<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JANUARY 10, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------------
OLD NATIONAL BANCORP
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
INDIANA 6021 35-1539838
- --------------------------------------- -------------------------------------- -------------------------------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
420 MAIN STREET, EVANSVILLE, INDIANA 47708, (812) 464-1434
-------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
JEFFREY L. KNIGHT, ESQ. TIMOTHY M. HARDEN, ESQ.
CORPORATE SECRETARY & GENERAL COUNSEL MICHAEL J. MESSAGLIA, ESQ.
OLD NATIONAL BANCORP KRIEG DEVAULT ALEXANDER & CAPEHART, LLP
420 MAIN STREET ONE INDIANA SQUARE, SUITE 2800
EVANSVILLE, INDIANA 47708 INDIANAPOLIS, INDIANA 46204-2017
(812) 464-1363 (317) 636-4341
(AGENT FOR SERVICE) (COPY TO)
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, or agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. ( )
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C>
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate offering registration
to be registered registered (1) per unit (2) price fee (3)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK, UP TO
NO PAR VALUE 7,669,301 SHARES $28.95 $ 222,044,526 $ 58,620
====================================================================================================================================
</TABLE>
(1) The number of shares of Old National common stock to be registered
pursuant to this registration statement is based upon an estimate of the
maximum number of shares of ANB common stock presently outstanding or
reserved for issuance under various plans or otherwise expected to be
issued upon the consummation of the proposed merger to which this
registration statement relates, multiplied by the exchange ratio of
1.3125 shares of Old National common stock per each share of ANB common
stock.
(2) Calculated in accordance with Rule 457(f) and 457(c) under the
Securities Act of 1933, as amended, the proposed maximum offering price
per share is computed by dividing (i) the product of (A) the average of
the bid and asked prices of ANB common stock as reported on the Nasdaq
National Market System on January 5, 2000 ($38.00) and (B) 5,843,277,
representing the maximum number of shares of ANB common stock expected
to be exchanged for the Old
<PAGE> 2
National common stock being registered by (ii) 7,669,301, representing
the maximum number of shares of Old National common stock to be issued
in connection with the merger.
(3) The registration fee was calculated pursuant to Rule 457(f) under the
Securities Act of 1933, as amended as follows: .000264 multiplied by the
proposed maximum aggregate offering price.
-----------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
[ANB CORPORATION LETTERHEAD]
_______________, 2000
Dear Shareholders:
I am pleased to invite you to attend a special meeting of shareholders
of ANB Corporation on:
_______________, __________ ___, 2000
_____:_____ __.m.
-------------------------
Muncie, Indiana 47305
The purposes of the Special Meeting are (1) to consider and vote upon
the Agreement of Affiliation and Merger dated as of July 29, 1999, between ANB
and Old National Bancorp, which provides for the merger of ANB into Old National
and (2) to consider and vote upon any other matters that may properly come
before the meeting. The merger agreement provides that you will receive 1.3125
shares of Old National common stock, as adjusted for the 5% stock dividend
declared by Old National on December 9, 1999, and subject to further adjustment,
for each share of ANB common stock you own. The exchange ratio will be adjusted
if, among other reasons, Old National issues a stock dividend prior to the
completion of the merger. A copy of the merger agreement is attached to the
enclosed Proxy Statement-Prospectus as Appendix A.
The Board of Directors of ANB enthusiastically supports the merger and
believes that the proposed merger between Old National and ANB is in the best
interests of ANB as a whole, including the interests of the shareholders,
customers and employees of ANB. Among other benefits, your Board of Directors
believes that the merger will result in a combined company with expanded
opportunities for profitable growth and enhancement of shareholder value. ANB's
financial adviser, Sandler O'Neill & Partners, L.P., has issued its opinion to
your Board of Directors that the 1.3125 exchange ratio in the proposed merger is
fair, from a financial point of view, to ANB's shareholders. Your Board of
Directors unanimously approved the merger agreement and recommends that you
approve it.
We have enclosed a Notice of Special Meeting of Shareholders and a
Proxy Statement-Prospectus containing information about the special meeting and
the proposed merger. We encourage you to read this document carefully. Also
enclosed is a proxy card so you can vote on the merger without attending the
special meeting. Please complete, sign and date the enclosed proxy card and
return it to us as soon as possible in the envelope we have provided. If you
decide to come to the special meeting, you may vote your shares in person
whether or not you have mailed us a proxy.
Please give this matter your careful consideration.
Sincerely,
James R. Schrecongost
Vice Chairman, President and CEO
<PAGE> 4
ANB CORPORATION
120 WEST CHARLES STREET
MUNCIE, INDIANA 47305
(765) 747-7575
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on __________ ___, 2000
To Our Shareholders:
We will hold a Special Meeting of Shareholders of ANB Corporation on:
--------, ---------- ---, -----
_____ __.m.
-----------------------------------
-------------------------
Muncie, Indiana 47305
The purposes of the special meeting are:
1. To consider and vote upon the Agreement of Affiliation and Merger,
dated as of July 29, 1999, by and between Old National Bancorp and ANB,
which provides for the merger of ANB into Old National. Under the terms
of the merger agreement, each outstanding share of ANB common stock
will be converted into the right to receive 1.3125 shares of Old
National common stock, as adjusted for the 5% stock dividend declared
by Old National on December 9, 1999; and
2. To transact such other business which may properly be presented at the
special meeting or any adjournment thereof.
We have fixed the close of business on ____________, 2000 as the record
date for determining those shareholders who are entitled to notice of, and to
vote at, the special meeting and any adjournment or postponement of it. Approval
and adoption of the merger agreement requires the affirmative vote of at least
the majority of the outstanding shares of ANB common stock.
The merger agreement, which describes the terms of the merger in great
detail, is attached as Appendix A to the accompanying Proxy
Statement-Prospectus.
Please do not send your stock certificates at this time. If the merger
is completed, we will send you instructions regarding the surrender of your
stock certificates.
BY ORDER OF THE BOARD OF DIRECTORS
____________, 2000 JAMES W. CONVY
SECRETARY
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 5
PROXY STATEMENT
PROSPECTUS FOR
OF SPECIAL MEETING OF SHAREHOLDERS
OLD NATIONAL BANCORP OF
ANB CORPORATION
---------------------------
Your Board of Directors and the Board of Directors of Old National
Bancorp have agreed that Old National will acquire ANB in a merger. Your Board
of Directors believes that the merger is in the best interests of ANB as a
whole, including your interests, and that it will result in a combined company
with expanded opportunities for profitable growth and enhancement of shareholder
value.
If the merger is approved by the shareholders of ANB and all other
closing conditions are satisfied, you will receive 1.3125 shares of Old National
common stock, as adjusted for the 5% stock dividend declared by Old National on
December 9, 1999, for each share of ANB common stock you own on the date the
merger is completed. If this exchange results in you owning a fractional share
of Old National common stock, Old National will pay you cash for the fractional
share. The number of shares of Old National common stock you receive as a result
of the merger will be proportionally increased or decreased if Old National
issues a stock dividend or stock split between now and the closing date of the
merger. Old National's common stock is traded on the Nasdaq National Market
System under the symbol "OLDB."
The merger cannot be completed unless the holders of at least a
majority of the outstanding shares of ANB approve it. The special meeting of ANB
shareholders to vote on the merger will be held on:
__________, __________ ___, 2000
_____ __.m.
--------------------
---------------
Muncie, Indiana 47305
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING, PLEASE TAKE THE TIME TO VOTE BY COMPLETING AND MAILING THE
ENCLOSED PROXY CARD TO US.
This document provides you with detailed information about the meeting
and the merger. In addition, you may obtain information about Old National from
documents it has filed with the Securities and Exchange Commission. We encourage
you to read this entire document carefully.
--------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION
NOR THE INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS HAS APPROVED OF THE
SECURITIES TO BE ISSUED UNDER THIS PROXY STATEMENT-PROSPECTUS OR DETERMINED IF
THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------
SHARES OF OLD NATIONAL COMMON STOCK ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
--------------------------------------------
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS ____________, 2000
AND IS BEING MAILED TO ANB SHAREHOLDERS ON THE SAME DATE.
<PAGE> 6
TABLE OF CONTENTS
PAGE
----
Questions and Answers About the ANB/Old National Merger.......................iv
Summary .....................................................................vi
The Parties to the Merger............................................vi
The Merger..........................................................vii
Interests of Certain Persons in the Merger...........................ix
Special Shareholders' Meeting.........................................x
Comparative Per Share Market Price Information........................x
Recent Developments..................................................xi
Comparative Per Share Data...........................................xi
Summary of Selected Financial Data -- Old National..........................xiii
Summary of Selected Financial Data -- ANB.....................................xv
Special Meeting................................................................1
General .............................................................1
Matters to be Considered..............................................1
Proxies .............................................................1
Solicitation of Proxies...............................................1
Record Date and Voting Rights.........................................2
Recommendation of ANB Board of Directors..............................3
Proposed Merger................................................................3
General .............................................................3
Description of the Merger.............................................4
Background of the Merger..............................................4
Reasons for the Merger................................................5
Fairness Opinion of ANB's Financial Advisor...........................7
Recommendation of the ANB Board of Directors.........................15
Conversion of ANB Common Stock.......................................16
Treatment of ANB Stock Options.......................................16
Exchange of Certificates; Fractional Shares..........................16
No Dissenters' or Appraisal Rights...................................17
Resale of Old National Common Stock by Affiliates of ANB.............18
Conditions to the Completion of the Merger...........................19
Termination of the Merger Agreement..................................20
Restrictions Affecting ANB...........................................22
Regulatory Approvals Required for the Merger.........................24
Accounting Treatment for the Merger..................................26
Effective Time.......................................................26
Management, Personnel and Employee Benefits After the Merger.........27
Employment Agreement.................................................29
Agreement with Larry E. Thomas.......................................31
Stock Option Agreement...............................................31
Indemnification; Directors' and Officers' Liability Insurance........33
i
<PAGE> 7
Federal Income Tax Consequences...............................................34
Tax Opinion..........................................................34
Tax Consequences to Old National and ANB.............................35
Tax Consequences to ANB Shareholders.................................35
Comparative Per Share Data....................................................36
Nature of Trading Market.............................................36
Dividends............................................................38
Existing and Pro Forma Per Share Information.........................39
Pro Forma Condensed Combined Financial Information............................42
Notes to Pro Forma Condensed Combined Financial Information...................48
Description of Old National...................................................49
Overview ............................................................49
Supervision and Regulation...........................................50
Recent Developments..................................................50
Incorporation of Certain Information by Reference....................51
Description of ANB............................................................51
Business ............................................................51
Incorporation of Certain Information by Reference....................52
Comparison of Common Stock....................................................52
Authorized But Unissued Shares.......................................53
Preemptive Rights....................................................54
Dividend Rights......................................................54
Voting Rights........................................................55
Dissenters' Rights...................................................56
Liquidation Rights...................................................56
Redemption and Assessment............................................57
Anti-Takeover Provisions.............................................57
Director Liability...................................................60
Director Nominations.................................................60
Legal Opinions................................................................61
Experts .....................................................................61
Other Matters.................................................................62
Forward-Looking Statements....................................................62
Where You Can Find More Information...........................................63
ii
<PAGE> 8
APPENDIX A.................................................................A - 1
APPENDIX B.................................................................B - 1
APPENDIX C.................................................................C - 1
iii
<PAGE> 9
QUESTIONS AND ANSWERS ABOUT THE ANB/OLD NATIONAL MERGER
Q: WHAT DO I NEED TO DO NOW?
A: After you carefully read this document, indicate on your proxy card how
you want to vote, sign it and mail it in the enclosed envelope as soon
as possible. The instructions on the accompanying proxy card will give
you more information on how to vote by mail. This will enable your
shares to be represented at the ANB special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares by
following the directions your broker provides. Your failure to instruct
your broker to vote your shares will result in your shares not being
voted. If you fail to return a proxy card or abstain from voting, the
effect will be a vote against the merger.
Q: CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY WITH VOTING INSTRUCTIONS?
