $35,822 $ - $3,201,275
========== ======= ======= ==========
1994
--------------------------------------------------------
Amortized Unrealized Unrealized Market
cost gains losses value
---------- ------- ------- ----------
U.S. Treasury and
government agencies $4,541,177 $ - $59,926 $4,481,251
========== ======= ======= ==========
</TABLE>
The weighted average yield on investment securities was 6.15% and 5.89%
at December 31, 1995 and 1994, respectively.
19
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
The amortized cost and estimated market value of investment securities
at December 31, 1995, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because the issuers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Amortized Market
Scheduled Maturities cost value
---------- ----------
<S> <C> <C>
Due in one year or less .............. $1,012,878 $1,012,500
Due after one year through five years 2,152,575 2,188,775
---------- ----------
$3,165,453 $3,201,275
========== ==========
</TABLE>
(3) MORTGAGE-BACKED SECURITIES HELD TO MATURITY
The amortized cost and estimated market values of mortgage-backed
securities held to maturity at December 31, are as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------
Amortized Unrealized Unrealized Market
cost gains losses value
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
FHLMC ............... $3,176,398 $25,158 $ 10,712 $3,190,844
GNMA ................ 482,025 25,472 - 507,497
FNMA ................ 891,982 - 11,104 880,878
---------- -------- -------- ----------
$4,550,405 $50,630 $ 21,816 $4,579,219
========== ======= ======== ==========
1994
--------------------------------------------------------
Amortized Unrealized Unrealized Market
cost gains losses value
---------- -------- -------- ----------
FHLMC ............... $3,726,109 $1,805 $199,717 $3,528,197
GNMA ................ 556,210 8,133 6,982 557,361
FNMA ................ 2,415,749 - 195,050 2,220,699
---------- -------- -------- ----------
$6,698,068 $9,938 $401,749 $6,306,257
========== ======= ======== ==========
</TABLE>
The weighted average yield on mortgage-backed securities was 6.35% and
6.29% at December 31, 1995 and 1994, respectively. At December 31, 1995,
WCHI held no commitments to buy or sell mortgage-backed securities.
During 1994, WFSB sold the remaining portion of mortgage-backed
securities held to maturity with an initial cost of $3,000,000 and a
carrying value at the time of sale of $294,722 at a gross gain of
$3,557.
(4) SECURITIES AVAILABLE FOR SALE
In December 1995, WFSB transferred a FNMA mortgage-backed security from
the held to maturity portfolio to the available for sale portfolio in
accordance with the provisions established by the Financial Accounting
Standards Board in a special report, A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt Equity
Securities.
Securities available for sale consisted of the following at December 31,
1995:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Market
cost gains losses value
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
Mortgage-backed securities:
FNMA ..................... $1,251,226 $5,207 $ - $1,256,433
========== ======= ======== ==========
Mutual funds:
Federated ARMs Fund ...... $4,000,000 $ - $106,453 $3,893,547
========== ======= ======== ==========
</TABLE>
There have been no sales of mortgage-backed securities available for sale.
20
<PAGE>
<PAGE>
(5) LOANS RECEIVABLE
Loans receivable at December 31, consist of:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Real estate mortgage loans .......................... $181,364,641 $174,153,165
Real estate construction and land loans ............. 4,397,837 4,654,098
Equity line of credit loans ......................... 3,559,229 3,003,171
Consumer related loans .............................. 3,141,071 2,115,793
------------ ------------
192,462,778 183,926,227
Less:
Undisbursed construction loans .................... 1,978,396 1,834,059
Loans in process .................................. 146,434 130,942
Allowance for loan losses ......................... 335,449 258,056
Deferred loan fees ................................ 341,303 434,384
------------ ------------
$189,661,196 $181,268,786
============ ============
</TABLE>
Loans serviced for others amounted to $4,798,671 and $5,242,170 at
December 31, 1995 and 1994, respectively. Loans receivable at December
31, 1995 include $459,750 of real estate mortgage loans held for sale
with estimated market values of $464,872.
At December 31, 1995, WFSB had commitments to originate $1,631,360 of
fixed-rate and $1,520,316 of adjustable-rate real estate loans. The
interest rates on the fixed-rate loan commitments range from 7.25% to
9.25%. WFSB also had $7,417,031 of unused variable-rate equity line of
credit loans. WFSB does not expect to incur a loss on these commitments.
