SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OLD NATIONAL BANCORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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[OLD NATIONAL BANCORP LETTERHEAD]
March 8, 1999
Dear Shareholder:
This is an exciting year for Old National Bancorp. Your management team is
working diligently to implement major changes to operate as "One Bank" by the
new millennium. This year we will have more challenges, opportunities and issues
than we have had in the Company's entire history.
In your proxy statement you will find information concerning one of the
recommended changes your board of directors recently approved: The Old National
Bancorp 1999 Equity Incentive Plan ("Plan"). The proxy statement provides
extensive details concerning the new Plan, but we felt it was important to
highlight certain benefits of the Plan to shareholders so you could understand
the business objectives of the Plan prior to voting.
Our board is recommending that our shareholders approve the Plan for these key
reasons:
1. ADDS FLEXIBILITY
The Plan will cover virtually every possible equity-based compensation
alternative available today. This means the Compensation Committee will
be able to use many different types of equity compensation, including
issuing shares under the existing Restricted Stock Plan, which was
approved by shareholders in 1986. While it is our intent to only grant
non-qualified stock options, the ability to use various types of equity
compensation gives us added flexibility in recruiting and retaining
executive talent in today's highly competitive marketplace.
2. REDUCES FINANCIAL IMPACT TO THE COMPANY
Restricted stock awards currently used are charged to the earnings of
the Company, while the new non-qualified stock options will not impact
earnings. The Hay Group, an executive compensation consulting group
retained by the Board's Compensation Committee, projects that using
non-qualified stock options instead of restricted stock could increase
earnings by approximately $.10 per share by the end of five (5) years.
3. ALIGNS THE COMPANY'S LONG TERM INCENTIVES WITH PREVALENT INDUSTRY
PRACTICES
Non-qualified stock options are the long term incentive plan of choice
for 80% of public companies. Only 10 to 12% of companies use restricted
stock as the sole form of equity compensation.
4. ALIGNS EXECUTIVE REWARDS WITH SHAREHOLDER REWARDS
With non-qualified stock options, executives are only rewarded if our
stock price rises. Financial rewards to executives occur only by
increasing shareholder value.
The proxy statement provides more detailed information concerning the Old
National Bancorp 1999 Equity Incentive Plan. A copy of the full Plan can be
obtained without cost by written request to our corporate secretary, Jeffrey L.
Knight, at 420 Main Street, Evansville IN 47708, or by calling 1-800-718-0079.
Thank you again for your continued trust in Old National's long term success.
Sincerely,
James A. Risinger
Chairman and CEO
<PAGE>
OLD NATIONAL BANCORP
NOTICE OF
ANNUAL MEETING AND
PROXY STATEMENT
Annual Meeting of Shareholders
April 15, 1999
<PAGE>
OLD NATIONAL BANCORP
420 MAIN STREET
EVANSVILLE, INDIANA 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of OLD
NATIONAL BANCORP (the "Company") will be held on Thursday, April 15, 1999 at
10:30 a.m., Evansville time, in Roberts Municipal Stadium, 2600 Division Street,
Evansville, Indiana.
The Annual Meeting will be held for the following purposes:
1. ELECTION OF DIRECTORS. Election of a Board of Directors consisting of
fifteen Directors to serve for the ensuing year.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
Ratification of the appointment of Arthur Andersen LLP, Indianapolis,
Indiana, as independent public accountants of the Company and its
affiliates for the fiscal year ending December 31, 1999.
3. APPROVAL OF THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN.
4. OTHER BUSINESS. Such other matters as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on February 8, 1999, are
entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors
Jeffrey L. Knight
Secretary
March 8, 1999
IMPORTANT
PLEASE MAIL YOUR PROXY PROMPTLY. IN ORDER THAT THERE MAY BE PROPER
REPRESENTATION AT THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
OLD NATIONAL BANCORP
420 MAIN STREET
EVANSVILLE, INDIANA 47708
PROXY STATEMENT
This Proxy Statement is furnished to the Shareholders of Old National
Bancorp ("the Company") in connection with the solicitation by the Board of
Directors of Proxies to be voted at the Annual Meeting of Shareholders of the
Company to be held on Thursday, April 15, 1999 at 10:30 a.m., Evansville time,
in Roberts Municipal Stadium, 2600 Division Street, Evansville, Indiana, and at
any and all adjournments of such meeting. A Notice of Annual Meeting of
Shareholders and form of Proxy accompany this Proxy Statement.
Any Shareholder giving a Proxy has the right to revoke it in person at the
meeting or by a written notice delivered to the Secretary of the Company, P.O.
Box 718, Evansville, Indiana 47705-0718, at any time before such Proxy is
exercised. All Proxies will be voted in accordance with the directions of the
Shareholder giving such Proxy. To the extent no directions are given, Proxies
will be voted "FOR" the election of the persons named as nominees in the Proxy
Statement as Directors of the Company, "FOR" the ratification of the appointment
of Arthur Andersen LLP, as independent public accountants of the Company and its
affiliates for the fiscal year ending December 31, 1999, and "FOR" the adoption
of the Old National Bancorp 1999 Equity Incentive Plan. With respect to such
other matters that may properly come before the Annual Meeting, it is the
intention of the persons named as Proxies to vote in accordance with their best
judgment.
The complete mailing address of the principal executive office of the
Company is Old National Bancorp, P.O. Box 718, Evansville, Indiana 47705-0718.
The approximate date on which this Proxy Statement and form of Proxy for the
1999 Annual Meeting of Shareholders are first being sent or given to
Shareholders of the Company is March 8, 1999.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only Shareholders of the Company of record at the close of business on
February 8, 1999, will be eligible to vote at the Annual Meeting or at any
adjournment thereof.
The voting securities of the Company entitled to be voted at the Annual
Meeting consist only of common stock, without par value, of which 30,701,394
shares were issued and outstanding on the record date of February 8, 1999. All
references in this Proxy Statement to shares of common stock of the Company on
the record date have been adjusted to include the shares of common stock issued
on January 28, 1999, in connection with the Company's 5% stock dividend. The
Company has no other class of stock that is outstanding. Each Shareholder of
record on the record date will be entitled to one vote for each share of common
stock registered in the Shareholder's name.
As of February 8, 1999, to the knowledge of the Company, no person or firm
other than the Company beneficially owned more than 5% of the common stock of
the Company outstanding on that date. As of February 8, 1999, no individual
director, nominee, or officer beneficially owned more than 5% of the common
stock of the Company outstanding.
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As of February 8, 1999, to the knowledge of the Company, only the Company
beneficially owned more than 5% of the outstanding common stock of the Company.
The Company owned 3,776,137 shares of common stock of the Company which
constituted 12.30% of the outstanding common stock of the Company on that date.
These shares are held in various fiduciary capacities through the Company's
wholly-owned trust companies. Neither the Company, nor any of its subsidiaries
or affiliates, has voting authority as to any of the shares of common stock of
the Company beneficially owned by it, except as may be provided by law with
respect to the shares held by the Employee Stock Ownership Plan. (See "Executive
Compensation and Other Information-Employee Stock Ownership Plan" on pages 13
and 14 of this Proxy Statement.) Of the 2,015,171 shares as to which the
Company, through its subsidiaries and affiliates, has investment authority, it
has sole investment authority as to all of the shares.
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ITEM 1. ELECTION OF DIRECTORS
The first item to be acted upon at the Annual Meeting of Shareholders will
be the election of fifteen Directors to the Board of Directors of the Company.
Each of the persons elected will serve a term of office for one year or until
the election and qualification of his or her successor.
If any Director nominee named in this Proxy Statement shall become unable
or decline to serve (an event which the Board of Directors does not anticipate),
the persons named as Proxies will have discretionary authority to vote for a
substitute nominee named by the Board of Directors, if the Board determines to
fill such nominee's position. Unless authorization is withheld, the enclosed
Proxy, when properly signed and returned, will be voted "FOR" the election as
Directors of all of the nominees listed in this Proxy Statement.
Pages three and four contain the following information regarding each
Director nominee of the Company: name; principal occupation or business
experience for the last five years (for principal occupation for the last five
years of Directors who are also Executive Officers, see page five); age; the
year in which the nominee first became a Director of the Company; the number of
shares of common stock of the Company beneficially owned by the nominee as of
February 8, 1999; and the percentage that the shares beneficially owned
represent of the total outstanding shares of the Company as of February 8, 1999.
The number of shares of common stock of the Company shown as being beneficially
owned by each Director nominee includes those over which he or she has either
sole or shared voting or investment power.