A: Yes. There are three ways you can change your vote. First, you may
send a written notice to the person to whom you submitted your proxy
stating that you would like to revoke your proxy. Second, you may
complete and submit a new proxy card by mail or submit your proxy with
new voting instructions. Your shares will be voted in accordance with
the latest proxy actually received by ANB prior to the shareholders'
meeting. Any earlier proxies will be revoked. Third, you may attend
the ANB special meeting and vote in person. Any earlier proxies will
be revoked. Simply attending the meeting without voting, however, will
not revoke your proxy. If you have instructed a broker to vote your
shares, you must follow directions you will receive from your broker to
change or revoke your proxy.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time.
ANB shareholders will exchange their ANB common stock certificates for
Old National common stock certificates after Old National and ANB
complete the merger. Old National will send you instructions for
exchanging your ANB common stock certificates promptly after the merger
is completed.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: In the merger you will receive 1.3125 shares of Old National common
stock for each share of ANB common stock you own. This means that,
based on the closing price of Old National common stock on the Nasdaq
National Market on January ___, 2000, you would have received
$__________ worth of Old National common stock for each share of ANB
common stock you own. Old National will not issue fractional shares of
Old National common stock. Instead, Old National will pay you cash for
any fractional shares.
Q: WHAT IS THE "EXCHANGE RATIO?"
iv
<PAGE> 10
A: The exchange ratio is the number of shares of Old National common stock
into which each share of ANB common stock will be converted when the
merger is completed. The exchange ratio is 1.3125 shares of Old
National common stock for each share of ANB common stock. Please note
that the share price of Old National common stock may fluctuate before
and after the merger is completed. As a result of the exchange ratio
being fixed, you will not be sure of the market value of the Old
National common stock you will receive until the time the merger is
completed.
Q: WHEN CAN I EXPECT THE MERGER WILL BE COMPLETED?
A: In addition to the approval of ANB shareholders, Old National and ANB
also must obtain certain banking and regulatory approvals. Old National
and ANB anticipate the merger will be completed in February, 2000.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?
A: For U.S. federal income tax purposes, the conversion of your ANB common
stock into Old National common stock will not cause you to recognize
any gain or loss. You will, however, recognize income gain or loss in
connection with any cash received for fractional shares of Old National
common stock. Your tax basis for the Old National common stock
received in the merger (including the fractional shares you are deemed
to have received and then are redeemed for cash) will be the same as
the tax basis for your ANB common stock and your holding period for the
Old National common stock received in the merger (including the
fractional shares you are deemed to have received and then are redeemed
for cash) generally will include the holding period of your ANB common
stock exchanged in the merger. For a more complete description of
federal income tax considerations, see page ___.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN ANB SHAREHOLDERS, INCLUDING
SHAREHOLDERS WHO ARE NON-U.S. PERSONS OR DEALERS IN SECURITIES.
DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU MAY BE
COMPLEX. THE TAX CONSEQUENCES WILL DEPEND ON YOUR SPECIFIC SITUATION
AND ON VARIABLES NOT WITHIN YOUR CONTROL. YOU SHOULD CONSULT YOUR OWN
TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE MEETING?
A: ANB does not expect that any matter other than the merger will be voted
on at the meeting.
Q: WILL MY SHAREHOLDER RIGHTS CHANGE AS A RESULT OF THE MERGER?
A: Yes. ANB and Old National are corporations organized under Indiana law.
Therefore, your rights as a shareholder will continue to be governed by
Indiana law. However, after the merger, you will become an Old National
shareholder, and therefore your rights will be governed by Old
National's Articles of Incorporation and By-Laws. For a summary of some
of the differences between the rights of ANB shareholders and the
rights of Old National shareholders, see page ___.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You should call Larry E. Thomas, Chief Financial Officer of ANB, at
(765) 747-7575.
v
<PAGE> 11
SUMMARY
This summary highlights some of the information contained in this
document. Because this is a summary, it does not contain all the information
that may be important to you. To understand the merger fully and for a more
complete description of the legal terms of the merger, you should read carefully
this entire document and the documents to which we have referred you.
THE PARTIES TO THE MERGER
OLD NATIONAL BANCORP
420 Main Street
Evansville, Indiana 47708
(812) 464-1434
Old National is a bank holding company, incorporated under Indiana law and
headquartered in Evansville, Indiana. Through its full-service banking
subsidiaries, Old National operates a general banking business from 119 banking
offices and 174 ATM locations located throughout Indiana, Illinois and Kentucky.
In addition, Old National provides trust services and additional financial
services through other subsidiaries. At September 30, 1999, on a consolidated
basis, Old National had assets of approximately $6.963 billion, deposits of
approximately $5.025 billion, and shareholders' equity of approximately $514.9
million. Old National's common stock is traded on the Nasdaq National Market
under the symbol "OLDB."
ANB CORPORATION
120 West Charles Street
Muncie, Indiana 47305
(765) 747-7600
ANB is a bank holding company, incorporated under Indiana law and headquartered
in Muncie, Indiana. ANB owns and operates three affiliate banks and a trust
company with 33 affiliated offices and 16 ATM locations in Indiana and Ohio. At
September 30, 1999, ANB, on a consolidated basis, had assets of approximately
$834 million, deposits of approximately $677 million and shareholders' equity of
approximately $74 million. ANB's common stock is traded on the Nasdaq National
Market under the symbol "ANBC."
vi
<PAGE> 12
THE MERGER
Description of the merger. We propose a merger in which ANB will merge with Old
National, and Old National will survive the merger. Old National will issue
shares of its common stock to shareholders of ANB in exchange for their shares
of ANB common stock.
Recommendation of the Board of Directors of ANB. The Board of Directors of ANB
believes that the merger is in the best interests of ANB as a whole, including
your interests, and unanimously recommends that you vote "FOR" the proposal to
approve the merger. See "Proposed Merger - Recommendation of the Board of
Directors" on page _____.
ANB shareholders will receive Old National common stock in the merger. If the
merger is completed, you will have the right to receive 1.3125 shares of Old
National common stock for each share of ANB common stock that you own as of the
effective time of the merger. Because the number of shares of common stock of
Old National that you will receive in the merger is fixed at 1.3125, subject to
adjustments that will not decrease the economic value of the exchange ratio, the
value of the shares of Old National common stock you will receive in the merger
will fluctuate as the price of Old National common stock changes. Based upon the
closing price of Old National common stock on the Nasdaq National Market on
January ___, 2000, the market value of shares of Old National common stock you
will receive in the merger would be $_____ per share of ANB common stock.
You will have to surrender your ANB common stock certificates to receive new
stock certificates representing Old National common stock. This will not be
necessary, however, until you receive written instructions after we complete the
merger. See "Proposed Merger - Conversion of ANB Common Stock," "- Exchange of
Certificates; Fractional Shares" on pages _____.
Payments of dividends on shares of ANB common stock. After the merger becomes
effective, your stock certificates for shares of ANB common stock will represent
only the right to receive shares of Old National common stock and cash for
fractional shares. You will not receive payments of dividends declared on shares
of Old National common stock until you surrender your ANB common stock
certificates to receive new stock certificates representing Old National common
stock.
Old National will not issue fractional shares. Old National will not issue any
fractional shares of its common stock as a result of the exchange ratio.
Instead, you will receive the value of any fractional share in cash, based upon
the market value of Old National's common stock.
Merger generally tax-free for ANB shareholders. ANB and Old National expect that
your exchange of shares of ANB common stock for shares of Old National common
stock generally will not cause you to recognize any gain or loss for U.S.
federal income tax purposes. You will, however, have to recognize income gain or
loss for any cash received instead of fractional shares. The expected material
federal income tax consequences are set out in greater detail on page ____.
Old National and ANB will not be obligated to complete the merger unless they
receive legal opinions, dated as of the closing date, from their respective
legal counsel that the merger will be treated as a transaction of a type that is
generally tax-free for U.S. federal income tax purposes. In that case, the U.S.
federal income tax treatment of the merger will be as described above. However,
these legal opinions will not bind the Internal Revenue Service, which could
take a different view.
Tax matters are very complicated, and the tax consequences of the merger to you
will depend on the facts of your own situation. Old National and ANB urge you to
consult with your tax
vii
<PAGE> 13
advisor for a full understanding of the tax consequences of the merger to you.
No Dissenters' rights. As a shareholder of ANB, you do not have any rights under
Indiana law to dissent from, or obtain payment of the "fair value" of your
shares as a result of, the merger.
Our reasons for the merger. ANB and Old National are proposing to merge because
they believe that by combining the companies they can create a stronger and more
diversified company that will provide significant benefits to ANB's shareholders
and customers. The Board of Directors of ANB believes that by bringing its
customers and banking products together with those of Old National, the
companies can do a better job of growing their combined revenue than if they did
not merge. The ANB Board of Directors also believes that in the rapidly changing
environment of the banking industry, ANB's long-term goal of enhancing
shareholder value will be reached by merging with Old National. You can find a
more detailed discussion of the background to the merger agreement and ANB's and
Old National's reasons for the merger under "Proposed Merger - Reasons for the
Merger" on page _____.
ANB's financial advisor believes the exchange ratio is fair, from a financial
point of view, to ANB's shareholders. Among other factors considered in deciding
to approve the merger, the ANB Board of Directors received the oral opinion,
which was subsequently delivered in writing, of its financial advisor, Sandler
O'Neill & Partners, L.P., that, as of July 29, 1999, the exchange ratio was fair
to the holders of ANB common stock from a financial point of view. ANB has
received a written opinion from Sandler O'Neill dated as of the date of this
document. The opinion is attached to this document as Appendix C. You should
read this opinion completely to understand the assumptions made, matters
considered and limitations of the review undertaken by Sandler O'Neill. See
"Proposed Merger - Fairness Opinion of ANB's Financial Advisor" on page _____.
Conditions to completion of the merger. The completion of the merger depends on
a number of conditions being met. Some of the conditions are:
- - The merger agreement is approved by the holders of at least a majority of
the outstanding shares of ANB common stock.
- - Regulatory approvals required under federal and state banking laws are
received and the waiting periods have expired.
- - Old National has received a letter from its independent auditors stating
its opinion that the merger will qualify for pooling of interests
accounting treatment.
See "Proposed Merger - Conditions to Completion of the Merger" on page _____.
We may decide not to complete the merger. Old National and ANB can agree at any
time not to complete the merger, even if the shareholders of ANB have approved
it. Also, either party can decide, without the consent of the other, to
terminate the merger agreement if, among other reasons:
- - The other party breaches any representation or any warranty contained in
the merger agreement.
- - The other party breaches any covenant contained in the merger agreement.
- - Certain claims, proceedings or litigation are commenced or threatened.
- - Old National experiences a material adverse change in financial condition
from March 31, 1999.
- - ANB experiences a material adverse change in financial condition from July
29, 1999.
- - The merger is not completed by March 31, 2000.
Additionally, ANB may terminate the merger agreement if the price of Old
National common stock fluctuates sufficiently resulting in the merger no longer
being in the best interests of ANB as a whole, including its shareholders. If
this occurs, Old National has the right to adjust the
viii
<PAGE> 14
exchange ratio. This right to terminate is based upon a complex formula that
compares any decrease in the value of Old National common stock to the change in
value of an index of bank stocks.
This formula provides that before ANB may terminate the merger because of a
decline in the value of Old National common stock, the value of Old National's
common stock must have declined by approximately 20% since the signing of the
merger agreement, and Old National's stock must be valued approximately 15% less
than the Nasdaq Bank Index during the period for valuing the stock. Assuming the
last regulatory approval was received on the date of this document, ANB would
not have the right to terminate the merger agreement on the basis of the price
of Old National's common stock. See "Proposed Merger - Termination of the Merger
Agreement" on page _____.
Effective time of the merger. Old National and ANB anticipate that the merger
will be completed in February, 2000. See "Proposed Merger - Effective Time" on
page _____.
Comparative shareholder rights. If the merger is completed, you will become a
shareholder of Old National. Both Old National and ANB are Indiana corporations.
