SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 0-10888
OLD NATIONAL BANCORP
(Exact name of Registrant as specified in its charter)
INDIANA 35-1539838
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 Main Street,
Evansville, Indiana 47708
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code, (812) 464-1200
Former name, former address and former fiscal year, if changed since last
reports.
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, and (2) has been subject to the filing
requirements for at least the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock. The Registrant has one class of common stock (no par value)
with approximately 27.6 million shares outstanding at June 30, 1998.
OLD NATIONAL BANCORP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheet
June 30, 1998 and 1997, and December 31, 1997. . . 3
Consolidated Statement of Income
Three and six months ended June 30, 1998 and 1997. 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1998 and 1997. . . . . . 5
Notes to Consolidated Financial Statements . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 10
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . 14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 15
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . 16
2
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED BALANCE SHEET
June 30, June 30, December 31,
($ in thousands) (unaudited) 1998 1997 1997
Assets
<S> <C> <C> <C>
Cash and due from banks. . . . . . . . . . $175,111 $147,208 $159,241
Money market investments . . . . . . . . . 2,530 1,968 7,868
Investment Securities:
U.S. Treasury . . . . . . . . . . . . . . 102,255 136,187 117,188
U.S. Government agencies
and corporations. . . . . . . . . . . . 974,201 966,627 951,444
Obligations of states and political
subdivisions. . . . . . . . . . . . . . 468,912 452,773 452,933
Other . . . . . . . . . . . . . . . . . . 51,407 42,447 45,411
--------- --------- ----------
Total Investment Securities . . . . . . 1,596,775 1,598,034 1,566,976
--------- --------- ----------
Loans
Commercial. . . . . . . . . . . . . . . . 969,164 848,305 878,690
Commercial real estate. . . . . . . . . . 800,568 698,014 762,505
Residential real estate . . . . . . . . . 1,454,220 1,340,959 1,416,963
Consumer credit, net of unearned income . 660,446 675,595 672,043
Financial . . . . . . . . . . . . . . . . 20,000 1,800 --
--------- --------- ----------
Total Loans . . . . . . . . . . . . . . 3,904,398 3,564,673 3,730,201
Allowance for loan losses . . . . . . . (48,875) (44,358) (46,233)
--------- --------- ----------
Net Loans . . . . . . . . . . . . . . . 3,855,523 3,520,315 3,683,968
Other assets . . . . . . . . . . . . . . . 349,590 267,413 270,162
--------- --------- ----------
Total Assets. . . . . . . . . . . . . . $5,979,529 $5,534,938 $5,688,215
========= ========= =========
Liabilities
Deposits
Noninterest bearing demand. . . . . . . . $485,879 $463,723 $502,276
Interest bearing:
NOW accounts. . . . . . . . . . . . . . 439,283 442,740 450,381
Savings accounts. . . . . . . . . . . . 466,982 484,410 469,589
Money market accounts . . . . . . . . . 651,171 645,765 660,240
Certificates of deposit
$100,000 and over . . . . . . . . . . . 363,841 318,544 359,695
Other time. . . . . . . . . . . . . . . 1,996,359 1,877,979 1,856,549
--------- --------- ----------
Total Deposits. . . . . . . . . . . . . 4,403,515 4,233,161 4,298,730
--------- --------- ----------
Short-term borrowings. . . . . . . . . . . 488,435 479,130 442,686
Other borrowings . . . . . . . . . . . . . 520,212 289,744 388,832
Accrued expenses and other liabilities . . 81,973 67,155 80,764
--------- --------- ----------
Total Liabilities . . . . . . . . . . . . 5,494,135 5,069,190 5,211,012
Shareholders' Equity
Common stock. . . . . . . . . . . . . . . 27,639 26,401 27,457
Capital surplus . . . . . . . . . . . . . 296,942 252,354 299,988
Retained earnings . . . . . . . . . . . . 145,165 178,377 133,218
Accumulated other comprehensive
income, net of tax . . . . . . . . . . 15,648 8,616 16,540
--------- --------- ----------
Total Shareholders' Equity. . . . . . . . 485,394 465,748 477,203
--------- --------- ----------
Total Liabilities and Shareholders'
Equity. . . . . . . . . . . . . . . . . $5,979,529 $5,534,938 $5,688,215
========= ========= =========
The accompanying notes are an integral part of this statement.
</TABLE>
3
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Six Months Ended
($ in thousands except share June 30, June 30,
and per share data) (Unaudited) 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Interest income
Loans including fees:
Taxable . . . . . . . . . . . . . . . $83,069 $77,494 $163,839 $152,325
Non-taxable . . . . . . . . . . . . . 1,398 1,073 2,642 2,040
Investment securities:
Taxable . . . . . . . . . . . . . . . 17,839 18,900 36,288 36,802
Non-taxable . . . . . . . . . . . . . 5,828 5,931 11,489 11,927
Money market investments . . . . . . . 228 222 689 398
------- ------- ------- -------
Total Interest Income . . . . . . . . 108,362 103,620 214,947 203,492
------- ------- ------- -------
Interest Expense
Savings, NOW and
money market accounts . . . . . . . . 10,725 11,279 21,541 22,423
Certificates of deposit of
$100,000 and over . . . . . . . . . . 5,573 4,031 10,922 7,807
Other time deposits. . . . . . . . . . 27,251 26,274 53,212 51,481
Short-term borrowings. . . . . . . . . 5,235 5,605 10,421 10,479
Other borrowings . . . . . . . . . . . 6,327 3,954 12,255 7,614
------- ------- ------- -------
Total Interest Expense. . . . . . . . 55,111 51,143 108,351 99,804
------- ------- ------- -------
Net Interest Income . . . . . . . . . 53,251 52,477 106,596 103,688
Provision for loan losses. . . . . . . 3,097 2,811 6,100 5,630
------- ------- ------- -------
Net Interest Income After Provision
For Loan Losses . . . . . . . . . . . 50,154 49,666 100,496 98,058
------- ------- ------- -------
Noninterest Income
Trust fees . . . . . . . . . . . . . . 3,071 2,752 6,244 5,553
Service charges on deposit accounts. . 4,071 3,968 7,921 7,802
Loan servicing fees. . . . . . . . . . 1,528 1,391 2,952 2,796
Securities gains (losses), net . . . . 32 (4) 51 (10)
Other income . . . . . . . . . . . . . 4,865 3,096 9,008 6,406
------- ------- ------- -------
Total Noninterest Income. . . . . . . 13,567 11,203 26,176 22,547
------- ------- ------- -------
Noninterest Expense
Salaries and employee benefits . . . . 22,242 21,930 44,624 43,590
Occupancy expense. . . . . . . . . . . 2,254 2,253 4,492 4,595
Equipment expense. . . . . . . . . . . 3,146 3,149 6,225 6,164
Marketing expense. . . . . . . . . . . 1,522 1,413 2,839 2,703
FDIC insurance expense . . . . . . . . 168 178 347 328
Data processing expense. . . . . . . . 1,308 1,305 2,551 2,574
Supplies expense . . . . . . . . . . . 970 1,047 1,955 2,115
Communication and transportation expense 1,644 1,619 3,446 3,326
Other expenses . . . . . . . . . . . . 5,617 5,289 10,811 10,187
------- ------- ------- -------
Total Noninterest Expense . . . . . . 38,871 38,183 77,290 75,582
------- ------- ------- -------
Income from continuing operations
before income taxes. . . . . . . . . 24,850 22,686 49,382 45,023
Provision for income taxes . . . . . . 7,495 6,807 14,912 13,539
------- ------- ------- -------
Income from continuing operations. . . 17,355 15,879 34,470 31,484
Income (loss) from discontinued
operations . . . . . . . . . . . . . (9,193) 393 (9,854) 846
------- ------- ------- -------
Net Income . . . . . . . . . . . . . . $8,162 $16,272 $24,616 $32,330
======= ======= ======= =======
Income from continuing operations
per common share
Basic . . . . . . . . . . . . . . . . $ 0.62 $ 0.57 $1.25 $1.13
======= ======= ======= =======
Diluted . . . . . . . . . . . . . . . $ 0.61 $ 0.56 $1.21 $1.10
======= ======= ======= =======
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . 27,724,321 27,784,456 27,583,960 27,890,074
========== ========== ========== ==========
Diluted . . . . . . . . . . . . . 28,895,185 29,380,412 28,958,427 29,485,098
========== ========== ========== ==========
The accompanying notes are an integral part of this statement.