[PHOTO] [PHOTO] [PHOTO]
DAVID L. BARNING RICHARD J. BOND ALAN W. BRAUN
o Investor o Chairman, Security o President, Industrial
o Age 65 Bank & Trust Co. Contractors, Inc.
o Director since 1982 (an Affiliate of (Construction)
o 150,369 shares the Company) o Age 54
beneficially owned o Age 65 o Director since 1988
o Owns .50% of o Director since 1989 o 59,481 shares
outstanding shares o 48,450 shares beneficially owned
beneficially owned o Owns .19% of
o Owns .16% of outstanding shares
outstanding shares
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[PHOTO] [PHOTO] [PHOTO]
WAYNE A. DAVIDSON LARRY E. DUNIGAN DAVID E. ECKERLE
o Retired o Chief Executive o President & CEO,
o Age 67 Officer, Holiday Dubois County
o Director since 1993 Management Company Bank (an Affiliate
o 21,301 shares (Long Distance of the Company)
beneficially owned Communication & o Age 55
o Owns .07% of Internet Services) o Director since 1993
outstanding shares o Age 56 o 54,711 shares
o Director since 1982 beneficially owned
o 142,938 shares o Owns .18% of
beneficially owned outstanding shares
o Owns .47% of
outstanding shares
[PHOTO]
PHELPS L. LAMBERT
o Managing Partner,
Bush and Lambert
(Investments)
o Age 51
o Director since 1990
o 130,775 shares
beneficially owned
o Owns .43% of
outstanding shares
[PHOTO] [PHOTO] [PHOTO]
RONALD B. LANKFORD LUCIEN H. MEIS LOUIS L. MERVIS
o President & COO, o President, o President, Mervis
Old National Bancorp Meis Ventures, Inc. Industries, Inc.
o Age 65 (Financial Investments) (Steel Fabricating)
o Director since 1994 o Age 64 o Age 64
o 12,132 shares o Director since 1985 o Director since 1996
beneficially owned o 50,915 shares o 698 shares
o Owns .04% of beneficially owned beneficially owned *
outstanding shares o Owns .17% of o Owns .002% of
outstanding shares outstanding shares
* The Mervis Charitable
Remainder Trust owns
17,363 shares of common
stock of the Company with
respect to which Mr.
Mervis disclaims
beneficial ownership.
[PHOTO]
LAWRENCE D. PRYBIL
o Senior Vice
President,
Daughters of Charity
National Health
System-East Central
Region
(Health Care)
o Age 58
o Director since 1998
o 346 shares
beneficially owned
o Owns .001% of
outstanding shares
[PHOTO] [PHOTO] [PHOTO]
JAMES A. RISINGER JOHN N. ROYSE MARJORIE Z. SOYUGENC
o Chairman & CEO, o Retired Chairman o President & CEO
Old National Bancorp; of Old National Welborn Baptist
Chairman, Old Bancorp Hospital
National Bank o Age 65 (Health Care)
(an Affiliate of o Director since 1985 o Age 58
the Company) o 171,184 shares o Director since 1993
o Age 50 beneficially owned o 4,313 shares
o Director since 1997 o Owns .56% of beneficially owned
o 18,941 shares outstanding shares o Owns .01% of
beneficially owned outstanding shares
o Owns .06% of
outstanding shares
[PHOTO]
CHARLES D. STORMS
o President & CEO,
Red Spot
Paint & Varnish
Co., Inc.
(Manufacturer of
Industrial Coatings)
o Age 55
o Director since 1988
o 28,987 shares
beneficially owned
o Owns .09% of
outstanding shares
The 20 Directors and Executive Officers of the Company as a group beneficially
own 927,255 shares or 3.02% of the total outstanding shares.
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EXECUTIVE OFFICERS OF THE COMPANY
The Executive Officers of the Company are listed in the table below. Each
officer serves a term of office of one year or until the election and
qualification of his successor.
Name Age Office and Business Experience
- ---- --- ------------------------------
James A. Risinger 50 Chairman of the Board and Chief Executive
Officer of the Company since January 1, 1998,
Executive Vice President and Director since
1997, and Senior Vice President from 1993 to
1997.
Ronald B. Lankford 65 President and Chief Operating Officer of the
Company since 1995, Director since 1994, and
Executive Vice President from 1993 to 1994.
William R. Britt 51 Senior Vice President of the Company since
1996 and Northern Regional Executive of the
Company since 1995. Currently, Chairman,
President and CEO of Merchants National Bank
(Terre Haute). Chairman of Palmer American
National Bank (Danville) since 1990 and
President from 1990 to 1995.
Thomas F. Clayton 53 Southern Regional Executive of the Company
since 1997 and Senior Vice President since
1991.
Daryl D. Moore 41 Senior Vice President and Chief Credit Officer
of the Company since 1996 and Vice President
and Chief Credit Officer from 1995 to 1996.
Executive Vice President and Chief Credit
Officer of Merchants National Bank (Terre
Haute) from 1993 to 1995.
John S. Poelker 56 Senior Vice President and Chief Financial
Officer of the Company since 1998. Previously,
Chief Financial Officer of American General
Finance from 1996 to 1998, and Chairman and
CEO of Fleet Finance from 1993 to 1996.
Jeffrey L. Knight 39 Corporate Secretary of the Company since 1994
and General Counsel since 1993.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors include an Executive
Committee, an Audit Committee, a Compensation Committee, a Nominating Committee,
and a Personnel Committee.
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When the Board is not in session, the Executive Committee has all of the
power and authority of the Board except with respect to amending the Articles of
Incorporation or By-Laws of the Company; approving an agreement of merger or
consolidation; recommending to the shareholders the sale, lease or exchange of
all or substantially all of the Company's property and assets; recommending to
the shareholders a dissolution of the Company or a revocation of such
dissolution; declaring dividends; or authorizing the issuance or reacquisition
of shares. The permanent members of the Executive Committee are James A.
Risinger (Chairman), Richard J. Bond, Alan W. Braun, Larry E. Dunigan, Ronald
B. Lankford (Vice Chairman), Lucien H. Meis and John N. Royse. Board members
who are not permanent members of the Executive Committee rotate onto the
Executive Committee a minimum of two times during the year. The Executive
Committee held seven meetings during 1998.
The principal duties of the Audit Committee are to nominate the Independent
Public Accountants for appointment by the Board; to meet with the Independent
Public Accountants to review and approve the scope of their audit engagement and
the fees related to such work; to meet with the Company's financial management,
internal audit management and Independent Public Accountants to review matters
relating to internal accounting controls, the internal audit program, the
Company's accounting practices and procedures and other matters relating to the
financial condition of the Company and its affiliates; and to report to the
Board periodically any conclusions or recommendations the Audit Committee may
have with respect to such matters. The members of the Audit Committee are Larry
E. Dunigan (Chairman), David L. Barning, Alan W. Braun and Phelps L. Lambert.
The Audit Committee held five meetings during 1998. At the end of each meeting,
the members of the Audit Committee have the opportunity to meet privately with
the Company's Independent Public Accountants with no officers or other personnel
of the Company present.
The principal duties of the Compensation Committee are to review corporate
organizational structures; to review key employee compensation policies, plans
and programs; to monitor performance and establish compensation of officers of
the Company and other key employees; to prepare recommendations and periodic
reports to the Board concerning such matters; and to function as the Committee
administering the Company's Short Term Incentive Plan, Restricted Stock Plan,
Pension Restoration Plan and Deferred Compensation Plan. The current members of
the Compensation Committee are Charles D. Storms (Chairman), Larry E. Dunigan,
Thomas B. Florida, Lucien H. Meis, and Lawrence D. Prybil, none of whom is an
officer or employee of the Company or any affiliate. The Compensation Committee
met four times during 1998.
The function of the Nominating Committee is to seek out, evaluate and
recommend to the Board qualified nominees for election as Directors of the
Company and to consider other matters pertaining to the size and composition of
the Board. The members of the Nominating Committee are Charles D. Storms
(Chairman), David L. Barning, Larry E. Dunigan, Thomas B. Florida, and Phelps L.