Therefore, your rights as a shareholder will continue to be governed by Indiana
law. However, your rights as a shareholder, which are now governed by the
Articles of Incorporation and By-laws of ANB, will be governed by Old National's
Articles of Incorporation and By-laws. See "Comparison of Common Stock" on page
_____.
INTERESTS OF CERTAIN PERSONS IN THE
MERGER
Interest of Mr. James R. Schrecongost. Old National and James R. Schrecongost
entered into an employment agreement which provides for Mr. Schrecongost to
serve as Chairman of Old National Trust Company, Old National Trust
Company-Illinois, Old National Trust Company-Kentucky, and American National
Trust and Investment Management Company. The agreement is effective at the time
the merger is completed, is for a term of two years and provides for a signing
bonus of $875,000, salary, incentive compensation awards, and a retention bonus
as well as a variety of other standard employee benefits. See "Proposed Merger
Employment Agreement" on page _____.
Interest of Kelly Stanley. Following the completion of the merger, Kelly
Stanley, Chairman of ANB, will be a director of Old National.
Interest of Larry E. Thomas. Old National and Larry E. Thomas entered into an
agreement which provides for Mr. Thomas to continue as an employee of Old
National for a period of 90 days following the completion of the merger. This
agreement also requires Old National to pay to Mr. Thomas in a lump sum the
money owed to him under his current employment agreement with ANB.
Stock options. At the time the merger is effective, all outstanding options to
purchase ANB common stock under ANB's stock option plans become options to
purchase Old National common stock.
Stock Option Agreement. As an inducement and condition to Old National's
willingness to enter into the merger agreement, ANB entered into a stock option
agreement with Old National. Under the stock option agreement, ANB granted Old
National an option that permits Old National to purchase up to 1,083,753 shares
of ANB common stock, which is approximately 19.9% of the outstanding shares of
ANB common stock. The number of shares Old National may purchase will be
increased if ANB has any change in the number of shares of its common stock
outstanding so that Old National may purchase an amount of shares equal to 19.9%
of the outstanding shares of common stock of ANB. The exercise price of the
option is $27.70 per share. Old National may exercise the option only
ix
<PAGE> 15
upon the occurrence of certain specified events. These events generally relate
to the acquisition of ANB or of a substantial portion of its stock or assets by
a party other than Old National. We have attached the Stock Option Agreement to
this document as Appendix B. See "Proposed Merger - Stock Option Agreement" on
page _____.
SPECIAL SHAREHOLDERS' MEETING
Date, time and place of special meeting. The special shareholders' meeting will
be held on __________, __________, 2000, at _____ __.m., local time, at
________________________, Muncie, Indiana 47305.
Purposes of special meeting. At the ANB special meeting, you will be asked:
- - to approve the merger agreement between
ANB and Old National; and
- - to act upon any other items that may be
submitted to a vote at the special meeting.
As of the date of this document the ANB Board of Directors does not know of any
other matters that will be presented at the special meeting. See "Notice of
Special Meeting of Shareholders" and the discussions under the captions "Special
Meeting" and "Proposed Merger" on pages _____ and _____, respectively.
Required shareholder vote. In order to approve the merger, the holders of at
least a majority of the issued and outstanding shares of ANB common stock must
vote in its favor.
Proxies. You can revoke your proxy at any time before it is exercised by
delivering a later dated proxy to ANB, by written notice delivered to the
Secretary of ANB, or by attending the special meeting and voting in person. See
"Special Meeting - Proxies" on page _____.
Shares outstanding and entitled to vote. As of ______________, 2000, there were
___________ shares of ANB common stock outstanding. You can vote at the special
meeting of ANB if you owned ANB common stock at the close of business on that
date. You can cast one vote for each share of ANB common stock you owned on that
date. See "Special Meeting - Record Date and Voting Rights" on page _____.
Old National and ANB expect pooling of interests accounting treatment. Old
National and ANB expect the merger to qualify as a pooling of interests. This
means that, for accounting and financial reporting purposes, Old National will
treat Old National and ANB as if they had always been one. Old National is not
required to complete the merger unless it receives a letter from its independent
accountants telling it that the merger will qualify as a "pooling of interests."
See "Proposed Merger - Accounting Treatment for the Merger" on page _____.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Old National common stock and ANB common stock trade on the Nasdaq National
Market System. Some examples of recent closing prices for Old National common
stock and ANB common stock are as follows:
Old National ANB
---------------- ---------------
July 29, 1999 $ 28.63 $ 28.25
________, 2000 $ $
---------------- ---------------
Based on the exchange ratio in the merger, which is 1.3125, the market value of
the consideration that ANB shareholders will receive in the merger for each
share of ANB common stock would be:
July 29, 1999 $ 37.58
____________, 2000 $
--------------------
In addition, recently declared per share dividend information for Old National
common stock and ANB common stock is as follows:
x
<PAGE> 16
Old National ANB
---------------- ---------------
1st Quarter 1999 $ 0.15 $ 0.19
2nd Quarter 1999 $ 0.16 $ 0.19
3rd Quarter 1999 $ 0.16 $ 0.19
4th Quarter 1999 $ 0.16 $ 0.19
Of course, the market price of Old National common stock will fluctuate prior to
the completion of the merger, while the exchange ratio is fixed. You should
obtain current stock price quotations for Old National common stock and ANB
common stock. You can get these quotations from a newspaper, on the Internet or
by calling your broker.
RECENT DEVELOPMENTS
Old National registered $200 million of trust preferred securities.
Old National completed the acquisition of Sycamore Agency, Inc., a general
insurance agency, located in Terre Haute, Indiana. Old National declared on
December 9, 1999 a 5% stock dividend to its shareholders payable on January 28,
2000. The exchange ratio has been adjusted from 1.25 to 1.3125 pursuant to the
merger agreement to give effect to the stock dividend. Additionally, all
references in this document to Old National's per share information has been
adjusted to give effect to the stock dividend.
On December 20, 1999, Old National agreed to acquire Permanent Bancorp, Inc. and
Permanent Bank, each of Evansville, Indiana, in a transaction valued at
approximately $92 million. Old National expects this acquisition to be completed
during the third quarter of 2000.
See "Description of Old National - Recent Developments" on page ___.
COMPARATIVE PER SHARE DATA
The table below shows historical information about Old National's and ANB's
earnings per share, cash dividends per share and book value per share, and
similar information reflecting the merger, which is referred to as pro forma
information. In presenting the comparative pro forma information for the time
periods shown in the table, Old National and ANB assumed that the companies had
been merged throughout those periods. See "Old National Bancorp Pro Forma
Condensed Combined Financial Information" on page _____.
Old National also assumed that it will treat Old National and ANB as if they had
always been combined for accounting and financial reporting purposes, a method
known as pooling of interests accounting. The information listed as equivalent
share basis was obtained by multiplying the pro forma amounts by the exchange
ratio of 1.3125. Old National and ANB present this information to reflect the
fact that ANB shareholders will receive more than one share of Old National
common stock for each share of ANB common stock exchanged in the merger.
Old National expects that it will incur merger and restructuring expenses as a
result of combining the companies. Old National also anticipates that the merger
will provide Old National with financial benefits that include reduced operating
expenses and enhanced opportunities to earn more revenue. The pro forma
information, while helpful in illustrating the financial characteristics of Old
National under
xi
<PAGE> 17
one set of assumptions, does not reflect these anticipated financial benefits
and, accordingly, does not attempt to predict or suggest future results.
The information in the following table is based on the historical financial
information that Old National and ANB have presented in their prior SEC filings.
Old National and ANB are incorporating this material into this document by
reference. See "Where You Can Find More Information" on page _____.
<TABLE>
<CAPTION>
Old National ANB
------------------------------------------ ------------------------------------------
Equivalent Share
Historical Pro Forma (1) Historical Basis (1)
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Earnings per share (2)
Nine months ended
September 30, 1999 $ 1.30 $ 1.24 $ 1.15 $ 1.63
Twelve months ended
December 31:
1998 $ 1.54 $ 1.49 $ 1.57 $ 1.96
1997 1.40 1.37 1.50 1.80
1996 1.25 1.22 1.31 1.60
Dividends declared per share
Nine months ended
September 30, 1999 $ 0.47 $ 0.47 $ 0.57 $ 0.62
Twelve months ended
December 31:
1998 $ 0.55 $ 0.55 $ 0.72 $ 0.72
1997 0.53 0.53 0.64 0.70
1996 0.50 0.50 0.55 0.66
Book value per share
At September 30, 1999 $ 10.75 $ 10.64 $ 13.41 $ 13.96
At December 31, 1998 10.86 10.63 13.04 13.95
</TABLE>
- -----------------------------
(1) Considers the pending merger with ANB as well as the pending merger as of
September 30, 1999 with Heritage Financial Services, Inc. See "Pro Forma
Condensed Combined Financial Information."
(2) Old National's and ANB's basic earnings per share.
xii
<PAGE> 18
SUMMARY OF SELECTED FINANCIAL DATA -- OLD NATIONAL
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
The following summary sets forth selected consolidated financial information
relating to Old National. This information should be read in conjunction with
the financial statements and notes incorporated herein by reference.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income $ 470,915 $ 448,875 $ 419,483 $ 402,793 $ 353,983
Interest expense 231,613 216,868 196,289 191,835 149,809
---------- ---------- ---------- ---------- ---------
Net interest income 239,302 232,007 223,194 210,958 204,174
Provision for loan losses 12,160 13,562 11,082 7,491 7,886
---------- ---------- ---------- ---------- ---------
Net interest income after provision for loan losses 227,142 218,445 212,112 203,467 196,288
Noninterest income 58,891 51,104 47,402 42,044 36,680
Noninterest expense 167,937 158,631 156,720 153,345 152,093
---------- ---------- ---------- ---------- ---------
Income before income taxes 118,096 110,918 102,794 92,166 80,875
Income taxes 43,961 42,835 40,107 35,222 29,550
---------- ---------- ---------- ---------- ---------
Net income from continuing operation 74,135 68,083 62,687 56,944 51,325
Discontinued operations (9,854) (5,005) 494 0 -
---------- ---------- ---------- ---------- ---------
Net income $ 64,281 $ 63,078 $ 63,181 $ 56,944 $ 51,325
========== ========== ========== ========== =========
PERIOD-END BALANCES
Total assets $ 6,416,611 $ 5,933,321 $ 5,602,460 $ 5,281,387 $5,081,088
Investment securities 1,636,674 1,606,930 1,573,708 1,481,267 1,419,378
Loans, net of unearned income 4,354,256 3,915,841 3,627,592 3,375,915 3,205,097
Deposits 4,668,858 4,521,010 4,479,357 4,336,406 4,028,932
Shareholders' equity 519,645 500,609 480,435 481,511 457,971
PER SHARE DATA (ON CONTINUING OPERATIONS) (1)
Net income - basic $ 1.54 $ 1.40 $ 1.25 $ 1.10 $ 0.97
Net income - diluted (2) 1.49 1.36 1.22 1.08 0.95
Cash dividends paid 0.55 0.53 0.50 0.49 0.46
Book value at year-end 10.86 10.41 9.77 9.43 8.72
SELECTED PERFORMANCE RATIOS (ON CONTINUING OPERATIONS)
Return on assets 1.21% 1.19% 1.17% 1.11% 1.04%
Return on equity (3) 14.95 14.28 13.23 12.20 11.07
Net interest margin 4.17 4.31 4.42 4.38 4.38
Average equity to average assets 8.38 8.46 8.95 9.02 9.36
Dividend payout 35.15 36.74 38.96 43.90 47.36
Primary capital to assets 9.22 9.27 9.77 9.88 10.26
Net charge-offs to average loans 0.23 0.21 0.30 0.25 0.27
End of period allowance for loan losses to end of period
loans 1.19 1.25 1.20 1.27 1.36
Non-performing loans to total loans 0.45 0.39 0.46 0.31 0.39
Leverage ratio 7.72 7.95 8.28 8.83 9.13
Tier 1 capital to risk adjusted assets 11.40 12.17 12.90 13.92 14.20
Efficiency ratio (4) 56.32 56.03 57.92 60.61 63.15
</TABLE>
- ------------------------------------------------------
(1) Restated for all stock dividends.
(2) Assumes the conversion of Old National's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment securities.
