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 March 31, 1999
[ ] 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 46.1 million shares
outstanding at March 31, 1999.
OLD NATIONAL BANCORP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheet
March 31, 1999 and 1998, and December 31, 1998 3
Consolidated Statement of Income
Three months ended March 31, 1999 and 1998 4
Consolidated Statement of Cash Flows
Three months ended March 31, 1999 and 1998 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 16
INDEX OF EXHIBITS 17
2
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED BALANCE SHEET
March 31, March 31, December 31,
($ in thousands) (unaudited) 1999 1998 1998
Assets
<S> <C> <C> <C>
Cash and due from banks ---------------------- $135,504 $145,277 $165,094
Money market investments---------------------- 27,372 9,311 16,699
Investment Securities
U.S. Treasury ------------------------------ 81,002 113,296 92,741
U.S. Government agencies
and corporations ------------------------ 1,105,102 972,176 995,492
Obligations of states and political
Subdivisions ---------------------------- 511,780 452,982 491,139
Other -------------------------------------- 55,956 50,118 57,302
--------- --------- ---------
Total Investment Securities ------------- 1,753,840 1,588,572 1,636,674
--------- --------- ---------
Loans
Commercial --------------------------------- 1,071,652 916,798 1,027,792
Commercial real estate --------------------- 971,407 778,186 944,813
Residential real estate -------------------- 1,736,648 1,543,900 1,688,572
Consumer credit, net of unearned income ---- 699,780 710,241 693,079
--------- --------- ---------
Total Loans ----------------------------- 4,479,487 3,949,125 4,354,256
Allowance for loan losses --------------- (54,487) (50,639) (51,847)
--------- --------- ---------
Net Loans ------------------------------- 4,425,000 3,898,486 4,302,409
Other assets --------------------------------- 301,302 372,747 295,735
--------- --------- ---------
Total Assets ---------------------------- $6,643,018 $6,014,393 $6,416,611
========= ========= =========
Liabilities
Deposits
Noninterest bearing demand ----------------- $515,176 $493,377 $553,704
Interest bearing:
NOW accounts ---------------------------- 516,250 484,093 539,169
Savings accounts ------------------------ 516,270 505,058 501,780
Money market accounts ------------------- 678,566 653,171 678,484
Certificates of deposit
$100,000 and over ----------------------- 449,877 396,214 390,123
Other time ------------------------------ 2,116,555 1,983,725 2,005,598
--------- --------- ---------
Total Deposits -------------------------- 4,792,694 4,515,638 4,668,858
--------- --------- ---------
Short-term borrowings ------------------------ 566,767 388,952 506,320
Other borrowings ----------------------------- 659,153 502,863 629,868
Accrued expenses and other liabilities ------- 89,131 90,409 91,920
--------- --------- ---------
Total Liabilities -------------------------- 6,107,745 5,497,862 5,896,966
--------- --------- ---------
Shareholders' Equity
Common stock ------------------------------- 46,131 29,498 30,388
Capital surplus ---------------------------- 352,376 308,251 350,256
Retained earnings -------------------------- 123,884 161,577 119,902
Accumulated other comprehensive
income, net of tax ----------------------- 12,882 17,205 19,099
--------- --------- ---------
Total Shareholders= Equity ------------------ 535,273 516,531 519,645
--------- --------- ---------
Total Liabilities and Shareholders'
Equity ----------------------------------- $6,643,018 $6,014,393 $6,416,611
========= ========= =========
The accompanying notes are an integral part of this statement.
</TABLE>
3
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
($ and shares in thousands except March 31,
per share data) (Unaudited) 1999 1998
<S> <C> <C>
Interest income
Loans including fees:
Taxable ----------------------------------- $89,329 $84,704
Non-taxable ------------------------------- 1,735 1,258
Investment securities:
Taxable ----------------------------------- 18,802 19,057
Non-taxable ------------------------------- 6,200 5,692
Money market investments -------------------- 389 604
------- -------
Total Interest Income --------------------- 116,455 111,315
------- -------
Interest Expense
Savings, NOW and
money market accounts --------------------- 10,326 11,527
Certificates of deposit of $100,000
and over ---------------------------------- 5,787 5,636
Other time deposits ------------------------- 27,255 27,186
Short-term borrowings ----------------------- 5,946 5,200
Other borrowings ---------------------------- 9,078 5,929
------- -------
Total Interest Expense -------------------- 58,392 55,478
------- -------
Net Interest Income ----------------------- 58,063 55,837
Provision for loan losses ------------------- 2,803 3,079
------- -------
Net Interest Income After Provision
For Loan Losses --------------------------- 55,260 52,758
------- -------
Noninterest Income
Trust fees ---------------------------------- 3,478 3,244
Service charges on deposit accounts---------- 4,207 4,132
Loan servicing fees ------------------------- 1,273 1,596
Insurance premiums and commissions ---------- 1,328 1,352
Investment product fees --------------------- 1,313 1,178
Bank-owned life insurance ------------------- 1,100 153
Securities gains net ------------------------ 1,321 45
Other income -------------------------------- 2,061 2,147
------- -------
Total Noninterest Income ------------------ 16,081 13,847
------- -------
Noninterest Expense
Salaries and employee benefits -------------- 25,249 23,542
Occupancy expense --------------------------- 2,591 2,381
Equipment expense --------------------------- 3,236 3,244
Marketing expense --------------------------- 1,327 1,378
FDIC insurance expense ---------------------- 187 186
Data processing expense --------------------- 1,433 1,397
Supplies expense ---------------------------- 1,020 1,035
Communication and transportation expense 1,831 1,861
Other expenses ------------------------------ 6,764 5,676
------- -------
Total Noninterest Expense ----------------- 43,638 40,700
------- -------
Income from continuing operations
before income taxes ----------------------- 27,703 25,905
Provision for income taxes ------------------ 7,693 7,930
------- -------
Income from continuing operations ----------- 20,010 17,975
Loss from discontinued operations ----------- 0 (661)
------- -------
Net Income ---------------------------------- $20,010 $17,314
======= =======
Income from continuing operations
per common share
Basic ------------------------------------- $0.43 $0.39
===== =====
Diluted ----------------------------------- $0.42 $0.38
===== =====
Net income per common share
Basic ------------------------------------- $0.43 $0.38
===== =====
Diluted ----------------------------------- $0.42 $0.37
===== =====
Weighted average common shares outstanding:
Basic ------------------------------------- 46,073 45,773
====== ======
Diluted ----------------------------------- 47,880 48,308
====== ======
The accompanying notes are an integral part of this statement.
</TABLE>
4
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
March 31,
($ in thousands) (unaudited) 1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income ------------------------------------------------- $ 20,010 $ 17,314
-------- --------
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation --------------------------------------------- 2,656 2,532
Amortization of intangible assets ------------------------ 394 452
Net premium amortization on investment securities -------- 548 539
Provision for loan losses -------------------------------- 2,803 3,079
Gain on sale of investment securities -------------------- (1,321) (45)
Gain on sale of assets ----------------------------------- (17) (259)
(Increase) decrease in interest receivable --------------- (371) 320
Increase in other assets --------------------------------- (4,796) (92,869)
Increase in accrued expenses and
other liabilities ------------------------------------- 959 9,844
-------- --------
Total adjustments ------------------------------------- 855 (76,407)
-------- --------
Net cash flows provided by (used in) operating activities 20,865 (59,093)
-------- --------
Cash flows from investing activities:
Cash and cash equivalents of subsidiary acquired ----------- 5,914 --
Purchase of investment securities available-for-sale ------- (418,343) (132,794)
Proceeds from maturities and paydowns of investment
securities available-for-sale ---------------------------- 208,945 102,385
Proceeds from sales of investment securities available-
for-sale ------------------------------------------------- 101,070 49,190
Net principal collected from (loans made to) customers:
Commercial and financial --------------------------------- (36,226) (13,924)
Mortgage ------------------------------------------------- (68,930) (59,067)
Consumer ------------------------------------------------- (5,599) 15,062
Proceeds from sale of mortgage loans ----------------------- 3,540 23,333
Proceeds from sale of premises and equipment --------------- 116 278
Purchase of premises and equipment ------------------------- (2,614) (3,112)
-------- --------
Net cash flows used in investing activities -------------- (212,127) ( 18,649)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits and short-term borrowings:
Noninterest bearing demand ------------------------------- (55,672) (32,581)
NOW Accounts --------------------------------------------- (22,919) (3,781)
Savings accounts ----------------------------------------- 11,260 594
Money market accounts ------------------------------------ 82 (23,567)
Certificates of deposit $100,000 and over ---------------- 57,719 15,960
Other time deposits -------------------------------------- 97,584 38,003
Short-term borrowings ------------------------------------ 60,447 (53,733)
Other borrowings ----------------------------------------- 29,285 122,420
Cash dividends paid ---------------------------------------- (7,248) (6,410)
Common stock repurchased ----------------------------------- (2,786) (10,507)
Common stock reissued, net of shares used to convert
subordinated debentures ---------------------------------- 4,593 6,689
-------- --------
Net cash flows provided by financing activities ---------- 172,345 53,087
-------- --------
Net decrease in cash and cash equivalents ------------------ (18,917) (24,655)
Cash and cash equivalents at beginning of period ----------- 181,793 179,243
-------- --------
Cash and cash equivalents at end of period ----------------- $162,876 $154,588
======== ========
Total interest paid -------------------------------------- $ 58,987 $ 55,854
======== ========
Total taxes paid ----------------------------------------- $ 7,150 $ 860
======== ========
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 March 31, 1999 and 1998 and December 31,
1998, and the results of its operations for the three months
ended March 31, 1999 and 1998 and its cash flows for the three
months ended March 31, 1999 and 1998. All prior period
information has been restated for the effects of business
combinations accounted for as pooling-of-interests as discussed
in Note 3.
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 28, 1999
to shareholders of record on January 7, 1999. On April 15, 1999,
a three-for-two stock split was declared to shareholders of
record on May 3, 1999. The dividend will be paid May 24, 1999.
All share and per share data presented herein have been restated
for the effects of the stock dividend and stock split.
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 common shares 1.7 million year-to-date,
are assumed to be issued in connection with the conversion of the
remaining outstanding debentures.
Earnings Per Share Reconciliation
($ and shares in thousands except per share data):
For the three For the three
months ended months ended
March 31, 1999 March 31, 1998
Per-Share Per-Share
Income Shares Amount Income Shares Amount
Basic EPS
Income from continuing
operations available to
common stockholders $20,010 46,073 $0.43 $17,975 45,773 $0.39
===== =====
Effect of Dilutive
Securities:
Stock options 104 238
8% convertible debentures 263 1,703 348 2,297
-------- ------ ------- ------
Diluted EPS
Income from continuing
operations available to
common stockholders
+ assumed conversions $20,273 47,880 $0.42 $18,323 48,308 $0.38
======= ====== ===== ======= ====== =====
6
3. Merger and Divestiture Activity
Completed Mergers
On Januray 29, 1999, ONB and Southern Bancshares LTD (Southern)
of Carbondale, Illinois, consummated a merger in which ONB issued
2,552,436 common shares in exchange for all of the shares of
Southern. This transaction was accounted for as a pooling-of-
interests. Net income for Southern prior to merger included in
these statements for the period ended January 29, 1999 was $332
thousand.
On February 5,1999 ONB and Dulaney Bancorp (Dulaney) of Marshall,
Illinois, consummated a merger in which ONB issued 472,284 common
shares in exchange for all the shares of Dulaney. This
transaction was accounted for as a pooling-of-interests without
restatement of prior years due to immateriality.
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. 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 $84.7 million at March
31, 1998. Loss from discontinued operations for the three months
ended March 31, 1998 was as follows ($ in thousands):
Three Months Ended
March 31, 1998
Loss before taxes
from operations of discontinued
operations $(1,111)
Income tax benefit (450)
--------
Loss from operations of
discontinued operations (661)
--------
Loss from discontinued
operations $(661)
=======
Loss from discontinued
operations per common share
Basic $(0.01)
=======
Diluted $(0.01)
=======
4. Investments
The market value and amortized cost of investment securities as
of March 31, 1999 are set forth below ($ in thousands):
Market Value Amortized Cost
Available-for-sale, at market value $1,753,840 $1,732,629
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 77.519 shares for each one thousand dollars
7
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 par value. Beginning September 15, 1998, debenture holders
are entitled to an annual sinking fund contribution of $2.5
million principal amount of debentures less conversions and
redemptions. The debentures are subordinated in right of payment
to all senior indebtedness of ONB. As of March 31, 1999, 1.7
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
March 31, 1999, a total of $32.0 million of the notes were
outstanding, with maturities ranging from one to four years and
fixed interest rates of 6.7% to 7.1%. At March 31, 1998, ONB had
outstanding $34 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 March 31, 1999 and 1998, a total of $64.3 million of the
notes were outstanding, with maturities ranging from one to nine
years and fixed interest rates from 6.4% to 7.0%.
As of March 31, 1999, 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 these unaffiliated banks. As of
March 31, 1999, no balance was outstanding under these lines. As
of March 31, 1998, $19.0 million was outstanding.
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 March 31, 1999, ONB has interest rate swaps with a notional
value of $65 million. The contracts are an exchange of interest
payments with no affect on the principal amounts of the
underlying hedged liability. The fair value of the swaps were
$(1.4) million as of March 31, 1999. ONB pays the counterparty a
variable rate based on three-month LIBOR and receives fixed rates
ranging from 5.375% to 7.0%. The contracts terminate on or prior
to January 28, 2009.
At March 31, 1999, ONB has an interest rate cap agreement (cap)
with a notional amount of $8 million with no fair value. These
caps are indexed to LIBOR with a strike price of 5.00% and mature
in 1999. The carrying value at March 31, 1999 was $0.1 million.
ONB is exposed to losses if a counterparty fails to make its
payments under a contract in which ONB is in the receiving
position. Although collateral or other security is not obtained,
ONB minimizes its credit risk by monitoring the credit standing
of the counterparties and anticipates that the counterparties
will be able to fully satisfy their obligation under the
agreements.