Lambert. The Nominating Committee met one time in 1998. Each year the Nominating
Committee makes a recommendation to the entire Board of Directors of nominees
for election as Directors. The Nominating Committee will review suggestions from
shareholders regarding nominees for election as Directors. All such suggestions
from shareholders must be submitted in writing to the Nominating Committee at
the Company's principal executive office not less than 120 days in advance of
the date of
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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 such shareholder, (iii) the name, address and age of the
suggested nominee for election as Director, (iv) the nominee's principal
occupation during the five years preceding the date of 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 suggested
nominee, and (vi) such other information as the Nominating Committee may
reasonably request. A consent of the suggested nominee to serve as a Director of
the Company, if elected, must also be included with the written suggestion.
The function of the Personnel Committee is to review and approve changes in
the Company's employee benefit programs, plans and policies relating to
personnel issues. The members of the Personnel Committee are Alan W. Braun
(Chairman), David L. Barning, Richard J. Bond, Ronald B. Lankford, James A.
Risinger, Marjorie Z. Soyugenc and Charles D. Storms. The Personnel Committee
met three times during 1998.
MEETINGS OF THE BOARD OF DIRECTORS AND DIRECTOR FEES
The Board of Directors of the Company held five meetings during the fiscal
year ended December 31, 1998. All incumbent Directors attended 75% or more of
the aggregate of 1998 meetings of the Board and of the Board Committees to which
they were appointed.
All Directors of the Company received an annual retainer of $5,000 for
serving as Directors. Directors not otherwise employed by the Company also
received $750 for each Board of Directors meeting attended and $500 for each
Committee meeting attended. Directors serving as a Committee Chairman received
an additional annual retainer of $1,500.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of five
non-employee Directors who are not eligible to participate in any management
compensation programs. The Committee is responsible for establishing all
compensation for the Company's Executive Officers and for setting and
administering the terms, policies and agreements related to other compensation
components for the Company's Executive Officers. An independent compensation
consulting firm, Hay Group, Inc., has been retained by the Company since 1982 to
advise the Compensation Committee on all compensation matters.
Compensation Principles
The Committee believes the most effective executive compensation program
is one which provides incentives to achieve both current and long-term strategic
management goals of the Company, with the ultimate objective of enhancing
shareholder value. In this regard, the Committee believes executive compensation
should be comprised of cash and equity-based programs which reward performance
not only as measured against the Company's specific annual and long-term goals,
but also which recognize that the Company operates in
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a competitive environment and that performance should be evaluated as compared
to industry peers. With respect to equity-based compensation, an integral part
of the Company's compensation program is the Restricted Stock Plan, which
encourages the ownership and retention of the Company's common stock by key
employees. This assures that employees have a meaningful stake in the Company,
the ultimate value of which is dependent on the Company's continued long-term
success, and that the interests of employees are thereby aligned with those of
the shareholders.
The Company's executive compensation program is structured to help the
Company achieve its business objectives by:
. setting levels of compensation designed to attract and retain superior
executives in a highly competitive environment;
. providing incentive compensation that varies directly with both Company
financial performance and individual contribution to that performance; and
. linking compensation to elements which affect short- and long-term stock
performance.
Salaries
The Compensation Committee establishes the salaries of the Chairman and
CEO and the President and COO. The base salaries of the Company's next three
highest paid senior executive officers are determined by the Compensation
Committee with recommendations from the Chairman and President. The same
compensation principles are applied in setting the salaries of all employees,
including the Chairman, to ensure that salaries are fairly and competitively
established. Salary ranges are determined for each executive position based upon
survey data which is obtained from the Company's peer group and from the Hay
Group, Inc. The Company uses the Hay Job Evaluation System to establish salary
grades and ranges for each position based on the knowledge and problem-solving
ability required to satisfactorily fulfill the position's assigned duties and
responsibilities, its accountability and the impact on the operations and
profitability of the Company. The Company's peer group consists of reasonably
comparable regional bank holding companies. Peer group data is used rather than
the NASDAQ Combined Financial Index because the peer group companies resemble
more closely the asset size and operations of the Company. The peer group data
is also used to validate and affirm recommendations presented by the Hay Group.
From survey data, salary ranges are established each year for the
Chairman and CEO and all other executive positions within the organization.
These ranges are designed so that the mid-point of the salary range is
approximately the average base salary paid to comparable positions across a
broad spectrum of comparable companies. Within these established ranges, actual
base salary adjustments are made periodically in accordance with the guidelines
of the Company's salary administration program and performance review system. In
1998, the base salaries for the Executive Officers as a group and the Chairman
and CEO were within the average salary ranges paid to executives in comparable
positions with Companies in the Company's peer group. Continuous outstanding
performance over an extended period of time could result in a salary at the top
end of the established range whereas undistinguished performance could result in
compensation at the lower end of the range.
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Short Term Incentive Plan
The Company implemented a Short Term Incentive Plan (the "STIP") for
certain key officers in 1996. The STIP provides for the payment of additional
compensation in the form of cash incentive payments contingent upon the
achievement of certain corporate goals and the participant's achievement of
certain individual performance goals. In 1998, the Compensation Committee
amended the Plan to provide for a seven-tiered incentive matrix based on
specific corporate and shareholder-related performance goals relating to the
Company's net income performance. Participants were assigned to one of the seven
incentive matrices based upon their level of responsibility and expected level
of contribution to the Company's achievement of its corporate goals. The
incentive matrices used to determine the amount of awards, based upon the
Company's and an individual participant's performances, range from 7.5% to 82.5%
of a participant's base salary. The STIP incentive award opportunity for the
Chairman and CEO ranges from 27.5% to 82.5% of base salary.
Each fiscal year the Compensation Committee establishes threshold
(minimum), target and maximum achievement levels under the STIP. If threshold
performance is not achieved, there is no payment from the plan for that period,
and if performance exceeds the threshold, actual incentive payments to
participants will vary with the actual financial performance achieved compared
to the Compensation Committee's goals. For 1998, the Company met the established
net income target, resulting in a payout to participating officers at the
"target" level under the STIP. (See Summary Compensation Table on page 11)
Restricted Stock Awards
Restricted stock awards are determined by the Compensation Committee.
Awarded shares vest over a four year period. In 1998, a total of 46,500 shares
of common stock of the Company were awarded under the Restricted Stock Plan,
including 12,285 shares which were awarded to the five most highly compensated
Executive Officers. Shares of restricted stock already held by the Executive
Officers as a group and the Chairman and CEO were not considered by the
Compensation Committee in its 1998 award determination. The amount of restricted
stock earned by Executive Officers on an annual basis under the plan is based
upon the Company's net income performance for the fiscal year compared to the
target level established at the beginning of the fiscal year. In 1998, the net
income goal established by the Compensation Committee was met, resulting in a
payout to participating officers at the "target" level under the plan. (See
Summary Compensation Table on page 11)
Each participant is granted a restricted stock award opportunity based
on the executive's position in the organization and scope of responsibilities.
Each fiscal year the Compensation Committee establishes threshold (minimum),
target and maximum performance levels under the Restricted Stock Plan. If
threshold performance is not achieved, there is no payment from the plan for
that period, and if performance falls below certain levels, unvested shares can
be fully or partially forfeited. If performance exceeds the threshold level,
actual awards to participants will vary with the actual performance achieved
compared to the annual goals. Participants can earn up to 150% of their base
award. In 1998, the Chairman and CEO earned 100% of the restricted stock
available to be awarded to him since the Company met its net income target level
established by the Compensation Committee.
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Discussion of 1998 Compensation for the Chairman and CEO
Annually, the Compensation Committee receives an analysis from the
Company's Vice President, Director of Human Resources, on all aspects of the
Chairman and CEO's remuneration, including base salary, incentive opportunity,
and the relationship of total compensation to the comparative survey data. When
appropriate, the Compensation Committee may direct the Vice President, Director
of Human Resources, to compile additional compensation information and
comparisons. The Committee considers several factors in establishing the
Chairman and CEO's compensation package. These include the Company's overall
performance as measured by total shareholder return, adherence to the Company's
strategic plan, the development of sound management practices and the
development of a management succession plan. These factors were considered by
the Committee in evaluating an increase in the Chairman and CEO's base salary in
1998.
Summary
The Committee has determined that Old National Bancorp's Executive
Compensation programs, plans and awards for 1998 are well within conventional
standards of reasonableness and competitive necessity and are clearly within
industry norms and practices.
In establishing executive compensation programs in the future, the
Compensation Committee will continue to focus on specific corporate goals
designed to promote the overall financial success of the Company, such as
earnings per share and affiliate performance, which are expected to improve the
return on shareholders' equity.