Certain officers, directors, and employees of WFSB incurred
indebtedness, in the form of loans, as customers. These loans were made
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other customers and did not involve more than the normal risk of
collectiblilty. Following is a summary of activity during the years
ended December 31 for such loans:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Balance at beginning of year ..................... $1,347,549 $1,076,069
Additions ...................................... 266,128 401,198
Repayments ..................................... (166,663) (129,718)
---------- ----------
Balance at end of year ........................... $1,447,014 $1,347,549
========== ==========
</TABLE>
(6) ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses for the years ended December
31, follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year ............... $258,056 $188,378 $140,807
Provision charged to operations ............ 78,000 72,250 84,000
Charge-offs, net of recoveries ............. (607) (2,572) (36,429)
-------- -------- --------
Balance at end of year ..................... $335,449 $258,056 $188,378
======== ======== ========
</TABLE>
(7) PREMISES AND EQUIPMENT
Premises and equipment at December 31, consist of:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Land ...................................... $ 487,125 $ 487,125
Building and parking lot improvements ..... 1,382,384 1,373,472
Furniture, fixtures and equipment ......... 931,598 801,454
---------- ----------
2,801,107 2,662,051
Less accumulated depreciation ............. 1,430,488 1,304,050
---------- ----------
$1,370,619 $1,358,001
========== ==========
</TABLE>
21
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
(8) DEPOSITS
Deposits at December 31, consist of:
<TABLE>
<CAPTION>
1995 1994
----------------------- ----------------------
Weighted Weighted
average average
Type Amount rate Amount rate
---- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Passbook $ 12,065,454 3.00% $ 15,695,221 3.00%
Money Market 8,375,399 3.76 7,477,231 2.75
NOW 6,424,575 3.16 6,649,376 2.43
Non-interest bearing 140,860 - 110,274 -
Certificates 125,134,899 6.01 119,420,601 5.62
------------ -------- ------------ --------
$152,141,187 5.53% $149,352,703 5.06%
============ ============
</TABLE>
The contractual maturities of certificates at December 31, follow:
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
Amount % Amount %
------------ ---- ------------ ----
<S> <C> <C> <C> <C>
Under 12 months $ 56,626,804 45% $ 52,633,093 44%
12 to 24 months $ 32,941,011 26 14,710,793 12
24 to 36 months $ 19,454,268 16 24,678,451 21
Over 36 months $ 16,112,816 13 27,398,264 23
------------ ---- ------------ ----
$125,134,899 100% $119,420,601 100%
============ ==== ============ ====
</TABLE>
Included in certificates at December 31, 1995 and 1994 are $19,604,871
and $14,296,414, respectively, in certificates greater than $100,000.
Interest expense by type of deposit for the years ended December 31,
follows:
<TABLE>
<CAPTION>
Type 1995 1994 1993
---- ---------- ---------- ----------
<S> <C> <C> <C>
Passbook $ 408,262 $ 528,280 $ 448,752
Money Market $ 259,476 261,862 363,731
NOW 200,816 158,243 155,682
Certificates $7,268,737 5,840,523 5,894,676
---------- ---------- ----------
$8,137,291 $6,788,908 $6,862,841
========== ========== ==========
</TABLE>
(9) FHLB ADVANCES
Each Federal Home Loan Bank (FHLB) is authorized to make advances to its
member institutions, subject to such regulations and limitations as the
FHLB may prescribe. FHLB advances at December 31, consisted of:
<TABLE>
<CAPTION>
Maturity Interest rates 1995 1994
-------- -------------- ----------- -----------
<C> <C> <C> <C>
1995 4.07 to 8.95% $ - $ 5,500,000
1996 5.80 to 8.40% 5,500,000 1,500,000
1997 6.71 to 9.20% 4,000,000 4,000,000
1998 5.41 to 8.68% 4,700,000 4,700,000
1999 6.08 to 7.26% 3,500,000 3,500,000
2000 5.36 to 6.82% 8,000,000 7,000,000
2001 7.54 to 8.80% 3,500,000 3,500,000
2002 6.09 to 7.59% $ 5,000,000 -
----------- -----------
$34,200,000 $29,700,000
=========== ===========
</TABLE>
The weighted average interest rate on advances was 6.845% and 7.004% at
December 31, 1995 and 1994, respectively.