8
7. Comprehensive Income
Three Months Ended
March 31 March 31
1999 1998
($ in Thousands)
Net income $20,010 $17,314
Unrealized gains (losses) on
securities:
Unrealized holding gains (losses)
arising during period, net of tax (5,424) 563
Less: reclassification adjustment
for (gains) losses realized
In net income, net of tax (793) (27)
-------- -------
Net unrealized gains (6,217) 536
-------- -------
Comprehensive income $13,793 $17,850
======== =======
8. Segment Data
Community
Banking Other Total
March 31,1999
Net interest income $58,892 $(829) $58,063
Income tax expense (benefit) 8,850 (1,157) 7,693
Segment profit (loss) 20,993 (983) 20,010
Total assets 6,568,683 74,335 6,643,018
March 31, 1998
Net interest income $56,882 $(1,045) 55,837
Income tax expense (benefit) 8,958 (1,028) 7,930
Segment profit (loss) 19,590 (1,615) 17,975
Total assets 5,923,388 91,005 6,014,393
7. Impact of Accounting Changes
In June 1998 the Financial Accounting Standards Board (FASB)
issued SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities." This statement requires that all derivative
instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period
in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The statement is
effective for all fiscal quarters of all fiscal years beginning
after June 15, 1999 (January 1, 2000 for ONB). ONB doesn't
expect the impact of this statement will be material to the
results of operations or its financial position, due to its
limited use of derivative instruments.
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 March 31, 1999, as compared to March 31, 1998 and December
31, 1998, and the results of operations from continuing
operations for the three months ended March 31, 1999 and 1998.
Financial Condition
ONB's assets at March 31, 1999 were $6.643 billion, a 10.4%
increase since March 1998 and a 3.5% increase since December
1998. Earning assets, which consist primarily of money market
investments, investment securities and loans, grew 12.9% over the
prior year. During the past year, the mix of earning assets
reflected loan growth of 13.4% while money market investments and
investment securities increased a combined 11.5%. Since December
1998, earning assets increased 4.2% with loans growing 2.9% and
investment securities and money market investments increasing
7.7%.
At March 31, 1999, total under-performing assets (defined as
loans 90 days or more past due, nonaccrual and restructured loans
and foreclosed properties) decreased slightly to $23.6 million
from $25.1 million as of December 31, 1998. As of these dates,
under-performing assets in total were 0.53% and 0.58%,
respectively, of total loans and foreclosed properties.
March 31, December 31,
1999 1998
Nonaccrual loans $16,203 $17,034
Restructured loans 173 116
Foreclosed properties 3,107 2,542
------- -------
Total Non-performing Assets 19,483 19,692
------- -------
Past due 90 days or more 4,099 5,389
------- -------
Total Under-performing Assets $23,582 $25,081
======= =======
Unper-performing assets as a % of total
loans and foreclosed properties 0.53% 0.58%
===== =====
As of March 31, 1999, the recorded investment in loans for which
impairment has been recognized in accordance with SFAS No. 114
and 118 was $7.9 million with no related allowance and $43.4
million with $9.0 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 three months ended March 31, 1999, the average balance of
impaired loans was $49.2 million and $0.8 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 March 31, 1999, increased $277.1 million or
6.1% compared to March 1998. Brokered CD's, included in other
10
time, increased $157.9 million since March 1998. Since December
1998, total deposits increased $123.8 million or 2.6% with
brokered CD's increasing $109.3 million in this same period.
Short-term borrowings, comprised of Federal funds purchased,
securities sold under agreements to repurchase and other short-
term borrowings, increased $177.8 million since March 1998 and
$60.4 million since December 1998. Other borrowings, which is
primarily debt from Federal Home Loan Banks, rose $156.3 million
over March 1998 and $29.3 million over December 1998.
Capital
Total shareholders' equity increased $18.7 million since March
1998 and $15.6 million since December 1998. Accumulated other
comprehensive income, primarily net unrealized gain on investment
securities, decreased $4.3 million since March 1998 and $6.2
million since December 1998.
ONB's consolidated capital position remains strong as evidenced
by the following comparisons of key industry ratios:
<TABLE>
<CAPTION>
Regulatory Guidelines March31, December 31,
Minimum Well-Capitalized 1999 1998 1998
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 capital to total
avg assets (leverage ratio) 4.00% 5.00% 7.83% 8.13% 7.94%
Tier 1 capital to risk-adjusted
total assets 4.00 6.00 11.51 12.20 11.40
Total capital to risk-adjusted
total assets 8.00 10.00 13.25 13.99 13.11
Shareholders' equity to total assets N/A N/A 8.06 8.59 8.10
</TABLE>
Each of ONB's affiliate banks have capital ratios which exceed
regulatory minimum and well-capitalized guidelines.
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
allow 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 March 31, 1999 the model's fluctuations has
not materially changed from December 31, 1998.
Using static gap, ONB's rate-sensitive assets at March 31, 1999
were 70% of rate-sensitive liabilities in the 1-180 day maturity
category and 76% in the 181-365 day category. These figures
compared to 78% and 83% on December 31, 1998 and 76% and 85% on
March 31, 1998. ONB's funds management committee meets bi-
monthly to closely monitor and effect changes as needed in the
consolidated rate-sensitivity position.
11
Year 2000
The national and local press have devoted much coverage to the
Year 2000 ("Y2K") issue, also know as the "Millennium Bug". This
refers to the possibility that some computers may be unable to
recognize the date change at the turn of the century. With the
high volume of transactions and electronic data, the banking
industry requires extensive computer capabilities to serve its
customers. With that in mind, ONB has devoted much attention to
its systems to prepare itself for the millennial change.
ONB has successfully completed its Y2K compliance testing of its
mission-critical computer systems and its core processing systems
used to serve its customers. Besides maintaining this status,
ONB is managing its third party system relationships, updating
disaster and contingency plans, and testing nonmission-critical
software. Renovation and testing of software and hardware may
not remove all risks related to Y2K. Alternative methods to
perform key activities will be addressed through contingency
planning.
There has been no significant financial impact to ONB as a result
of the Year 2000 project. ONB's 1998 Y2K expenses were less than
$500 thousand. Much of ONB's software is externally generated
with minimal internal software. Much of the software and hardware
items have been changed, upgraded, or replaced in preparation for
Y2K and have been part of the normal maintenance. While the
company will continue testing and implementing secondary systems
and replacing certain personal computers through 1999, it does
not expect any material impact on earnings associated with these
Y2K compliance efforts.
Results of Operations
Income from Continuing Operations
Income from continuing operations for the three months ended
March 31, 1999 was $20.0 million, an 11.3% increase from the same
period 1998. Basic net income from continuing operations per
common share for the first quarter of 1999 was $0.43 compared to
$0.39 for 1998.
The company's return on average assets (ROA) for the first
quarter of 1999 was 1.25% compared to 1.23% for 1998. Return on
average equity (ROE) for the quarter was 15.93%, which compares
favorably to 1998 ROE results of 14.96%. Growth in net interest
income and other income combined with a lower effective tax rate
generated the net income improvements.
Net Interest Income/Net Interest Margin (taxable equivalent
basis)
Year-to-date net interest income for 1999 was $58.1 million, a
4.0% increase over 1998. The net interest margin for the quarter
was 4.10% and 4.31% for 1999 and 1998, respectively. 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.
12
Provision and Allowance for Loan Losses
The provision for loan losses was $2.8 million in the first
quarter of 1999 compared to $3.0 million in the first quarter of
1998. ONB's net charge-offs were 0.11% of average loans for the
current quarter, compared to 0.15% in the first quarter of 1998.
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
1.22% at March 31, 1999 compares to 1.28% in 1998. The allowance
for loan losses covers all under-performing loans by 2.3 times at
March 31, 1999 compared to 2.0 times at December 31, 1998.
Noninterest Income
Excluding securities gains (losses), noninterest income increased
6.9% in the three months ended March 31, 1999 as compared to the
same period in 1998. Both increases were fueled by several
factors. Trust fees were up 7.2% for the first quarter due to
continued development of new and current trust business. Income
from bank-owned life insurance (BOLI) policies, purchased in
March 1998, generated $1.1 million income in the first quarter
compared to $0.2 million in 1998. Investment product fees rose
over 1998 in excess of 11%. The security gains of $1.3 million
were taken to offset a similar level of non-recurring charges
incurred in connection with the restructuring of ONB's banks into
a single charter. Most other categories of noninterest income
were comparable to last year's results.
Noninterest Expense
Noninterest expense increased 7.2% in the first quarter of 1999
compared to 1998. Salaries and benefits, together the largest
individual component of noninterest expense, increased 7.2% in
the first quarter of 1999 compared to 1998. Other expense
increased 19.2% over the first quarter of 1998. These increases,
primarily professional fees were mainly related to the
restructuring discussed previously. 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,decreased in the first quarter to 27.8% compared to 30.6%
in 1998. Higher levels of BOLI income and other tax exempt
income, as well as favorable state taxation developments helped
lower our effective rate in the first quarter of 1999.
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
At the April 15, 1999 Annual Meeting of Shareholders, the
following matters were submitted to a vote of the shareholders.
Election of Directors - The following directors were elected for
a term of one year.
Vote Count
For Against Abstained Unvoted
David L. Barning 32,819,456 126,168 -- 13,119,971
Richard J. Bond 32,822,039 122,778 -- 13,120,776
Alan W. Braun 32,794,490 162,866 -- 13,108,238
Wayne A. Davidson 32,809,119 135,998 -- 13,120,476
Larry E. Dunigan 32,828,877 116,157 -- 13,120,557
David E. Eckerle 32,811,183 131,448 -- 13,122,960
Phelps L. Lambert 32,828,642 115,533 -- 13,121,418
Ronald B. Lankford 32,827,563 117,335 -- 13,120,695
Lucien H. Meis 32,773,733 171,126 -- 13,120,734
Louis L. Mervis 32,732,093 213,296 -- 13,120,205
Lawrence Prybil 32,676,149 274,475 -- 13,114,968
James Risinger 32,819,223 128,001 -- 13,118,369
John N. Royse 32,788,481 167,984 -- 13,109,174
Marjorie Z. Soyugenc 32,671,227 277,139 -- 13,117,227
Charles D. Storms 32,829,606 213,025 -- 13,122,960
Selection of Independent Public Accountants - Arthur Andersen
LLP, Indianapolis, Indiana Votes For - 32,644,475 Votes Against
- - 158,114 Votes Abstained - 175,775, Unvoted - 13,087,229.
Approval of the Old National Bancorp 1999 Equity Incentive Plan
Votes For - 25,861,479 Votes Against - 2,835,375 Votes Abstained
- - 780,317, Unvoted - 16,588,421.
ITEM 5. Other Information
NONE
14
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits as required by Item 601 of Regulation S-K.
(3(ii)) By-Laws of the Registrant, as amended
(10) The Old National Bancorp 1999 Equity Incentive Plan, as
amended
(27) Financial Data Schedule
(b) ONB did not file a current report on Form 8-K during the
quarter ended March 31, 1999.
15
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 John S. Poelker
John S. Poelker
Senior Vice President
Chief Financial Officer
Date: May 14, 1999
16
INDEX OF EXHIBITS
Regulation S-K
Reference
(Item 601)
3(ii) By-Laws of the Registrant, as amended
10 The Old National Bancorp 1999 Equity Incentive Plan, as
amended
27 Financial Data Schedule
17
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OLD NATIONAL
BANCORP'S MARCH 31, 1999 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 135,504
<INT-BEARING-DEPOSITS> 27,372
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,753,840
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 4,479,487
<ALLOWANCE> 54,487
<TOTAL-ASSETS> 6,643,018
<DEPOSITS> 4,792,694
<SHORT-TERM> 566,767
<LIABILITIES-OTHER> 89,131
<LONG-TERM> 659,153
0
0
<COMMON> 46,131
<OTHER-SE> 489,142
<TOTAL-LIABILITIES-AND-EQUITY> 535,273
<INTEREST-LOAN> 91,064
<INTEREST-INVEST> 25,002
<INTEREST-OTHER> 389
<INTEREST-TOTAL> 116,455
<INTEREST-DEPOSIT> 43,368
<INTEREST-EXPENSE> 58,392
<INTEREST-INCOME-NET> 58,063
<LOAN-LOSSES> 2,803
<SECURITIES-GAINS> 1,321
<EXPENSE-OTHER> 6,764
<INCOME-PRETAX> 27,703
<INCOME-PRE-EXTRAORDINARY> 20,010
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,010
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 4.10
<LOANS-NON> 16,203
<LOANS-PAST> 4,099
<LOANS-TROUBLED> 173
<LOANS-PROBLEM> 114,156
<ALLOWANCE-OPEN> 51,847
<CHARGE-OFFS> 2,216
<RECOVERIES> 1,053
<ALLOWANCE-CLOSE> 54,487
<ALLOWANCE-DOMESTIC> 54,487
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
EXHIBIT 3(ii)
BY-LAWS
OF
OLD NATIONAL BANCORP
ARTICLE I
Section 1. Name. The name of the corporation is Old
National Bancorp ("Corporation").
Section 2. Principal Office of the Resident Agent. The
post-office address of the principal office of the Corporation is
420 Main Street, Evansville, Indiana 47705, and the name and post-
office address of its Resident Agent in charge of such office is
Jeffrey L. Knight, 420 Main Street, Evansville, Indiana 47705.
Section 3. Seal. The seal of the Corporation shall be
circular in form and mounted upon a metal die, suitable for
impressing the same upon paper. About the upper periphery of the
seal shall appear the words "Old National Bancorp" and about the
lower periphery thereof the word "Indiana". In the center of the
seal shall appear the word "Seal".
ARTICLE II
The fiscal year of the Corporation shall begin each year on
the first day of January and end on the last day of December of
the same year.
ARTICLE III
Capital Stock
Section 1. Number of Shares and Classes of Capital Stock.
The total number of shares of capital stock which the Corporation
shall have authority to issue shall be as stated in the Articles
of Incorporation.
Section 2. Consideration for No Par Value Shares. The
shares of stock of the Corporation without par value 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. Upon payment of the consideration fixed by the Board
of Directors, such shares of stock shall be fully paid and
nonassessable.
Section 3. Consideration for Treasury Shares. Treasury
shares may be disposed of by the Corporation for such
consideration as may be determined from time to time by the Board
of Directors.
Section 4. Payment for Shares. The consideration for the
issuance of shares of capital stock of the Corporation may be
paid, in whole or in part, in money, in other property, tangible
or intangible, or in labor actually performed for, or services
actually rendered to the Corporation; provided, however, that the
part of the surplus of the Corporation which is transferred to
stated capital upon the issuance of shares as a share dividend
shall be deemed to be the consideration for the issuance of such
shares. When payment of the consideration for which a share was
authorized to be issued shall have been for which a share was
authorized to be issued shall have been received by the
Corporation, or when surplus shall have been transferred to
stated capital upon the issuance of a share dividend, such share
shall be declared and taken to be fully paid and not liable to
any further call or assessment, and the holder thereof shall not
be liable for any further payments thereon. In the absence of
actual fraud in the transaction, the judgment of the Board of
Directors as to the value of such property, labor or services
received as consideration, or the value placed by the Board of
Directors upon the corporate assets in the event of a share
dividend, shall be conclusive. Promissory notes, uncertified
checks, or future services shall not be accepted in payment or
part payment of the capital stock of the Corporation, except as
permitted by The Indiana General Corporation Act.