In 1998, the Compensation Committee consisted of the following
Directors:
Charles D. Storms, Chairman
Larry E. Dunigan
Thomas B. Florida
Lucien H. Meis
Lawrence D. Prybil
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended December 31, 1998,
1997, and 1996, the cash compensation paid by the Company and its affiliates, as
well as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and each of the next four most highly compensated Executive
Officers of the Company in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
- ---------------------------------------------------------------
(a) (b) (c) (d)
Name
and
Principal Restricted All Other
Position Year Salary Bonus Stock Awards Compensation
--------- ---- ------ ----- ------------ ------------
James A. Risinger 1998 $380,003 $217,802 $95,175 $34,200
Chairman and CEO 1997 215,911 50,804 53,894 20,908
1996 201,578 73,858 48,684 18,142
Ronald B. Lankford 1998 $344,205 $141,506 $79,684 $30,978
President and COO 1997 316,707 0 48,965 28,504
1996 269,874 93,107 44,080 24,289
John S. Poelker 1998 $220,000* $35,742 $26,598 $0
Senior Vice President 1997 0 0 0 0
& CFO 1996 0 0 0 0
Thomas F. Clayton 1998 $212,093 $98,593 $49,916 $18,540
Senior Vice President 1997 197,006 27,121 36,363 17,191
& Regional Executive 1996 172,568 57,133 34,583 14,991
William R. Britt 1998 $192,299 $79,534 $46,626 $17,235
Senior vice President 1997 171,998 31,033 32,085 15,480
& Regional Executive 1996 149,866 23,079 14,681 13,488
(a) Salary reflects base compensation and income recognized in the form of
Director fees paid by the Company or its affiliate banks during the
indicated calendar years.
(b) These amounts represent bonuses payable pursuant to the Company's Short
Term Incentive Plan (STIP) which is described on pages 9, 16 and 17 of this
Proxy Statement.
(c) Restricted Shares awarded each year are based on the achievement of net
income goals and vest over a four year period. The shares itemized in this
column (c) reflect the value of earned shares that have vested in 1998 that
are no longer subject to forfeiture under the plan. The number and value of
the total restricted stock awarded for vesting and still subject to partial
forfeiture as of December 31, 1998 to the persons named are as follows:
James A. Risinger 3,869 shares, $195,868; Ronald B. Lankford 2,843 shares,
$143,927; Thomas F. Clayton 1,582 shares, $80,089; and John S. Poelker
1,575 shares, $79,734, and William R. Britt 2,049 shares, $103,731.
Dividends are paid only on vested shares. See page 9 for a full discussion
of the Restricted Stock Plan.
(d) All other Compensation includes the following for Messrs. Risinger,
Lankford, Britt, and Clayton for 1998: (i) Company contribution to the
Employee Stock Ownership Plan of Old National Bancorp of $14,400, for each
named executive; and (ii) Company contribution to the Supplemental Deferred
Compensation Plan of $19,800, $16,578, $2,835, and $4,140, respectively.
* John S. Poelker joined the Company on August 10, 1998. His salary is
presented on an annualized basis such that if he had been with the Company
an entire year, he would have been one of the four most highly compensated
Executive Officers.
11
<PAGE>
Retirement Plan
The Old National Bancorp Employees' Retirement Plan (the "Retirement
Plan") is a qualified, defined benefit, non-contributory pension plan covering
substantially all employees of the Company and its subsidiaries and affiliates
(collectively, "Affiliates") with one or more years of service with the Company
or its Affiliates, and with credited service accruing from the date of
employment, provided that the employee has not less than 1,000 hours of service
(as defined in the plan) during such period.
The Retirement Plan provides for the payment of monthly benefits in a
fixed amount upon attainment of age 65. As a normal form of benefit, each
eligible participant is entitled to receive a monthly pension for his or her
life based on years of service and "average monthly compensation" (which
excludes bonuses). In general, the formula for determining the amount of a
participant's monthly pension is average monthly compensation multiplied by
1.45% for the first ten years of service, 1.65% for the next ten years of
service, and 1.95% for the next fifteen years of service, less any amount
related to Social Security earnings. In general, the amount of the reduction is
.59% of average monthly compensation (up to a maximum of 125% of covered
compensation) multiplied by all years of service up to 35 years of service. The
standard retirement benefit for married participants is payable in the form of a
joint and survivor annuity in an amount which is actuarially equivalent to the
normal form of benefit. Instead of an annuity, participants may elect to receive
a single sum cash settlement upon retirement in an amount which is actuarially
equivalent to the participant's normal form of benefit.
The amount of annual contribution attributable to specific individuals
cannot be determined in a meaningful manner. The following table shows the
estimated annual pensions payable to eligible employees upon retirement at age
65. The amounts shown do not reflect any reduction related to Social Security
earnings or for the survivor benefit features of the Retirement Plan, the
application of which would reduce the amount of pension payable.
Pension Plan Table (1)
Final Average
Salary Years of Service
- -----------------------------------------------------------------------------
5 10 15 20 25 30 35 & Over
--------------------------------------------------------------
$100,000 $7,250 $14,500 $22,750 $31,000 $40,750 $50,500 $60,250
150,000 10,875 21,750 34,125 46,500 61,125 75,750 90,375
200,000 14,500 29,000 45,500 62,000 81,500 101,000 120,500
250,000 18,125 36,250 56,875 77,500 101,875 126,250 150,625
300,000 21,750 43,500 68,250 93,000 122,250 151,500 180,750
350,000 25,375 50,750 79,625 108,500 142,625 176,750 210,875
400,000 29,000 58,000 91,000 124,000 163,000 202,000 241,000
450,000 32,625 65,250 102,375 139,500 183,375 227,250 271,125
500,000 36,250 72,500 113,750 155,000 203,750 252,500 301,250
550,000 39,875 79,750 125,125 170,500 224,125 277,750 331,375
600,000 43,500 87,000 136,500 186,000 244,500 303,000 361,500
(1) The law in effect at December 31, 1998 prohibited the distribution of
benefits from the Retirement Plan in excess of $125,000 per year expressed as a
straight life annuity. It also
12
<PAGE>
prohibited compensation in excess of $160,000 to be used in the computation of
the retirement benefit. Both amounts are indexed for inflation.
1998 base salary figures for the Chairman and CEO and the next four
most highly compensated Executive Officers of the Company are set forth in
column (a) in the Summary Compensation Table on page 11. The credited years of
service as of December 31, 1998, for each such Executive Officer are as follows:
James A. Risinger - 20; Ronald B. Lankford - 42; William R. Britt - 6; Thomas F.
Clayton - 11; and John S. Poelker - 0.
For certain employees, in addition to the persons listed in the Summary
Compensation Table, whose annual retirement income benefit under the Retirement
Plan exceeds the limitations imposed by the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (including, among others, the limitation
that annual benefits paid under qualified defined benefit pension plans may not
exceed $125,000) such excess benefits will be paid from the Company's
non-qualified, unfunded, non-contributory supplemental retirement plan.
Employee Stock Ownership Plan
Effective January 1, 1998, the Company amended and restated the Employees'
Savings and Profit Sharing Plan of Old National Bancorp ("Prior Plan") as the
Old National Bancorp Employee Stock Ownership Plan ("ESOP") which is an employee
stock ownership plan and a stock bonus plan. As such, it is designed to be
invested primarily in Common Stock. In connection therewith, the "rollover
contribution," "salary reduction contributions," "investment," and "prior plan"
accounts of all participants under the Prior Plan, and all allocations to the
Prior Plan on account of the plan year ended December 31, 1997, were spun off to
a new plan, the Old National Bancorp Employees' Savings Plan ("Savings Plan").
All such accounts were fully vested and nonforfeitable, both prior to and at the
time of their spin off from the Prior Plan to the Savings Plan. All amounts
allocated to participants' "matching" and "profit sharing" accounts under the
Prior Plan through December 31, 1997 remained under the Prior Plan and became
the "matching" and "regular" contributions accounts, respectively, under the
ESOP.
The purpose of the ESOP is to enable participating employees of the Company
and its Affiliates to share in the growth and prosperity of the Company, to
provide participating employees with an opportunity to accumulate capital for
their future economic security, to furnish additional security to participating
employees who become totally and permanently disabled and to acquire beneficial
stock ownership interests in the Company. Generally, all regular employees of
the Company and its Affiliates who have completed twelve months of continuous
service (as defined) consisting of at least 1,000 hours of service may
participate in the ESOP.
Under the terms of the ESOP, the Company contributes common stock of the
Company ("Common Stock") or cash which is invested primarily in Common Stock.