</TABLE>
4
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30,
($ in thousands) (unaudited) 1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . $ 24,616 $ 32,330
-------- --------
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . 4,828 4,667
Amortization of intangible assets . . . . . . . . . . 684 642
Net premium amortization on investment securities . . 1,371 780
Provision for loan losses . . . . . . . . . . . . . . 6,100 5,630
Loss (gain) on sale of investment securities. . . . . (51) 10
Gain on sale of assets. . . . . . . . . . . . . . . . (391) (126)
(Increase)decrease in interest receivable . . . . . . 523 (914)
Increase in other assets. . . . . . . . . . . . . . . (81,285) (27,433)
Increase in accrued expenses and
other liabilities. . . . . . . . . . . . . . . . . 1,815 1,790
-------- --------
Total adjustments . . . . . . . . . . . . . . . . . (66,406) (14,954)
-------- --------
Net cash flows provided by (used in)
operating activities . . . . . . . . . . . . . . . (41,790) 17,376
-------- --------
Cash flows from investing activities:
Purchase of investment securities available-for-sale . (305,534) (243,057)
Proceeds from maturities and paydowns of investment
securities available-for-sale . . . . . . . . . . . . 213,323 139,396
Proceeds from sales of investment securities available-
for-sale. . . . . . . . . . . . . . . . . . . . . . . 59,594 20,711
Net principal collected from (loans made to) customers:
Commercial and financial . . . . . . . . . . . . . . (111,164) (53,488)
Mortgage . . . . . . . . . . . . . . . . . . . . . . (123,038) (78,194)
Consumer . . . . . . . . . . . . . . . . . . . . . . 8,952 20,183
Proceeds from sale of mortgage loans . . . . . . . . . 47,967 11,112
Proceeds from sale of premises and equipment . . . . . 410 45
Purchase of premises and equipment . . . . . . . . . . (4,658) (5,137)
-------- --------
Net cash flows used in investing activities . . . . . (214,148) (188,429)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits and short-term borrowings:
Noninterest bearing demand. . . . . . . . . . . . . . (16,397) (48,558)
NOW Accounts. . . . . . . . . . . . . . . . . . . . . (11,098) (6,746)
Savings accounts. . . . . . . . . . . . . . . . . . . (2,607) (4,361)
Money market accounts . . . . . . . . . . . . . . . . (9,069) (60,028)
Certificates of deposit $100,000 and over . . . . . . 4,146 60,556
Other time deposits . . . . . . . . . . . . . . . . . 139,810 24,274
Short-term borrowings . . . . . . . . . . . . . . . . 45,749 143,145
Other borrowings. . . . . . . . . . . . . . . . . . . 139,794 51,589
Cash dividends paid. . . . . . . . . . . . . . . . . . (12,671) (11,924)
Common stock repurchased . . . . . . . . . . . . . . . (20,648) (18,223)
Common stock reissued, net of shares used to convert
subordinated debentures. . . . . . . . . . . . . . . 9,461 4,213
-------- --------
Net cash flows provided by financing activities . . . 266,470 133,937
-------- --------
Net increase (decrease) in cash and cash equivalents . 10,532 (37,116)
Cash and cash equivalents at beginning of period . . . 167,109 186,292
-------- --------
Cash and cash equivalents at end of period . . . . . . $177,641 $149,176
======== ========
Total interest paid. . . . . . . . . . . . . . . . . . $106,437 $ 98,034
======== ========
Total taxes paid . . . . . . . . . . . . . . . . . . . . $ 13,484 $ 14,061
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
5
Old National Bancorp
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of the
Old National Bancorp and its affiliate entities (ONB). All significant
intercompany transactions and balances have been eliminated. In the opinion
of management, the consolidated financial statements contain all the normal
and recurring adjustments necessary to present fairly the financial position
of ONB as of June 30, 1998 and 1997 and December 31, 1997, and the results of
its operations for the three and six months ended June 30, 1998 and 1997 and
its cash flows for the six months ended June 30, 1998 and 1997. All prior
period information has been restated for the effects of business combinations
accounted for as pooling-of-interests.
2. Net Income Per Share
Net income per common share computations are based on the weighted average
number of common shares outstanding during the periods presented. A 5% stock
dividend was paid January 29, 1998 to shareholders of record on January 8,
1998. All share and per share data presented herein have been restated for
the effects of this stock dividend.
Net income on a diluted basis is computed as above and assumes the conversion
of ONB's 8% convertible subordinated debentures (Note 5). For the diluted
computation, net income is adjusted for the assumed reduction in interest
expense, net of income tax effect, and an additional 1.1 million for the
quarter and 1.3 million year-to-date common shares are assumed to be issued in
connection with the conversion of the remaining outstanding debentures.
<TABLE>
<CAPTION>
Earnings Per Share Reconciliation
($ and shares in thousands except per share data):
For the three For the three
months ended months ended
June 30, 1998 June 30, 1997
---------------------------- ----------------------------
Per-Share Per-Share
Income Shares Amount Income Shares Amount
Basic EPS
<S> <C> <C> <C> <C> <C> <C>
Income from continuing
operations available to
common stockholders $17,355 27,724 $0.62 $15,879 27,784 $0.57
===== =====
Effect of Dilutive
securities:
Stock options 88 96
8% convertible debentures 264 1,083 368 1,500
------- ------ ------- ------
Diluted EPS
Income from continuing
operations available to
common stockholders
+ assumed conversions $17,619 28,895 $0.61 $16,247 29,380 $0.56
======= ====== ===== ======= ====== =====
6
For the six For the six
months ended months ended
June 30, 1998 June 30, 1997
--------------------------- ----------------------------
Per-Share Per-Share
Income Shares Amount Income Shares Amount
Basic EPS
Income from continuing
operations available to
common stockholders $34,470 27,584 $1.25 $31,484 27,890 $1.13
===== =====
Effect of Dilutive
securities:
Stock options 88 95
8% convertible debentures 611 1,286 736 1,500
------- ------ ------- ------
Diluted EPS
Income from continuing
operations available to
common stockholders
+ assumed conversions $35,081 28,958 $1.21 $32,220 29,485 $1.10
======= ====== ===== ======= ====== =====
</TABLE>
3. Merger and Divestiture Activity
Pending Mergers
On May 27, 1998, ONB and Southern Bancshares LTD (Southern) of Carbondale,
Illinois, executed a definitive merger agreement. ONB will issue common
shares in exchange for all of the outstanding common shares of Southern. The
transaction will be accounted for as a pooling-of-interests. The merger is
subject to the approvals of Southern's shareholders and regulatory
authorities. As of June 30, 1998, Southern's financial statements reflected
$248.1 million in total assets, net loans of $186.0 million, total deposits of
$220.2 million and net income for the six months then ended of $1,670
thousand. This merger is expected to be consummated in the first quarter of
1999.