Section 5. Certificate for Shares. Each holder of capital
stock of the Corporation shall be entitled to a stock
certificate, signed by the President or a Vice President and the
Secretary or any Assistant Secretary of the Corporation, with the
seal of the Corporation thereto affixed, stating the name of the
registered holder, the number of shares represented by such
certificate, the par value of each share of stock or that such
shares of stock are without par value, and that such shares are
fully paid and nonassessable. If such shares are not fully paid,
the certificates shall be legibly stamped to indicate that
percent which has been paid, and as further payments are made,
the certificate shall be stamped accordingly.
If the Corporation is authorized to issue shares of more
than one class, every certificate shall state the kind and class
of shares represented thereby, and the relative rights,
interests, preferences and restrictions of such class, or a
summary thereof; provided, that such statement may be omitted
from the certificate if it shall be set forth upon the face or
back of the certificate that such statement, in full, will be
furnished by the Corporation to any shareholder upon written
request and without charge.
Section 6. Facsimile Signatures. If a certificate is
countersigned by the written signature of a transfer agent other
than the Corporation or its employee, the signatures of the
officers of the Corporation my be facsimiles. If a certificate
is countersigned by the written signature of a registrar other
than the Corporation or its employee, the signatures of the
transfer agent and the officers of the corporation may be
facsimiles. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of its issue.
Section 7. Transfer of Shares. The shares of capital stock
of the Corporation shall be transferable only on the books of the
Corporation upon surrender of the certificate or certificates
representing the same, properly endorsed by the registered holder
or by his duly authorized attorney or accompanied by proper
evidence of succession, assignment or authority to transfer.
Section 8. Cancellation. Every certificate surrendered to
the Corporation for exchange or transfer shall be cancelled, and
no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in
Section 10 of this Article III.
Section 9. Transfer Agent and Registrar. The Board of
Directors may appoint a transfer agent and a registrar for each
class of capital stock of the Corporation and may require all
certificates representing such shares to bear the signature of
such transfer agent and registrar. Shareholders shall be
responsible for notifying the transfer agent and registrar for
the class of stock held by such shareholder in writing of any
changes in their addresses from time to time, and failure so to
do shall relieve the Corporation, its shareholders, directors,
officers, transfer agent and registrar of liability for failure
to direct notices, dividends, or other documents or property to
an address other than the one appearing upon the records of the
transfer agent and registrar of the Corporation.
Section 10. Lost, Stolen or Destroyed Certificates. The
Corporation may cause a new certificate or certificates to be
issued in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates, the Corporation may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of
such lost, stolen or destroyed certificate or certificates, or
his legal representative, to give the Corporation a bond in such
sum and in such form as it may direct to indemnify against any
claim that may be made against the Corporation with respect to
the certificate alleged to have been lost, stolen or destroyed or
the issuance of such new certificate. The Corporation, in its
discretion, may authorize the issuance of such new certificates
without any bond when in its judgment it is proper to do so.
Section 11. Registered Shareholders. The Corporation shall
be entitled to recognize the exclusive right of a person
registered on its books as the owner of such shares to receive
dividends, to vote as such owner, to hold liable for calls and
assessments, and to treat as owner in all other respects, and
shall not be bound to recognize any equitable or other claims to
or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Indiana.
Section 12. Options to Officers and Employees. The
issuance, including the consideration, of rights or options to
directors, officers or employees of the Corporation, and not to
the shareholders generally, to purchase from the Corporation
shares of its capital stock shall be approved by the shareholders
or shall be authorized by and consistent with a plan approved by
the shareholders.
ARTICLE IV
Meetings of Shareholders
Section 1. Place of Meeting. Meetings of shareholders of
the Corporation shall be held at such place, within or without
the State of Indiana, as may from time to time be designated by
the Board of directors, or as may be specified in the notices or
waivers of notice of such meetings.
Section 2. Annual Meeting. The annual meetings of
shareholders for the election of Directors, and for the
transaction of such other business as may properly come before
the meeting, shall be held on the third Wednesday in March of
each year, if such day is not a holiday, and if a holiday, then
on the first following day that is not a holiday, or in lieu of
such day may be held on such other day as the Board of Directors
may set by resolution, but not later than the end of the fifth
month following the close of the fiscal year of the Corporation.
Failure to hold the annual meeting at the designated time shall
not work any forfeiture or a dissolution of the Corporation, and
shall not affect otherwise valid corporate acts.
Section 3. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Articles of incorporation, may be
called by the Board of Directors or the President and shall be
called by the President or Secretary at the request in writing of
a majority of the Board of Directors, or at the request in
writing of shareholders holding of record not less than one-
fourth of all the shares outstanding and entitled by the Articles
of Incorporation to vote on the business for which the meeting is
being called.
Section 4. Notice of Meetings. A written or printed
notice, stating the place, day and hour of the meeting, and in
case of a special meetings, or when required by any other
provision of The Indiana General Corporation Act, or of the
Articles of Incorporation, as now or hereafter amended, or these
By-Laws, the purpose or purposes for which the meeting is called,
shall be delivered or mailed by the Secretary, or by the officers
or persons calling the meeting, to each shareholder of record
entitled by the Articles of incorporation, as now or hereafter
amended, and by The Indiana General Corporation Act to vote at
such meeting, as such address as appears upon the records of the
Corporation, at least ten (10) days before the date of the
meeting. Notice of any such meetings may be waived in writing by
any shareholder, if the waiver sets forth in reasonable detail
the purpose or purposes for which the meeting is called, and the
time and place thereof. Attendance at any meeting in person, or
by proxy, shall constitute a waiver of notice of such meeting.
Each shareholder, who has in the manner above provided waived
notice of a shareholders' meeting, or who personally attends a
shareholders' meeting, or is represented thereat by a proxy
authorized to appear by an instrument of proxy, shall be
conclusively presumed to have been given due notice of such
meeting. Notice of any adjourned meeting of stockholders shall
not be required to be given if the time and place thereof are
announced at the meeting at which the adjournment is taken,
except as may be expressly required by law.
Section 5. Addresses of Shareholders. The address of any
shareholder appearing upon the records of the Corporation shall
be deemed to be the latest address of such shareholder appearing
on the records maintained by the Transfer Agent for the class of
stock held by such shareholder.
Section 6. Voting at Meetings.
(a) Quorum. The holders of record of a majority of the
issued and outstanding stock of the Corporation entitled to vote
at such meeting, present in person or by proxy, shall constitute
a quorum at all meetings of stockholders for the transaction of
business, except where otherwise provided by law, the Articles of
Incorporation or these By-Laws. In the absence of a quorum, any
officer entitled to preside at, or act as secretary of, such
meetings shall have the power to adjourn the meeting from time to
time until a quorum shall be constituted. At any such adjourned
meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the original
meeting, but only those stockholders entitled to vote at the
original meeting shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the
Board of Directors for the adjourned meeting.
(b) Voting Rights. Except as otherwise provided by law or
by the provisions of the Articles of Incorporation, every
shareholder shall have the right at every shareholders' meeting
to one vote for each share of stock having voting power,
registered in his name on the books of the Corporation on the
date for the determination of shareholders entitled to vote, on
all matters coming before the meeting including the election of
directors. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person, or
by proxy executed in writing by the shareholder or a duly
authorized attorney in fact and bearing a date not more than
eleven months prior to its execution, unless a longer time is
expressly provided therein.
(c) Required Vote. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy
shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of The Indiana
General Corporation Act or of the Articles of Incorporation or by
these By-Laws, a greater vote is required, in which case such
express provision shall govern and control the decision of such
question.
Section 7. Voting List. The Transfer Agent of the
Corporation shall make, at least five days before each election
of directors, a complete list of the shareholders entitled by the
Articles of Incorporation, as now or hereafter amended, to vote
at such election, arranged in alphabetical order, with the
address and number of shares so entitled to vote held by each,
which list shall be on file at the principal office of the
Corporation and subject to inspection by any shareholder. Such
list shall be produced and kept open at the time and place of
election and subject to the inspection of any shareholder during
the holding of such election. The original stock register or
transfer book, or a duplicate thereof kept in the State of
Indiana, shall be the only evidence as to who are the
shareholders entitled to examine such list or the stock ledger or
transfer book or to vote at any meeting of the shareholders.
Section 8. Fixing of Record Date to Determine Shareholders
Entitled to Vote. The Board of Directors may prescribe a period
not exceeding 70 days prior to meetings of the shareholders
during which no transfer of stock on the books of the corporation
may be made; or, in lieu of prohibiting the transfer of stock,
may fix a day and hour not more than 70 days prior to the holding
of any meeting of shareholders as the time of which shareholders
entitled to notice of, and to vote, at such meeting shall be
determined, and all persons who are holders of record of voting
stock at such time, and no others, shall be entitled to notice
of, and to vote at such meeting. In the absence of such a
determination, such date shall be ten days prior to the date of
such meeting
Section 9. Director Nominations; Nominating Committee.
(a) All nominations for election as Directors of the
Corporation shall be made only by the Board of Directors in
accordance with this Section. The Nominating Committee of the
Board of Directors shall submit to the entire Board of Directors
its recommendation of nominees for election as Directors of the
Corporation not less than sixty (60) days prior to each annual or
special meeting of shareholders at which Directors will be
elected.
(b) The Nominating Committee of the Board of Directors
shall be comprised of five (5) Directors of the Corporation, none
of whom may be an officer or employee of the Corporation.
(c) The Nominating Committee of the Board of Directors
shall consider appropriate candidates for election as Directors
of the Corporation and shall recommend to the entire Board of
Directors nominees for election as Directors in connection with
any annual or special meeting of shareholders. The Nominating
Committee also shall consider appropriate candidates and
recommend to the entire Board of Directors persons to fill
Director vacancies and newly-created directorships. In addition
to the foregoing, and not by way of limitation, the Nominating
Committee will be responsible for recruiting potential Director
candidates, recommending changes to the entire Board of Directors
concerning the size, composition and responsibilities of the
Board of Directors, reviewing proxy documents received from
shareholders relating to the Board of Directors and reviewing
suggestions of shareholders regarding nominees for election as
Directors. All such suggestions of shareholders must be
submitted in writing to the Nominating Committee at the
Corporation's principal executive offices not less than one
hundred twenty (120) days in advance of the date of the annual or
special meeting of shareholders at which Directors shall be
elected. All written suggestions of shareholders must set forth
(i) the name and address of the shareholder making the
suggestion, (ii) the number and class of shares owned by the such
shareholder, (iii) the name, address and age of the nominee for
election as director, (iv) the nominee's principal occupation
during the five (5) preceding the date of the suggestion, (v) all
other information concerning the nominee as would be required to
be included in the proxy statement used to solicit proxies for
the election of the nominee, and (vi) such other information as
the Nomination Committee may reasonably request. A consent of
the nominee to serve as a Director of the Corporation, if
elected, must also be included with the written suggestion.
(d) The Nominating Committee has absolute power and
discretion in carrying out its duties prescribed herein,
including, but not limited to, recommending to the entire Board
of Directors nominees for election as directors at any annual or
special meeting of shareholders and accepting or rejecting
suggestions of shareholders of nominees for election as
Directors.
(e) All nominations and suggestions of shareholders with
respect to nominees for election as Directors of the Corporation
must be made in accordance with the provisions of this Section.
Any suggestions of shareholders not made in accordance with this
Section are not required to be considered by the Nominating
Committee. Any nominations for election as Directors at any
annual or special meeting of shareholders not made in accordance
with this Section may be disregarded by the Chairman of the
meeting, in his discretion, and, upon his instructions, the
tellers or inspectors of shareholder votes may disregard all
votes cast for each such nominees.
ARTICLE V
Board of Directors
Section 1. Election, Number and Term of Office. Directors
shall be elected at the annual meeting of shareholders, or, if
not so elected, at a special meeting of shareholders called for
that purpose, by the holders of the shares of stock entitled by
the Articles of Incorporation to elect Directors.
The number of Directors of the Corporation to be elected by
the holders of the shares of stock entitled by the Articles of
Incorporation to elect Directors shall be established at no less
than twelve and no more than twenty-four, unless changed by
amendment to this section.
All Directors elected by the holders of such shares, except
in the case of earlier resignation, removal or death, shall hold
office until their respective successors are chosen and qualified
Directors need not be shareholders of the Corporation.
Any vacancy on the Board of Directors caused by an increase
in the number of Directors shall be filled by a majority vote of
the members of the Board of Directors, until the next annual or
special meeting of the shareholders or, at the discretion of the
Board of Directors, such vacancy may be filled by vote of the
shareholders at a special meeting called for that purpose. No
decrease in the number of Directors shall have the effect of
shortening the term of any incumbent Director.
Section 2. Vacancies. Any vacancy occurring in the Board
of Directors caused by resignation, death or other incapacity
shall be filled by a majority vote of the remaining members of
the Board of Directors, until the next annual meeting of the
shareholders. If the vote of the remaining members of the Board
shall result in a tie, such vacancy, at the discretion of the
Board of Directors, may be filled by vote of the shareholders at
a special meeting called for that purpose.
Section 3. Annual Meeting of Directors. The Board of
Directors shall meet each year immediately after the annual
meeting of the shareholders, at the place where such meeting of
the shareholders has been held either within or without the State
of Indiana, for the purpose of organization, election of
officers, and consideration of any other business that may
properly come before the meeting. No notice of any kind to
either old or new members of the Board of Directors for such
annual meeting shall be necessary.
Section 4. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such times and places, wither
within or without the State of Indiana, as may be fixed by the
Directors. Such regular meetings of the Board of Directors may
be held without notice or upon such notice as may be fixed by the
Directors.
Section 5. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board, the
President, or by not less than a majority of the members of the
Board of Directors. Notice of the time and place, either within
or without the State of Indiana, of a special meeting shall be
served upon or telephoned to each Director at least twenty-four
hours, or mailed, telegraphed or cabled to each Director at his
usual place of business or residence at least forty-eight hours,
prior to the time of the meeting. Directors, in lieu of such
notice, may sign a written waiver of notice either before the
time of the meeting, at the meeting or after the meeting.