WFSB, under a security agreement with the FHLB, is required to pledge
its FHLB stock, certain government and agency securities, and qualifying
mortgages, as defined, equal to 170 percent of FHLB advances.
22
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
(10) INCOME TAXES
Total income tax expense (benefit) for the years ended December 31,
1995, 1994 and 1993 was allocated as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Earnings $1,209,351 $1,126,499 $1,206,609
Shareholders' equity, for
compensation expense for tax
purposes in excess of amounts
recognized for financial reporting
purposes .......................... (6,387) - (19,338)
---------- ---------- ----------
$1,202,964 $1,126,499 $1,187,271
========== ========== ==========
</TABLE>
Income tax expense (benefit) related to earnings for the years ended
December 31, 1995, 1994 and 1993 consists of:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal ....... $ 891,973 $ 832,515 $ 964,231
State ......... 256,951 250,508 290,872
---------- ---------- ----------
1,148,924 1,083,023 1,255,103
---------- ---------- ----------
Deferred:
Federal ....... 66,104 50,195 (22,236)
State ......... (5,677) (6,719) (26,258)
---------- ---------- ----------
60,427 43,476 (48,494)
---------- ---------- ----------
$1,209,351 $1,126,499 $1,206,609
========== ========== ==========
</TABLE>
The effective income tax rate differs from the statutory federal
corporate rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Federal statutory rate ............... 34.0% 34.0% 34.0%
Increase (decrease) resulting from:
State income taxes ................. 5.3 5.5 5.6
Increase in cash surrender value
of life insurance ................ (.8) (.9) -
Other non-taxable income ........... (.4) (.4) (.6)
----- ----- -----
Effective rate ....................... 38.1% 38.2% 39.0%
===== ===== =====
</TABLE>
23
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1995, 1994 and 1993 are presented below:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Deferred tax assets:
Deferred loan fees $ 136,421 $ 173,261 $ 186,702
Allowance for loan losses for
financial reporting purposes 132,871 102,216 74,617
Premises and equipment, principally
due to differences in depreciation 20,854 7,773 9,646
Deferred directors' fees 47,718 27,045 8,021
Investment securities available for sale 40,437 79,500 -
--------- --------- ---------
Total deferred tax assets 378,301 389,795 278,986
Less valuation allowance (42,500) (79,500) -
--------- --------- ---------
Net deferred tax assets 335,801 310,295 278,986
--------- --------- ---------
Deferred tax liabilities:
Allowance for loan losses for tax purposes
in excess of the base year allowance (521,179) (438,421) (363,636)
Stock in FHLB of Indianapolis,
principally due to stock dividends (83,696) (83,696) (83,696)
--------- --------- ---------
Deferred tax liabilities (604,875) (522,117) (447,332)
--------- --------- ---------
Net deferred tax liability $(269,074) $(211,822) $(168,346)
========= ========= =========
</TABLE>
Under the Internal Revenue Code, WFSB is allowed a special bad debt
deduction for additions to tax bad debt reserves established for the
purpose of absorbing losses. The allowable deduction is currently 8% of
income subject to tax before such deduction. WFSB used the percentage of
taxable income method in computing Federal income tax expense. Retained
earnings at December 31, 1995 includes approximately $3,295,000 for
which no provision for Federal income taxes has been made. This amount
represents the base year allowance for loan losses for tax purposes.
Reduction of this amount for purposes other than tax bad debt losses
will create taxable income, which will be subject to the then current
corporate income tax rate. It is not contemplated that amounts allocated
to bad debt deductions will be used in any manner to create taxable
income.
(11) EMPLOYEE BENEFITS
WFSB is a participant in a defined benefit multi-employer pension fund
known as Financial Institutions Retirement Fund ("FIRF"). FIRF
administrators suspended employer contributions beginning July 1, 1987
through June 1994, because the plan had reached the Internal Revenue
Services "Full Funding Limit"; therefore, no pension expense was
recorded for the year ended December 31, 1993. Pension expense for the
years ended December 31, 1995 and 1994 was $48,296 and $26,313,
respectively.