(4) Excludes One Bank related security gains (losses) and expenses.
xiii
<PAGE> 19
SUMMARY OF SELECTED FINANCIAL DATA -- OLD NATIONAL (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months ended September 30,
----------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
RESULTS OF OPERATIONS
(Taxable equivalent basis)
Interest income $ 374,906 $ 351,426
Interest expense 183,723 172,930
----------------- ------------------
Net interest income 191,183 178,496
Provision for loan losses 8,437 9,189
----------------- ------------------
Net interest income after provision for loan losses 182,746 169,307
Noninterest income 50,186 42,879
Noninterest expense 134,695 122,442
----------------- ------------------
Income before income taxes 98,237 89,744
Income taxes 35,389 33,603
----------------- ------------------
Net income from continuing operation 62,848 56,141
Discontinued operations 3,483 (9,854)
----------------- ------------------
Net Income $ 66,331 $ 46,287
================= ==================
PERIOD-END BALANCES
Total assets $ 6,963,307 $ 6,235,978
Investment securities 1,725,378 1,611,085
Loans, net of unearned income 4,796,556 4,228,864
Deposits 5,025,330 4,592,992
Shareholders' equity 514,935 518,083
PER SHARE DATA (ON CONTINUING OPERATIONS) (1)
Net income - basic $ 1.30 $ 1.16
Net income - diluted (2) 1.26 1.13
Cash dividends paid 0.47 0.42
Book value at period-end 10.75 10.76
SELECTED PERFORMANCE RATIOS (ON CONTINUING OPERATIONS)
Return on assets 1.25% 1.23%
Return on equity (3) 15.91 15.13
Net interest margin 4.02 4.19
Average equity to average assets 7.91 8.42
Dividend payout 36.03 36.07
Primary capital to assets 8.73 9.26
Net charge-offs to average loans 0.09 0.21
End of period allowance for loans losses to end of period loans 1.21 1.23
Non-performing loans to total loans 0.40 0.38
Leverage ratio 7.51 7.80
Tier 1 capital to risk adjusted assets 11.58 11.58
Efficiency ratio (4) 55.03 55.31
</TABLE>
- ---------------------------------------------------------------------
(1) Restated for all stock dividends.
(2) Assumes the conversion of Old National's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment securities.
(4) Excludes One Bank related security gains (losses) and expenses.
xiv
<PAGE> 20
SUMMARY OF SELECTED FINANCIAL DATA -- ANB
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
The following table presents financial data for ANB. The financial data
below includes amounts previously reported by ANB. This summary should be read
in conjunction with the consolidated financial statements and the notes thereto
of ANB which are incorporated herein.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income - tax equivalent (1) $ 51,575 $ 48,202 $ 45,794 $ 43,402 $ 36,550
Interest expense 22,665 20,785 19,848 18,926 14,296
---------- ---------- ---------- ---------- ---------
Net interest income - tax equivalent (1) 28,910 27,417 25,946 24,476 22,254
Tax equivalent adjustment (1) 1,401 1,340 1,363 1,286 1,348
---------- ---------- ---------- ---------- ---------
Net interest income 27,509 26,077 24,583 23,190 20,906
Provision for loan losses 1,502 1,027 1,156 1,144 402
---------- ---------- ---------- ---------- ---------
Net interest income after provision for loan losses 26,007 25,050 23,427 22,046 20,504
Noninterest income 10,282 7,944 7,362 6,891 6,876
Noninterest expense 23,628 20,851 20,344 19,692 19,174
---------- ---------- ---------- ---------- ---------
Income before income taxes 12,661 12,143 10,445 9,245 8,206
Income taxes 4,205 4,102 3,375 3,019 2,480
---------- ---------- ---------- ---------- ---------
Net income $ 8,456 $ 8,041 $ 7,070 $ 6,226 $ 5,726
========== ========== ========== ========== =========
BALANCE SHEET DATA
Total assets $ 708,564 $ 616,383 $ 584,944 $ 573,226 $ 527,207
Total loans, net 531,414 470,457 435,699 402,190 375,876
Total deposits 590,800 491,881 486,106 495,832 456,721
Federal Home Loan Bank advances 36,145 39,615 14,000 2,395 395
Shareholders' equity 70,409 65,737 60,735 58,381 53,366
PER SHARE DATA
Net income - basic $ 1.57 $ 1.50 $ 1.31 $ 1.14 $ 1.04
Net income - diluted 1.54 1.48 1.29 1.12 1.03
Cash dividends paid 0.72 0.64 0.55 0.46 0.41
Book value at year-end 13.04 12.26 11.30 10.75 9.72
SELECTED PERFORMANCE RATIOS
Return on assets 1.31% 1.37% 1.26% 1.16% 1.15%
Return on equity 12.56 12.98 12.18 11.26 11.10
Equity to assets 9.94 10.66 10.38 10.18 10.12
Net charge-offs to average loans 0.26 0.20 0.15 0.23 0.06
Allowance for loan losses to average loans 0.98 1.01 1.07 1.01 1.07
</TABLE>
- ------------------------------------------------------
(1) Net interest income has been presented on both a tax equivalent and
non-tax equivalent basis. The tax equivalent basis was calculated using a
34% tax rate for all periods presented. The tax equivalent adjustment
reverses the tax equivalent basis in order to present net interest income
in accordance with GAAP, as reflected in the consolidated financial
statements.
xv
<PAGE> 21
SUMMARY OF SELECTED FINANCIAL DATA -- ANB (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months ended September 30,
----------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
RESULTS OF OPERATIONS
Interest income - tax equivalent (1) $ 42,665 $ 38,054
Interest expense 18,402 16,583
----------------- ------------------
Net interest income - tax equivalent (1) 24,263 21,471
Tax equivalent adjustment (1) 718 1,061
----------------- ------------------
Net interest income 23,545 20,410
Provision for loan losses 1,090 432
----------------- ------------------
Net interest income after provision for loan losses 22,455 19,978
Noninterest income 8,299 6,988
Noninterest expense 20,941 16,890
----------------- ------------------
Income before income taxes 9,813 10,076
Income taxes 3,568 3,369
----------------- ------------------
Net income $ 6,245 $ 6,707
================= ==================
BALANCE SHEET DATA
Total assets $ 833,876 $ 705,317
Total loans, net 648,146 499,096
Total deposits 676,642 580,067
Federal Home Loan Bank advances 56,718 42,145
Shareholders' equity 73,575 70,157
PER SHARE DATA
Net income - basic $ 1.15 $ 1.25
Net income - diluted 1.13 1.22
Cash dividends paid 0.57 0.53
Book value at period-end 13.41 13.02
SELECTED PERFORMANCE RATIOS
Return on assets 1.10% 1.43%
Return on equity 11.70 13.47
Equity to assets 8.82 9.95
Net charge-offs to average loans 0.06 0.09
Allowance for loan losses to average loans 0.93 0.95
</TABLE>
- ----------------------------------------------------------------
(1) Net interest income has been presented on both a tax equivalent and
non-tax equivalent basis. The tax equivalent basis was calculated using a
34% tax rate for all periods presented. The tax equivalent adjustment
reverses the tax equivalent basis in order to present net interest income
in accordance with GAAP, as reflected in the consolidated financial
statements.
xvi
<PAGE> 22
SPECIAL MEETING
General
This document is first being mailed by ANB to the holders of ANB common
stock on ___________________, 2000 and is accompanied by the notice of the ANB
special meeting and a form of proxy that is solicited by the Board of Directors
of ANB for use at the special meeting. The special meeting will be held on
__________, __________ ___, 2000 at ____:____ _.m., local time, at the
____________________, _______________________, Muncie, Indiana 47305.
Matters to be Considered
The purposes of the special meeting are to consider and vote upon the
merger agreement, dated July 29, 1999, between Old National Bancorp and ANB,
which provides for the merger of ANB into Old National, and to consider and vote
upon any other matters that may properly come before the special meeting.
Proxies
The accompanying form of proxy is for your use at the special meeting
if you are unable or do not wish to attend the meeting in person. You may revoke
your proxy at any time before it is exercised by delivering to the Secretary of
ANB a written notice of revocation, a properly executed proxy having a later
date, or by attending the special meeting and voting in person. Written notices
of revocation should be addressed to ANB Corporation, 120 West Charles Street,
Muncie, Indiana 47305, Attn: James Convy, Secretary. To be effective, ANB must
receive the revocation before the shares are voted. The shares represented by
proxies properly signed and returned will be voted at the special meeting as
instructed by the shareholders of ANB giving the proxies. If you make no
specification as to your vote on the proxy, your proxy will be voted in favor of
approval of the merger agreement.
The ANB Board is unaware of any other matters that may be presented for
action at the special meeting. However, if other matters do properly come before
the special meeting, the shares represented by properly executed proxies will be
voted in accordance with the best judgment of the person named in the proxy.
Solicitation of Proxies
ANB will bear the entire cost of soliciting proxies from shareholders.
In addition to the solicitation of proxies by mail, ANB will request that banks,
brokers and other record holders send
1
<PAGE> 23
proxies and proxy material to the beneficial owners of stock held by them and
secure their voting instructions, if necessary. Additionally, proxies may be
solicited personally or by telephone by directors, officers and certain
employees of ANB, who will not be specifically compensated for such soliciting.
Record Date and Voting Rights
ANB has fixed _______________, 2000 as the record date for determining
those ANB shareholders entitled to notice of, and to vote at, the special
meeting. Accordingly, only ANB shareholders of record at the close of business
on _______________, 2000 will be entitled to notice of and to vote at the
special meeting. Each share of ANB common stock you own on the record date
entitles you to one vote on each matter presented for a vote at the special
meeting. At the close of business on the record date, there were ________ shares
of ANB common stock outstanding held by approximately ________ holders of
record. The presence, in person or by proxy, of shares of ANB common stock
representing a majority of those shares outstanding and entitled to vote on the
record date is necessary to constitute a quorum at the special meeting.
Shares of ANB common stock held by persons attending the special
meeting but not voting, and shares of ANB common stock for which ANB has
received proxies but with respect to which the holders have abstained from
voting, will be counted as present at the special meeting for purposes of
determining the presence or absence of a quorum for the transaction of business
at the special meeting. Brokers who hold shares of ANB common stock in nominee
or "street" name for customers who are the beneficial owners of those shares are
prohibited from giving a proxy to vote shares held for those customers on
matters to be considered and voted upon at the special meeting without specific
instructions from those customers. These so-called "broker non-votes" will be
counted for purposes of determining whether a quorum exists.
The merger agreement must be approved by the affirmative vote of the
holders of at least a majority of the outstanding shares of ANB common stock
entitled to vote at the special meeting.
BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF ANB COMMON
STOCK ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES
WILL HAVE THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE MERGER AGREEMENT.
ACCORDINGLY, THE ANB BOARD URGES YOU TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
As of the record date, directors and executive officers of ANB owned
approximately ________ shares of ANB common stock, entitling them to exercise
_____% of the voting power of the ANB common stock entitled to vote at the
special meeting. On the basis of the unanimous approval of the
2
<PAGE> 24
merger agreement by the ANB Board, we currently expect that each director and
executive officer ANB will vote the shares of ANB common stock owned by him or
her for approval of the merger agreement and the transactions contemplated by
the merger agreement. As of the record date, the banking, trust and investment
management subsidiaries of ANB, as fiduciaries, custodians or agents, held a
total of ___________ shares of ANB common stock. These entities maintained sole
or shared voting power with respect to _____ of these shares of ANB common
stock.
Additional information with respect to the beneficial ownership of ANB
common stock by individuals and entities owning more than 5% of that stock and
more detailed information with respect to beneficial ownership of ANB common
stock by directors and executive officers of ANB is incorporated by reference to
the Annual Report on Form 10-K of ANB for the year ended December 31, 1998. See
"Where You Can Find More Information."
Recommendation of ANB Board of Directors
The ANB Board has unanimously approved the merger agreement and the
transactions contemplated by the merger agreement. The ANB Board believes that
the merger agreement is in the best interests of ANB as a whole, including the
interests of ANB shareholders, and recommends that the ANB shareholders vote
"FOR" approval of the merger agreement. See "PROPOSED MERGER Background of the
Merger, - Reasons for the Merger, - Recommendation of the ANB Board of
Directors."
PROPOSED MERGER
At the special meeting, the shareholders of ANB will consider and vote
upon approval of the merger, certain features of which are summarized below. The
following summary of aspects of the merger is not a complete description of the
terms and conditions of the merger and is qualified in its entirety by reference
to the merger agreement, which is attached to this document as Appendix A and is
incorporated herein by reference.