Attendance by a director in person at any such special meeting
shall constitute a waiver of notice.
Section 6. Quorum. A majority of the actual number of
Directors elected and qualified, from time to time, shall be
necessary to constitute a quorum for the transaction of any
business except the filling of vacancies, and the act of a
majority of the Directors present at the meeting, at which a
quorum is present, shall be the act of the Board of Directors,
unless the act of a greater number is required by The Indiana
General Corporation Act, by the Articles of Incorporation, or by
these By-Laws. A Director, who is present at a meeting of the
Board of Directors, at which action on any corporate matter is
taken, shall be conclusively presumed to have assented to the
action take, unless (a) his dissent shall be affirmatively stated
by him at and before the adjournment of such meeting (in which
event the fact of such dissent shall be entered by the secretary
of the meeting in the minutes of the meeting), or (b) he shall
forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting.
The right of dissent provided for by either clause (a) or clause
(b) of the immediately preceding sentence shall not be available,
in respect of any matter acted upon at any meeting, to a Director
who voted at the meeting in favor of such matter and did not
change his vote prior to the time that the result of the vote on
such matter was announced by the chairman of such meeting.
Section 7. Consent Action by Directors. Any action
required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a
meeting, if 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 8. Removal of Directors. Any or all member of the
Board of Directors may be removed, with or without cause, at a
meeting of shareholders called expressly for that purpose by a
vote of the holders of not less than a majority of the
outstanding shares of capital stock then entitled to vote at the
election of directors.
Section 9. Dividends. The Board of Directors shall have
power, subject to any restrictions contained in The Indiana
General Corporation Act or in the Articles of Incorporation and
out of funds legally available therefor, to declare and pay
dividends upon the outstanding capital stock of the Corporation
as and when they deem expedient. Before declaring any dividend,
there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of
Directors from time to time in their absolute discretion deem
proper for working capital, or as a reserve or reserves to meet
contingencies or for such other purposes as the Board of
Directors shall deem conducive to the interests of the
Corporation and the Board of Directors may modify or abolish any
such reserve in the manner in which it was created.
Section 10. Fixing of Record Date to Determine Shareholders
Entitled to Receive Corporate Benefits. The Board of Directors
may fix a day and hour not exceeding 50 days preceding the date
fixed for payment of any dividend or for the delivery of evidence
of rights, or for the distribution of other corporate benefits,
or for a determination of shareholders for any other purpose, as
a record time for the determination of the shareholders entitled
to receive any such dividend, rights or distribution, and in such
case only shareholders of record at the time so fixed shall be
entitled to receive such dividend, rights or distribution. If no
record date is fixed for the determination of shareholders
entitled to receive payment of a dividend, the end of the day on
which the resolution of the Board of Directors declaring such
dividend is adopted shall be the record date for such
determination.
Section 11. 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
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 or 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 of 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 contact or other transaction which would otherwise
be valid under the common and statutory law applicable thereto.
Section 12. Committees. The Board of Directors may, by
resolution adopted by a majority of the actual number of
Directors elected and qualified, from time to time, designate
from among its members an executive committee and one or more
other committees, each of which, to the extent provided in the
resolution, the Articles of Incorporation, or these By-Laws, may
exercise all of the authority of the Board of Directors of the
Corporation, including, but no limited to, the authority to issue
and sell or prove 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 reasonable believes is in the best interest of the
Corporation.
ARTICLE VI
Officers
Section 1. Principal Officers. The principal officers of
the Corporation shall be a Chairman of the Board, a President,
one or more vice Presidents, a Treasurer and a Secretary. The
Corporation may also have, at the discretion of the Board of
Directors, such other subordinate officers as may be appointed in
accordance with the provisions of these By-Laws. Any two or more
offices may be held by the same person, except the duties of
President and Secretary shall not be performed by the same
person. No person shall be eligible for the office of Chairman
of the Board or President who is not a director of the
Corporation.
Section 2. Election and Term of Office. The principal
officers of the Corporation shall be chosen annually by the Board
of Directors a the annual meeting thereof. Each such officer
shall hold office until his successor shall have been duly chosen
and qualified, or until his death, or until he shall resign, or
shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any principal officer may be removed,
either with or without cause, at any time, by resolution adopted
at any meeting of the Board of Directors by a majority of the
actual number of Directors elected and qualified from time to
time.
Section 4. Subordinate Officers. In addition to the
principal officers enumerated in Section 1 of this Article VI,
the Corporation may have one or more Assistant Treasurers, one or
more Assistant Secretaries and such other officers, agents and
employees as the Board of Directors may deem necessary, each of
whom shall hold office for such period, may be removed with or
without cause, have such authority, and perform such duties as
the President, or the Board of Directors may from time to time
determine. The Board of Directors may delegate to any principal
officer the power to appoint and to remove any such subordinate
officers, agents or employees.
Section 5. Resignations. Any officer may resign at any
time by giving written notice to the Chairman of the Board or to
the Board of Directors or to the President or to the Secretary.
Any such resignation shall take effect upon receipt of such
notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6. Vacancies. Any vacancy in any office for any
cause may be filled for the unexpired portion of the term in the
manner prescribed in these By-Laws for election or appointment to
such office for such term.
Section 7. Chairman of the Board. The Chairman of the
Board, who shall be chosen from among the Directors, shall
preside at all meetings of shareholders and at all meetings of
the Board of Directors. He shall perform such other duties and
have such other powers as, from time to time, may be assigned to
him by the Board of Directors.
Section 8. President. The President, who shall be chosen
from among the Directors, shall be the chief executive officer of
the Corporation and as such shall have general supervision of the
affairs of the Corporation, subject to the control of the Board
of Directors. He shall be an ex officio member of all standing
committees. In the absence or disability of the Chairman of the
Board, the President shall preside at all meetings of
shareholders and at all meetings of the Board of Directors.
Subject to the control and direction of the Board of Directors,
the President may enter into any contract or execute and deliver
any instrument in the name and on behalf of the Corporation. In
general, he shall perform all duties and have all the powers
incident to the office of President, as herein defined, and all
such other duties and powers as, from time to time, may be
assigned to him by the Board of Directors.
Section 9. Vice Presidents. The Vice Presidents in the
order of their seniority, unless otherwise determined by the
Board of Directors, shall, in the absence or disability of the
President and Executive Vice President, perform the duties and
exercise the powers of the President. They shall perform such
other duties and have such other powers as the President or the
Board of Directors may from time to time assign.
Section 10. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of
the Corporation and shall deposit all such funds in the name of
the Corporation in such banks or other depositories as shall be
selected by the Board of Directors. He shall upon request
exhibit at all reasonable times his books of account and records
to any of the directors of the Corporation during business hours
at the office of the Corporation where such books and records
shall be kept; shall render upon request by the Board of
directors a statement of the condition of the finances of the
Corporation at any meeting of the Board of Directors or at the
annual meeting of the shareholders; shall receive, and give
receipt for, moneys due and payable for the Corporation from any
source whatsoever; and in general, shall perform all duties
incident to the office of Treasurer and such other duties as form
time to time may be assigned to him by the President or the Board
of Directors. The Treasurer shall give such bond, if any, for
the faithful discharge of his duties as the Board of Directors
may require.
Section 11. Secretary. The Secretary shall keep or cause
to be kept in the books provided for that purpose the minutes of
the meetings of the shareholders and of the Board of Directors;
shall duly give and serve all notices required to be given in
accordance with the provisions of these By-Laws and by The
Indiana General Corporation Act; shall be custodian of the
records and of the seal of the Corporation and see that the seal
is affixed to all documents, the execution of which on behalf of
the Corporation under its seal is duly authorized in accordance
with the provisions of these By-Laws; and, in general, shall
perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by the
President or the Board of Directors.
Section 12. Salaries. The salaries of the principal
officers shall be fixed from time to time by the Board of
Directors, and the salaries of any subordinate officers may be
fixed by the President.
Section 13. Voting Corporation's Securities. Unless
otherwise ordered by the Board of Directors, the Chairman of the
Board, the President and Secretary, and each of them, are
appointed attorneys and agents of the Corporation, and shall have
full power and authority in the name and on behalf of the
Corporation, to attend, to act, and to vote all stock or other
securities entitled to be voted at any meetings of security
holders of corporations, or associations in which the Corporation
may hold securities, in person or by proxy, as a stockholder or
otherwise, and at such meetings shall possess and may exercise
any and all rights and powers incident to the ownership of such
securities, and which as the owner thereof the Corporation might
have possessed and exercised, if present or to consent in writing
to any action by any such other corporation or association. The
Board of Directors by resolution from time to time may confer
like powers upon any other person or persons.
ARTICLE VII
Indemnification
Section 1. 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 or 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 or
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, 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 standard of conduct.
If several claims, issues or matters of action are involved,
any such person may be entitled to indemnification 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 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.
ARTICLE VIII
Amendments
The power to make, alter, amend, or repeal these By-Laws is
vested in the Board of Directors, but the affirmative vote of a
majority of the actual number of directors elected and qualified,
from time to time, shall be necessary to effect any alteration,
amendment or repeal of these By-Laws.
EXHIBIT 10
OLD NATIONAL BANCORP
1999 EQUITY INCENTIVE PLAN
SECTION 1
PURPOSE AND DURATION
1.1. Establishment of the Plan. Old National Bancorp, an
Indiana corporation, hereby establishes an equity-based incentive
compensation plan to be known as the Old National Bancorp 1999
Equity Incentive Plan, set forth in this document. This Plan
permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance
Units and Performance Shares. This Plan and the grant of Awards
hereunder are expressly conditioned upon the Plan's approval by
the shareholders of the Company to the extent required. The Plan
is adopted effective as of April 15, 1999, which is the date that
the shareholders of the Company approved the Plan, as specified
in Section 10.2.
1.2. Purposes of the Plan. The purposes of this Plan are to
further the growth and financial success of the Company and its
Affiliates by aligning the interests of the Participants, through
the ownership of Shares and through other incentives, with the
interests of the Company's shareholders; to provide Participants
with an incentive for excellence in individual performance; and
to promote teamwork among Participants. The Plan is further
intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Participants who
make significant contributions to the Company's success and to
allow Participants to share in the success of the Company.
SECTION 2
DEFINITIONS
For purposes of this Plan, the following words and
phrases shall have the following meanings unless a different
meaning is plainly required by the context:
2.1. "1934 Act" means the Securities Exchange Act of 1934,
as amended. Reference to a specific Section of the 1934 Act or
regulation thereunder shall include such section or regulation,
any valid regulation promulgated under such Section, and any
comparable provision of any future legislation or regulation
amending, supplementing, or superseding such Section or
regulation.
2.2. "Affiliate" means any corporation or any other entity
(including, but not limited to, partnerships, limited liability
companies, joint ventures and Subsidiaries) controlling,
controlled by or under common control with the Company.
2.3. "Affiliated SAR" means an SAR that is granted in
connection with a related Option, and that automatically will be
deemed to be exercised at the same time that the related Option
is exercised.
2.4. "Award" means, individually or collectively, a grant
under this Plan of Nonqualified Stock Options, Incentive Stock
Options, SARs, Restricted Stock, Performance Units or Performance
Shares.
2.5. "Award Agreement" means the written agreement which
sets forth the terms and provisions applicable to each Award
granted under this Plan.
2.6. "Beneficiary" means the person or persons designated by
a Participant to receive the benefits under this Plan, if any,
which become payable as a result of the Participant's death.
2.7. "Board" or "Board of Directors" means the Board of
Directors of the Company serving at the time that this Plan is
approved by the shareholders of the Company or thereafter.
2.8. "Cashless Exercise" means, if there is a public market
for the Shares, the payment of the Exercise Price of Options, (a)
through a "same day sale" commitment from the Participant and an
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares so
purchased in order to pay the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such stock to
forward the Exercise Price directly to the Company, or (b)
through a "margin" commitment from the Participant and an NASD
Dealer whereby the Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer
in the amount of the Exercise Price and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company.
2.9. "Cause" means, for purposes of determining whether and
when a Participant has incurred a Termination of Service for
Cause, any act or failure to act which permits the Company to
terminate the written agreement or arrangement between the
Participant and the Company or an Affiliate for "cause" as
defined in such agreement or arrangement or, in the event there
is no such agreement or arrangement or the agreement or
arrangement does not define the term "cause", then "Cause" for
purposes of this Plan shall mean any act or failure to act deemed
to constitute "cause" under the Company's established and applied
practices, policies, or guidelines applicable to the Participant.
2.10. "Change in Control" shall have the meaning
assigned to such term in Section 12.2.
2.11. "Code" means the Internal Revenue Code of 1986, as
amended. Reference to a specific Section of the Code or
regulation thereunder shall include such Section or regulation,
any valid regulation promulgated under such Section, and any
comparable provision of any future law, legislation, or
regulation amending, supplementing, or superseding such Section
or regulation.
2.12. "Committee" means the Compensation Committee of
the Board, or such other committee appointed by the Board
pursuant to Section 3.1 to administer this Plan, serving on the
date that this Plan is approved by the shareholders of the
Company or thereafter.
2.13. "Company" means Old National Bancorp, an Indiana
corporation, and any successor thereto. With respect to the
definition of Performance Goals, the Committee, in its sole
discretion, may determine that "Company" means Old National
Bancorp and its Subsidiaries on a consolidated basis.
2.14. "Covered Employee" means an Employee who is a
covered employee as defined in Section 162(m)(3) of the Code.
2.15. "Director" means any individual who is a member of
the Board of Directors of the Company.
2.16. "Disability" means a mental or physical illness
that entitles the Participant to receive benefits under the long-
term disability plan of the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify
under this Plan if it is the result, as determined by the
Committee in its sole discretion, of (a) an intentionally self-
inflicted injury or an intentionally self-induced sickness, or
(b) an injury or disease contracted, suffered, or incurred while
participating in a criminal offense. The determination of a
Disability for purposes of this Plan shall not be construed to be
an admission of a disability for any other purpose.
2.17. "Effective Date" means April 15, 1999, which is
the date that the shareholders of the Company approved the Plan.
2.18. "Employee" means all officers and key employees of
the Company or an Affiliate, whether such officers or key
employees are so employed on the date that this Plan is approved
by the shareholders of the Company or become employed subsequent
to such approval.
2.19. "Exercise Price" means the price at which a Share
may be purchased by a Participant pursuant to the exercise of an
Option.
2.20. "Fair Market Value" means the per share closing
price for the Shares, as reported by the Nasdaq Stock Market or
by such other exchange or market on which the Shares are then
listed or regularly traded, determined as of the day on which the
applicable Award is granted to a Participant.