Discontinued Operations
In April 1998, ONB announced it would look at exit strategies from its sub-
prime lending affiliate, Consumer Acceptance Corporation (CAC). During June
1998, ONB finalized the sale of CAC's sub-prime auto loans, which closed in
July 1998, and has included the loss in the second quarter results. ONB has
accounted for this entity as discontinued operations on the consolidated
financial statements. Net assets of the entity which were included in other
assets were $71.1 million at June 30, 1998, $71.6 million at June 30, 1997 and
$79.2 Million at December 31, 1997. Income(loss) from discontinued operations
for the three and six months ended June 30, 1998 and 1997 were as follows ($
in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Income (loss) before taxes ------- ----- ------- ------
from operations of discontinued
operations $(6,833) $654 $(7,943) $1,411
Income tax expense (benefit) (2,734) 261 (3,183) 565
------- ----- ------- ------
Income (loss) from operations of
discontinued operations (4,099) 393 (4,760) 846
------- ----- ------- ------
Loss before taxes from disposal
of discontinued operations (8,489) 0 (8,489) 0
Income tax expense (benefit) (3,395) 0 (3,395) 0
------- ----- ------- ------
Loss from disposal of discontinued
operations (5,094) 0 (5,094) 0
------- ----- ------- ------
Income (loss) from discontinued
operations $(9,193) $393 $(9,854) $846
======= ===== ======= ======
Income (loss) from discontinued
operations per common share
Basic $(0.33) $0.01 $(0.36) $0.03
======= ===== ======= =====
Diluted $(0.32) $0.01 $(0.34) $0.03
======= ===== ======= =====
4. Investments
The market value and amortized cost of investment securities as of June 30,
1998 are set forth below ($ in thousands):
Market Value Amortized Cost
Available for Sale, at market value $1,596,775 $1,570,710
========== ==========
5. Borrowings
ONB has outstanding $22.0 million of 8% convertible subordinated debentures
which are due September 15, 2012, unless previously converted or redeemed.
The debentures are convertible at any time prior to maturity into shares of
common stock of ONB at a conversion rate of 49.218 shares for each one
thousand dollars principal amount of debentures. Interest on the debentures
is payable on March 15 and September 15 of each year. The debentures are
redeemable in whole or in part at the option of ONB at a premium to par value.
Beginning September 15, 1998, debenture holders are entitled to an annual
sinking fund of $2.5 million principal amount of debentures annually less
conversions and redemptions. The debentures are subordinated in right of
payment to all senior indebtedness of ONB. As of June 30, 1998, 1.1 million
authorized and unissued common shares were reserved for conversion of the
debentures.
ONB has registered Series A Medium Term Notes in the principal amount of $50
million. The series has been fully issued. As of June 30, 1998, a total of
$32 million of the notes were outstanding, with maturities ranging from one to
five years and fixed interest rates of 6.1% to 7.0%. At June 30, 1997, ONB
had outstanding $44 million of medium term notes.
ONB also has registered Medium Term Notes in the principal amount of $150
million. These notes may be issued with maturities of nine months or more and
rates may either be fixed or variable. As of June 30, 1998, a total of $64.3
million of the notes were outstanding, with maturities ranging from four to
nine years and fixed interest rates from 6.4% to 7.0%. No notes were issued
under this program as of June 30, 1997.
As of June 30, 1998, ONB has $80 million in unsecured lines of credit with
unaffiliated banks. These lines of credit include various informal
arrangements to maintain compensating balances. The compensating balances are
maintained for the benefit of the parent company by affiliate banks which
normally maintain correspondent balances with unaffiliated banks. As of June
30, 1998, $13.4 million was outstanding under these lines bearing interest
rates that averaged 6.33%. As of June 30, 1997, $67.8 million was
outstanding.
8
6. Interest Rate Contracts
ONB uses interest rate contracts such as interest swaps and caps to manage its
interest rate risk. These contracts are designated as hedges of specific
assets and liabilities. The net interest receivable or payable on swaps is
accrued and recognized as an adjustment to the interest income or expense of
the hedged asset or liability. The premium paid for an interest rate cap is
included in the basis of the hedged item and is amortized as an adjustment to
the interest income or expense on the related asset or liability.
At June 30, 1998, ONB has an interest rate swap with a notional value of $20
million. The contract is an exchange of interest payments with no affect on
the principle amounts of the underlying hedged liability. The fair value of
the swap contract was $0.1 million as of June 30, 1998. ONB pays the
counterparty a variable rate based on three-month LIBOR and receives a fixed
rate of 6.50%. The contract terminates on or prior to March 13, 2008.
At June 30, 1998, ONB has interest rate cap agreements (caps) with notional
amounts of $11 million with a fair value of $0.1 million. These caps are
indexed to LIBOR with a strike price of 5.00% and mature in 1999. The
carrying value at June 30, 1998 was $0.1 million.
ONB is exposed to losses if a counterparty fails to make its payments under a
contract in which ONB is in the receiving position. Although collateral or
other security is not obtained, ONB minimizes its credit risk by monitoring
the credit standing of the counterparties and anticipates that the
counterparties will be able to fully satisfy their obligation under the
agreements.
7. Impact of Accounting Changes
Effective January 1, 1998, ONB adopted Statement of Financial Accounting
Standards (SFAS) No. 130 "Reporting Comprehensive Income" which establishes
standards for reporting and display of comprehensive income and its
components. The new rule requires reporting of comprehensive income, which
includes net income and all other nonowner changes in equity during the
period.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
($ in Thousands)
<S> <C> <C> <C> <C>
Net income $ 8,162 $ 16,272 $ 24,616 $ 32,330
Unrealized gains(losses)on securities:
Unrealized holding gains(losses)
arising during period, net of tax (1,764) 7,519 (861) 730
Less: reclassification adjustment
for (gains) losses realized
in net income, net of tax (19) 2 (31) 6
------- -------- -------- --------
Net unrealized gains (losses) (1,783) 7,521 (892) 736
------- -------- -------- --------
Comprehensive income $ 6,379 $ 23,793 $ 23,724 $ 33,066
======= ======== ======== ========
</TABLE>
ONB also adopted SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information" which establishes standards for reporting information on
operating segments. Segment data will be disclosed starting December 31,
1998, including interim periods. The adoption of the above statement did not
have a material impact on ONB's disclosures.
9
PART I. FINANCIAL INFORMATION
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following management's discussion and analysis is presented to provide
information concerning the financial condition of ONB as of June 30, 1998, as
compared to June 30, 1997 and December 31, 1997, and the results of operations
from continuing operations for the three and six months ended June 30, 1998
and 1997.