General
The Board of Directors of Old National and ANB each have unanimously
approved the merger agreement, which provides for the merger. Old National and
ANB expect to complete the merger in February, 2000. Each share of ANB common
stock issued and outstanding at the effective time of the merger will be
converted into the right to receive 1.3125 shares of Old National common stock,
as adjusted for the 5% stock dividend declared by Old National on December 9,
1999, and subject to further adjustment as discussed in this document.
3
<PAGE> 25
Description of the Merger
In the merger, ANB will merge with Old National. Old National will be
the surviving corporation in the merger and the separate corporate existence of
ANB will cease.
As of September 30, 1999, ANB had consolidated assets of approximately
$834 million, consolidated deposits of approximately $677 million, consolidated
shareholders' equity of approximately $74 million and consolidated net income
for the nine months then ended of approximately $6.2 million. Based upon the pro
forma financial information included elsewhere in this document and assuming
that the merger had been consummated on September 30, 1999, ANB represented as
of such date 10.69% of the consolidated assets of Old National, 11.68% of its
consolidated deposits, 12.50% of its consolidated shareholders' equity and, for
the nine month period then ended, 8.60% of its consolidated net income.
See "Pro Forma Condensed Combined Financial Information".
Background of the Merger
Historically banking laws in Indiana and many other states prohibited
banks from expanding outside of their home counties. Many changes to Indiana's
law have occurred since 1985, first permitting in-state acquisitions by bank
holding companies, then permitting regional interstate acquisitions and
currently permitting virtual nationwide and international expansion
opportunities. These developments stimulated aggressive acquisition activity
among financial institutions located in Indiana and neighboring states,
resulting in the entry of large bank holding companies into virtually every
attractive market in the Midwestern United States. Moreover, developments and
deregulation in the financial services industry generally have led to further
increases in competition for bank services. Compounded by the significant
increase in bank regulatory burdens over the past several years, these
competitive factors have created an environment in which it is increasingly
difficult for regional bank holding companies such as ANB to compete
effectively.
In analyzing how to address the increasing competition and continuing
consolidation in the banking industry, the Board of Directors considered several
strategic alternatives including remaining independent, growing through
acquisitions, and seeking a merger partner. A sub-committee of the Board of
Directors was organized on May 10, 1999 to study these strategic alternatives.
On May 26, 1999, the sub-committee presented a report to the Board of Directors.
After evaluation of the report and financial, economic, legal and market
considerations, the Board of Directors concluded that the sub-committee should
continue to give serious attention to seeking a merger partner.
On June 21 and 22, 1999 and at the request of the sub-committee,
Sandler O'Neill & Partners, L.P., ANB's financial advisors, contacted five
regional bank holding companies, including Old National,
4
<PAGE> 26
seeking to determine the level of market interest in a potential affiliation
with ANB. As a result of the responses to Sandler O'Neill's inquiries, on June
30, 1999, members of the sub-committee discussed the merits of a potential
affiliation with senior executives of Old National. Beginning on July 7, 1999,
ANB and Old National began to exchange information and conduct preliminary due
diligence reviews for the purpose of evaluating a potential business
combination.
Following the receipt by ANB of Old National's formal letter of
interest to discuss an affiliation with ANB, the Board of Directors met on July
19, 1999 to review with ANB's financial advisors available strategic
alternatives and the rationale for ANB to consider a merger at this time. The
Board of Directors concluded that an affiliation with Old National was in the
interest of ANB as a whole, and that it would be appropriate to begin
negotiations with Old National.
Following the July 19, 1999 board meeting, ANB, Old National and their
respective advisors continued their due diligence review and initiated
negotiations of the terms of a business combination. These discussions
culminated in the submission of the merger agreement for consideration by the
Board of Directors at a meeting held on July 29, 1999. After consideration of
the factors described under "Reasons for the Merger", the Board of Directors
determined that a merger with Old National was in the best interest of ANB and
its shareholders, and unanimously approved the merger agreement and the
transactions contemplated therein.
Reasons for the Merger
In reaching its decision to approve the merger agreement and the stock
option agreement, the ANB Board consulted with management of ANB, as well as its
financial and legal advisors, and it considered a variety of factors, including
the following:
- The ANB Board's knowledge and analysis of the current environment
of the financial services industry, which is characterized by
rapid consolidation, increased opportunities for cross-industry
expansion, evolving trends in technology and increasing nationwide
and Internet competition;
- The ANB Board's evaluation of the financial terms of the merger
and the effect of the financial terms on ANB's shareholders,
including the exchange ratio which represented a 32.99% premium
over the closing price of ANB common stock on July 29, 1999 and a
54.70% premium to the average closing price of ANB common stock
for the 30 trading days preceding the approval of the merger
agreement by ANB's Board;
- The ANB Board's belief that the financial terms of the merger are
fair and in the best interests of ANB as a whole and ANB's
shareholders and are consistent with ANB's long term strategy of
maximizing shareholder value;
5
<PAGE> 27
- The business, operations, financial condition, earnings and
prospects of ANB and Old National. In making its determination,
the ANB Board took into account the results of ANB's due diligence
review of Old National;
- The scale, scope, strength and diversity of operations, product
lines and delivery systems that can be achieved by combining ANB
and Old National;
- The complimentary nature of the businesses of ANB and Old National
and the earnings in varying economic and market climates relative
to ANB on a stand-alone basis as a result of greater geographic,
asset and line-of-business diversification;
- The ANB Board's belief that the merger represents:
- an opportunity to leverage ANB's management, infrastructure,
products, marketing and business lines over a larger
consumer, business and corporate customer base through Old
National's geographically diverse network; and
- the possibility of achieving expense savings and operating
efficiencies through, among other things, the elimination of
duplicative efforts;
- The structure of the merger and the terms of the merger agreement,
including the fact that the fixed exchange ratio provides
certainty as to the number of shares of common stock of Old
National to be issued in the merger, and that the merger is
intended to qualify as a transaction of a type that is generally
tax-free for U.S. federal income tax purposes and as a pooling of
interests for accounting purposes;
- The opinion of Sandler O'Neill to the ANB Board that, based upon
and subject to the considerations set forth in the opinion, the
exchange ratio was fair from a financial point of view to ANB
shareholders (see "- - Fairness Opinion of ANB's Financial
Advisor");
- The ANB Board's belief that, while no assurances could be given,
the business and financial advantages contemplated in connection
with the merger were likely to be achieved within a reasonable
time frame;
- The likelihood of the merger being approved by the appropriate
regulatory authorities;
- Consideration of the effect of the merger on ANB's other
constituencies, including ANB's employees and the customers and
communities served by ANB, including consideration of Old
National's historical practice of retaining employees of acquired
institutions with competitive salary and benefit programs, and the
opportunity for training, education and advancement of employees
within Old National or one of its affiliated companies; and
- The ANB Board's analysis of alternatives to merging with Old
National, including merging with other potential acquirors and its
analysis of relevant price information from recent comparable bank
mergers which occurred in the Midwest and across the United
States.
6
<PAGE> 28
This discussion of the information and factors considered by the ANB
Board is not intended to be exhaustive, but it does include all material factors
considered by the ANB Board. In reaching its decision to approve and recommend
the merger, the ANB Board of Directors did not assign any relative or specific
weights to these factors, and individual directors may have given differing
weights to different factors. Based upon the foregoing and other factors, the
Board of Directors of ANB concluded that it was in the best interests of ANB and
its shareholders to merge with Old National.
Fairness Opinion of ANB's Financial Advisor
By letter agreement dated as of June 18, 1999, ANB retained Sandler
O'Neill as an independent financial advisor in connection with ANB's
consideration of a possible business combination with Old National. Sandler
O'Neill is a nationally recognized investment banking firm whose principal
business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler O'Neill is regularly engaged in the
valuation of financial institutions and their securities in connection with
mergers and acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to ANB in connection with
the merger and participated in certain of the negotiations leading to the merger
agreement. At the request of the ANB Board, representatives of Sandler O'Neill
attended the July 29, 1999 meeting of the ANB Board at which the Board
considered and approved the merger agreement. At the meeting, Sandler O'Neill
delivered to the ANB Board its oral opinion, subsequently confirmed in writing,
that as of such date, the exchange ratio of 1.25 shares, prior to adjustment of
the 5% stock dividend declared by Old National on December 9, 1999, was fair to
the ANB shareholders from a financial point of view. Sandler O'Neill has also
delivered to the ANB Board a written opinion dated the date of this document
(the "Sandler Opinion") which is substantially identical to the July 29, 1999
opinion. THE FULL TEXT OF THE SANDLER OPINION IS ATTACHED AS APPENDIX C TO THIS
DOCUMENT. THE SANDLER OPINION OUTLINES THE PROCEDURES FOLLOWED, ASSUMPTIONS
MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY SANDLER O'NEILL IN RENDERING THE OPINION. THE SANDLER OPINION IS
INCORPORATED BY REFERENCE INTO THIS DESCRIPTION OF THE OPINION AND THIS
DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE SANDLER OPINION.
ANB SHAREHOLDERS ARE URGED TO CAREFULLY READ THE SANDLER OPINION IN CONNECTION
WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
THE SANDLER OPINION WAS DIRECTED TO THE ANB BOARD AND WAS PROVIDED TO
ANB FOR ITS INFORMATION IN CONSIDERING THE MERGER. THE SANDLER OPINION IS
DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO TO ANB SHAREHOLDERS FROM A
FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF
ANB TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE MERGER AND IS NOT A
RECOMMENDATION TO ANY ANB SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT
THE SPECIAL MEETING WITH RESPECT TO THE MERGER OR ANY OTHER RELATED MATTER.
7
<PAGE> 29
In rendering its July 29, 1999 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portions of the factors and analyses considered without considering
all factors and analyses, or attempting to ascribe relative weights to some or
all such factors and analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in Sandler O'Neill's
comparative analyses described below is identical to Old National or ANB and no
transaction is identical to the merger of Old National and ANB. Accordingly, an
analysis of comparable companies or transactions is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors that
could affect the public trading values or merger transaction values, as the case
may be, of Old National and ANB and the companies to which they are being
compared.
The earnings projections for ANB and Old National relied upon by
Sandler O'Neill in its analyses were reviewed with management and were based
upon 1999 internal projections of ANB and Old National provided to Sandler
O'Neill and on published IBES consensus earnings estimates for 2000. For periods
after 2000, Sandler O'Neill assumed an annual growth rate on earning assets of
5.00% in the case of ANB and 6.50% in the case of Old National. The 1999
earnings projections furnished to Sandler O'Neill were prepared by the senior
managements of ANB and Old National for internal purposes only and not with a
view towards public disclosure. Those projections, as well as the other earnings
estimates relied upon by Sandler O'Neill in its analyses, were based on numerous
variables and assumptions which are inherently uncertain and accordingly, actual
results could vary materially from those set forth in such projections.
In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of ANB, Old National and Sandler O'Neill. The analyses
performed by Sandler O'Neill are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Sandler O'Neill prepared its analyses solely for purposes of
rendering its opinion and provided such analyses to the ANB Board at the July
29th meeting. Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Such estimates are inherently subject to
uncertainty and actual values may be materially different. Accordingly, Sandler
8
<PAGE> 30
O'Neill's analyses do not necessarily reflect the value of ANB common stock or
Old National common stock or the prices at which ANB common stock or Old
National common stock may be sold at any time.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of
the proposed transaction. Based on the closing price of Old National common
stock on July 28, 1999 of $30.00 and an exchange ratio of 1.25, Sandler O'Neill
calculated an implied transaction value per share of ANB common stock of $37.50.
The implied aggregate transaction value was approximately $212 million, based
upon 5,653,026 fully diluted shares of ANB common stock outstanding, which was
determined using the treasury stock method at the implied value of $37.50. Based
upon ANB's June 30, 1999 financial information, Sandler O'Neill calculated the
following ratios:
Implied value/Tangible book value 3.39x
Implied value/Book value 2.85x
Implied value/Last twelve month full-diluted EPS (1) 24.61x
Implied value/Projected twelve months ended 1999 22.19x
Tangible book premium/core deposits (1)(2) 22.68%
Implied value/Total deposits 32.55%
Implied value/Total assets 27.05%
-----------------------------------------------------
(1) LTM EPS excluded one-time merger related charges
(2) Assumes 5% non-core deposits
For purposes of Sandler O'Neill's analyses, earnings per share were based on
fully diluted earnings per share, normalized for non-recurring merger charges.