2.21. "Fiscal Year" means the annual accounting period
of the Company.
2.22. "Freestanding SAR" means an SAR that is granted
independently of any Option.
2.23. "Grant Date" means, with respect to any Award
granted under this Plan, the date on which the Award was granted
by the Committee, regardless if the Award Agreement to which the
Award relates is executed subsequent to such date.
2.24. "Incentive Stock Option" means an Option granted
under this Plan to purchase Shares which is designated as an
Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.
2.25. "NASD Dealer" means a broker-dealer who is a
member of the National Association of Securities Dealers, Inc.
2.26. "Nonqualified Stock Option" means an Option
granted under this Plan to purchase Shares which is not an
Incentive Stock Option.
2.27. "Option" means an Incentive Stock Option or a
Nonqualified Stock Option.
2.28. "Option Period" means the period during which an
Option shall be exercisable in accordance with the applicable
Award Agreement and Section 6.
2.29. "Participant" means an Employee to whom an Award
has been granted.
2.30. "Performance Goals" means, except as otherwise
provided in Sections 8.4.2 and 9.3.2, the goals determined by the
Committee in its sole discretion to be applicable to a
Participant with respect to an Award. As determined by the
Committee in its sole discretion, the Performance Goals
applicable to each Award granted under the Plan to a Participant
who is not a Covered Employee, shall provide for targeted level
or levels of financial achievement with respect to one (1) or
more of the following business criteria: (a) return on assets,
(b) income before interest and taxes, (c) net income, (d) total
shareholder return, (e) return on equity, and (f) Affiliate or
division operating income. The Performance Goals may differ from
Participant to Participant and from Award to Award. In the case
of a Participant who is a Covered Employee, as described in the
preceding sentence, the sole Performance Goal shall be based on
the return on equity of the Company on a consolidated basis for a
calendar year calculated in accordance with generally accepted
accounting principles consistently applied.
2.31. "Performance Period" means the period of time
during which Performance Goals must be achieved with respect to
an Award, as determined by the Committee in its sole discretion.
2.32. "Performance Share" means an Award granted to a
Participant pursuant to Section 9.
2.33. "Performance Unit" means an Award granted to a
Participant pursuant to Section 9.
2.34. "Period of Restriction" means the period during
which the transfer of Shares of Restricted Stock are subject to
restrictions and, therefore, the Shares are subject to a
substantial risk of forfeiture. As provided in Section 8, such
restrictions may be based on the passage of time, the achievement
of specific target levels of performance (in the case of
"performance-based compensation" under Section 162(m) of the
Code), or the occurrence of such other events as may be
determined by the Committee in its sole discretion.
2.35. "Plan" means the Old National Bancorp 1999 Equity
Incentive Plan, as set forth in this instrument and as hereafter
amended from time to time.
2.36. "Restricted Stock" means an Award granted to a
Participant pursuant to Section 8.
2.37. "Retirement" means the date on which a Participant
satisfies the conditions for early retirement under the Old
National Bancorp Employees" Retirement Plan then in effect.
2.38. "Rule 16b-3" means Rule 16b-3 promulgated under
the 1934 Act, and any future rule or regulation amending,
supplementing, or superseding such rule.
2.39. "Section 16 Person" means a person subject to
potential liability under Section 16(b) of the 1934 Act with
respect to transactions which involve equity securities of the
Company.
2.40. "Shares" means the whole shares of issued and
outstanding regular voting common stock, no par value, of the
Company, whether presently or hereafter issued and outstanding,
and any other stock or securities resulting from adjustment
thereof as provided in Section 4.5, or the stock of any successor
to the Company which is so designated for the purposes of the
Plan.
2.41. "Stock Appreciation Right" or "SAR" means an
Award, granted alone or in connection or tandem with a related
Option, that is designated as an "SAR" pursuant to Section 7.
2.42. "Subsidiary" means any corporation (including,
without limitation, any bank, savings association or financial
institution or any financial services company) in an unbroken
chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken
chain then owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain. A Subsidiary includes any
Subsidiary of the Company as of the Effective Date and each
corporation that becomes a Subsidiary of the Company after the
Effective Date.
2.43. "Tandem SAR" means an SAR that is granted in
tandem with a related Option, the exercise of which shall require
forfeiture of the right to exercise such Option and to purchase
an equal number of Shares under the related Option; and, when a
Share is purchased pursuant to the exercise of such Option, the
SAR shall be forfeited to the same extent.
2.44. "Termination of Service" means the occurrence of
any act or event or any failure to act whether pursuant to an
employment agreement or otherwise that actually or effectively
causes or results in a Participant ceasing, for whatever reason,
to be an Employee of the Company or an Affiliate, including, but
not limited to, death, Disability, Retirement, termination by the
Company or an Affiliate of the Participant"s employment with the
Company or an Affiliate (whether with or without Cause), and
voluntary resignation or termination by the Participant of his or
her employment with the Company or an Affiliate. A Termination
of Service also shall occur with respect to an Employee who is
employed by an Affiliate if the Affiliate shall cease to be an
Affiliate of the Company and the Participant shall not
immediately thereafter become an Employee of the Company or
another Affiliate. For purposes of this Plan, transfers or
changes of employment of a Participant between the Company and an
Affiliate (or between Affiliates) shall not be deemed a
Termination of Service.
SECTION 3
ADMINISTRATION
3.1. The Committee. This Plan shall be administered by the
Committee. The decision or action of a majority of the actual
number of members of the Committee shall constitute the decision
or action of the Committee. The Committee shall consist of not
less than three (3) Directors. The members of the Committee
shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors. It is intended that the
Committee be comprised solely of Directors who both are (a) "non-
employee directors" under Rule 16b-3, and (b) "outside directors"
as described in Section 162(m)(3)(C)(ii) of the Code. Failure of
the Committee to be so comprised shall not result in the
cancellation, termination, expiration, or lapse of any Award.
3.2. Authority of the Committee. Except as limited by law
or by the Articles of Incorporation or By-Laws of the Company,
and subject to the provisions of this Plan, the Committee shall
have full power and discretion to select Employees who shall
participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner
consistent with this Plan; construe and interpret this Plan, all
Award Agreements and any other agreements or instruments entered
into under this Plan; establish, amend, or waive rules and
regulations for the Plan's administration; and amend the terms
and conditions of any outstanding Award and applicable Award
Agreement to the extent such terms and conditions are within the
discretion of the Committee as provided in this Plan. Further,
the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. Each
Award shall be evidenced by a written Award Agreement between the
Company and the Participant and shall contain such terms and
conditions established by the Committee consistent with the
provisions of this Plan. Any notice or document required to be
given to or filed with the Committee will be properly given or
filed if hand delivered (and a delivery receipt is received) or
mailed by certified mail, return receipt requested, postage paid,
to the Committee at 420 Main Street, Evansville, Indiana 47708.
3.3. Delegation by the Committee. The Committee, in its
sole discretion and on such terms and conditions as it may
provide, may delegate all or any part of its authority and powers
under this Plan to one or more Directors or officers of the
Company; provided, however, that the Committee may not delegate
its authority and powers (a) with respect to grants to Section 16
Persons, or (b) in any way which would jeopardize this Plan's
qualification under Section 162(m) of the Code or Rule 16b-3.
3.4. Decisions Binding. All determinations and decisions
made by the Committee, the Board and any delegate of the
Committee pursuant to Section 3.3 shall be final, conclusive, and
binding on all persons, including the Company and Participants.
No such determinations shall be subject to de novo review if
challenged in court.
SECTION 4
SHARES SUBJECT TO THIS PLAN
4.1. Number of Shares. Subject to adjustment as provided in
Section 4.5, the maximum number of Shares cumulatively available
for issuance under this Plan pursuant to: (a) the exercise of
Options, (b) the grant of Affiliated, Freestanding and Tandem
SARs, (c) the grant of Shares of Restricted Stock, and (d) the
payment of Performance Units and Performance Shares, shall not
exceed Three Million Eight Hundred Thousand (3,800,000) Shares of
the Company less the total number of Shares previously issued
under this Plan, and less the total number of Shares then subject
to outstanding Options or other Awards; provided, however, that
in calculating the number of Shares available for issuance under
this Plan, no more than One Hundred Thousand (100,000) Shares
shall be cumulatively available for the grant of Incentive Stock
Options under this Plan. Shares issued under this Plan may be
either authorized but unissued Shares, treasury Shares or
reacquired Shares (including Shares purchased in the open
market), or any combination thereof, as the Committee may from
time to time determine in its sole discretion.
Shares covered by an Award that are forfeited or that remain
unpurchased or undistributed upon termination or expiration of
any such Award may be made the subject of further Awards to the
same or other Participants. If the exercise price of any Option
is satisfied by tendering Shares (by either actual delivery or
attestation), only the number of Shares actually issued, net of
the Shares tendered, shall be deemed issued for purposes of
determining the number of Shares available for grants under this
Plan.
4.2. Release of Shares. Subject to the limitations set
forth in this Plan, the Committee shall have full authority to
determine the number of Shares available for Awards, and in its
sole discretion may include (without limitation) as available for
distribution any Shares that have ceased to be subject to an
Award; any Shares subject to an Award that have been previously
forfeited; any Shares under an Award that otherwise terminates
without the issuance of Shares being made to a Participant; any
Shares that are received by the Company in connection with the
exercise of an Award, including the satisfaction of any tax
liability or tax withholding obligation; or any Shares
repurchased by the Company in the open market or otherwise,
having an aggregate repurchase price no greater than the amount
of cash proceeds received by the Company from the exercise of
Options granted under this Plan. Any Shares that are available
immediately prior to the termination of the Plan, or any Shares
returned to the Company for any reason subsequent to the
termination of the Plan, may be transferred to a successor plan.
4.3. Restrictions on Shares. Shares issued upon exercise of
an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions, and restrictions as
the Committee in its sole discretion may determine or provide in
the Award Agreement. The Company shall not be required to issue
or deliver any certificates for Shares, cash, or other property
prior to (a) the listing of such Shares on any stock exchange (or
other public market) on which the Shares may then be listed (or
regularly traded), and (b) the completion of any registration or
qualification of such shares under federal, state, local, or
other law, or any ruling or regulation of any government body
which the Committee determines to be necessary or advisable. The
Company may cause any certificate for any Shares to be delivered
hereunder to be properly marked with a legend or other notation
reflecting the limitations on transfer of such Shares as provided
in this Plan or as the Committee may otherwise require.
Participants, or any other persons entitled to benefits under the
Plan, must furnish to the Committee such documents, evidence,
data, or other information as the Committee considers necessary
or desirable for the purpose of administering this Plan. The
benefits under this Plan for each Participant, and each other
person who is entitled to benefits hereunder, are to be provided
on the condition that he furnish full, true, and complete data,
evidence, or other information, and that he will promptly sign
any document reasonably related to the administration of this
Plan requested by the Committee. No fractional Shares shall be
issued under this Plan; rather, fractional shares shall be
aggregated and then rounded to the next lower whole Share.
4.4. Shareholder Rights. Except with respect to Restricted
Stock as provided in Section 8, no person shall have any rights
of a shareholder (including, but not limited to, voting and
dividend rights) as to Shares subject to an Award until, after
proper exercise or vesting of the Award or other action as may be
required by the Committee in its sole discretion, such Shares
shall have been recorded on the Company's official shareholder
records (or the records of its transfer agents or registrars) as
having been issued and transferred to the Participant. Upon
exercise of the Award or any portion thereof, the Company will
have a reasonable period in which to issue and transfer the
Shares to the Participant, and the Participant will not be
treated as a shareholder for any purpose whatsoever prior to such
issuance and transfer. No payment or adjustment shall be made
for cash dividends or other rights for which the record date is
prior to the date such Shares are recorded as issued and
transferred in the Company's official shareholder records (or the
records of its transfer agents or registrars), except as provided
herein or in an Award Agreement.
4.5. Changes in Stock.
4.5.1. Substitution of Stock and Assumption of Plan.
In the event of any change in the Shares by virtue of any
stock dividends, stock splits, recapitalizations, or
reclassifications or any acquisition, merger, consolidation,
share exchange, tender offer, or other combination involving
the Company that does not constitute a Change in Control but
that results in the acquisition of a Subsidiary by the
Company, or in the event that other stock shall be
substituted for the Shares as the result of any merger,
consolidation, share exchange, or reorganization or any
similar transaction which constitutes a Change in Control of
the Company, the Committee shall correspondingly adjust (a)
the number, kind, and class of Shares which may be delivered
under this Plan, (b) the number, kind, class, and price of
Shares subject to outstanding Awards (except for mergers or
other combinations in which the Company is the surviving
entity), and (c) the numerical limits of Sections 4.1, 6.1,
7.1, 8.1 and 9.1, all in such manner as the Committee in its
sole discretion shall determine to be advisable or
appropriate to prevent the dilution or diminution of such
Awards; provided, however, in no event shall the One Hundred
Thousand Dollars ($100,000) limit on ISOs contained in
Section 6.1 be affected by an adjustment under this Section
4.5.1. The Committee's determination in this respect shall
be final and conclusive.
4.5.2. Conversion of Shares. In the event of a
Change in Control of the Company pursuant to which another
person or entity acquires control of the Company (such other
person or entity being the "Successor"), the kind of shares
of stock which shall be subject to this Plan and to each
outstanding Award shall, automatically by virtue of such
Change in Control, be converted into and replaced by
securities of the Successor having full voting, dividend,
distribution, preference, and liquidation rights, and the
number of shares subject to an Award, the calculation of an
Award's value, and the purchase price per share upon
exercise of the Award shall be correspondingly adjusted so
that, by virtue of such Change in Control of the Company,
each Participant shall (a) in the case of Options, have the
right to purchase (I) that number of shares of stock of the
Successor which have a Fair Market Value, as of the date of
such Change in Control of the Company, equal to the Fair
Market Value, as of the date of such Change in Control of
the Company, of the Shares of the Company theretofore
subject to each Option, and (ii) for a purchase price per
share which, when multiplied by the number of shares of
stock of the Successor subject to each Option, shall equal
the aggregate exercise price at which the Participant could
have acquired all of the Shares of the Company previously
optioned to the Participant, and (b) in the case of Awards
other than Options, Performance Shares, and Performance
Units, have the right to receive that number of shares of
stock of the Successor which have a Fair Market Value, as of
the date of such Change in Control of the Company, equal to
the Fair Market Value, as of the date of the Change in
Control of the Company, of the Shares of the Company to
which each Award relates. The Committee, in its sole
discretion, shall determine the method by which Awards of
Performance Shares and Performance Units shall be adjusted
due to a Change in Control of the Company.