During 1989, WFSB began participating in the Financial Institutions
Thrift Plan. Substantially all full-time employees of WFSB are eligible
to participate in this defined contribution plan, and WFSB's expense for
the years ended December 31, 1995, 1994 and 1993 amounted to $26,827,
$25,056 and $24,783, respectively.
WCHI adopted an Incentive Stock Option Plan whereby 180,000 shares of
authorized but unissued common stock were reserved for future issuance
upon the exercise of stock options granted to officers, directors and
key employees. Stock options for 136,620 shares were granted on June 7,
1990, at an option price of $5.00 per share, the market value at the
date of grant. The options are exercisable at any time within 10 years
from the grant date. During 1995, 1993 and 1992, 10,500, 8,000 and
42,940 shares of common stock were issued upon the exercise of stock
options. No options were exercised in 1994. At December 31, 1995, stock
options for 67,620 shares remain outstanding, and options for 43,380
remain available for future grant.
24
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
The Board of Directors approved a Directors Deferred Compensation
Agreement for members of the Board effective August 1, 1993. Under the
agreement, directors may elect to defer all or a portion of their
director fees with principal and accumulated interest paid out over a
specified period after retirement. In the event of a director's death
prior to commencement of the payout period, WFSB is obligated to pay the
director's beneficiary a survivor benefit based on the deferral amount
elected by the director. Concurrent with the approval of the agreement,
WFSB has purchased single premium life insurance, covering the eligible
directors. The cash value of the insurance acquired is $1,745,145 and
$1,668,030 at December 31, 1995 and 1994, respectively, and is included
in other assets.
(12) SHAREHOLDERS' EQUITY
WCHI is subject to regulation as a savings and loan holding company by
the Office of Thrift Supervision ("OTS"). WFSB, as a subsidiary of a
savings and loan holding company, is subject to certain restrictions in
its dealings with WCHI. WFSB is subject to the regulatory requirements
applicable to a federal savings bank.
During the fall of 1994, the Board of Directors declared a two-for-one
stock split whereby one additional share of common stock was issued for
each share held. All common share and per share amounts have been
retroactively restated to reflect this stock split.
Savings institutions are required to have risk-based capital of 8.0% of
risk-weighted assets. At December 31, 1995, WFSB's risk-based capital
exceeded the required amount. Risk weighting of assets is derived from
assigning one of four risk-weighted categories to an institution's
assets, based on the degree of credit risk associated with the asset.
The categories range from zero percent for low-risk assets (such as
United States Treasury securities) to 100% for high-risk assets (such as
real estate owned). The book value of each asset is then multiplied by
the risk weighting applicable to the asset category. The sum of the
products of the calculation equals total risk-weighted assets.
Savings institutions are also required to maintain a minimum leverage
ratio under which core capital must equal at least 3% of total assets,
but no less than the minimum required by the Office of the Comptroller
of the Currency ("OCC") for national banks, which minimum currently
stands at 4%. WFSB's primary regulator, the Office of Thrift
Supervision, is expected to adopt the OCC minimum. The components of
core capital are the same as those set by the OCC for national banks,
and consist of common equity plus non- cumulative preferred stock and
minority interests in consolidated subsidiaries, minus certain
intangible assets. At December 31, 1995, WFSB's core capital and
leverage ratio were in excess of the required amount. Savings
institutions must also maintain minimum tangible capital of 3% of total
assets. WFSB's tangible capital and tangible capital ratio at December
31, 1995 exceeded the required amount.
OTS has minimum capital standards that place savings institutions into
one of five categories, from "critically undercapitalized" to
"well-capitalized," depending on levels of three measures of capital. A
well-capitalized institution as defined by the regulations would have a
total risk-based capital ratio of at least 10 percent, a Tier 1 (core)
risk-based capital ratio of at least six percent, and a leverage (core)
risk-based capital ratio of at least five percent. At December 31, 1995,
WFSB was classified as well-capitalized.