Sandler O'Neill noted that the implied transaction value represented a 30%
premium over the July 28, 1999 closing price of ANB common stock of $28.75.
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the
reported trading prices and volume of ANB common stock and Old National common
stock, and the relationship between the movements in the prices of ANB common
stock and Old National common stock, respectively, to movements in certain stock
indices, including the Standard & Poor's 500 Index, the Nasdaq Bank Index and,
in the case of ANB, the median performance of a composite group of publicly
traded regional commercial banks selected by Sandler O'Neill and, in the case of
Old National, the median performance of a composite group of regional commercial
banks selected by Sandler O'Neill. During the one year period ended July 27,
1999, the ANB common stock outperformed the Nasdaq Bank Index and its composite
index, and underperformed the S&P Index. During the one year period ended July
27, 1999, Old National common stock outperformed the Nasdaq Bank Index and its
composite index, and underperformed the S&P Index.
9
<PAGE> 31
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information for ANB
and two groups of selected financial institutions. The first group consisted of
ANB and the following 11 publicly traded regional commercial banks (the
"Regional Group"): BancFirst Ohio Corp., Peoples Bancorp, Inc., Lakeland
Financial Corp., Indiana United Bancorp, German American Bancorp, Premier
Financial Bancorp, Inc., S.Y. Bancorp, Inc., UnionBancorp, Inc., Wayne Bancorp,
Inc., Oak Hill Financial, Inc., and Belmont Bancorp. Sandler O'Neill also
compared ANB to a group of 12 publicly traded commercial banks which had a
return on average equity (based on last twelve months' earnings) of greater than
15% and a price-to-tangible book value of greater than 200% (the "Highly Valued
Group"). The Highly Valued Group was comprised of Mid-State Bancshares, Prime
Bancshares, Inc., Independent Bank Corp., Arrow Financial Corp., Suffolk
Bancorp, Great Southern Bancorp, Inc., Glacier Bancorp, Inc., Tompkins Trustco,
Inc., S.Y. Bancorp, Inc., Summit Bancshares, Inc., City Bank and Oak Hill
Financial, Inc. The analysis compared publicly available financial information
for ANB and the median data for each of the Regional Group and Highly Valued
Group as of and for each of the years ended December 31, 1994 through 1998 and
as of and for the twelve months ended March 31, 1999 or June 30, 1999, as
applicable. Sandler O'Neill also used publicly available information to perform
a similar comparison of selected financial and market trading information for
Old National and two different groups of commercial banks. The first group
consisted of Old National and the following 12 publicly traded regional
commercial banks (the "Midwestern Group"): Associated Banc-Corp, Commerce
Bancshares, Inc., TCF Financial Corp., FirstMerit Corp., Provident Financial
Group, Inc., UMB Financial Corp., Community First Bankshares, First Midwest
Bancorp, Inc., Citizens Banking Corp., Sky Financial Group, Inc., AMCORE
Financial, Inc. and Republic Bancorp, Inc. Sandler O'Neill also compared Old
National to a group of 11 publicly traded commercial banks which had a return on
equity of greater than 17% (based on last twelve months' earnings) and a
price-to-tangible book value of greater than 290% ("The High Performing Group").
The High Performing Group consisted of the following 11 publicly traded
commercial banks: Associated Banc-Corp, North Fork Bancorp, Synovus Financial
Corp., TCF Financial Corp., CCB Financial Corp., Cullen/Frost Bankers, Inc.,
National Commerce Bancorp, City National Corp., Valley National Bancorp,
Commerce Bancorp, Inc. and Westamerica Bancorp. The analysis compared publicly
available financial information for Old National and the median data for the
Midwestern Group and the High Performing Group as of and for each of the years
ended December 31, 1994 through 1998 and as of and for the twelve months ended
March 31, 1999 or June 30, 1999, as applicable. The table below sets forth the
comparative data as of and for the twelve months ended June 30, 1999.
10
<PAGE> 32
<TABLE>
<CAPTION>
High
Regional Highly Midwestern Performing
ANB Group Valued Old National Group Group
------------ ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 783,677 $ 791,685 $ 788,931 $ 6,898,400 $ 6,898,400 $ 6,902,000
Annual growth rate of total 10.60% 14.72% 10.60% 10.81% 7.26% 10.06%
assets
Tangible equity/assets 7.68% 7.25% 8.82% 7.46% 7.25% 7.80%
Intangible assets/total equity 16.00% 14.55% 1.19% 2.75% 7.73% 3.40%
Net loans/total assets 78.48% 63.96% 71.32% 66.98% 66.98% 65.51%
Cash & securities/total assets 16.32% 30.13% 23.19% 28.67% 30.82% 27.24%
Gross loans/total deposits 95.24% 83.39% 88.72% 97.34% 90.91% 85.40%
Total borrowings/total assets 7.35% 7.96% 8.28% 21.61% 17.43% 12.09%
Non-performing assets/total 0.22% 0.40% 0.34% 0.28% 0.41% 0.24%
assets
Loan loss reserve/gross loans 0.86% 1.19% 1.25% 1.20% 1.34% 1.34%
Net interest margin 4.47% 4.03% 4.88% 4.07% 4.15% 4.62%
Loan loss provision/average 0.23% 0.22% 0.22% 0.17% 0.29% 0.17%
assets
Non-interest income/average 1.42% 0.78% 1.39% 0.95% 1.50% 1.50%
assets
Non-interest expense/average 3.32% 2.78% 3.13% 2.66% 3.41% 3.10%
assets
Efficiency ratio 63.51% 57.81% 52.82% 55.38% 57.53% 54.86%
Return on average assets 1.12% 0.96% 1.59% 1.26% 1.26% 1.70%
Price/tangible book value per 255.08% 250.49% 261.50% 269.03% 276.85% 377.46%
share
Price/earnings per share 18.54x 17.29x 14.86x 17.55x 16.73x 16.31x
Dividend yield 2.69% 2.25% 1.78% 2.05% 2.33% 2.01%
Dividend payout ratio 49.87% 38.58% 24.80% 35.68% 39.59% 38.92%
</TABLE>
ANALYSIS OF SELECTED MERGER TRANSACTIONS Sandler O'Neill reviewed
certain other transactions involving publicly traded commercial banks as
acquired institutions with transaction values greater than $15 million. Sandler
O'Neill reviewed 77 transactions announced nationwide from January 1, 1999 to
July 26, 1999 ("Nationwide Transactions") and 30 transactions announced from
January 1, 1999 to July 26, 1999 in the Midwestern region, comprised of
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, North
Dakota, Ohio, South Dakota, and Wisconsin ("Midwestern Transactions"). Sandler
O'Neill reviewed the ratios of transaction value to last four quarters'
earnings, transaction value to book value, transaction value to tangible book
value, tangible book premium to core deposits, transaction value to total assets
and premium to market and computed high, low, mean, and median ratios and
premiums for the respective groups of transactions. These multiples were applied
to ANB's financial information as of and for the twelve months ended June 30,
1999. As illustrated in the
11
<PAGE> 33
following table, Sandler O'Neill derived an imputed range of values per share of
ANB common stock of $32.84 to $39.66 based upon the median multiples for
Nationwide Transactions and $33.42 to $40.48 based upon the median multiples for
Midwestern Transactions. As calculated by Sandler O'Neill, the implied
transaction value per share of ANB common stock in the merger was $37.50.
<TABLE>
<CAPTION>
Nationwide Transactions Midwestern Transactions
------------------------------- -------------------------------
Median Implied Median Implied
Multiple Value Multiple Value
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Deal price/LTM EPS (1) 21.65x $33.01 21.92x $33.42
Deal price/Book Value 2.74x 36.03 2.87x 37.72
Deal price/Tangible book value 2.97x 32.84 3.04x 33.58
Tangible book premium/Core deposits 22.46% 36.18 21.28% 34.85
Deal price/Total assets 24.49% 34.86 24.43% 34.78
Deal price/Total deposits 30.28% 35.83 30.03% 35.54
</TABLE>
- -------------------------------------------------
(1) Based on a normalized EPS of $1.52.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of ANB through December 31, 2004 under various circumstances,
assuming ANB's current dividend payout ratio and that ANB performed in
accordance with the earnings forecasts reviewed with management. To approximate
the terminal value of ANB common stock at December 31, 2004, Sandler O'Neill
applied price/earnings multiples ranging from 10x to 25x and applied multiples
of tangible book value ranging from 150% to 400%. The dividend income streams
and terminal values were then discounted to present values using different
discount rates ranging from 9% to 15% chosen to reflect different assumptions
regarding required rates of return of holders or prospective buyers of ANB
common stock. As illustrated in the following table, this analysis indicated an
imputed range of values per share of ANB common stock of $15.68 to $43.60 when
applying the price/earnings multiples and $17.51 to $54.05 when applying
multiples of tangible book value. As calculated by Sandler O'Neill, the implied
transaction value per share of ANB common stock in the merger was $37.50.
<TABLE>
<CAPTION>
Price/Earnings Multiples Tangible Book Value Multiples
---------------------------------------- ----------------------------------------
Discount Rate 10x 25x 1.50x 4.00x
- --------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
9% $19.51 $43.60 $23.06 $54.05
11 18.11 40.30 21.00 48.83
13 16.84 37.32 19.16 44.15
15 15.68 34.61 17.51 39.95
</TABLE>
12
<PAGE> 34
In connection with its analysis, Sandler O'Neill considered and
discussed with the ANB Board how the present value analysis would be affected by
changes in the underlying assumptions, including variations with respect to the
growth rate of assets, net interest spread, non-interest income, non-interest
expenses and dividend payout ratio. Sandler O'Neill noted that the discounted
dividend stream and terminal value analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results.
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential
pro forma effects of the merger, based upon the exchange ratio of 1.25, Old
National's and ANB's current and projected income statements and balance sheets,
and assumptions regarding the economic environment, accounting and tax treatment
of the merger, charges associated with the merger, operating efficiencies and
other adjustments discussed with the senior managements of ANB and Old National.
As illustrated in the following table, this analysis indicated that the merger
would be accretive to ANB's projected earnings per share, tangible book value
per share and dividend as of December 31, 2000. Also, the analysis indicated
that the merger would be dilutive to Old National's earnings and tangible book
value per share for the year ended December 31, 2000. The actual results
achieved by Old National and ANB may vary from projected results and the
variations may be material.
<TABLE>
<CAPTION>
Year ending December 31, 2000 Old National ANB
- ------------------------------------ ----------------------------------- -----------------------------------
Stand-alone Pro Forma Stand-alone Pro Forma(1)
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Projected EPS $ 1.94 $ 1.93 $ 1.88 $ 2.41
Projected tangible book value 13.06 12.60 13.04 15.75
Projected dividend .76 .76 .79 .95
Projected leveraged capital ratio 8.18% 7.86% NM NM
</TABLE>
- ----------------------------------------
(1) Determined by multiplying the Old National values by the exchange ratio of
1.25.
In connection with rendering its July 29, 1999 opinion, Sandler O'Neill
reviewed, among other things: (1) the merger agreement and exhibits thereto; (2)
the Stock Option Agreement, dated July 29, 1999, by and between ANB and Old
National; (3) certain publicly available financial statements of ANB and other
historical financial information provided by ANB that they deemed relevant; (4)
certain publicly available financial statements of Old National and other
historical financial information provided by Old National that they deemed
relevant; (5) certain internal financial analyses and forecasts of ANB prepared
by and reviewed with management of ANB and the views of senior management of
ANB, based on certain limited discussions with certain members of senior
management, regarding ANB's past and current business, financial condition,
results of operations and future prospects; (6)
13
<PAGE> 35
certain internal financial analyses and forecasts of Old National prepared by
and reviewed with management of Old National and the views of senior management
of Old National, based on certain limited discussions with certain members of
senior management, regarding Old National's past and current business, financial
condition, results of operations and future prospects; (7) the pro forma impact
of the merger; (8) the publicly reported historical price and trading activity
for ANB's and Old National's common stock, including a comparison of certain
financial and stock market information for ANB and Old National with similar
publicly available information for certain other companies the securities of
which are publicly traded; (9) the financial terms of recent business
combinations in the commercial banking industry, to the extent publicly
available; (10) the current market environment generally and the banking
environment in particular; and (11) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as they
considered relevant.