Financial Condition
ONB's assets at June 30, 1998 were $5.980 billion, a 8.0% increase since June
1997 and a 5.1% increase since December 1997. Earning assets, which consist
primarily of money market investments, investment securities and loans, grew
6.6% over the prior year. During the past year, the mix of earning assets
reflected loan growth of 9.5% while money market investments and investment
securities remained steady. Since December 1997, earning assets increased
3.7% with loans growing 4.7% and investment securities and money market
investments increasing 1.6%.
At June 30, 1998, total risk assets (defined as loans 90 days or more past
due, nonaccrual and restructured loans and foreclosed properties) increased
slightly to $19.0 million from $18.8 million as of December 31, 1997. As of
these dates, risk assets in total were 0.49% and 0.50%, respectively, of total
loans and foreclosed properties.
June 30, December 31,
1998 1997
Nonaccrual loans $12,499 $11,233
Restructured loans 231 248
Foreclosed properties 2,315 2,881
------ ------
Total Non-Performing Assets 15,045 14,362
Past due 90 days or more 3,962 4,405
------ ------
Total Risk Assets $19,007 $18,767
====== ======
Risk assets as a % of total
loans and foreclosed properties 0.49% 0.50%
==== ====
As of June 30, 1998, the recorded investment in loans for which impairment has
been recognized in accordance with SFAS No. 114 and 118 was $5.8 million with
no related allowance and $42.5 million with $9.7 million of related allowance.
ONB's policy for recognizing income on impaired loans is to accrue earnings
unless a loan becomes nonaccrual. When loans are classified as nonaccrual,
interest accrued during the current year is reversed against earnings;
interest accrued in the prior year, if any, is charged to the allowance for
loan losses. Cash received while a loan is classified nonaccrual is recorded
to principal.
For the six months ended June 30, 1998, the average balance of impaired loans
was $49.6 million and $1.6 million of interest was recorded.
ONB's consolidated loan portfolio is well diversified and contains no
concentrations of credit in any particular industry exceeding 10% of its
portfolio. ONB has minimal exposure to construction lending or leveraged
buyouts and no exposure in credits to foreign or lesser-developed countries.
Total deposits at June 30, 1998, increased $170.4 million or 4.0% compared to
June 1997. Brokered CD's, included in other time, increased $172.9 million
10
since June 1997. Since December 1997, total deposits increased $104.8 million
or 2.4% with Brokered CD's increasing $150.6 million in this same period.
Other categories had minimal fluctuations.
Short-term borrowings, comprised of Federal funds purchased, securities sold
under agreements to repurchase and other short-term borrowings, increased $9.3
million since June 1997. Since December 1997, ONB's short-term borrowings
increased $45.8 million.
Capital
Total shareholders' equity increased $19.6 million since June 1997 and has
increased $8.2 million since December 1997. Since June 1997, accumulated
other comprehensive income, primarily net unrealized gain on investment
securities, increased $7.0 million. During the first six months of 1998,
accumulated other comprehensive income decreased $0.9 million and $8.3 million
of subordinated debentures converted to common stock.
ONB's consolidated capital position remains strong as evidenced by the
following comparisons of key industry ratios:
<TABLE>
<CAPTION>
Regulatory Guidelines June 30, June 30, December 31,
------------------------
Minimum Well-Capitalized 1998 1997 1997
------- ---------------- ---- ---- ----
Risk-based capital:
<S> <C> <C> <C> <C> <C>
Tier 1 capital to total
avg assets (leverage ratio). . . . 4.00% 5.00% 7.83% 8.18% 7.95%
Tier 1 capital to risk-adjusted
total assets . . . . . . . . 4.00 6.00 11.82 12.46 12.16
Total capital to risk-adjusted
total assets . . . . . . . . 8.00 10.00 13.64 14.56 14.24
Shareholders' equity to total assets N/A N/A 8.12 8.41 8.39
Each of ONB's affiliate banks have capital ratios which exceed regulatory
minimum and well-capitalized guidelines.
</TABLE>
Liquidity and Asset/Liability Management
ONB continually monitors its liquidity and actively manages its
asset/liability position. The purpose of liquidity management is to match the
sources of funds with anticipated customer borrowings and withdrawals and
other obligations. The primary purpose of asset/liability management is to
minimize the effect on net income of changes in interest rates and to maintain
a prudent match within specified time periods of rate-sensitive assets and
rate-sensitive liabilities.
ONB also uses net interest income simulation modeling to better quantify the
impact of potential interest rate fluctuations on net interest income. With
this understanding, management can best determine possible balance sheet
changes, pricing strategies, and appropriate levels of capital and liquidity
which allows ONB to generate strong net interest income while controlling and
monitoring interest rate risk. ONB simulates a gradual change in rates of 200
basis points up or down over 12 months and sustained for an additional 12
months. The policy limit for the maximum negative impact on net interest
income over 12 months is 10%. At June 30, 1998 the model's fluctuation has
not materially changed from December 31, 1997.
Using static gap, ONB's rate-sensitive assets at June 30, 1998 were 78% of
rate-sensitive liabilities in the 1-180 day maturity category and 83% in the
181-365 day category. These figures compared to 79% and 89% on December 31,
1997 and 79% and 89% on June 30, 1997. ONB's funds management committee meets
bi-monthly to closely monitor and effect changes as needed in the consolidated
rate-sensitivity position.
Year 2000
With the new millennium drawing near, some computers and software throughout
the world may be unable to properly handle dates after December 31, 1999. ONB
has developed a plan to address its risk, and has identified and assessed its
11
critical software and hardware. ONB is following a four step approach which
includes assessment, renovation, validation and implementation, with awareness
being a top priority within and throughout each phase. This approach allows
ONB to systematically identify and evaluate all areas of our corporation in a
timely and effective manner. All mission critical items have completed the
assessment phase and are on schedule to complete the renovation and validation
phases by 12/31/98. Updates are reported to executive management of the
holding company and the status of the project are reviewed periodically by the
corporate and affiliate board of directors. At this time the estimated
cost of Year 2000 compliance is not expected to be material to ONB.
Results of Operations
Income from Continuing Operations
Income from continuing operations for the six months ended June 30, 1998 was
$34.5 million, a 9.5% increase from the same period 1997. Income from
continuing operations for the second quarter of 1998 was up 9.3% over 1997.
Basic net income from continuing operations per common share for the second
quarter of 1998 and for the six months ended June 30, 1998 were $0.62 and
$1.25, respectively.
The company's return on average assets (ROA) for the second quarter of 1998
was 1.19% compared to 1.17% for 1997. Year-to-date ROA percentages were 1.19%
in 1998 and 1.17% for 1997. Return on average equity (ROE) for the quarter
and the first six months of 1998 were 14.61% and 14.68%, respectively,
excluding unrealized security gains(losses). These compare favorably to 1997
ROE results of 14.02% and 13.94% for similar periods. Growth in net interest
income and other income generated the net income improvements.