The Company may make "regular" and "matching" contributions to the ESOP. No
participant contributions are allowed under the ESOP. Regular contributions are
allocated to each participant who has completed 1,000 hours of service (as
defined) during the year and is actually employed by the Company, or any of its
Affiliates, on the last day of such year. The allocation is made in the
proportion that the participant's compensation (as defined) for the
13
<PAGE>
year bears to the total compensation of all participants entitled to an
allocation of the regular contribution for the year. The Board of Directors
determines the amount of any regular contributions.
Matching contributions are made in an amount necessary to match an amount of
each eligible participant's eligible salary reduction contributions under the
Savings Plan for a year determined under the following schedule based on the
participant's years of service with the Company and its Affiliates:
Matched Percentage
Years of Service of Salary Reduction
---------------- -------------------
0-4 50%
5-9 75%
10 or more 100%
Up to 4% of a participant's salary reduction contributions are eligible for a
matching contribution so long as the participant completes 1,000 hours of
service in the year to which the matching contribution relates and is actually
employed on the last day of such year.
Participants are vested in their ESOP accounts on a graduated basis
commencing with 20% after one year of "vesting service" (as defined) and
reaching 100% after 5 years of service. Distributions to participants or their
beneficiaries are made on termination of employment in a lump sum, periodic
installments or a qualified joint and 50% survivor annuity. In general,
distributions are made in the form of whole shares of Common Stock or cash, as
elected by participants.
After a participant has attained age 55 and completed 10 years of
participation in the ESOP, he or she may elect to diversify his or her ESOP
account by transferring to the Savings Plan up to 100% of the Common Stock
allocated to the account. Any such transfer will be in cash at the fair market
value of the shares of Common Stock to which the participant's diversification
election relates.
Participants have the right to direct the voting of the shares of Common
Stock allocated to their accounts on all matters with respect to which the
shares are entitled to vote. The ESOP's voting provisions require Old National
Trust Company, the trustee of the ESOP and wholly-owned subsidiary of the
Company, to vote the shares of Common Stock allocated to participants' accounts
in accordance with the written instructions of the participants. These
provisions also provide that, with respect to shares as to which no voting
instructions have been received, and with respect to shares which have not yet
been allocated to participants' accounts, the benefits committee under the ESOP
will instruct the trustee to vote such shares in the same proportion that the
allocated shares are voted by participant direction. However, applicable law
requires the trustee to vote the shares in a manner which is consistent with its
fiduciary obligations under the Employee Retirement Income Security Act
("ERISA"). Accordingly, if the trustee determines that, under the circumstances,
voting instructions are inconsistent with the requirements of ERISA, the trustee
will vote the shares in a manner which it determines to be consistent with
ERISA.
14
<PAGE>
Savings Plan
The Savings Plan is a qualified salary reduction plan within the meaning of
Section 401(k) of the Code. Under the Savings Plan, all regular employees of the
Company and its Affiliates who have completed 12 consecutive months of
continuous service (as defined) consisting of at least 1,000 hours of service
may participate in the Savings Plan. An employee who has satisfied this
eligibility requirement may participate in the Savings Plan by directing his or
her employer to make before-tax salary reduction contributions to the Savings
Plan. Contributions may be directed in any integral percentage between 1% and
15% of the employee's basic compensation (as defined) subject to an annual
dollar limitation under the Code (currently $10,000). Before-tax salary
reduction contributions are fully vested at all times and are invested by
participants in one or more of the four investment funds made available by Old
National Trust Company, the trustee of the Savings Plan. Benefits are
distributed from the Savings Plan in the form of a single lump sum, periodic
installments or a qualified joint and 50% survivor annuity.
Restricted Stock Plan
The Company also sponsors the Old National Bancorp Restricted Stock Plan.
The purpose of the Restricted Stock Plan is to promote the long-term
profitability and success of the Company by providing equity interests in the
Company to officers and key employees of the Company and its Affiliates. The
Restricted Stock Plan is administered by the Compensation Committee of the Board
of Directors.
Generally, the Restricted Stock Plan provides for the granting of shares of
Common Stock ("Restricted Stock") to an officer or key employee, subjecting the
shares to a vesting schedule and restricting the grantee's right to transfer the
shares for a period of not less than 3 years nor more than 5 years. During such
periods, the grantee has all of the rights of a shareholder; however, the
Restricted Stock is subject to a substantial risk of forfeiture. A grantee will
forfeit his or her interest in the Restricted Stock if he or she terminates
employment before the shares become vested and transferable. However, if a
grantee ceases to be an employee prior to the end of the restriction period as
the result of death, disability (as defined) or retirement (as defined), the
Compensation Committee may, if it deems appropriate, direct that the grantee
receive a greater number of shares of Common Stock than he or she is vested in,
not to exceed the number of shares of Restricted Stock initially granted.
A total of 50,000 shares of Common Stock may be awarded under the Restricted
Stock Plan, subject to adjustment for changes in the capitalization of the
Company. All awards are subject to the award agreement entered into between the
Company and the grantee; however agreements may differ among employees.
Executive Deferred Compensation
Supplemental Deferred Compensation Plan. Effective August 1, 1987, the
Company adopted the Supplemental Deferred Compensation Plan for Select Executive
Employees of Old National Bancorp and its Subsidiaries (the "Executive Plan"),
in the form of an unfunded, non-qualified deferred compensation plan. The
primary purpose of the Executive
15
<PAGE>
Plan is to enable participating executives to supplement their salary reduction
contributions to the Savings Plan and to receive allocations of matching
contributions which they are otherwise unable to receive under the Savings Plan
due to the limitations imposed thereon by the Code. A participant may contribute
up to 25% of his or her compensation (as defined) to the Executive Plan during
any year. In addition, participants may defer up to 100% of any short term
incentive payments. The Company also makes matching contributions to the
Executive Plan on account of participants' salary reduction contributions
thereunder. The amount of the Company's matching contributions for a year are
equal to the matching contributions which would have been made under the
matching contribution formula contained in the Savings Plan, reduced by the
amount of matching contributions actually allocated to the participant's Savings
Plan accounts for the year. The Company may also make contributions to the
Savings Plan in such amounts as are determined by the Board of Directors.
Participants in the Executive Plan are limited to officers and key
employees of the Company and its Affiliates who are designated by the
Compensation Committee. Benefits under the Executive Plan are provided without
regard to any limitation imposed by the Code on benefits payable under qualified
plans (such as the Savings Plan) and represent unfunded, unsecured, general
contracted obligations of the Company. The Compensation Committee of the Board
of Directors is responsible for administrating the Executive Plan.
Pension Restoration Plan. Effective December 1, 1995, the Company
adopted the Old National Bancorp Pension Restoration Plan, in the form of a
non-qualified, unfunded deferred compensation plan. The purpose of the
Restoration Plan is to restore to affected participants the difference between
the amount of their benefits under the Retirement Plan and the benefit they
would have received under the Retirement Plan were it not for the limits thereon
imposed by the Code. Thus, the Restoration Plan provides a participant with an
actuarial equivalent benefit in an amount equal to the difference between the
monthly amount payable under the Retirement Plan without regard to any
limitations on benefits imposed by the Code less the amount of the single life
annuity benefit actually payable under the Retirement Plan. Benefits under the
Restoration Plan are subject to the same vesting schedule that applies to
benefits accrued under the Retirement Plan.
Participants in the Restoration Plan are limited to officers and key
employees of the Company, and its Affiliates who are designated by the
Compensation Committee. Benefits under the Restoration Plan are provided without
regard to any limitation imposed by the Code on benefits payable under qualified
plans (such as the Retirement Plan) and represent unfunded, unsecured, general
contractual obligations of the Company. The Restoration Plan is administered by
the Compensation Committee of the Board of Directors.
Short Term Incentive Plan
In 1996, the Company implemented the STIP which provides for additional
compensation in the form of cash incentive payments which are contingent on the
achievement of certain corporate and individual performance goals. Participation
in the STIP is limited to officers and key employees of the Company and its
Affiliates based upon salary grade level and performance ratings. The STIP is
administered by the Compensation Committee of the Board of Directors.
16
<PAGE>
The corporate and shareholder-related goals of the STIP are intended to
challenge the Company's management to achieve higher performance levels given
the facts and circumstances known to the Compensation Committee at the time the
goals are established. At the beginning of each year, participants establish
individual goals which are linked to the Company's business and strategic plans.
The individual goals relate to the specific segments for which the participant
has responsibility and are intended to challenge the participants to perform
beyond expected levels of performance.