In connection with rendering the Sandler Opinion, Sandler O'Neill
confirmed the appropriateness of its reliance on the analyses used to render its
July 29, 1999 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the other factors considered in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and
relied upon the accuracy and completeness of all the financial information,
analyses and other information that was publicly available or otherwise
furnished to, reviewed by or discussed with it, and Sandler O'Neill did not
assume any responsibility or liability for independently verifying the accuracy
or completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of ANB or Old National or
any of their respective subsidiaries, or the collectibility of any such assets,
nor was it furnished with any such evaluations or appraisals. Sandler O'Neill is
not an expert in the evaluation of allowances for loan losses and it has not
made an independent evaluation of the adequacy of the allowance for loan losses
of ANB or Old National, nor has it reviewed any individual credit files relating
to ANB or Old National. With ANB's consent, Sandler O'Neill has assumed that the
respective allowances for loan losses for both ANB and Old National are adequate
to cover such losses and will be adequate on a pro forma basis for the combined
entity. In addition, Sandler O'Neill has not conducted any physical inspection
of the properties or facilities of ANB or Old National. With respect to all
financial projections reviewed with each company's management and used by
Sandler O'Neill in its analyses, Sandler O'Neill assumed that they reflected the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of ANB and Old National and that
such performances will be achieved. Sandler O'Neill expressed no opinion as to
such financial projections or the assumptions on which they were based.
14
<PAGE> 36
Sandler O'Neill's opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of its
opinion. Sandler O'Neill assumed, in all respects material to its analysis, that
all of the representations and warranties contained in the merger agreement and
all related agreements are true and correct, that each party to such agreements
will perform all of the covenants required to be performed by such party under
such agreements and that the conditions precedent in the merger agreement are
not waived. Sandler O'Neill also assumed, with ANB's consent, that there has
been no material change in ANB's and Old National's assets, financial condition,
results of operations, business or prospects since the date of the last publicly
filed financial statements available to them, that ANB and Old National will
remain as going concerns for all periods relevant to its analyses, and that the
merger will be accounted for as a pooling of interests and will qualify as a
tax-free reorganization for federal income tax purposes.
ANB has agreed to pay Sandler O'Neill a transaction fee in connection
with the merger, a substantial portion of which is contingent upon the closing
of the merger. Based on the closing price of ANB common stock on _________, 2000
(the latest practicable date prior to the date of this document), ANB would pay
Sandler O'Neill a transaction fee of approximately $__ million, of which
approximately $529,287 has been paid and the balance will be paid when the
merger is closed. ANB paid Sandler O'Neill a fee of $250,000 for rendering its
fairness opinion, which will be credited against that portion of the transaction
fee due upon closing of the merger. ANB has also agreed to indemnify Sandler
O'Neill and its affiliates and their respective partners, directors, officers,
employees, agents, and controlling persons against certain expenses and
liabilities, including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment
banking services to ANB and has received compensation for such services. In the
ordinary course of its business as a broker-dealer, Sandler O'Neill may also
purchase securities from and sell securities to ANB and Old National and may
actively trade the equity or debt securities of ANB and Old National and their
respective affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Recommendation of the ANB Board of Directors
THE BOARD OF DIRECTORS OF ANB HAS CAREFULLY CONSIDERED AND UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF ANB VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT.
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Conversion of ANB Common Stock
Under the terms of the merger agreement, shareholders of ANB of record
when the merger is completed will be entitled to receive 1.3125 shares of Old
National common stock, as adjusted for the 5% stock dividend declared by Old
National on December 9, 1999 and subject to further adjustment, if any, for
stock splits, stock dividends or any similar recapitalization of Old National or
if Old National elects to adjust the exchange ratio following ANB's exercise of
its right to terminate the merger agreement due to a decline in the value of Old
National common stock. Because the exchange ratio is fixed and because the
market price of Old National common stock prior to the effective time of the
merger may fluctuate, the value of the shares of Old National common stock that
you will receive if and when the merger is completed may increase or decrease
prior to and following the merger.
As of _______________, 2000, the closing price of Old National common
stock was $_____ per share, as reported by the Nasdaq National Market System. If
the merger had been consummated on that date, the number of shares of Old
National common stock exchanged in the merger would have been ________, with an
aggregate market value of approximately $________.
Treatment of ANB Stock Options
Each stock option to acquire ANB common stock granted under ANB's stock
option and incentive plans outstanding and unexercised immediately prior to the
effective time of the merger will be converted automatically at the effective
time into a stock option to purchase Old National common stock on the same terms
that were applicable to the stock option at the effective time of the merger.
Old National will assume the obligations of ANB with respect to each outstanding
option to purchase ANB common stock. The number of shares of Old National common
stock subject to the new Old National options will be equal to the product of
the number of shares of ANB common stock subject to the ANB stock options times
the exchange ratio as then in effect, rounded to the nearest whole share. The
exercise price per share of Old National common stock subject to the new Old
National stock options will be equal to the aggregate exercise price for shares
of ANB common stock divided by the number of shares of Old National common
stock, rounded to the nearest whole share, deemed purchasable pursuant to the
stock options. Additionally, stock options that are incentive stock options
under the Internal Revenue Code will be adjusted in the manner required by the
Code.
Exchange of Certificates; Fractional Shares
Immediately after the effective time of the merger, Old National will
mail a letter of transmittal to ANB shareholders. This transmittal letter will
contain instructions with respect to the surrender of certificates representing
shares of ANB common stock. YOU SHOULD NOT RETURN YOUR ANB STOCK
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CERTIFICATES WITH THE ENCLOSED PROXY AND SHOULD NOT FORWARD THEM TO OLD NATIONAL
UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL FROM OLD NATIONAL.
If your certificate for your shares of ANB common stock has been lost,
stolen or destroyed, Old National will issue the Old National common stock and
pay cash for any fractional shares after Old National receives from you an
agreement to indemnify Old National against loss from such lost, stolen or
destroyed certificate and appropriate evidence of the loss, theft or
destruction, such as an affidavit.
After the effective time of the merger, stock certificates previously
representing ANB common stock will represent only the right to receive shares of
Old National common stock and cash for any fractional shares. Following the
effective time of the merger and prior to the surrender by holders of ANB of
their stock certificates to Old National in exchange for Old National common
stock, the holders will not be entitled to receive payment of dividends or other
distributions declared on shares of Old National common stock. Upon the
subsequent exchange of such certificates, however, Old National will pay,
without interest, any accumulated dividends or other distributions previously
declared and withheld on the shares of Old National common stock. After the
effective time of the merger, there will be no transfers on the stock transfer
books of ANB of shares of ANB issued and outstanding immediately prior to the
effective time. Following the effective time of the merger, the shares of ANB
common stock will no longer be traded on the Nasdaq National Market. If, after
the effective time of the merger, you present certificates representing shares
of ANB common stock for registration or transfer, the certificates will be
canceled and exchanged for shares of Old National common stock.
No fractional shares of Old National common stock will be issued to
shareholders of ANB in connection with the merger. Each shareholder of ANB who
otherwise would be entitled to a fractional interest in a share of Old National
common stock as a result of the exchange ratio will be paid a cash amount equal
to the fractional interest multiplied by the average of the per share closing
price of Old National common stock as reported on the Nasdaq National Market
System for the five days on which shares of Old National common stock were
traded immediately before the effective time of the merger.
Old National will distribute stock certificates representing shares of
Old National common stock and will pay any cash payment for fractional shares
(without interest) to each former shareholder of ANB as soon as practical
following the shareholder's delivery to Old National of his or her
certificate(s) representing shares of ANB common stock.
No Dissenters' or Appraisal Rights
In connection with the merger, under Indiana law, shareholders of ANB
do not have the statutory right to dissent and require appraisal of their shares
of ANB common stock.
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Resale of Old National Common Stock by Affiliates of ANB
Shares of Old National common stock to be issued to ANB shareholders in
the merger have been registered under the Securities Act of 1933, as amended.
Shares of Old National common stock issued in the merger may be traded freely
and without restriction by those shareholders not considered to be affiliates
(as that term is defined by the Securities Act) of ANB. However, shares by any
person who is an affiliate of ANB at the time of the merger is submitted for a
vote at the special meeting will, under existing law, require:
- the further registration under the Securities Act of the shares of
Old National common stock to be transferred;
- compliance with Rule 145 promulgated under the Securities Act,
which permits limited sales in certain circumstances; or
- the availability of another exemption from registration.
An "affiliate" of ANB is a person who directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, ANB. These restrictions are expected to apply to the directors and
executive officers of ANB and the holders of 10% or more of the ANB common
stock. The same restrictions apply to certain relatives or the spouse of those
persons and any trusts, estates, corporations or other entities in which those
persons have a 10% or greater beneficial or equity interest. Old National will
give stop transfer instructions to the transfer agent with respect to the shares
of ANB common stock to be received by persons subject to these restrictions, and
the certificates for their shares may contain a legend indicating the resale
restrictions.
SEC guidelines regarding qualifying for the pooling of interests method
of accounting also limit sales of shares of the acquiring and acquired company
by affiliates of either company in a business combination. SEC guidelines
indicate that the pooling of interests method of accounting will generally not
be challenged on the basis of sales by affiliates of the acquiring or acquired
company if those affiliates do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection with
a merger during the period beginning 30 days before the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
Each affiliate of ANB delivered to Old National on July 29, 1999, a
written agreement to the effect that the affiliate (1) will not sell, pledge,
transfer, dispose of or otherwise reduce the affiliate's market risk with
respect to the shares of ANB common stock directly or indirectly owned or held
by such person during the thirty day period prior to the effective time of the
merger, and (2) will not sell, pledge, transfer or otherwise dispose of or
reduce the affiliate's market risk with respect to the shares of Old
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National common stock to be received by such person pursuant to the merger
agreement (i) until such time as financial results covering at least thirty days
of combined operations of ANB and Old National have been published within the
meaning of Section 201.01 of the Securities and Exchange Commission's
Codification of Financial Reporting Policies and (ii) unless done pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
145 or another exemption from the registration requirements under the Securities
Act. The merger agreement requires that any person who becomes an affiliate of
ANB after July 29, 1999 deliver a similar agreement to Old National, and that
all persons who have delivered these agreements confirm, at the effective time
of the merger, that they have complied with the terms of the agreements.
This is only a general statement of certain restrictions regarding the
sale or transfer of the shares of Old National common stock to be issued in the
merger. Therefore, those shareholders of ANB who may be deemed to be affiliates
of ANB should consult with their legal counsel regarding the resale restrictions
that may apply to them.
Conditions to the Completion of the Merger
ANB's and Old National's obligations to complete the merger are subject
to the satisfaction of the following conditions at or prior to the effective
time of the merger:
- The merger agreement has been approved by the affirmative vote of
the holders of at least a majority of the outstanding shares of
ANB common stock;
- Old National and ANB have received all regulatory approvals
required for the merger; o Old National and ANB have received the
opinions of their respective counsel dated as of the effective
time of the merger, with respect to the fact that the merger will
be treated as tax-free for U.S. federal income tax purposes;
- The registration statement of which this document is a part is
effective and no stop order suspending its effectiveness is issued
or threatened;
- Old National and ANB have received certain officers' certificates
and other closing documents;
- The representations and warranties contained in the merger
agreement are accurate at the effective time of the merger; and
- Certain covenants set forth in the merger agreement have been
fulfilled.
Old National's obligation to complete the merger also is subject to the
condition that it has received an opinion from its independent auditors dated as
of the effective time of the merger, to the effect that the merger will qualify
for pooling of interests accounting treatment.
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The conditions to consummation of the merger, which are more fully
enumerated in the merger agreement, are requirements subject to waiver by the
party entitled to the benefit of such conditions, as set forth in the merger
agreement. See "Proposed Merger - Resale of Old National Common Stock by
Affiliates of ANB," "- Regulatory Approvals Required for the Merger", "Federal
Income Tax Consequences" and Appendix A.