Net Interest Income/Net Interest Margin (taxable equivalent basis)
Year-to-date net interest income for 1998 was $113,521 a 2.7% increase over
1997. Net interest income for the second quarter of 1998 was $56,785 compared
to $55,908 in 1997, a 1.6% increase over the prior year. The net interest
margin for the second quarter was 4.19% and 4.39% for 1998 and 1997,
respectively. The year-to-date net interest margin percentage in 1998 was
4.22% compared to 4.38% in 1997. The lower net interest margin resulted from
the lower and flatter yield curve and our investment in bank owned life
insurance discussed in noninterest income. Increases in earning assets offset
the declining yields to contribute to an improved net interest income.
Provision and Allowance for Loan Losses
The provision for loan losses was $3.1 million in the second quarter of 1998
compared to $2.8 million in the second quarter of 1997. Year-to-date, the
provision for loan losses of $6.1 million compares to $5.6 million in 1997.
ONB's net charge-offs were 0.21% of average loans for the current quarter,
compared to 0.17% in the second quarter of 1997. For the first six months,
net charge-offs were 0.18% in 1998 compared to 0.16% in 1997. The provision
and net charge-off levels in the first half of 1997 were low. Levels in 1998
are comparable with the second half of 1997.
The allowance for loan losses is continually monitored and evaluated both
within each affiliate bank and at the holding company level to provide
adequate coverage for potential losses. ONB maintains a comprehensive loan
review program to provide independent evaluations of loan administration,
credit quality, loan documentation, and adequacy of the allowance for loan
losses. The allowance for loan losses to end-of-period loans of 1.25% at June
30, 1998 compares to 1.24% in 1997. The allowance for loan losses covers all
under-performing loans by 2.6 times at June 30, 1998 compared to 2.5 times at
December 31, 1997.
12
Noninterest Income
Excluding securities gains (losses), noninterest income increased 20.8% in the
three months ended June 30, 1998 as compared to the same period in 1997. For
the first six months, this increase was 15.8%. Both increases were fueled by
several factors. Trust fees were up 11.6% for the second quarter and 12.4% for
the first six months and income from bank owned life insurance (BOLI)
policies, purchased in March 1998 and included in other income, which
generated $1.2 million income in the second quarter, $1.3 million year-to-date.
There was no BOLI income in 1997. Brokerage income rose over 1997 in
excess of 40% for both periods and reached $0.9 million for the quarter and
$1.8 million for the first six months. Insurance commission income increased
over 17% for these periods and added income of $1.3 million for the quarter
and $2.5 million for the first six months. Most other categories of
noninterest income were comparable to last year's results.
Noninterest Expense
Noninterest expense increased 1.8% in the second quarter of 1998 compared to
1997. For the first six months noninterest expense increased 2.3% from 1997.
Salaries and benefits, together the largest individual component of
noninterest expense, increased 1.4% in the second quarter of 1998 compared to
1997. For the first six months, this percentage increased 2.4%. Other expense
increased 6.2% over the second quarter of 1997 and 6.1% over 1997 year-to-date.
These increases were mainly related to new outsourcing charges, which
would have replaced previous salaries and benefit expense, professional fees,
and loan related expenses. Most other categories of noninterest expense
experienced relatively small changes between the years.
Provision for Income Taxes
The provision for income taxes, as a percentage of pre-tax income, remained
relatively unchanged in the second quarter at 30.1% compared to 30.0% in 1997.
For the first six months, this percentage was 30.2% for 1998 and 30.1% in
1997.
13
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
NONE
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
If a shareholder proposal is introduced at the 1999 Annual Meeting of
Shareholders without any discussion of the proposal in the proxy statement,
and if the proponent does not notify the Company on or before March 1, 1999,
as required by SEC Rule 14a-4(c)(1), of the intent to raise such proposal at
the Annual Meeting of Shareholders, then proxies received by the Company for
the 1999 Annual Meeting will be voted by the persons named as proxies in their
discretion with respect to such proposal. Notice of such proposals is to be
given to the Secretary of the Company in writing at its principal executive
office, 420 Main Street, P.O. Box 718, Evansville, Indiana 47705.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits as required by Item 601 of Regulation S-K.
(10.1) Severance Agreement, as amended
(10.2) Employment Agreement
(27) Financial Data Schedule
(b) ONB did not file a current report on Form 8-K during the quarter ended
June 30, 1998.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLD NATIONAL BANCORP
(Registrant)
By: s/s Ronald W. Seib
Ronald W. Seib
Vice President
Corporate Controller
Date: August 14, 1998
15
INDEX OF EXHIBITS
Regulation S-K
Reference
(Item 601)
10.1 Severance Agreement, as amended
10.2 Employment Agreement
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OLD NATIONAL
BANCORP'S JUNE 30, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 175,111
<INT-BEARING-DEPOSITS> 2,530
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,596,775
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 3,904,398
<ALLOWANCE> 48,875
<TOTAL-ASSETS> 5,979,529
<DEPOSITS> 4,403,515
<SHORT-TERM> 488,435
<LIABILITIES-OTHER> 81,973
<LONG-TERM> 520,212
0
0
<COMMON> 27,639
<OTHER-SE> 457,755
<TOTAL-LIABILITIES-AND-EQUITY> 5,979,529
<INTEREST-LOAN> 166,481
<INTEREST-INVEST> 47,777
<INTEREST-OTHER> 689
<INTEREST-TOTAL> 214,947
<INTEREST-DEPOSIT> 85,675
<INTEREST-EXPENSE> 108,351
<INTEREST-INCOME-NET> 106,596
<LOAN-LOSSES> 6,100
<SECURITIES-GAINS> 51
<EXPENSE-OTHER> 10,811
<INCOME-PRETAX> 49,382
<INCOME-PRE-EXTRAORDINARY> 34,470
<EXTRAORDINARY> (9,854)
<CHANGES> 0
<NET-INCOME> 24,616
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.21
<YIELD-ACTUAL> 4.22
<LOANS-NON> 12,499
<LOANS-PAST> 3,962
<LOANS-TROUBLED> 231
<LOANS-PROBLEM> 101,574
<ALLOWANCE-OPEN> 46,233
<CHARGE-OFFS> 5,266
<RECOVERIES> 1,808
<ALLOWANCE-CLOSE> 48,875
<ALLOWANCE-DOMESTIC> 48,875
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
Exhibit 10.1
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into and effective as
of the 1st day of January, 1998, 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
_______________________________________.
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, 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; and
WHEREAS, to that end, the Company and Executive entered into an Agreement on the
1st day of January, 1996, which Agreement has been extended annually by mutual
agreement of the Company and Executive; and
WHEREAS, the Board of Directors of the Company approved changes to the Agreement
at its January 22, 1998 Board Meeting; and
WHEREAS, to effectuate the changes, the Company desires to enter into a new
Agreement with Executive on substantially the same terms and conditions as the
previous Agreement with the additional benefits as authorized by the Board of
Directors.
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 term of this Agreement shall begin on January 1, 1998, and continue
for a two (2) year period ending December 31, 1999, unless terminated as
hereinafter provided. This Agreement shall be subject to an annual review
and may be extended for successive one (1) 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(d) hereof upon any termination of Executive's employment
by the Company during the one (1) 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 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(d) if a change in control occurs during the term of
this Agreement and Executive terminates his employment during the
one (1) 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 incentive,
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;
(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. In addition to the rights the Executive has under the provisions of
Sections 2(a) and 2(b) above, the Executive shall have the exclusive
right, within the thirty (30) days immediately following the one (1)
year period after a change in control occurs, to elect to resign and
terminate his employment with the Company for any reason, and at
such time Executive shall be entitled to receive all compensation
and benefits set forth in Section 2(d) of this Agreement.