The OTS has regulations governing dividend payments, stock redemptions,
and other capital distributions, including upstreaming of dividends by a
savings institution to a holding company. Under these regulations, WFSB
may, without prior OTS approval, make capital distributions to WCHI of
up to 100% of its net earnings during the calendar year, plus an amount
that would reduce by half its excess capital over its fully phased-in
capital requirement at the beginning of the calendar year. WCHI is not
subject to any regulatory restrictions on the payments of dividends to
its shareholders, other than restrictions under Indiana Law.
25
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
(13) PARENT COMPANY FINANCIAL INFORMATION
Following is parent company financial information of WCHI as of December
31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995.
<TABLE>
<CAPTION>
Statements of Financial Condition
---------------------------------
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Cash .......................... $ 533,607 $ 244,486
Income taxes receivable ....... 4,621 4,357
Investment in subsidiary ...... 25,146,291 23,903,071
----------- -----------
$25,684,519 $24,151,914
=========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Shareholders' equity .......... $25,684,519 $24,151,914
----------- -----------
$25,684,519 $24,151,914
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Statements of Earnings
----------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operating expenses:
Management fees $ (140,004) $ (132,000) $ (132,000)
Applicable income tax benefit $ 55,456 52,285 52,286
---------- ---------- ----------
Loss before equity in
earnings of subsidiary (84,548) (79,715) (79,714)
Equity in earnings of subsidiary
including dividends of $900,000,
$900,000 and $750,000 2,047,660 1,903,404 1,969,530
---------- ---------- ----------
Net earnings $1,963,112 $1,823,689 $1,889,816
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Statements of Cash Flows
------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $1,963,112 $1,823,689 $1,889,816
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Income tax receivable applicable to
operations (55,456) (52,285) (52,286)
Payment from subsidiary for income
tax receivable 61,579 237,419 -
Increase in undistributed earnings of
subsidiary (1,147,660) (1,003,404) (1,219,528)
---------- ---------- ----------
Net cash provided by operating
activities 821,575 1,005,419 618,002
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock 52,500 - 40,000
Repurchase of common stock - (300,600) (278,623)
Payments of dividends to common
shareholders (584,954) (513,392) (475,636)
---------- ---------- ----------
Net cash used by financing
activities (532,454) (813,992) (714,259)
---------- ---------- ----------
Net increase in cash 289,121 191,427 (96,257)
Cash at beginning of year 244,486 53,059 149,316
---------- ---------- ----------
Cash at end of year $ 533,607 $ 244,486 $ 53,059
========== ========== ==========
</TABLE>
26
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
(14) FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures About
Fair Value of Financial Instruments (FAS No. 107) requires that WFSB
disclose estimated fair values for its financial instruments. Fair value
estimates, methods, and assumptions are set forth below for WFSB's
financial instruments.
Cash and Interest-Bearing Deposits
- ----------------------------------
The carrying amount of cash and interest-bearing deposits is a
reasonable estimate of fair value.
Investments and Mortgage-Backed Securities
- ------------------------------------------
The fair value of investments and mortgage-backed securities is
estimated based on bid prices published in financial newspapers or bid
quotations received from securities dealers.
Stock in FHLB of Indianapolis
- -----------------------------
Fair value of FHLB stock is based on the price at which it may be resold
to the FHLB of Indianapolis.
Loans Receivable
- ----------------
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type, such as owner-occupied
residential mortgage, non-owner-occupied residential mortgage,
construction, credit card, and other consumer. Each loan category is
further segmented into fixed- and adjustable-rate interest terms. The
fair value of loans is estimated by discounting the future cash flows
using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities. For residential mortgage loans, contractual cash flows were
adjusted for prepayment estimates based on industry data.
Residential Loan Servicing
- --------------------------
Fair value of residential loan servicing is estimated based on sales of
similar portfolios adjusted for the characteristics of WFSB's
residential servicing portfolio.
Deposit Liabilities
- -------------------
The fair value of deposits with no stated maturity, such as savings, NOW
and money market accounts, is equal to the amount payable on demand as
of December 31, 1995. The fair value of certificates of deposit is based
on the discounted value of contractual cash flows using the rates
currently offered for deposits of similar remaining maturities.
FHLB Advances
- -------------
Rates available to WFSB at December 31, 1995, for FHLB advances with
similar terms and remaining maturities were used to estimate fair value
of existing FHLB advances.