Agreements with Certain Officers
The Company has entered into severance agreements with Messrs. William
R. Britt, Thomas F. Clayton, John S. Poelker, and James A. Risinger. Each
executive is entitled to benefits under his severance agreement upon any
termination of the executive's employment by the Company (except for, and as is
more specifically described in each severance agreement, termination for cause,
disability, voluntary retirement or death), or upon a termination of employment
by the executive under certain circumstances specified in his severance
agreement, during the one-year period following a change in control (as defined
in the severance agreements) of the Company which occurs during the term of the
severance agreement.
In the event of a termination of employment, the executive will be
entitled to receive a lump sum cash payment equal to the aggregate of: his
then-effective base salary through the date of termination; all amounts due to
the executive under the Company's accrued vacation program through the date of
termination; and a certain amount under the Retirement Plan, as specified in his
severance agreement. In addition, the Company must pay to the executive in a
lump sum cash payment an amount equal to two times the average annual base
salary paid to him by the Company in the three years preceding the date of
termination. The severance agreements further require the Company to cause to be
vested in each executive's name those awarded but unvested shares held in the
executive's account in the Restricted Stock Plan, all amounts due the executive
under the Company's Short Term Incentive Plan and to maintain in force for two
years following the date of termination all employee welfare plans and programs
in which the executive was entitled to participate immediately prior to such
termination.
The severance agreements provide for one year extensions by mutual
agreement of the Company and the respective executives. With respect to Messrs.
Britt, Clayton, Poelker and Risinger, each of their severance agreements was
extended by the Board of Directors in 1998 through December 31, 2000.
The Company has entered into an employment agreement with John S.
Poelker according to which the Company has agreed to employ Mr. Poelker through
August 10, 2000 as its Senior Vice President and Chief Financial Officer. Under
the employment agreement, the Company is required to pay Mr. Poelker an annual
base salary of $220,000 and to permit Mr. Poelker to participate in the
Company's executive incentive compensation programs, employee benefit plans and
key management perquisites. The employment agreement with Mr. Poelker will not
duplicate any benefits provided to him under his severance agreement with the
Company.
17
<PAGE>
If the Company terminates Mr. Poelker's employment without cause, or if
Mr. Poelker terminates his employment for cause, whether during the term or
after the expiration of the employment agreement, then the Company must pay Mr.
Poelker certain amounts (including the greater of his base salary for the
remainder of the term of the employment agreement or his annual base salary) and
cause all incentive compensation stock awards to become vested and
nonforfeitable. If Mr. Poelker's employment is terminated by the Company for
cause or by Mr. Poelker without cause, then the Company must pay him only his
earned but unpaid compensation through the date of termination. If Mr. Poelker's
employment is terminated because of his death or disability, then the Company
must pay him his earned but unpaid compensation through the date of death or
disability and will cause all incentive compensation stock awards to become
vested and nonforfeitable.
SHAREHOLDER RETURN PERFORMANCE COMPARISONS
The Company is required to include in this Proxy Statement a line graph
comparing cumulative five-year total shareholder returns for the Company's
common stock to cumulative total returns of a broad-based equity market index
and a published industry index. The following indexed graph compares the
performance of the Company's common stock for the past five years to the Russell
2000 Index and the NASDAQ Combined Financial Index.
[CHART APPEARS BELOW]
TOTAL RETURN TO SHAREHOLDERS
(ASSUMES $100 INVESTMENT ON 12/31/93)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Total Return Analysis
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Old National Bancorp $100.00 $101.30 $103.77 $125.91 $165.84 $204.49
- ---------------------------------------------------------------------------------
Russell 2000 $100.00 $96.82 $122.19 $140.23 $169.00 $165.22
- ---------------------------------------------------------------------------------
Nasdaq Comb. Fin'l $100.00 $96.72 $139.00 $178.68 $280.45 $296.15
- ---------------------------------------------------------------------------------
</TABLE>
The comparison of shareholder returns (change in December year end stock
price plus reinvested dividends) for each of the periods assumes that $100 was
invested on December 31, 1993, in common stock of each of the Company, the
Russell 2000 Index and the NASDAQ Combined Financial Index, with investment
weighted on the basis of market capitalization.
18
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Officers and Directors of the Company are at present, as in the past,
customers of one or more of the Company's affiliate banks and have had and
expect in the future to have similar transactions with the affiliate banks in
the ordinary course of business. In addition, some of the Officers and Directors
of the Company are at present, as in the past, officers, directors or principal
shareholders of corporations which are customers of these affiliate banks and
which have had and expect to have transactions with the affiliate banks in the
ordinary course of business. All such transactions were made in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of collectibility or
present other unfavorable features.
During 1998, the Company paid approximately $853,450 for engineering,
design and construction services to Industrial Contractors, Inc. in connection
with its role as general contractor for renovations to the Old National Bank
Tower and for work at other Old National Bank branch locations. Alan W. Braun,
President of Industrial Contractors Inc., is a Director of the Company.
ITEM 2. RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors proposes the ratification by the Shareholders at
the Annual Meeting of the appointment of Arthur Andersen LLP, Indianapolis,
Indiana, certified public accountants, as independent public accountants for the
Company and its Affiliates for the fiscal year ending December 31, 1999.
Although ratification by the Shareholders of the Company's independent public
accountants is not required, the Company deems it desirable to continue its
established practice of submitting such selection to the Shareholders. Arthur
Andersen LLP, has served as independent public accountants for the Company since
1982. In the event the appointment of Arthur Andersen LLP, is not ratified by
the Shareholders, the Board of Directors will consider appointment of other
independent public accountants for the fiscal year ending December 31, 1999. A
representative of Arthur Andersen LLP, will be present at the Annual Meeting and
will have the opportunity to make a statement or respond to any appropriate
questions that Shareholders may have.
ITEM 3. APPROVAL OF THE OLD NATIONAL BANCORP
1999 EQUITY INCENTIVE PLAN
On March 3, 1999, the Board of Directors adopted the Old National Bancorp
1999 Equity Incentive Plan ("Incentive Plan"), effective on the date the
shareholders approve the Incentive Plan. In connection therewith, the Board of
Directors reserved 3,800,000 shares of Common Stock for issuance under the
Incentive Plan subject to adjustment as set forth in the Incentive Plan. The
Incentive Plan permits a committee of the Board of Directors to grant (i)
non-qualified stock options ("NSOs"), (ii) incentive stock options ("ISOs"),
(iii) restricted stock ("Restricted Stock"), (iv) 3 types of stock appreciation
rights ("SARs"), and (v) performance units ("Performance Units") and performance
shares ("Performance Shares") to key employees of the Company and its
Affiliates.
19
<PAGE>
The Incentive Plan has been designed to satisfy the requirements of Section
162(m) of the Code, which generally denies a corporate-level income tax
deduction for annual compensation to the extent it exceeds $1,000,000 which is
paid to the chief executive officer and the four other most highly compensated
officers of a public company ("Covered Employees"). Certain types of
compensation, including "performance-based compensation" which meets the
requirements of Section 162(m) of the Code, are generally excluded from this
deduction limit. It is contemplated that awards made under the Incentive Plan to
a Covered Employee will constitute "performance-based compensation" under
Section 162(m). In an effort to ensure that ISOs granted under the Incentive
Plan will qualify as "incentive stock options" under Section 422 of the Code and
that the Incentive Plan complies with Section 162(m) of the Code, the Incentive
Plan is being submitted to Shareholders for approval. However, while the Company
believes that compensation payable pursuant to the Incentive Plan generally will
be deductible for federal income tax purposes, payments made to Covered
Employees under certain circumstances such as death, disability or a change in
control of the Company that do not qualify as "performance based compensation"
may be payable pursuant to the provisions of the Incentive Plan.
Set forth below is a summary of certain important features of the Incentive
Plan, which summary is qualified in its entirety by reference to the actual
plan.
Purpose. The purpose of the Incentive Plan is to promote the success of the
Company and its Affiliates by providing incentives to their officers and key
employees by aligning their interests, through ownership of Common Stock and
through other incentives, with the interests of the Shareholders to provide an
incentive for excellence in individual performance and to promote teamwork. The
Incentive Plan is designed to provide flexibility to the Company and its
Affiliates with regard to their ability to motivate, attract and retain the
services of the officers and key employees who make significant contributions to
the Company's success and to allow such employees to share in that success.