<PAGE>
d. Subject to Sections 2(a), 2(b) and 2(c) above, the Company shall pay
to Executive the amounts provided in (i), (ii), (iii), (iv) and (v)
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.
(i) Within thirty (30) days of his date of termination under
Section 2(a), 2(b) or 2(c), 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.
(c) An amount computed by the actuary for Old National
Bancorp Pension Restoration Plan (the "Restoration
Plan") based on the actuarial assumptions for the
Restoration Plan and the Restoration 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
Restoration 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
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
Restoration Plan continues for that two (2) year period,
minus the present value of the Executive's Accrued
Benefit under the Restoration Plan as computed on the
date of termination.
(d) An amount equal to the Company descretionary and
matching contribution that would have been made on
behalf of the Executive to the OLD NATIONAL BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN (the "ESOP Plan") at the
end of each ESOP Plan Year, had the Executive been in
the employ of the Company for two (2) consecutive Plan
years after his termination of employment and had
received the same compensation from the Company for
determining benefits under the ESOP Plan, being paid to
him at the time of his termination of employment for the
two (2) year period, and assuming Credited Service as
defined in the ESOP Plan continues for that two (2) year
period.
<PAGE>
(e) An amount equal to the Company descretionary and
matching contribution that would have been made on
behalf of the Executive to the SUPPLEMENTAL DEFERRED
COMPENSATION PLAN FOR SELECTED EXECUTIVE EMPLOYEES OF
OLD NATIONAL BANCORP AND SUBSIDIARIES (the "Supplemental
Plan") at the end of each Supplemental Plan Year, had
the Executive been in the employ of the Company for two
(2) consecutive Plan years after his termination of
employment and had received the same compensation from
the Company for determining benefits under the
Supplemental Plan, being paid to him at the time of his
termination of employment for the two (2) year period,
and assuming Credited Service as defined in the
Supplemental Plan continues for that two (2) year
period.
(ii) Within thirty (30) days of his date of termination under
Sections 2(a) and (b) or within thirty (30) days of his
election to resign and terminate employment under Section
2(c), the Company shall further pay to Executive a lump sum
single cash payment 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.
(iii) Within thirty (30) days of his date of termination under
Sections 2(a)and (b) or within thirty (30) days of his
election to resign and terminate employment under Section
2(c), the Company shall cause to be vested in the
Executive's name those awarded but unvested shares which
are held in the Executive's account in the Old National
Bancorp Restricted Stock Plan, including the shares awarded
to Executive but not yet earned in the year in which
Executive's employment is terminated.
(iv) Within thirty (30) days of his date of termination under
Sections 2(a) and (b) or within thirty (30) days of his
election to resign and terminate employment under Section
2(c), the Company shall further cause to be paid to Executive
in a lump sum single cash payment all the amounts the
Executive is entitled to receive under the Company's Short
Term Incentive Plan ("STIP") in the year in which Executive's
employment is terminated. For purposes of determining the
STIP amount to be paid to Executive, the Company will use the
Executive's then current annualized salary multiplied by the
greater of the following percentages:
(a) An amount that is the result of averaging the
Executive's STIP percentage for the prior two plan
years; or
(b) The Executive's projected STIP percentage as approved by
the Company's Compensation Committee at the time of any
merger announcement.
(v) 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.
<PAGE>
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(d) 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(d) of the application of 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.
e. For the purposes of this Agreement, a "change in control" shall
mean:
(i) a 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.
f. 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 Sections 2(b) and 2(c) shall
be communicated by written "Notice of Termination" to the other
party, delivered in a manner provided in Section 13 hereof. Any
"Notice of Termination" given by Executive pursuant to Sections 2(b)
and 2(c), 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(d), shall
indicate the specific provision in this Agreement 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.
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.
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:
Old National Bancorp
Post Office Box 718
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
__________________________________________________________
OLD NATIONAL BANCORP
__________________________________________________________
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT has been made and entered into as of the 10th day
of August, 1998 ("Effective Date"), between Old National Bancorp
("Company"), and John S. Poelker (the "Executive").
Section 1. Operation of Agreement. This Agreement shall be effective
and operative from and after the date set forth above (the "Effective
Date").
Section 2. Employment; Period of Employment.
A. The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to become employed by the Company, upon and subject to the
terms and conditions set forth herein.
B. The Company shall employ the Executive on a full-time basis during his
employment hereunder (the "Period of Employment"), which shall be deemed to
have commenced on the Effective Date and which shall end two (2) years from
the Effective Date (the "Term").
Section 3. Position, Duties, Responsibilities.
The Executive shall serve as Senior Vice President, Chief Financial Officer
of the Company, and shall have such commensurate responsibilities, duties
and authority as may from time to time be assigned to the Executive by the
Chief Executive Officer or the Chief Operating Officer of the Company. The
Executive shall devote substantially all his time, energy and skill during
reasonable business hours to the service of the Company. The Executive's
office shall be located at the Company's headquarters, which shall be
located in the Evansville, Indiana metropolitan area. Without his consent,
the Executive will not be required to relocate outside of the Evansville,
Indiana metropolitan area.
Section 4. Compensation and Related Matters.
A. For all services rendered by the Executive in any capacity during the
Period of Employment, including, without limitation, services as an
executive officer, director, or member of any committee of the Company or
of any other subsidiary, division, or affiliate of the Company, the
Executive shall be paid as compensation:
1. Salary. During the Period of Employment, the Company shall pay
him an annual base salary at a rate of $220,000 per year, such salary
to be paid in substantially equal payments in accordance with the
Company's practices for other executive employees. Such annual salary
shall be subject to increase annually (generally, effective the first
pay in January) at the discretion of the Chief Executive Officer of
the Company, taking into account the Executive's performance of his
duties during the preceding year and other relevant factors, and
subject to the approval of the Board's Compensation Committee.
2. Incentives. The Company shall grant to the Executive, executive
performance awards, stock options, stock appreciation rights, bonuses,
and other incentive grants ("Incentive Compensation Awards") at least
in equal amount, and of substantially the same kind and subject to
substantially the same terms and conditions, as those awarded to each
other executive of the Company during the Period of Employment, under
all executive compensation plans, programs, and policies existing on
the Effective Date and all such plans, programs, and policies that may
thereafter be adopted for the benefit of executives of the Company or
employees of the Company generally. Without limiting the foregoing,
for the 1998 Plan Year, the Executive shall have a 40% incentive
opportunity under the Company's Short Term Incentive Plan. In 1998
the Executive's Short Term Incentive will be based on the total salary
payable to Executive from the Effective Date through December 31,
1998. In addition, the Company shall, as of the Effective Date, award
the Executive 1,600 Restricted Stock Shares plus 400 additional
Restricted Stock Shares as "seed" shares under the Company's
Restricted Stock Plan, which are subject to all provisions of the
Restricted Stock Plan.