SECTION 5
ELIGIBILITY
5.1. Eligibility. Except as herein provided, the
individuals who shall be eligible to participate in the Plan and
be granted Awards shall be those individuals who are Employees of
the Company or any Affiliate. The Committee may, from time to
time and in its sole discretion, select Employees to be granted
Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the
form of the Award, the Committee may give consideration to the
functions and responsibilities of the Employee's contributions to
the Company or its Affiliates, the value of the Employee's
services (past, present, and future) to the Company or its
Affiliates, and such other factors deemed relevant by the
Committee in its sole discretion. Committee members shall not be
eligible to participate in this Plan while serving as Committee
members. An Employee will become a Participant in this Plan as
of the date specified by the Committee. A Participant can be
removed as an active Participant by the Committee effective as of
any date.
5.2. No Contract of Employment. Neither the Plan nor any
Award Agreement executed under this Plan shall constitute a
contract of employment between a Participant and the Company or
an Affiliate, and participation in the Plan shall not give a
Participant the right to be rehired by or retained in the
employment of the Company or an Affiliate.
SECTION 6
STOCK OPTIONS
6.1. Grant of Options. Subject to the terms and provisions
of this Plan, the Committee, at any time and from time to time,
may grant Options to any Employees in such amounts as the
Committee, in its sole discretion, may determine. The Committee
may grant Incentive Stock Options, Nonqualified Stock Options, or
any combination thereof. Subject to the terms and provisions of
this Plan, the Committee, in its sole discretion, shall determine
the number of Shares subject to each Option; provided, however,
that during any three (3) consecutive Fiscal Year period, no
Participant shall be granted Options to acquire more than Three
Hundred Thousand (300,000) Shares. Furthermore, no Participant
may be granted Incentive Stock Options under this Plan which
would result in Shares with an aggregate Fair Market Value
(measured on the Grant Date(s)) of more than One Hundred Thousand
Dollars ($100,000) first becoming exercisable in any one calendar
year.
6.2. Option Award Agreement. Each Option shall be evidenced
by an Option Award Agreement that shall specify the Exercise
Price, the number of Shares to which the Option pertains, the
Option Period, any conditions to exercise of the Option, and such
other terms and conditions as the Committee, in its sole
discretion, shall determine. The Option Award Agreement also
shall specify whether the Option is intended to be an Incentive
Stock Option or a Nonqualified Stock Option. All grants of
Options intended to constitute Incentive Stock Options shall be
made in accordance, and all Award Agreements pursuant to which
Incentive Stock Options are granted shall comply, with the
requirements of Section 422 of the Code.
6.3. Exercise Price. Subject to the provisions of this
Section 6.3, the Exercise Price for each Option shall be
determined by the Committee in its sole discretion.
6.3.1. Nonqualified Stock Options. In the case of a
Nonqualified Stock Option, the Exercise Price per Share shall be
determined by the Committee; provided, however, in no event shall
the Exercise Price be less than the one hundred percent (100%) of
Fair Market Value of the Shares to which the Nonqualified Stock
Option relates determined as of the Grant Date.
6.3.2. Incentive Stock Options. In the case of an
Incentive Stock Option, the Exercise Price shall be not less
than one hundred percent (100%) of the Fair Market Value of
the Shares to which the Incentive Stock Option relates
determined as of the Grant Date; provided, however, that if,
on the Grant Date, the Participant (together with persons
whose stock ownership is attributed to the Participant
pursuant to Section 424(d) of the Code) owns securities
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any
of its Subsidiaries, the Exercise Price shall be not less
than one hundred ten percent (110%) of the Fair Market Value
of the Shares to which the Incentive Stock Option relates
determined as of the Grant Date.
6.3.3. Substitute Options. Notwithstanding the
provisions of Sections 6.3.1 and 6.3.2, in the event that
the Company or an Affiliate consummates a transaction
described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated
corporation), individuals who become Employees on account of
such transaction may be granted Options in substitution for
options granted by such former employer or recipient of
services. If such substitute Options are granted, the
Committee, in its sole discretion and consistent with
Section 424(a) of the Code, may determine that such
substitute Options shall have an exercise price less than
one hundred (100%) of the Fair Market Value of the Shares to
which the Options relates determined as of the Grant Dates.
In carrying out the provisions of this Section 6.3.3, the
Committee shall apply the principles contained in Section
4.5.
6.4. Duration of Options. Subject to the terms and
provisions of Sections 10 and 12, the Option Period with respect
to each Option shall commence and expire at such times as the
Committee shall provide in the Award Agreement, provided that:
(a) Incentive and Nonqualified Stock Options shall not
be exercisable later than the tenth anniversary of
their respective Grant Dates;
(b) Incentive Stock Options granted to an Employee who
possesses more than ten percent (10%) of the total
combined voting power of all classes of Shares of
the Company, taking into account the attribution
rules of Section 422(d) of the Code, shall not be
exercisable later than the fifth anniversary of
their Grant Date(s); and
(c) Subject to the limits of this Section 6, the
Committee may, in its sole discretion, after an
Option is granted, extend the maximum term of the
Option.
6.5. Exercisability of Options. Subject to the provisions
of Section 12 and this Section 6, all Options granted under this
Plan shall be exercisable at such times, under such terms, and
subject to such restrictions and conditions as the Committee
shall determine in its sole discretion and specify in the Award
Agreements to which such Options relate. After an Option is
granted, the Committee, in its sole discretion, may accelerate
the exercisability of the Option.
6.6. Method of Exercise. Subject to the provisions of this
Section 6 and the applicable Award Agreement, a Participant may
exercise an Option, in whole or in part, at any time during the
Option Period to which the Option relates by giving written
notice to the Company of exercise on a form provided by the
Committee (if available). Such notice shall specify the number
of Shares subject to the Option to be purchased and shall be
accompanied by payment in full of the total Exercise Price by
cash or check or such other form of payment as the Company may
accept. If permitted by the Committee or the applicable the
Award Agreement, payment in full or in part may also be made by:
(a) Delivering Shares already owned by the Participant
for more than six (6) months and having a total
Fair Market Value on the date of such delivery
equal to the total Exercise Price;
(b) The execution and delivery of a promissory note or
other evidence of indebtedness (and any security
agreement thereunder required by the Committee)
satisfactory to the Committee and permitted in
accordance with Section 6.7;
(c) The delivery of cash by a broker-dealer as a
Cashless Exercise;
(d) The certification of ownership of Shares
owned by the Participant to the satisfaction of
the Committee for later delivery to the Company as
specified by the Committee; or
(e) Any combination of the foregoing.
If payment of the Exercise Price of an Option is made in
whole or in part in the form of Restricted Stock, a number of the
Shares to be received upon such exercise equal to the number of
shares of Restricted Stock used for payment of the Exercise Price
shall be subject to the same forfeiture restrictions or deferral
limitations to which such Restricted Stock was subject, unless
otherwise determined by the Committee in its sole discretion.
No Shares shall be issued until full payment therefor has
been made. Subject to any forfeiture restrictions or deferral
limitations that may apply if an Option is exercised using
Restricted Stock, a Participant shall have all of the rights of a
shareholder of the Company holding the class of Shares subject to
such Option (including, if applicable, the right to vote the
shares and the right to receive dividends) when the Participant
has given written notice of exercise, has paid the total Exercise
Price, and such Shares have been recorded on the Company's
official shareholder records (or the records of its transfer
agents or registrars) as having been issued and transferred to
the Participant.
6.7. Company Loan or Guarantee. Upon the exercise of any
Option and subject to the Award Agreement, the Company may, in
its sole discretion, at the request of a Participant:
(a) Lend to the Participant, with or without recourse,
an amount equal to such portion of the Exercise
Price as the Company may determine; or
(b) Guarantee a loan obtained by the Participant from
a third-party for the purpose of paying the
Exercise Price.
6.8. Reload Provision. In the event a Participant exercises
an Option and pays all or a portion of the Exercise Price in
Shares, in the manner permitted by Section 6.6, such Participant
may (either pursuant to terms of the Award Agreement or pursuant
to the sole discretion of the Committee at the time the Option is
exercised) be issued a new Option to purchase additional Shares
equal to the number of Shares surrendered to the Company in such
payment. Such new Option shall (a) have an Exercise Price equal
to the Fair Market Value per Share on the Grant Date of the new
Option, (b) first be exercisable six (6) months from the Grant
Date of the new Option, and (c) expire on the same date as the
original Option so exercised by payment of the Exercise Price in
Shares.
6.9. Restrictions on Share Transferability. In addition to
the restrictions imposed by Section 14.8, the Committee may
impose such restrictions on any Shares acquired pursuant to the
exercise of an Option as it may deem advisable or appropriate in
its sole discretion, including, but not limited to, restrictions
related to applicable Federal and state securities laws and the
requirements of any national securities exchange or market on
which Shares are then listed or regularly traded.
6.10. Termination by Reason of Death, Disability, or
Retirement. Unless otherwise provided in the Award Agreement or
determined by the Committee in its sole discretion, if a
Participant incurs a Termination of Service due to death,
Disability, or Retirement, any unexpired and unexercised Options
held by such Participant shall thereafter be fully exercisable
until the expiration of the Option Period.
6.11. Other Termination. Unless otherwise provided in
the Award Agreement or determined by the Committee in its sole
discretion, if a Participant incurs a Termination of Service that
is involuntary on the part of the Participant (but is not due to
death or Disability or is not with Cause) or is voluntary on the
part of the Participant (but is not due to Retirement), any
Options held by such Participant shall thereupon terminate,
except that such Options, to the extent then exercisable at the
time of such Termination of Service, may be exercised until the
expiration of the shorter of the following two (2) periods: (a)
the thirty (30) consecutive day period commencing on the date of
such Termination of Service, or (b) the date on which the Option
Period expires. If a Participant incurs a Termination of Service
which is with Cause, all of his Options shall terminate
immediately as of the date of such Termination of Service.
6.12. Special Provision for Incentive Stock Options.
Notwithstanding any other provision of this Plan to the contrary,
an Incentive Stock Option shall not be exercisable (a) more than
three (3) months after the Participant's Termination of Service
for any reason other than Disability, or (b) more than one (1)
year after the Participant's Termination of Service by reason of
Disability.
SECTION 7
STOCK APPRECIATION RIGHTS
7.1. Grant of SARs. Subject to the terms and conditions of
this Plan, the Committee, at any time and from time to time, may
grant SARs to any Employees in such amounts as the Committee, in
its sole discretion, shall determine. The Committee, in its sole
discretion, may grant Affiliated SARs, Freestanding SARs, Tandem
SARs, or any combination thereof.
7.1.1. Number of Shares. Subject to the limitations
of Section 4, the Committee shall have complete discretion
to determine the number of SARs granted to any Participant
provided that during any three (3) consecutive Fiscal Year
period, no Participant shall be granted SARs covering more
than Three Hundred Thousand (300,000) Shares.
7.1.2. Exercise Price and Other Terms. The
Committee, subject to the provisions of this Plan, shall
have complete discretion to determine the terms and
conditions of SARs granted under this Plan; provided,
however, that the Exercise Price of a Freestanding SAR shall
be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date and the Exercise
Price of Tandem or Affiliated SARs shall be equal to the
Exercise Price of the Option to which such SAR relates.
7.2. Exercise of Tandem SARs. Tandem SARs may be exercised
for all or part of the Shares subject to the related Option upon
the surrender of the right to exercise the equivalent portion of
the related Option. A Tandem SAR may be exercised only with
respect to the Shares with respect to which its related Option is
then exercisable. With respect to a Tandem SAR granted in
connection with an Incentive Stock Option the following
requirements shall apply: (a) the Tandem SAR shall expire not
later than the date on which the underlying Incentive Stock
Option expires; (b) the value of the payout with respect to the
Tandem SAR shall be no more than one hundred percent (100%) of
the difference between the Exercise Price of the underlying
Incentive Stock Option and one hundred percent (100%) of the Fair
Market Value of the Shares subject to the underlying Incentive
Stock Option at the time the Tandem SAR is exercised; and (c) the
Tandem SAR shall be exercisable only when the Fair Market Value
of the Shares subject to the Incentive Stock Option to which the
Tandem SAR relates exceeds the Exercise Price of such Incentive
Stock Option.
7.3. Exercise of Affiliated SARs. An Affiliated SAR shall
be deemed to be exercised upon the exercise of the Option to
which the Affiliated SAR relates. Such deemed exercise of an
Affiliated SAR shall not reduce the number of Shares subject to
the related Option.
7.4. Exercise of Freestanding SARs. Freestanding SARs shall
be exercisable on such terms and conditions as the Committee, in
its sole discretion, shall specify in the applicable Award
Agreement.
7.5. SAR Award Agreement. Each SAR shall be evidenced by an
Award Agreement that specifies the exercise price, the expiration
date of the SAR, the number of SARs, any conditions on the
exercise of the SAR, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. The Award
Agreement shall also specify whether the SAR is an Affiliated
SAR, Freestanding SAR, Tandem SAR, or a combination thereof.
7.6. Expiration of SARs. Each SAR granted under this Plan
shall expire upon the date determined by the Committee, in its
sole discretion, as set forth in the applicable Award Agreement.
Notwithstanding the foregoing, the terms and provisions of
Section 6.4 also shall apply to Affiliated and Tandem SARs.
7.7. Payment of SAR Amount. Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company
in an amount determined by multiplying:
(a) The positive difference between the Fair Market
Value of a Share on the date of exercise and the
exercise price; by
(b) The number of Shares with respect to which the SAR
is exercised.
At the sole discretion of the Committee, such payment may be in
cash, in Shares which have a Fair Market Value equal to the cash
payment calculated under Section 7.7, or in a combination of cash
and Shares.
7.8. Termination of SAR. An Affiliated or Tandem SAR shall
terminate at such time as the Option to which such SAR relates
terminates. A Freestanding SAR shall terminate at the time
provided in the applicable Award Agreement.
SECTION 8
RESTRICTED STOCK
8.1. Grant of Restricted Stock. Subject to the terms and
provisions of this Plan, the Committee, at any time and from time
to time, may grant Shares of Restricted Stock to any Employees in
such amounts as the Committee, in its sole discretion, shall
determine. Subject to the limitations of Section 4, the
Committee, in its sole discretion, shall determine the number of
Shares of Restricted Stock to be granted to each Participant;
provided, however, that during any three (3) consecutive Fiscal
Year period, no Participant shall be granted more than Three
Hundred Thousand (300,000) Shares of Restricted Stock.