Administration. The Incentive Plan will be administered by a committee of
the Board of Directors ("Committee") which will be composed of not less than 3
directors, who, to the extent required by Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), qualify as "non-employee directors"
and who, to the extent required by Section 162(m) of the Code, also qualify as
"outside directors". Until changed by the Board of Directors, the Committee will
be the Compensation Committee, as discussed on pages six and seven of this Proxy
Statement. Among other things, the Committee will have the authority, subject to
the terms of the Incentive Plan, to select officers and key employees to whom
awards are granted, to determine the type of awards as well as the number of
shares of Common Stock covered by each award and to determine the terms and
conditions of awards. The Committee will also have the authority to construe and
interpret the Incentive Plan, establish, amend or waive rules and regulations
for its administration and amend the terms and conditions of any outstanding
option, SAR or other award. All decisions made by the Committee will be final
and binding.
Eligibility. Participants will be officers and key employees of the Company
or any Affiliate who, in the opinion of the Committee, make significant
contributions to the growth, management, protection and success of the Company
and its Affiliates.
20
<PAGE>
Number of Shares. The Incentive Plan authorizes the issuance of 3,800,000
shares of Common Stock subject to adjustment as set forth in the Incentive Plan.
During any consecutive 3 year period during the life of the Incentive Plan, no
participant may be granted (i) options to acquire, (ii) SARs covering or (iii)
shares of Restricted Stock in excess of 300,000 shares of Common Stock. Also, no
participant can be granted any Performance Unit or Performance Share Award with
respect to any performance period with an initial value of more than $750,000 or
more than 300,000 shares of Common Stock. Finally, no participant can be granted
ISOs with an aggregate fair market value of more than $100,000 that first become
exercisable in any one calendar year. Subject to the foregoing limits, the
shares of Common Stock available for issuance under the Incentive Plan can be
divided among the various types of awards and among the participants as the
Committee determines. Such shares are to be made available from authorized but
unissued shares or shares reacquired by the Company in the open market. The
number of shares subject to the Incentive Plan and subject to awards which are
outstanding thereunder (except for mergers or other combinations in which the
Company is the surviving entity) will be adjusted by the Committee to reflect
stock dividends or splits, recapitalizations, reclassifications, mergers,
consolidations, combinations or exchanges of shares and similar corporate
capital structure changes.
DESCRIPTION OF TYPES OF AWARDS
Stock Options. Each option granted under the Incentive Plan must be
evidenced by a written agreement which specifies the type of option, the number
of shares of Common Stock covered, the exercise price, when and under what
circumstances the option becomes exercisable, any restriction on transferability
of shares received on the exercise, the duration of the option and such other
terms and conditions as the Committee determines, within the limits prescribed
by the Incentive Plan.
The per share exercise price of all options will be determined by the
Committee, but may not be less than 100% of the fair market value of the shares
on the date of grant. No option can be exercised more than 10 years after its
date of grant. Payment of the exercise price may be made with cash, with
previously owned shares of Common Stock, by a loan to the participant from the
Company, by the participant foregoing regular compensation in accordance with
Committee rules or by a combination thereof. If a participant exercises an
option and pays all or a portion of the exercise price in previously owned
shares, a new option will automatically be issued to the participant to purchase
additional shares in an amount equal to the number of previously owned shares
surrendered to the Company in such payment. The new option will (i) have an
exercise price equal to the per share fair market value of the Common Stock on
the date the option is granted, (ii) first be exercisable 6 months from the date
of grant of the new option, and (iii) expire on the same date as the original
option. The principal difference between ISOs and NSOs is their tax treatment to
the Company and optionees. See "Federal Income Tax Consequences" below.
Stock Appreciation Rights. "Affiliated SARs," "Freestanding SARs," "Tandem
SARs," or any combination thereof, may be granted under the Incentive Plan. An
Affiliated SAR is an SAR that is granted in connection with a related option and
is automatically deemed to be exercised at the same time the related option is
exercised. A Freestanding SAR is an SAR that is granted independently of any
stock option. Freestanding SARs are exercisable at such
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time as the Committee determines. A Tandem SAR is an SAR that is granted in
tandem with a stock option. A Tandem SAR 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.
The exercise price of each Freestanding SAR must be not less than 100% of
the fair market value of a share of Common Stock on the date of grant and the
exercise price of a Tandem or Affiliated SAR must be equal to the exercise price
of the option to which such SAR relates. A holder of an SAR is entitled on
exercise to receive a number of shares of Common Stock, cash or a combination
thereof, as determined by the Committee, which is equal in value on the exercise
date to the amount by which the fair market value of one share of Common Stock
on the exercise date exceeds the exercise price multiplied by the number of
shares with respect to which the SAR is exercised.
Restricted Stock. The Incentive Plan also authorizes the Committee to grant
shares of Restricted Stock to a participant with such periods and terms of
restriction and performance goals as the Committee determines. In the case of a
Covered Employee, the Committee may condition the vesting or lapse of periods of
restriction on the attainment of one or more performance goals established by
the Committee within the time period prescribed by Section 162(m) of the Code.
With respect to Covered Employees, the performance goal applicable to the grant
of Restricted Stock is the Company's Return on Equity. This performance goal is
intended to be an objective performance goal which satisfies the requirements
for "performance-based compensation" under Section 162(m)(4)(C) of the Code.
Each grant of Restricted Stock will be evidenced by a restricted stock
agreement that specifies the period of restriction, the number of shares of
Restricted Stock granted and such other provisions as the Committee determines.
Generally, all rights with respect to the Restricted Stock will be exercisable
only during the participant's lifetime and only by the participant. Restricted
Stock may not be sold, assigned, transferred, pledged or otherwise encumbered.
During the period of restriction, participants holding Restricted Stock may
exercise full voting rights with respect to the shares; in addition, all cash
dividends paid with respect to the shares will be reinvested in additional
shares of Restricted Stock. Dividends paid in stock of the same class as the
Restricted Stock will be restricted to the same extent as the Restricted Stock
to which the dividend relates. Upon the lapse of the applicable period of
restriction, the shares of Restricted Stock will become transferable.
Performance Units and Performance Shares. The Incentive Plan also authorizes
the Committee to grant Performance Units and Performance Shares which may be
earned if specified performance goals set by the Committee are achieved over the
period of time specified by the Committee (a "Performance Period"). At the
conclusion of a particular Performance Period, the Committee will determine the
extent to which the performance goals have been met. Depending on the Company's
performance in relation to the performance goals, a Participant may earn less
than the number of Performance Shares or Performance Units initially awarded. In
addition, to the extent the value of a Performance Share or Performance Unit is
related to a share of Common Stock, the value of any payout will be dependent on
the changing value of the share. Payments may be made in shares of Common Stock,
cash or a combination thereof, as determined by the Committee. For purposes of
qualifying grants of Performance Units and Performance Shares as
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"performance-based compensation" under Section 162(m) of the Code, the
applicable performance goal will be the Company's Return on Equity. This
performance goal is intended to be an objective performance goal which satisfies
the requirements for "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code.
Change in Control. Upon a change in control of the Company (as defined), all
awards will become immediately vested and/or exercisable, and all restrictions
and performance goals will be removed and will remain as such for the remaining
life of the awards.
Limits on Transferability and Exercisability. No award may be sold,
transferred, assigned, pledged or hypothecated, other than by will or the laws
of descent and distribution. All rights to an award will be exercisable during
the participant's lifetime only by the participant. Options and SARs will be
exercisable at such times as the Committee determines and specifies in the
applicable award agreement. However, in the discretion of the Committee, NSOs
may be transferred to "immediate family members" (as defined). For the transfer
to be effective, the transferee, participant and the Company must enter into a
written agreement which makes the transferred NSOs subject to all applicable
provisions of the Incentive Plan and the award agreement between the participant
and the Company.
Amendment and Discontinuance. The Incentive Plan may be amended, altered or
discontinued by the Board of Directors. Except as specifically provided in the
Incentive Plan, without the written consent of the participant, no amendment,
alteration or discontinuance may be made which would adversely affect any
outstanding award. However, the Committee may modify or adjust an award if
necessary to (i) avoid a material charge or expense to the Company or an
Affiliate, (ii) cause the Incentive Plan to comply with applicable law, or (iii)
permit the Company or an Affiliate to claim a tax deduction. Likewise, if any
right, award or award agreement would cause a transaction engaged in by the
Company to be ineligible for a "pooling of interest" accounting treatment, the
Committee may adjust, amend or modify the right, award or award agreement
without the participant's consent, to enable the Company to treat such
transaction as a "pooling of interest." However, the Board of Directors cannot
adopt any supplement, amendment or alteration to the Incentive Plan or an award
agreement, without the approval of the shareholders, which would (i) increase
the number of shares of Common Stock subject to the Incentive Plan or (ii)
increase the maximum number of options, SARs, shares of Restricted Stock,
Performance Units or Performance Shares the Company may award to an individual
participant, except as described under "Number of Shares," above.