B. Other Benefits. The Executive shall be entitled to participate in or
receive benefits under all employee benefit plans, arrangements and
perquisites made available by the Company now or in the future to its
executives and key management employees, subject to and on a basis
consistent with the terms conditions and overall administration of such
plans, arrangements and perquisites. Without limiting the foregoing, the
Company agrees to pay Executive's initiation fee and monthly dues to the
Rolling Hills Country Club. In addition, the Company agrees to provide the
Executive with a company vehicle with a value up to $36,000. Use of the
vehicle and other conditions are subject to the Company Vehicle Policy.
The Executive shall be provided a copy of the Vehicle Policy prior to the
Effective Date. Nothing paid to the Executive under any plan, arrangement
or perquisite presently in effect or made available in the future shall be
deemed to be in lieu of the salary and other compensation payable to the
Executive pursuant to this Section 4.
C. Vacation. The Executive shall be entitled to the number of vacation
days in each calendar year determined in accordance with the Company's
vacation plan or policy in effect from time to time for their executives
generally. The Executive shall also be entitled to all paid holidays given
by the Company to their executives.
D. Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive reimbursement for all reasonable
and customary expenses incurred by him in performing services hereunder,
including all expense of travel and living expenses while away from home on
business or at the request of and in the service of the Company; provided,
that such expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company and approved by the
Board.
Section 5. Termination by the Company.
A. The Executive's employment under this Agreement may be terminated by
the Company, without a breach by the Company of its obligations under this
Agreement, only for "Cause," death or Disability. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment during the Term upon the happening of any of the following: (I)
the willful and continued failure by the Executive substantially to perform
his duties hereunder (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness) which continues
after the Company has given Executive written notice of the same; (II) any
act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Company; (III) conviction of a felony or any crime involving
moral turpitude; (IV) the requirement of a federal or state regulatory
agency having jurisdiction over the Company; or (V) the Executive engages
in other serious misconduct of such a nature that the continued employment
of the Executive may reasonably be expected to adversely affect the
business or properties of the Company. As a condition to the Company's
ability to terminate the Executive's employment for Cause, the Company
shall have given or delivered to the Executive a Notice of Termination (as
defined below) stating that, in the good faith opinion of the Chief
Executive Officer, the Executive was guilty of the conduct set forth in
clauses (I), (II), (III), (IV), or (V) of the preceding sentence. While
the Company may not terminate the Executive's employment for Cause without
complying with the preceding sentence, the good faith determination
provided by the Chief Executive Officer will not be dispositive as to
whether a termination for Cause hereunder has in fact occurred. Whether a
termination for Cause hereunder has in fact occurred will be governed by
whether Executive is in fact guilty of the conduct described under the
definition of "Cause". For purposes of this Agreement, a "Notice of
Termination" means a written notice which (a) indicates the specific
termination provision of this Agreement/ relied upon, (b) sets forth the
specific facts and circumstances (including specific acts and omissions by
the Executive) claimed to provide a basis for termination of the
Executive's employment under the provisions so indicated and (c) specifies
the termination date (which date shall not be less than 15 days after the
giving of such notice).
For purposes of this Subsection A, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
B. Death. The Executive's employment shall terminate upon his death.
C. Disability. If, in the written opinion of a qualified physician
selected by the Company and reasonably approved by the Executive, the
Executive shall become unable to perform his duties hereunder due to
physical or mental illness, and has failed because of such illness, to
render, for 90 days out of any 180 day period, services of the character
contemplated by this Agreement, the Company may terminate the Executive's
employment due to Disability.
D. The effective date of the Executive's termination from employment,
whether for Cause, death, or Disability or for Good Reason as defined in
Section 6 hereof, shall be referred to as "Termination Date". Termination
for Cause shall result in the loss of all unpaid compensation and benefits,
except to the extent that such compensation is earned as of the Termination
Date or benefits are provided in accordance with applicable plan
provisions. Termination due to death or Disability shall result in the
following: loss of all unpaid salary and cash incentive compensation,
except to the extent earned as of the Termination Date (and for this
purpose, the earned cash incentive compensation for the fiscal year in
which the Termination Date occurs will be prorated based on days in the
fiscal year through the Termination Date, and for this purpose and all
purposes of this Agreement, the unpaid cash incentive compensation, if any,
for the fiscal year preceding the fiscal year in which the Termination Date
occurs will be earned in full); all other Incentive Compensation Awards
(including without limitation, unvested Restricted Stock Shares) will
become fully vested and nonforfeitable on the Termination Date; and all
other benefits will be paid in accordance with the terms of the applicable
plans and policies.
Section 6. Termination by the Executive for Good Reason.
A. The Company shall also provide Executive with the benefits set forth
in Section 7 if the Executive terminates his employment for "Good Reason"
defined as follows:
1. Without the express consent of the Executive, the assignment of
the Executive to any duties materially inconsistent with his
positions, duties, responsibilities, or status with the Company
or a substantial reduction of his duties or responsibilities, or
any removal of the Executive from, or any failure to reelect the
Executive to, any positions held by the Executive;
2. A reduction by the Company in the compensation or benefits of the
Executive, or any failure to include the Executive in any
incentive, bonus or benefit plans as may be offered by the
Company from time to time; unless such reduction or exclusion
applies to all other similar executives of the Company;
3. A requirement that without his consent the 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.
4. Any failure of the Company to obtain the assumption of the
obligation to perform this Agreement by any successor; or
5. 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.
B. The Executive shall be required to give the Company a thirty (30) day
written notice of his intent to resign for Good Reason. The notice shall
include a statement of all reasons for such resignation. The Company shall
have 30 days to cure any breach and remedy for such resignation. Failure
by the Executive to provide the required notice by this Section shall
result in the forfeiture by the Executive of all rights, payments, and
benefits granted under Section 7.
Section 7. Severance Benefits.
A. In the event (I) of the termination of the Executive's employment by
the Company without Cause, (ii) of termination of the Executive's
employment by the Executive for Good Reason, or (iii) this Agreement
expires and is not replaced by a successor employment agreement between the
parties and as a result, or at any time thereafter, Executive's employment
is terminated by the Company without Cause or by the Executive for Good
Reason (excluding the reasons set forth in Sections 6(A)4 and 6(A)5 because
the term of this Agreement will have otherwise expired), the Company shall
pay the amounts and benefits described in this Section 7 to the Executive
and these payments shall constitute liquidated damages and shall constitute
full settlement of any claim under law or in equity that he might otherwise
assert against the Company with regard to breach of this Agreement.
1. Executive shall be entitled to payment of any portion of the
Executive's fixed salary which is earned but unpaid as of the date of
termination and to severance pay as follows;
(a) In the event of termination occurring before one year after
the Effective Date, severance pay shall equal the Executive's
then fixed salary for the balance of the Term; or
(b) In the event of termination on or after one year of the
Effective Date, severance pay shall equal the then fixed
salary for a one year period, commencing on the first pay
date following the date of termination.
2. The Company shall pay the Executive in accordance with the
Company's normal payroll practices at the time of termination. The
Company shall withhold from this and all other benefits payable under
this Agreement all federal, state, city, county or other taxes as
shall be required pursuant to any law or governmental regulation or
ruling; and
3. The Company shall cause to be nonforfeitable and vested in the
Executive's name all Incentive Compensation Awards (including without
limitation those awarded but unvested shares which are held in the
Executive's account in the Old National Bancorp Restricted Stock Plan,
including the shares awarded to the Executive but not yet earned in
the year in which the Executive's employment is terminated). In the
event the Old National Bancorp Restricted Stock Plan does not allow
the Company to treat such Restricted Stock Awards as nonforfeitable
and / or vested, the Company shall pay the Executive an amount of cash
compensation which is equivalent to the value of the Restricted Stock
that otherwise would have been payable to the Executive without those
Plan restrictions.