27
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
The estimated fair values of financial instruments at December 31, 1995
and 1994, are as follows:
<TABLE>
1995 1994
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Financial Instruments amount fair value amount fair value
- --------------------- ------------ ------------ ------------ ------------
Assets
- ------
<S> <C> <C> <C> <C>
Cash $ 1,297,780 $ 1,297,780 $ 918,123 $ 918,123
Interest-bearing deposits 3,231,181 3,231,181 1,287,171 1,287,171
Investment securities 3,165,453 3,201,275 4,541,177 4,481,251
Investment in mutual fund 3,893,547 3,893,547 3,801,131 3,801,131
Mortgage-backed securities 5,806,838 5,835,652 6,698,068 6,306,257
Stock in FHLB of
Indianapolis 1,758,200 1,758,200 1,632,600 1,632,600
Loans receivable, net 189,201,446 190,370,082 181,268,786 177,362,945
Residential loan servicing - 57,000 - 63,000
Loans held for sale 459,750 464,872 - -
Liabilities
- -----------
Deposits (152,144,187) (153,318,037) (149,352,703) (149,026,072)
FHLB advances (34,200,000) (35,455,102) (29,700,000) (28,448,500)
------------ ------------ ------------ ------------
22,470,008 $ 21,336,450 $ 21,094,353 $ 18,377,906
============ ============
Non-financial Instruments
- -------------------------
Assets 4,440,296 4,376,240
Liabilities (1,225,785) (1,318,679)
------------ ------------
Shareholders' equity $ 25,684,519 $ 24,151,914
============ ============
</TABLE>
The fair value estimates are made at a point in time based on relevant
market information and information about the financial instruments.
Because no market exists for a significant portion of WFSB's financial
instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and such other
factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could significantly
affect the estimates.
The fair value estimates are based on existing financial instruments
without attempting to estimate the value of anticipated future business
and the value of assets and liabilities that are not considered
financial instruments.
28
<PAGE>
<PAGE>
WORKINGMENS
CAPITAL
HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
(15) RECENT REGULATORY DEVELOPMENTS
The deposits of WFSB are presently insured by the Savings Association
Insurance Fund ("SAIF"), which together with the Bank Insurance Fund
("BIF"), which insures the deposits of commercial banks, are the two
deposit insurance funds administered by the Federal Deposit Insurance
Corporation ("FDIC"). On August 8, 1995, the FDIC revised the premium
schedule for BIF-insured banks to provide a range of .04% to .31% of
deposits (as compared to the former rate of .23% to .31% of deposits for
both BIF- and SAIF-insured institutions) in anticipation of the BIF
achieving its statutory reserve ratio. The lower premiums for BIF
members became effective in the third quarter of 1995 after FDIC
verification that the BIF had achieved the statutory reserve ratio on
June 30, 1995. As a result, BIF members generally will pay lower
premiums than the SAIF members.
The FDIC has indicated that the SAIF will not be adequately
recapitalized until 2002, absent a substantial increase in premium rates
or the imposition of special assessments. As a result of the disparity,
SAIF members could be placed at a significant, competitive disadvantage
to BIF members due to higher costs for deposit insurance. Proposed
legislation under consideration by the United States Congress provides
for a one-time assessment to be imposed on all deposits assessed at the
SAIF rates, as of March 31, 1995, in order to recapitalize the SAIF. The
special assessment rate is anticipated to be .75% to .85% of insured
deposits. If the legislation is enacted in its current form, it is
anticipated the assessment would be payable in the first calendar
quarter of 1996. Accordingly, this special assessment would
significantly increase non-interest expense and adversely affect the
WFSB's results of operations during 1996. Conversely, depending upon
WFSB's capital level and supervisory rating, and assuming, although
there can be no assurance, that the insurance premium levels for BIF and
SAIF members are again equalized, deposit insurance premiums could
decrease significantly in future periods.
29
<PAGE>
<PAGE>
SHAREHOLDER
INFORMATION
Market Information
The common stock of Workingmens Capital Holdings, Inc. is traded on
the National Association of Securities Dealers Automated Quotation
System, National Market System, under the symbol "WCHI." WCHI's stock
appears in the Wall Street Journal under the abbreviation WorkmnCap. As
of March 1, 1996, there were 1,395 shareholders of record of WCHI's
Common Stock.