FEDERAL INCOME TAX CONSEQUENCES
The following constitutes a brief summary of the federal income tax rules
relevant to options, SARs, Restricted Stock, Performance Units and Performance
Shares granted under the Incentive Plan. The laws which govern the tax aspects
of awards under the Incentive Plan are highly technical and are subject to
change.
NSOs and SARs. On the grant of an NSO (with or without a Tandem or
Affiliated SAR), the participant will not recognize any taxable income. On the
exercise of such an NSO or SAR, the excess of the fair market value of the
shares of Common Stock acquired on the exercise of the NSO over the purchase
price (the "spread"), or the consideration paid to the participant upon the
exercise of the SAR, will constitute compensation which is
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taxable to the participant as ordinary income. In determining the amount of the
spread or the amount of compensation paid to the participant, the fair market
value of the Common Stock on the date of exercise is used, except that in the
case of a participant who is subject to the 6 month short-swing profit recovery
provisions of Section 16(b) of the Exchange Act (generally executive officers),
the fair market value will generally be determined at the expiration of the 6
month period, unless such participant elects to be taxed based on the fair
market value at the date of exercise. Any such election (a "Section 83(b)
election") must be made and filed with the Internal Revenue Service within 30
days after the election in accordance with the Income Tax Regulations under
Section 83(b) of the Code. The Company, in computing its federal income tax
liability, will generally be entitled to a deduction in an amount equal to the
compensation income recognized by the participant in the Company's taxable year
in which the amount is included as income to the participant.
ISOs. A participant will not recognize taxable income on the grant or
exercise of an ISO. However, the spread at the time of exercise will constitute
a tax preference item in determining whether the participant is liable for the
alternative minimum tax. Such alternative minimum tax may be payable even though
the participant receives no cash upon the exercise of his or her ISO with which
to pay such tax. Upon the sale of shares acquired pursuant to the exercise of an
ISO after the later of (i) two years from the date of grant of the ISO, or (ii)
one year after the date of exercise (the "ISO Holding Period"), the participant
will recognize capital gain or loss, as the case may be, measured by the
difference between the net sales proceeds received on the sale and the exercise
price. The Company is not entitled to any tax deduction by reason of the grant
or exercise of an ISO, or by reason of a disposition of stock received upon
exercise of an ISO if the ISO Holding Period is satisfied. Different rules apply
if the participant disposes of the shares before the expiration of the ISO
Holding Period. Option grants for shares which are exercisable for the first
time by a participant during any calendar year, which have a fair market value
in excess of $100,000, are treated as NSOs, and will be subject to the same tax
treatment as is applicable to NSOs, as discussed above.
Restricted Stock. A participant who receives an award of Restricted Stock
may make a Section 83(b) election to have the award taxed as compensation income
at the date of receipt, with the result that any future appreciation (or
depreciation) in the value of the shares granted will be taxed as capital gain
(or loss) on the later sale of the shares. However, if the participant does not
make a Section 83(b) election, the grant will be taxed as compensation income at
the full fair market value on the date that the restrictions imposed on the
shares lapse. Any dividends paid on Restricted Stock are compensation income to
the participant. The Company is generally entitled to a tax deduction for any
compensation income taxed to the participant, subject to the provisions of
Section 162(m) of the Code.
Performance Units and Performance Shares. A participant who receives an
award of Performance Shares or Performance Units may also make a Section 83(b)
election to have the award taxed as compensation income at the date of receipt
with the same result as described above under "Restricted Stock". If the
participant does not make the Section 83(b) election, he or she will not
recognize taxable income thereon until the units or shares vest and the
participant receives stock and/or cash distributed in payment of the award. At
that time, the participant must recognize income which is taxed as compensation
in an amount equal to the fair market value of the shares delivered and/or the
amount of cash paid. At that time, the Company generally will be allowed a
corresponding tax deduction equal to the compensation taxable to the
participant, subject to the provisions of Section 162(m) of the Code.
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INCENTIVE PLAN BENEFITS
It cannot be determined at this time what benefits or amounts, if any, will
be received by or allocated to any persons or group of persons under the
Incentive Plan if the plan is adopted by the shareholders. Such determinations
are subject to the discretion of the Committee.
VOTE REQUIRED
The affirmative vote of a majority of the votes entitled to be cast by the
holders of the Common Stock present or represented at the Annual Meeting and
entitled to vote thereon is required to approve the Incentive Plan. Such vote
will also satisfy the shareholder approval requirements of Sections 162(m) and
422 of the Code with respect to performance based compensation and the grant of
ISOs, respectively. Proxies received by the Company and not revoked prior to or
at the Annual Meeting will, unless otherwise specifically indicated, be voted
"FOR" this proposal and the adoption of the Incentive Plan.
THE BOARD OF DIRECTORS HAS APPROVED AND ADOPTED THE
INCENTIVE PLAN AND RECOMMENDS A VOTE FOR ADOPTION OF THE
OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN.
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Proposals submitted by Shareholders to be presented at the 2000 Annual
Meeting must be received by the Company at its principal executive office no
later than November 9, 1999, to be considered for inclusion in the Proxy
Statement and form of Proxy relating to that meeting. Any such proposals should
be sent to the attention of the Corporate Secretary of the Company, P. O. Box
718, Evansville, Indiana 47705-0718.
VOTE REQUIRED
The nominees for election as Directors of the Company named in this Proxy
Statement will be elected by a plurality of the votes cast. Action on the other
items or matters to be presented at the Annual Meeting will be approved if the
votes cast in favor of the action exceed the votes cast opposing the action.
Abstentions or broker non-votes will not be voted for or against any items or
other matters presented at the meeting. Abstentions will be counted for purposes
of determining the presence of a quorum at the Annual Meeting, but broker
non-votes will not be counted for quorum purposes if the broker has failed to
vote as to all matters.
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ANNUAL REPORT
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
SHAREHOLDER WHO DOES NOT OTHERWISE RECEIVE A COPY OF THE COMPANY'S ANNUAL REPORT
TO SHAREHOLDERS A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WHICH IS
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR
ENDED DECEMBER 31, 1998. ADDRESS ALL REQUESTS TO:
RONALD W. SEIB
VICE PRESIDENT AND CONTROLLER
OLD NATIONAL BANCORP
P. O. BOX 718
EVANSVILLE, INDIANA 47705-0718
OTHER MATTERS
The Board of Directors of the Company does not know of any matters for
action by Shareholders at the 1999 Annual Meeting other than the matters
described in the accompanying Notice of Annual Meeting of Shareholders. However,
the enclosed Proxy will confer upon the named Proxies discretionary authority
with respect to matters which are not known to the Board of Directors at the
time of the printing hereof and which may properly come before the Annual
Meeting. It is the intention of the persons named as Proxies to vote pursuant to
the Proxy with respect to such matters in accordance with their best judgment.
The cost of soliciting Proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, Proxies may be solicited
personally by Directors and Officers of the Company and its subsidiaries, by
telephone or in person, but such persons will not be specially compensated for
their services. No solicitations will be made by specially engaged employees of
the Company or other paid solicitors.
It is important that Proxies be returned promptly. Whether or not you
expect to attend the Annual Meeting in person, Shareholders are requested to
complete, sign and return their Proxies in order that a quorum for the meeting
may be assured. Return may be made in the enclosed envelope, to which no postage
need be affixed.
By Order of the Board of Directors
Jeffrey L. Knight
Secretary
26
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.
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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.
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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
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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
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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.
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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.
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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
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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,
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or other combination involving the Company that does not constitute a
Change in Control, 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.
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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
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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
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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 authorization of the Company to retain Shares
which would otherwise be issuable upon exercise of
the Option having a total Fair Market Value on the
date of delivery equal to the total Exercise Price;
(d) The delivery of cash by a broker-dealer as a Cashless
Exercise;
(e) 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
(f) Any combination of the foregoing.
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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
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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.
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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
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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
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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.
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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.
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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
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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
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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.
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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 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
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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
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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.
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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
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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
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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.
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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: By:
----------------------- ----------------------------
[Name and Title]
ATTEST:
By:
--------------------------
[Name and Title]
28