4. The Company shall pay to the Executive in a lump sum single cash
payment of all the amounts the Executive is entitled to receive under
the Company's Short Term Incentive Plan ("STIP") that are earned but
unpaid for the Company's fiscal year preceding the year of termination
and also for the year in which the Executive's employment is
terminated. For purposes of determining the STIP amount to be paid to
the Executive for the year in which Executive's employment is
terminated, the Company will use the Executive's then current
annualized salary multiplied by the greater of the following
percentages:
(a) The Executive's STIP percentage paid for the prior plan
year; or
(b) The Executive's projected STIP percentage as approved by the
Company's Compensation Committee at the time of the
Executive's "Termination Date".
5. Until the expiration of the Term, the Company will maintain, in
full force and effect for the continued benefit of the Executive (and
his eligible dependents as of the Termination Date, to the extent such
person or persons were covered under or actually insured by an
employee benefit plan of the Company on the Termination Date), each
employee benefit plan, including any group medical plan, dental care
plan, disability insurance plan, life or other insurance or death
benefit plan, or other similar present group employee benefit plan or
program, in which the Executive participated immediately prior to the
Termination Date, unless an essentially equivalent and no less
favorable benefit is provided by the Company. If the terms of any
employee benefit plan of the Company do not permit continued
participation by the Executive following the Termination Date, then
the Company shall arrange to provide to the Executive, at the end of
the period of coverage, a benefit substantially similar to, and no
less favorable than, the benefit he was entitled to receive under such
plan. The Executive will be responsible for any and all applicable
insurance premiums the Executive would have paid as an employee
covered by such plans(s) ; and
B. Although the parties to this Agreement do not believe payments made
pursuant to Section 7, hereof would constitute "parachute payments" under
Section 280G of the Internal Revenue Code of 1986, as amended, in the event
that the Company receives a notice of deficiency or an opinion of counsel
to the contrary, no payment shall be made to the Executive hereunder to the
extent such payment would constitute a non-deductible "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as
amended, or similar provisions then in effect. In the event of any
question as to whether any payments otherwise due hereunder constitute
excess parachute payments, the matter shall be determined jointly by the
firm of certified public accountants regularly employed by the Company and
the firm of certified public accountants selected by the Executive, in each
case upon the advice of actuaries to the extent the certified public
accountants consider necessary, and, in the event such accountants are
unable to agree upon a resolution of the question, such matter shall be
determined by an independent firm of certified public accountants selected
by both firms of accountants.
Section 8. Mitigation.
The Executive shall not be required to mitigate the amount of any payments
provided for in Section 7 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in Section 7 be reduced by any
compensation earned by the Executive as a result of employment by another
employer after the Date of Termination, or otherwise.
Section 9. Change in Control.
This Agreement is not intended to duplicate benefits provided to Executive
under the Severance Agreement entered into contemporaneously with this
Agreement. Therefore, all compensation and benefits provided to Executive
under this Agreement shall be offset by all compensation and benefits
provided under the Severance Agreement.
Section 10. Covenant Not to Solicit Company's Customers.
The Executive hereby understands and acknowledges that, by virtue of his
position with the Company, he will have advantageous familiarity and personal
contacts with the Company's customers, wherever located, and the business,
operations and affairs of the Company. Accordingly, while the Executive is
employed by the Company, and at all locations for a period of one (1) year
after termination of the Executive's employment with the Company for any
reason (whether with or without cause or whether by the Company or the
Executive), the Executive shall not, directly or indirectly, or individually
or jointly, (i) solicit in any manner, seek to obtain or service the business
of any party which is a customer of the Company at the time of such
termination or any party which was a former customer or a prospective
customer of the Company during the one (1) year period immediately preceding
such termination, (ii) request or advise any customers or suppliers of the
Company to terminate, reduce, limit or change their business or relationship
with the Company, or (iii) induce, request or attempt to influence any
employee of the Company to terminate his employment with the Company.
Section 11. Covenant Not to Compete or be Employed by Competitors.
The Executive hereby understands and acknowledges that, by virtue of his
position with the Company, he will have advantageous familiarity and personal
contacts with the Company's customers, wherever located, and the business,
operations and affairs of the Company. Accordingly, while the Executive is
employed by the Company and within a fifty (50) mile radius of the City of
Evansville, Indiana for a period of one (1) year after termination of the
Executive's employment with the Company for any reason (whether with or
without cause, or whether by the Company or the Executive), the Executive
shall not, directly or indirectly, or individually or jointly, as owner,
shareholder, member, investor, partner, proprietor, principal, director,
officer, employee, agent, representative, consultant or otherwise, engage in,
assist another party in engaging in or provide services to any party engaging
in any business, operation or venture that competes with the business of the
Company as conducted at any time during the Executive's employment by the
Company.
Section 12. Confidentiality and Company Records.
A. The Executive agrees not to disclose, either while in the Company's
employ or at any time thereafter, to any person not employed by the Company,
or not engaged to render service to the Company, any confidential information
obtained by him while in the employ of the Company, including, without
limitation, any of the Company's customers or trade secrets; provided,
however, that this provision shall not preclude the Executive from use or
disclosure of information known generally to the public or of information not
considered confidential by persons engaged in the business conducted by the
Company or from disclosure required by law or Court order.
B. The Executive agrees that all records and copies of the records
pertaining to the financial affairs, operations, customers and business of
the Company and their affiliates, subsidiaries and division, including, but
not limited to, customer lists and trade secrets, that are made or received
by the Executive in the course of his employment by the Company shall be the
property of the Company, and agrees to keep such documents subject to the
Company's custody and control and to surrender to the Company such of those
documents as are still in his possession at the termination of his
employment. The Executive agrees not to disclose or give possession of such
documents or records to anyone except authorized representatives of the
Company. The Executive further agrees to return to the Company, at the
Company's main office, any and all such documents or records and other
property of the Company promptly upon termination of his employment.
C. The Executive agrees that a breach of Section 11 absolves the Company's
obligation to provide any and all benefits set forth in this Agreement.
Section 13. 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 the 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 the 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 the Executive and the Company.
Section 14. 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.
Section 15. Governing Law
This Agreement is being delivered in and shall be governed by the laws of the
State of Indiana.
Section 16. 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:
John S. Poelker Old National Bancorp
420 Main Street Post Office Box 718
Evansville, Indiana 47708 Evansville, Indiana 47705
ATTENTION: Chief Executive Officer
Section 17 Indemnification.
The Company shall indemnify Executive for acts and omissions occurring while
he is employed hereunder to the fullest extent permitted under applicable
law.
Section 18 Survival of Severance Provisions.
The provisions of Sections 5(D), 7 and 17 hereof shall survive the
termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
EXECUTIVE
__________________________________________________________
John S. Poelker
OLD NATIONAL BANCORP
__________________________________________________________
James A. Risinger, Chairman and Chief Executive Officer