Transfer Agent and Registrar
Fifth Third Bank is WCHI's stock transfer agent and registrar. Fifth
Third Bank maintains WCHI's shareholder records. To change name, address
or ownership of stock, to report lost certificates, or to consolidate
accounts, contact:
Fifth Third Bank
Corporate Trust Operations
38 Fountain Square Plaza MD-1090F5
Cincinnati, OH 45202
(513) 579-5320 or (800) 837-2755
General Counsel
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
Independent Auditor
KPMG Peat Marwick LLP
2400 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, Indiana 46204-2452
Shareholder & General Inquiries
WCHI is required to file an Annual Report on Form 10-K for its fiscal
year ended December 31, 1995 with the Securities and Exchange
Commission. Copies of this annual report may be obtained without charge
upon written request to:
Jane C. Thoma
Investor Relations
Workingmens Capital Holdings, Inc.
P.O. Box 2689
Bloomington, Indiana 47402-2689
(812) 332-9465
Office Location
121 East Kirkwood Avenue
Bloomington, Indiana 47408
(812) 332-9465
Branch Location
609 West Temperance
Ellettsville, Indiana 47429
(812) 876-6584
30
<PAGE>
<PAGE>
DIRECTORS AND
OFFICERS
Directors
William E. Benckart has been a director of Stone Belt Freight Lines,
Inc. and East West Freight Brokers, Inc. since prior to 1988. In
December, 1991, he became Chairman of the Board of B&B Investments,
Inc., a motor carrier holding company.
Richard R. Haynes has been President of WCHI since its initial
organization in February, 1990. He has been employed by WFSB since 1961.
He served in various positions until 1984 when he was elected President
and Chief Operating Officer. In January, 1987, he was elected President
and Chief Executive Officer. Mr. Haynes was a director of the FHLB of
Indianapolis until January 1, 1992. Mr. Haynes has been active in both
the Savings and Loan League of Indiana and the U. S. League of Savings
Institutions, and is past Chairman of the Indiana League of Savings
Institutions. He also is active in community organizations and is past
President of the Bloomington Kiwanis Club and is a past member of the
Board of Directors of the Bloomington Chamber of Commerce. Mr. Haynes is
also a member of the appraisal institute MAI.
J. H. McCutchen was first employed by WFSB in 1946 and served as Chief
Executive Officer and President of WFSB from January, 1964 to January,
1984. From 1984 through 1986, Mr. McCutchen served as Chairman and Chief
Executive Officer. In 1987, he retired as Chief Executive Officer but
remained Chairman of its Board of Directors until January, 1990. Mr.
McCutchen has been Senior Vice President of One System, Inc. (an
annuities marketing firm) since January, 1991.
David Rogers was a partner in the Rogers & Jones law firm from 1955
until September, 1993, and is a former Indiana State Senator and past
President of the Monroe County Bar Association. Mr. Rogers currently
serves as an of-counsel with the law firm of Jones, McGlasson &
Benckart.
Robert H. Shaffer is Professor Emeritus of the schools of Business and
Education at Indiana University. Mr. Shaffer has served as an
educational consultant and lecturer in educational administration for
Indiana University since 1981. He became Chairman of the Board of WFSB
in January, 1990.
Joseph A. Walker has been Vice President/Treasurer of WCHI since
February, 1990. He has been employed by WFSB since 1975. He served as
Senior Vice President, Chief Financial Officer, and Secretary/Treasurer
from 1988 to January, 1996, when he became Chief Operating Officer,
Chief Financial Officer and Treasurer. Mr. Walker is a certified public
accountant.
Robert J. Wetnight has been a majority owner and manager of Bloomington
Paint & Wallpaper Co. since 1983.