8.2. Restricted Stock Award Agreement. Each Award of
Restricted Stock shall be evidenced by an Award Agreement that
shall specify the Period of Restriction, the number of Shares
granted, and such other terms and conditions as the Committee, in
its sole discretion, shall determine. Unless the Committee in
its sole discretion determines otherwise, Shares of Restricted
Stock shall be held by the Company, and shall not be delivered to
any Participant, until the end of the applicable Period of
Restriction.
8.3. Transferability. Except as provided in Section 6.6,
Section 14.8, and this Section 8, Shares of Restricted Stock may
not be sold, transferred, assigned, margined, encumbered, gifted,
bequeathed, alienated, hypothecated, pledged or otherwise
disposed of, whether by operation of law, whether voluntarily or
involuntarily or otherwise, until the end of the applicable
Period of Restriction.
8.4. Other Restrictions. The Committee, in its sole
discretion, may impose such other restrictions on Shares of
Restricted Stock as it may deem advisable or appropriate in
accordance with this Section 8.
8.4.1. General Restrictions. The Committee may
impose restrictions on Restricted Stock based upon any of
the following criteria: (a) the achievement of specific
Company-wide, Affiliate-based, Subsidiary-based, divisional,
individual Participant, or other Performance Goals, (b)
applicable Federal or state securities laws, or (c) any
other basis determined by the Committee in its sole
discretion.
8.4.2. Section 162(m) Performance Restrictions.
Notwithstanding any other provision of this Section 8.4.2 to
the contrary, for purposes of qualifying grants of
Restricted Stock as "performance-based compensation" under
Section 162(m) of the Code, the Committee shall establish
restrictions based upon the achievement of Performance
Goals. The specific targets under the Performance Goals
that must be satisfied for the Period of Restriction to
lapse or terminate shall be set by the Committee on or
before the latest date permissible to enable the Restricted
Stock to qualify as "performance-based compensation" under
Section 162(m) of the Code. The business criteria for
Performance Goals under this Section 8.4.2 shall be the
return on equity of the Company on a consolidated basis for
a calendar year calculated in accordance with generally
accepted accounting principles consistently applied. In
granting Restricted Stock that is intended to qualify under
Section 162(m), the Committee shall follow any procedures
determined by it in its sole discretion from time to time to
be necessary, advisable, or appropriate to ensure
qualification of the Restricted Stock under Section 162(m)
of the Code.
8.4.3. Legend on Certificates. The Committee, in
its sole discretion, may require the placement of a legend
on certificates representing Shares of Restricted Stock to
give appropriate notice of such restrictions. For example,
the Committee may determine that some or all certificates
representing Shares of Restricted Stock shall bear the
following legend:
"THE SALE, PLEDGE, OR OTHER TRANSFER OF THE
SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY,
OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER UNDER FEDERAL AND
STATE SECURITIES LAWS AND UNDER THE OLD
NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN,
AS SET FORTH IN AN AWARD AGREEMENT EXECUTED
THEREUNDER. A COPY OF SUCH PLAN AND SUCH
AWARD AGREEMENT MAY BE OBTAINED FROM THE
CORPORATE SECRETARY OF OLD NATIONAL BANCORP."
8.5. Removal of Restrictions. Except as otherwise provided
in this Section 8, Shares of Restricted Stock covered by each
Restricted Stock grant made under this Plan shall be released to
a Participant as soon as practicable after the end of the
applicable Period of Restriction. Except in the case of grants
of Restricted Stock to Covered Employees which are intended to
qualify as "performance-based compensation" under Section 162(m)
of the Code (the vesting of which cannot be accelerated except as
provided in Section 12.1 or 14.2), the Committee, in its sole
discretion, may accelerate the time at which any restrictions
shall lapse or remove any restrictions. After the end of the
applicable Period of Restriction, the Participant shall be
entitled to have any restrictive legend or legends placed on the
Shares under Section 8.4.3 removed from his or her Share
certificate.
8.6. Voting Rights. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares,
unless the applicable Award Agreement provides otherwise.
8.7. Dividend Rights. Unless otherwise determined by the
Committee and subject to this Plan, the distribution of cash
dividends on Shares of Restricted Stock shall be automatically
reinvested, by a constructive purchase by the Company in the name
and on behalf of the Participant, in additional Shares of
Restricted Stock. The number of Shares to be constructively
purchased by the Company shall be based upon the Fair Market
Value of the Shares determined on the date on which the
applicable cash dividend is paid. Dividends on Shares that are
the subject of a Restricted Stock Award Agreement and which are
paid in the form of Shares shall be paid in the form of
additional Shares of Restricted Stock of the same class as the
Shares on which such dividend was paid. All Shares of Restricted
Stock which are attributable to cash and stock dividends shall be
subject to all of the provisions of this Section 8, including,
for example, the terms and conditions of the Award Agreement
which applies to the Shares to which the dividends relate.
8.8. Return of Restricted Stock to Company. On the date set
forth in the applicable Award Agreement, the Restricted Stock for
which restrictions have not lapsed by the last day of the Period
of Restriction shall revert to the Company and thereafter shall
be available for the grant of new Awards under this Plan.
8.9. Termination of Service. Unless otherwise provided in
an Award Agreement or determined by the Committee in its sole
discretion, in the event of a Participant's Termination of
Service due to death, Disability or Retirement during the Period
of Restriction, the restrictions on his Shares of Restricted
Stock shall lapse and the Participant (or his or her Beneficiary)
shall, on the date of such Termination of Service, be fully
vested in the Restricted Stock. Unless otherwise provided in an
Award Agreement or this Plan, in the event of a Participant's
Termination of Service for any reason during the Period of
Restriction other than a Termination of Service due to death,
Disability or Retirement, all Shares of Restricted Stock still
subject to restriction shall be forfeited by the Participant and
thereafter shall be available for the grant of new Awards under
this Plan; provided, however, that the Committee shall have the
sole discretion to waive, in whole or in part, any or all
remaining restrictions with respect to any or all of such
Participant's Shares of Restricted Stock. Notwithstanding any
other provision of this Section 8 to the contrary, in the case of
grants of Restricted Stock to Covered Employees that the
Committee intends to qualify as "performance-based compensation"
under Section 162(m) of the Code (the vesting of which cannot be
accelerated, except as provided in Section 12.1 or 14.2), no
shares of Restricted Stock shall become vested unless the
applicable Performance Goals have first been met; provided,
further, that the Committee shall not waive any restrictions with
respect to such Restricted Stock. If the vesting of shares of
Restricted Stock is accelerated after the applicable Performance
Goals have been met, the amount of Restricted Stock distributed
shall be discounted by the Committee to reasonably reflect the
time value of money in connection with such early vesting.
SECTION 9
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1. Grant of Performance Units/Shares. Subject to the
terms and provisions of this Plan, the Committee, at any time and
from time to time, may grant Performance Units and Performance
Shares to any Employees in such amounts as the Committee, in its
sole discretion, shall determine. Subject to the limitations of
Section 4, the Committee shall have complete discretion in
determining the number of Performance Units and Performance
Shares granted to each Participant; provided, however, that
during any three (3) consecutive Fiscal Year period, (a) no
Participant shall receive Performance Units having an initial
value greater than Seven Hundred Fifty Thousand Dollars
($750,000), and (b) no Participant shall receive more than Three
Hundred Thousand (300,000) Performance Shares.
9.2. Value of Performance Units/Shares. Each Performance
Unit shall have an initial value that is established by the
Committee on or before the Grant Date. Each Performance Share
shall have an initial value equal to the Fair Market Value of a
Share on the Grant Date.
9.3. Performance Objectives and Other Terms. The Committee
shall set performance objectives in its sole discretion which,
depending on the extent to which they are met, will determine the
number or value of Performance Units or Performance Shares, or
both, that will be paid to the Participant. Each Award of
Performance Units or Performance Shares shall be evidenced by an
Award Agreement that shall specify the number of Performance
Units or Performance Shares, the Performance Period, the
performance objectives, and such other terms and conditions as
the Committee, in its sole discretion, shall determine.
9.3.1. General Performance Objectives. The
Committee may set performance objectives based
upon (a) the achievement of Company-wide,
Affiliate-based, Subsidiary-based, divisional,
individual Participant, or other Performance
Goals, (b) applicable Federal or state securities
laws, or (c) any other basis determined by the
Committee in its sole discretion.
9.3.2. Section 162(m) Performance Objectives.
Notwithstanding any other provision of this Section 9.3.2 to
the contrary, for purposes of qualifying grants of
Performance Units or Performance Shares to Covered Employees
as "performance-based compensation" under Section 162(m) of
the Code, the Committee shall establish the specific targets
under the Performance Goals applicable to Performance Units
or Performance Shares. Such targets under the Performance
Goals shall be set by the Committee on or before the latest
date permissible to enable the Performance Units or
Performance Shares, as the case may be, to qualify as
"performance-based compensation" under Section 162(m) of the
Code. The business criteria for Performance Goals under
this Section 9.3.2 shall be the return on equity of the
Company on a consolidated basis for a calendar year
calculated in accordance with generally accepted accounting
principles consistently applied. In granting Performance
Units or Performance Shares to Covered Employees which are
intended to qualify under Section 162(m) the Committee shall
follow any procedures determined by it from time to time to
be necessary or appropriate in its sole discretion to ensure
qualification of the Performance Units or Performance
Shares, as the case may be, under Section 162(m) of the
Code.
9.4. Earning of Performance Units/Shares. After the
applicable Performance Period has ended, the holder of
Performance Units or Performance Shares shall be entitled to
receive those Performance Units or Performance Shares, as the
case may be, earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the
applicable Performance Goals have been achieved. Except in the
case of Performance Goals applicable to Performance Units or
Performance Shares granted to Covered Employees which are
intended to qualify as "performance-based compensation" under
Section 162(m) of the Code (which cannot be reduced or waived
except as provided in Section 12.1 or 14.2), after the grant of a
Performance Unit or Performance Share, the Committee, in its sole
discretion, may reduce or waive any Performance Goals or related
business criteria applicable to such Performance Unit or
Performance Share.
9.5. Form and Timing of Payment of Performance Units/Shares.
Payment of earned Performance Units or Performance Shares shall
be made as soon as practicable after the end of the applicable
Performance Period. The Committee, in its sole discretion, may
pay earned Performance Units or Performance Shares in the form of
cash, in Shares (which have an aggregate Fair Market Value equal
to the value of the earned Performance Units or Performance
Shares, as the case may be, determined as of the last day of the
applicable Performance Period), or a combination thereof.
9.6. Cancellation of Performance Units/Shares. On the date
set forth in the applicable Award Agreement, all Performance
Units or Performance Shares which have not been earned or vested
shall be forfeited and thereafter shall be available for the
grant of new Awards under this Plan.
9.7. Termination of Service. Unless otherwise provided in
an Award Agreement or determined by the Committee in its sole
discretion, in the event of a Participant's Termination of
Service due to death, Disability or Retirement during a
Performance Period, the Participant (or his or her Beneficiary)
shall receive the Performance Units or Performance Shares which
relate to such Performance Period. Unless otherwise provided in
an Award Agreement or determined by the Committee in its sole
discretion, in the event of a Participant's Termination of
Service for any other reason, all Performance Units or
Performance Share shall be forfeited and thereafter shall be
available for the grant of new Awards under this Plan.
Distribution of earned Performance Units or Performance Shares
may be made at the same time payments are made to Participants
who did not incur a Termination of Service during the applicable
Performance Period. Notwithstanding any other provision of this
Section 9 to the contrary, in the case of awards of Performance
Units or Performance Shares to Covered Employees that the
Committee intends to qualify as "performance-based compensation"
under Section 162(m) of the Code (the vesting of which cannot be
accelerated except as provided in Section 12.1 or 14.2), no
Performance Units or Performance Shares shall become vested until
the applicable Performance Goals have been met.
SECTION 10
AMENDMENT, TERMINATION, AND DURATION
10.1. Amendment, Suspension, or Termination. The Board
may supplement, amend, alter, or discontinue the Plan in its sole
discretion at any time and from time to time, but no supplement,
amendment, alteration, or discontinuation shall be made which
would impair the rights of a Participant under an Award
theretofore granted without the Participant's consent, except
that any supplement, amendment, alteration, or discontinuation
may be made to (a) avoid a material charge or expense to the
Company or an Affiliate, (b) cause this Plan to comply with
applicable law, or (c) permit the Company or an Affiliate to
claim a tax deduction under applicable law. In addition, subject
to the provisions of this Section 10.1, the Board of Directors,
in its sole discretion at any time and from time to time, may
supplement, amend, alter, or discontinue this Plan without the
approval of the Company's shareholders (a) to the extent such
approval is not required by applicable law or the terms of a
written agreement, and (b) so long as any such amendment or
alteration does not increase the number of Shares subject to this
Plan (other than pursuant to Section 4.5) or increase the maximum
number of Options, SARs, Shares of Restricted Stock, Performance
Units or Performance Shares that the Committee may award to an
individual Participant under this Plan. The Committee may
supplement, amend, alter, or discontinue the terms of any Award
theretofore granted, prospectively or retroactively, on the same
conditions and limitations (and exceptions to limitations) as
apply to the Board under the foregoing provisions of this Section
10.1, and further subject to any approval or limitations the
Board may impose. Notwithstanding any provision of this Plan to
the contrary, if any right, Award or Award Agreement under this
Plan would cause a transaction of or acquisition by the Company
to be ineligible for "pooling of interest" accounting treatment
that would, but for such right hereunder, otherwise be eligible
for such accounting treatment, the Committee may amend, modify,
or adjust the right, the Award, or the Award Agreement of a
Participant (without the prior consent, approval, or
authorization of the Participant) so that pooling of interest
accounting treatment shall be available with respect to such
transaction or acquisition even if any such amendment,
modification, or adjustment would be detrimental to or impair the
rights of a Participant under this Plan.
10.2. Duration of This Plan and Shareholder Approval.
This Plan shall become effective on the Effective Date, and
subject to Section 10.1 (regarding the Board's right to
supplement, amend, alter, or discontinue this Plan), shall remain
in effect thereafter; provided, however, that no Incentive Stock
Option shall be exercised and no other Award shall be exercised
or otherwise paid hereunder until this Plan has been approved by
the holders of at least a majority of the outstanding Shares at a
meeting at which approval of this Plan is considered; and
provided further, however, that no Incentive Stock Option may be
granted under this Plan after the tenth anniversary of the
Effective Date.