WORKINGMENS CAPITAL
HOLDINGS, INC. WORKINGMENS FEDERAL SAVINGS BANK
Officers Officers
- -------- --------
RICHARD R. HAYNES RICHARD R. HAYNES JOHN E. FLEENER
President and Director President, Chief Executive Vice President
Officer and Director
JOSEPH A. WALKER MICHAEL S. POLLEY
Vice President/Treasurer JOSEPH A. WALKER Vice President
and Director Chief Operating Officer,
Chief Financial Officer, JANE C. THOMA
JERRY L. HAYS Treasurer and Director Assistant Vice President
Vice President/Secretary
JERRY L. HAYS JANET L. PATTERSON
R. WM. RICHARDSON, JR. Senior Vice President Assistant Vice President
Vice President and Secretary
STELLA M. BRUCE
R. WM. RICHARDSON, JR. Assistant Vice President
Senior Vice President
31
<PAGE>
<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
Orange County Bank United States of America
The First National Bank of Oblong United States of America
<PAGE>
<PAGE>
The Citizens National Bank of Tell City United States of America
ONB Bank United States of America
The National Bank of Carmi United States of America
City National Bank 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 Unites States of America
Old National Trust Company - Illinois United States of America
Old National Trust Company - Kentucky United States of America
Consumer Acceptance Corporation Indiana
<PAGE>
<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>
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of
our report dated January 24, 1996 included in Old National
Bancorp's Form 10-K for the year ended December 31, 1995 and to
all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
August 7, 1996
<PAGE>
<PAGE>
EXHIBIT 23.03
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Workingmens Capital Holdings, Inc.
We consent to the use of our reports incorporated herein by
reference and to the reference to our firm under the heading
"EXPERTS" in the prospectus.
Indianapolis, Indiana
August 9, 1996
<PAGE>
<PAGE>
EXHIBIT 23.04
August 9, 1996
LETTER OF CONSENT
Board of Directors
Old National Bancorp
420 Main Street
Evansville, IN 47708
Board of Directors
Workingmens Capital Holdings, Inc.
121 East Kirkwood Avenue
Bloomington, IN 47402
Gentlemen:
We consent to the inclusion in this Registration Statement
on Form S-4 of Old National Bancorp of the form of our opinion
set forth as Appendix B to the Proxy Statement-Prospectus, which
is part of this Registration Statement, and to the summarization
thereof in the Proxy Statement-Prospectus under the caption
"Opinion of Financial Advisor to WCHI."
Sincerely,
\s\ Michael A. Murphy
Michael A. Murphy
Managing Director
MAM/sbl
7/12/2
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 10, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 12, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 11, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 11, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 19, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 15, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 11, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 10, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 11, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 8, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 10,1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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/ LOUIS L. MERVIS
-------------------
DIRECTOR
Louis L. Mervis
---------------
Printed Name
Dated: April 10, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 10, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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/ MARJORIE Z. SOYUGENC
------------------------
DIRECTOR
Marjorie Z. Soyugenc
--------------------
Printed Name
Dated: April 25, 1996
<PAGE>
<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,
Ronald W. Seib 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) The
National Bank of Carmi and (ii) Workingmens Capital Holdings,
Inc.; (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: April 10, 1996
<PAGE>
<PAGE>
EXHIBIT 99
PROXY
WORKINGMENS CAPITAL HOLDINGS, INC.
Special Meeting of Shareholders
______________, 1996
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 Workingmens Capital Holdings, Inc. ("WCHI") which
the undersigned beneficially holds of record on ______________,
1996 and would be entitled to vote at the Special Meeting of
Shareholders of WCHI, to be held at the main office of WCHI, 121
East Kirkwood Avenue in Bloomington, Indiana, on __________,
1996, at ___:____ __.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 WCHI recommends a vote FOR approval and
adoption of the Agreement of Affiliation and Merger specified in
Item 1 below.
1. Approval and adoption of the Agreement of Affiliation and
Merger ("Agreement"), dated as of April 8, 1996, among WCHI,
ONB, ONB Bank and Workingmens Federal Savings Bank, pursuant
to which WCHI will merge with and into ONB and each
outstanding share of WCHI common stock will be converted
into the right to receive 0.64 shares of ONB common stock,
subject to adjustment in event of certain changes in the
market price of ONB common stock, all as provided for in the
Agreement.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, on such other matters as may properly
come before the Special 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 SPECIAL MEETING, THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE
BOARD OF DIRECTORS OF WCHI. THIS PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
DATED: ______________, 1996 _________________________
(Signature of Shareholder)
_________________________
(Signature of Shareholder)
<PAGE>
<PAGE>
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.
MM:awc:SS-73429-3
<PAGE>