SECTION 11
TAX WITHHOLDING
11.1. Withholding Requirements. Prior to the delivery
of any Shares or cash pursuant to the payment or exercise of an
Award, the Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy all Federal, state, and local income
and employment taxes required to be withheld with respect to the
payment or exercise of such Award.
11.2. Withholding Arrangements. The Committee, in its
sole discretion and pursuant to such procedures as it may specify
from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part, by (a) electing to
have the Company withhold otherwise deliverable Shares (except in
the case of exercises of Incentive Stock Options), or (b)
delivering to the Company Shares then owned by the Participant
having a Fair Market Value equal to the amount required to be
withheld; provided, however, that any shares delivered to the
Company shall satisfy the ownership requirements specified in
Section 6.6(a). The amount of the withholding requirement shall
be deemed to include any amount that the Committee agrees may be
withheld at the time any such election is made, not to exceed, in
the case of income tax withholding, the amount determined, based
upon minimum statutory requirements, by using the maximum
federal, state, or local marginal income tax rates applicable to
the Participant with respect to the Award on the date that the
amount of income tax to be withheld is determined. The Fair
Market Value of the Shares to be withheld or delivered shall be
determined as of the date that the taxes are required to be
withheld.
SECTION 12
CHANGE IN CONTROL
12.1. Change in Control. Notwithstanding any other
provision of this Plan to the contrary, in the event of a Change
in Control of the Company, all Awards granted under this Plan
that then are outstanding and that either are not then
exercisable or are subject to any restrictions or Performance
Goals shall, unless otherwise provided for in the Award
Agreements applicable thereto, become immediately exercisable,
and all restrictions and Performance Goals shall be removed, as
of the first date that the Change in Control has been deemed to
have occurred, and shall remain removed for the remaining life of
the Award as provided herein and within the provisions of the
related Award Agreements.
12.2. Definition. For purposes of Section 12.1, a
"Change in Control" of the Company shall be deemed to have
occurred if the conditions or events set forth in any one or more
of the following subsections shall occur:
(a) 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;
(b) Any sale, lease, exchange transfer, or other
disposition of all or any substantial part of the
assets of the Company;
(c) Any acquisition or agreement to acquire by any
person or entity (other than an employee pension
benefit plan sponsored by the Company), directly
or indirectly, beneficial ownership of twenty-five
percent (25%) or more of the outstanding voting
stock of the Company;
(d) During any period of two consecutive years during
the term of this Plan, individuals who at the
Effective Date constitute the Board of Directors
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 Effective Date;
(e) A majority of the Board 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;
(f) The consummation of any series of transactions
which result in any of the transactions described
above; or
(g) Any other set of circumstances which the Board
determines, in its sole discretion, to constitute
a Change in Control of the Company.
SECTION 13
LEGAL CONSTRUCTION
13.1. Gender and Number. Except where otherwise
indicated by the context, any masculine term used herein also
shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.
13.2. Severability. In the event any provision of this
Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of
this Plan, and this Plan shall be construed and enforced as if
the illegal or invalid provision had never been included herein.
13.3. Requirements of Law. The grant of Awards and the
issuance of Shares under this Plan shall be subject to all
applicable statutes, laws, rules, and regulations and to such
approvals and requirements as may be required from time to time
by any governmental authorities or any securities exchange or
market on which the Shares are then listed or traded.
13.4. Governing Law. Except to the extent preempted by
the Federal laws of the United States of America, this Plan and
all Award Agreements shall be construed in accordance with and
governed by the laws of the State of Indiana without giving
effect to any choice or conflict of law provisions, principles or
rules (whether of the State of Indiana or any other jurisdiction)
that would cause the application of any laws of any jurisdiction
other than the State of Indiana.
13.5. Headings. The descriptive headings and sections
of this Plan are provided herein for convenience of reference
only and shall not serve as a basis for interpretation or
construction of this Plan.
13.6. Mistake of Fact. Any mistake of fact or
misstatement of facts shall be corrected when it becomes known by
a proper adjustment to an Award or Award Agreement.
13.7. Evidence. Evidence required of anyone under the
Plan may be by certificate, affidavit, document, or other
information which the person relying thereon considers pertinent
and reliable, and signed, made, or presented by the proper party
or parties.
SECTION 14
MISCELLANEOUS
14.1. Deferrals. The Committee, in its sole discretion,
may permit a Participant to elect to defer receipt of all or any
percentage of the cash or Shares that would otherwise be due to
such Participant under an Award so long as (a) such deferral
election is made by the Participant in the Award Agreement which
provides for the payment of cash or the delivery of Shares, and
(b) the Award evidenced by such Award Agreement is based upon
services to be rendered by the Participant as an Employee after
the Grant Date. The Award Agreement shall specify the whole
percentage (or dollar amount or Fair Market Value) of the cash or
Shares to be deferred and the date or event on or with respect to
which any amount deferred thereunder shall be distributed. In no
event shall any amount deferred under this Section 14.1 become
distributable later than the earlier of the following two (2)
events: the date of the Participant's death or the date on which
the Participant attains age sixty-five (65). Any such deferral
election shall be subject to such additional rules and procedures
as may be determined by the Committee in its sole discretion.
All cash amounts deferred under this Section 14.1 shall be
distributed solely in the form of a single lump sum payment as
soon as reasonably practicable following the date on which the
amount deferred becomes distributable. In the case of all
amounts deferred under this Section 14.1 which are intended to
qualify as "performance-based compensation" under Section 162(m)
of the Code, any amount paid in excess of the amount deferred
shall be based on a reasonable rate of interest or a
"predetermined actual investment" as described in the Treasury
Regulations promulgated under Section 162(m) of the Code.
14.2. No Effect on Employment or Service. Neither this
Plan nor the grant of any Awards or the execution of any Award
Agreement shall confer upon any Participant any right to
continued employment by the Company or shall interfere with or
limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without
Cause. Employment with the Company and its Affiliates is on an
at-will basis only, unless otherwise provided by a written
employment or severance agreement, if any, between the
Participant and the Company or an Affiliate, as the case may be.
If there is any conflict between the provisions of this Plan and
an employment or severance agreement between a Participant and
the Company, the provisions of such employment or severance
agreement shall control, including, but not limited to, the
vesting and nonforfeiture of any Awards.
14.3. No Company Obligation. Unless required by
applicable law, the Company, an Affiliate, the Board of
Directors, and the Committee shall not have any duty or
obligation to affirmatively disclose material information to a
record or beneficial holder of Shares or an Award, and such
holder shall have no right to be advised of any material
information regarding the Company or any Affiliate at any time
prior to, upon, or in connection with the receipt, exercise, or
distribution of an Award. In addition, the Company, an
Affiliate, the Board of Directors, the Committee, and any
attorneys, accountants, advisors, or agents for any of the
foregoing shall not provide any advice, counsel, or
recommendation to any Participant with respect to, without
limitation, any Award, any exercise of an Option, or any tax
consequences relating to an Award.
14.4. Participation. No Employee shall have the right
to be selected to receive an Award under this Plan or, having
been selected, to be selected to receive a future Award.
Participation in the Plan will not give any Participant any right
or claim to any benefit under the Plan, unless such right or
claim has specifically accrued under the terms of this Plan.
14.5. Liability and Indemnification. No member of the
Board, the Committee, or any officer or employee of the Company
or any Affiliate shall be personally liable for any action,
failure to act, decision, or determination made in good faith in
connection with this Plan. By participating in this Plan, each
Participant agrees to release and hold harmless the Company and
its Affiliates (and their respective directors, officers, and
employees) and the Committee from and against any tax liability,
including, but not limited to, interest and penalties, incurred
by the Participant in connection with his receipt of Awards under
this Plan and the deferral, payment, and exercise thereof. Each
person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company
against and from (a) any loss, cost, liability, or expense
(including, but not limited to, attorneys' fees) that may be
imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under
this Plan or any Award Agreement, and (b) any and all amounts
paid by him or her in settlement thereof, with the Company's
prior written approval, or paid by him or her in satisfaction of
any judgment in any such claim, action, suit, or proceeding
against him or her; provided, however, that he or she shall give
the Company an opportunity, at the Company's expense, to handle
and defend such claim, action, suit, or proceeding before he or
she undertakes to handle and defend the same on his or her own
behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Articles of
Incorporation or By-Laws, by contract, as a matter of law or
otherwise, or under any power that the Company may have to
indemnify them or hold them harmless.
14.6. Successors. All obligations of the Company under
this Plan, with respect to Awards granted hereunder, shall be
binding on any successor to the Company, whether or not the
existence of such successor is the result of a Change in Control
of the Company.
The Company shall not, and shall not permit its Affiliates
to, recommend, facilitate, or agree or consent to a transaction
or series of transactions which would result in a Change in
Control of the Company unless and until the person or persons or
entity or entities acquiring control of the Company as a result
of such Change in Control agree(s) to be bound by the terms of
this Plan insofar as it pertains to Awards theretofore granted
and agrees to assume and perform the obligations of the Company
and its Successor (as defined in subsection 4.5.2) hereunder.
14.7. Beneficiary Designations. Any Participant may
designate, on such forms as may be provided by the Committee for
such purpose, a Beneficiary to whom any vested but unpaid Award
shall be paid in the event of the Participant's death. Each such
designation shall revoke all prior designations by the
Participant and shall be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such
designation, any vested benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate
and, subject to the terms of this Plan and of the applicable
Award Agreement, any unexercised vested Award may be exercised by
the administrator or executor of the Participant's estate.
14.8. Nontransferability of Awards. Except as provided
in Sections 14.8.1 and 14.8.2, no Award under this Plan can be
sold, transferred, assigned, margined, encumbered, bequeathed,
gifted, alienated, hypothecated, pledged, or otherwise disposed
of, whether by operation of law, whether voluntarily or
involuntarily or otherwise, other than by will or by the laws of
descent and distribution. In addition, no Award under this Plan
shall be subject to execution, attachment, or similar process.
Any attempted or purported transfer of an Award in contravention
of this Plan or an Award Agreement shall be null and void ab
initio and of no force or effect whatsoever. All rights with
respect to an Award granted to a Participant shall be exercisable
during his or her lifetime only by the Participant.
14.8.1. Limited Transfers of Nonqualified Stock
Options. Notwithstanding the foregoing, the Committee may,
in its sole discretion, permit the transfer of Nonqualified
Stock Options by a Participant to: (a) the Participant's
spouse, any children or lineal descendants of the
Participant or the Participant's spouse, or the spouse(s) of
any such children or lineal descendants ("Immediate Family
Members"), (b) a trust or trusts for the exclusive benefit
of Immediate Family Members, or (c) a partnership or limited
liability company in which the Participant and/or the
Immediate Family Members are the only equity owners,
(collectively, "Eligible Transferees"); provided, however,
that, in the event the Committee permits the transferability
of Nonqualified Stock Options granted to the Participant,
the Committee may subsequently, in its sole discretion,
amend, modify, revoke, or restrict, without the prior
consent, authorization, or agreement of the Eligible
Transferee, the ability of the Participant to transfer
Nonqualified Stock Options that have not been already
transferred to an Eligible Transferee. An Option that is
transferred to an Immediate Family Member shall not be
transferable by such Immediate Family Member, except for any
transfer by such Immediate Family Member's will or by the
laws of descent and distribution upon the death of such
Immediate Family Member. Incentive Stock Options granted
under this Plan shall not be transferable pursuant to this
Section 14.8.
14.8.2. Exercise by Eligible Transferees. In the
event that the Committee, in its sole discretion, permits
the transfer of Nonqualified Stock Options by a Participant
to an Eligible Transferee under Section 14.8.1, the Options
transferred to the Eligible Transferee must be exercised by
such Eligible Transferee and, in the event of the death of
such Eligible Transferee, by such Eligible Transferee's
executor or administrator only in the same manner, to the
same extent, and under the same circumstances (including,
but not limited to, the time period within which the Options
must be exercised) as the Participant could have exercised
such Options. The Participant, or in the event of his or
her death, the Participant's estate, shall remain liable for
all federal, state, local, and other taxes applicable upon
the exercise of a Nonqualified Stock Option by an Eligible
Transferee.
14.9. No Rights as Shareholder. Except to the limited
extent provided in Sections 8.6 and 8.7, no Participant (or any
Beneficiary) shall have any of the rights or privileges of a
shareholder of the Company with respect to any Shares issuable
pursuant to an Award (or the exercise thereof), unless and until
certificates representing such Shares shall have been recorded on
the Company's official shareholder records (or the records of its
transfer agents or registrars) as having been issued and
transferred to the Participant (or his or her Beneficiary).
14.10. Mitigation of Excise Tax. Subject to any other
agreement providing for the Company's indemnification of the tax
liability described herein, if any payment or right accruing to a
Participant under this Plan (without the application of this
Section 14.10), either alone or together with other payments or
rights accruing to the Participant from the Company or an
Affiliate ("Total Payments"), would constitute a "parachute
payment", as defined in Section 280G of the Code and regulations
thereunder, such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the
amount payable or right accruing under this Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed
as a deduction under Section 280G of the Code. The determination
of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith
after consultation with the Participant, and such determination
shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the Committee in
making such determination and providing the necessary information
for this purpose.
14.11. Funding. Benefits payable under this Plan to any
person will be paid by the Company from its general assets.
Shares to be distributed hereunder shall be issued directly by
the Company from its authorized but unissued Shares or acquired
by the Company on the open market, or a combination thereof.
Neither the Company nor any of its Affiliates shall be required
to segregate on their books or otherwise establish any funding
procedure for any amount to be used for the payment of benefits
under this Plan. The Company or any of its Affiliates may,
however, in their sole discretion, set funds aside in investments
to meet any anticipated obligations under this Plan. Any such
action or set-aside shall not be deemed to create a trust of any
kind between the Company or any of its Affiliates and any
Participant or other person entitled to benefits under the Plan
or to constitute the funding of any Plan benefits. Consequently,
any person entitled to a payment under the Plan will have no
rights greater than the rights of any other unsecured general
creditor of the Company or its Affiliates.
14.12. Use of Proceeds. The proceeds received by the
Company from the sale of Shares pursuant to this Plan will be
used for general corporate purposes.
OLD NATIONAL BANCORP
DATED: April 15, 1999
By: _________________________________
James A. Risinger
Chairman and CEO
ATTEST:
By: ____________________________________
Jeffrey L. Knight
Corporate Secretary and General Counsel