Termination of the Merger Agreement
The merger agreement contains provisions allowing Old National and ANB
to terminate the merger agreement and the merger for various reasons. The merger
may be terminated by Old National or ANB before or after the shareholders of ANB
have approved the merger if one of the events which gives a party the right to
terminate occurs. The merger agreement may be terminated:
- by the mutual, written consent of the Board of Directors of Old
National and ANB;
- by either Old National or ANB if the merger has not been completed
by March 31, 2000;
- by either the Old National Board or the ANB Board if there has
been a breach of any representation or warranty contained in the
merger agreement by ANB, in the case of termination by Old
National, or by Old National, in the case of termination by ANB,
and the breach has not been cured within 30 days after written
notice to the breaching party of the breach;
- by either the Old National Board or the ANB Board if there has
been a breach of any of the covenants or agreements contained in
the merger agreement by ANB, in the case of termination by Old
National, or by Old National, in the case of termination by ANB,
and (1) the breach has not been cured within 30 days written
notice to the breach party of the breach; and (2) the breach will
be likely, individually or in the aggregate with other breaches,
to result in a material adverse effect;
- by either Old National or ANB if the terminating party reasonably
determines that the merger has become impracticable because of (1)
the commencement or threat of any claim or litigation against Old
National, ANB, any subsidiary of Old National or ANB, or any
director or officer of any of these companies relating to the
merger or merger agreement, if Old National is the terminating
party or (2) the commencement, a threat of any material claim,
litigation or proceeding against Old National which relates to the
merger or merger agreement or which is likely to have a material
adverse effect on Old National, if the terminating party is ANB;
or
- by either Old National or ANB if the shareholders of ANB do not
approve the merger and the merger agreement and ANB has satisfied
its obligation to obtain shareholder approval.
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Additionally, Old National may terminate the merger if:
- the merger will not qualify for pooling of interests accounting
treatment; or
- there has been a material adverse change in the business, assets,
capitalization, financial condition or results of operations of
ANB and its subsidiaries (considered as a whole) as of the
effective time of the merger compared to that in existence as of
July 29, 1999 (the date of the merger agreement) other than
changes that occur as a result of changes in banking laws,
accounting principles, actions approved by Old National, changes
such as interest rates that affect the banking industry generally
and changes and charges that are a result of the merger.
Further, ANB may terminate the merger if:
- there has been a material adverse change in the financial
condition, results of operations, business, assets or
capitalization of Old National on a consolidated basis as of the
effective time as compared to that in existence on March 31, 1999
other than changes that occur as a result of changes in banking
laws, accounting principles, changes such as interest rates that
affect the banking industry generally and changes and charges that
are a result of the merger;
- prior to approval of the shareholders of ANB of the merger,
without breaching its covenant relating to negotiations with other
potential acquirors, ANB enters into a definitive agreement with a
third party that provides for an acquisition of ANB or a
subsidiary of ANB on terms determined in good faith by the ANB
Board to be more favorable to the shareholders of ANB than the
merger with Old National and that the ANB Board has determined
that to proceed with the merger with Old National would violate
their fiduciary duties to ANB's shareholders; or
- at any time during the five-day period beginning on the date on
which the last required regulatory approval is obtained, both of
the following conditions are satisfied:
(1) the number obtained by dividing the average of the closing
price of a share of Old National common stock on the Nasdaq
National Market System for the 20 consecutive trading days
ending on the day prior to the day the last required
regulatory approval is obtained by $28.51 (the "Old National
Ratio") is less than 0.80; and
(2) the Old National Ratio is less than a number obtained by
dividing two index numbers derived from the Nasdaq Bank Index
as reported in the Bloomberg News Service ("the Index
Ratio"). The Index Ratio is calculated by dividing the
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average of the index value of the Nasdaq Bank Index for the
20 consecutive trading days ending on the trading day prior
to the day the last regulatory approval is obtained by $28.51
and then subtracting 0.15.
If ANB elects to terminate the merger for this reason, it
must give written notice to Old National of its desire to
terminate the merger within a five day period, which begins
on the day the last regulatory approval is received. After
Old National receives the notice of termination, Old National
has five days to determine, at its option, to increase the
consideration to be received by ANB shareholders by adjusting
the exchange ratio of 1.3125. The exchange ratio would be
adjusted to equal the lesser of:
(a) a number obtained by dividing the product of $28.51, 0.80
and the exchange ratio by the average of the closing
price of a share of Old National common stock on the
Nasdaq National Market System during the period of 20
consecutive trading days ending on the day before the day
the last regulatory approval is obtained; and
(b) a number obtained by dividing the product of the Index
Ratio by the exchange ratio (as then in effect) by the
Old National Ratio.
If Old National elects to adjust the exchange ratio, it must
give ANB prompt notice of this election and of the revised
exchange ratio.
Assuming the last regulatory approval was received on the
date of this document, the average of the closing price of a
share of Old National common stock for the above calculation
would be $________. The Old National Ratio would equal
$________ ($________ divided by $________). As a result of
the Old National Ratio being less than .80, ANB would not
have the right to terminate the merger agreement on the basis
of the price of Old National's common stock.
Upon termination for any of these reasons, the merger agreement will be of no
further force or effect.
Restrictions Affecting ANB
The merger agreement contains a number of restrictions regarding the
conduct of business of ANB until the merger is completed. Among other items, ANB
or any subsidiary of ANB may not, without the prior written consent of Old
National:
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- change its capital stock accounts, except for the ANB's Dividend
Reinvestment and Stock Purchase Plan and the issuance of up to
391,624 shares of ANB common stock under the 1996 Directors' Stock
Option Plan, ANB Corporation Stock Option Plan and ANB Corporation
1995 Stock Option Plan;
- authorize any additional class of stock or issue securities other
than or in addition to the securities which were issued and
outstanding as of the date of the merger agreement;
- distribute or pay any dividends or make any other distributions to
its shareholders except that (1) American National Bank and Trust
Company of Muncie, Peoples Loan and Trust Bank, Farmers State Bank
of Union City, Ohio and American National Trust and Investment
Management Company may pay cash dividends to ANB in the ordinary
course of business and to provide funds for ANB's dividends to its
shareholders; and (2) ANB may pay a quarterly cash dividend of no
more than $0.19 per share for any quarter prior to the quarter in
which the merger is completed; provided that no dividend may be
paid for the quarterly period in which the merger is completed,
if, during this quarter, ANB shareholders will be entitled to
receive dividends on their shares of Old National common stock
received pursuant to the merger;
- redeem any of its outstanding shares of common stock;
- merge, consolidate or sell its assets or securities to any other
person or entity;
- purchase any assets or securities or assume any liabilities of
another bank, bank holding company or other entity, except in the
ordinary course of business; o make any loan or commitment to lend
money or accept any deposit except in accordance with existing
banking practices;
- amend or restate its Articles of Incorporation or By-Laws or the
Articles of Incorporation or By-Laws of any of its subsidiaries;
- open, close or alter any of its offices or facilities;
- fail to maintain the reserve for loan and lease losses of its
subsidiaries financial institutions;
- elect or appoint any new executive officers or directors of ANB or
any of its subsidiaries;
- hire or employ additional employees of ANB or any subsidiary,
except those which are reasonably necessary for the proper
operation of their businesses; or
- negotiate or discuss with third parties a possible sale, merger or
combination of ANB, unless the failure to do so would be breach of
the fiduciary duties of the ANB Board.
This discussion of the restrictions imposed by the merger agreement is not
intended to be exhaustive, but includes the material restrictions imposed on
ANB. Please refer to Appendix A for a complete listing of the restrictions.
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Regulatory Approvals Required for the Merger
Old National and ANB have agreed to use their best efforts to obtain
all regulatory approvals required to complete the transactions contemplated in
the merger agreement. The merger requires the prior approval of the Board of
Governors of the Federal Reserve System ("Federal Reserve"), the Indiana
Department of Financial Institutions and the Ohio Division of Financial
Institutions. The merger cannot be completed without these approvals. It is
possible we may not obtain the required regulatory approvals and, if we do, we
do not know when the regulators will give approvals.
Approval of the merger by the Federal Reserve and the state regulators
is not to be interpreted as the opinion of the regulatory authorities that the
merger is favorable to the shareholders of ANB from a financial point of view or
that the regulatory authorities have considered the adequacy of the terms of the
merger. An approval by the Federal Reserve or a state regulatory agency in no
way constitutes an endorsement or a recommendation of the merger by such
regulatory authority.
- FEDERAL RESERVE
The merger is subject to approval by the Federal Reserve. Old National
has filed the required application and notification with the Federal Reserve for
approval of the merger. Assuming the Federal Reserve approves the merger, Old
National and ANB may not complete the merger until 30 days after that approval.
During that time, the Department of Justice may challenge the merger on
antitrust grounds. With the approval of the Federal Reserve and the Department
of Justice, the waiting period may be reduced to no fewer than 15 days. The
commencement of an antitrust action by the Department of Justice would stay the
effectiveness of Federal Reserve approval of the merger, unless a court
specifically orders otherwise.
The Federal Reserve is prohibited from approving any transaction under
the applicable statutes that (1) would result in a monopoly, (2) would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any party of the United States, or (3) may
have the effect in any section of the Unites States of substantially lessening
competition, tending to create a monopoly or resulting in a restraint of trade,
unless it finds that the anti-competitive effects of the transaction are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served.
In reviewing a transaction under the applicable statutes, the Federal
Reserve will consider the financial and managerial resources of the companies
and their subsidiary banks and the convenience and needs of the communities to
be served. As part of, or in addition to, consideration of these facts, Old
National and ANB anticipate that the Federal Reserve will consider the
regulatory status of Old National
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<PAGE> 46
and ANB, current and projected economic conditions in the areas of the
Midwestern United States where Old National and ANB operate, and the overall
capital and safety and soundness standards established by the Federal Deposit
Insurance Corporation Improvement Act of 1991 (the "FDICIA") and the regulations
promulgated under the FDICIA.
Furthermore, the Federal Reserve will assess the degree to which Old
National and ANB and their subsidiaries have taken appropriate steps to assure
that electronic data processing systems and those of their vendors are year 2000
compliant. Additional information about Old National's and ANB's year 2000
compliance efforts to date may be found in each company's Annual Report on Form
10-K for the year ended December 31, 1998. See "Where You Can Find More
Information."
Under the Community Reinvestment Act of 1977, as amended (the "CRA"),
the Federal Reserve must take into account the record of performance of each Old
National and ANB in meeting the credit needs of the entire community, including
low and moderate-income neighborhoods, served by each company and their
subsidiaries. Each of Old National's and ANB's subsidiary depository
institutions has either an outstanding or satisfactory CRA rating with the
appropriate federal regulator. None of the subsidiary banks of Old National or
ANB received any negative comments from its respective federal regulator in its
last CRA examination relating to those ratings that were material and remain
unresolved.
The BHC Act and Federal Reserve regulations require publication or
notice of, and the opportunity for public comment on, the application submitted
by Old National for approval of the merger, and authorize the Federal Reserve to
hold a public meeting in connection with the application if the Federal Reserve
determines that a meeting would be appropriate. Any meeting or comments provided
by third parties could prolong the period during which the application is
subject to review by the Federal Reserve.
Old National's rights to exercise its options under the option
agreement are also subject to the prior approval of the Federal Reserve, to the
extent that the exercise of the options under the option agreement would result
in Old National owning more than 5% of the outstanding shares of ANB common
stock. In considering whether to approve Old National's right to exercise its
option, including its right to purchase more than 5% of the outstanding shares
of ANB common stock, the Federal Reserve would generally apply the same
statutory criteria it will apply to its consideration of the merger.
- INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS
The merger requires the approval of the Indiana Department of Financial
institutions ("DFI") under Chapter 28-2-14 of the Indiana Financial Institutions
Act. In determining whether to approve the merger, the DFI will consider, among
other factors, whether the merger will jeopardize the interests of
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depositors, creditors and the public, whether Old National proposes to provide
adequate services in the communities served by ANB and whether the banks already
controlled by Old National are operated in a safe, sound and prudent manner. Old
National has filed the appropriate application with DFI.
- OHIO DIVISION OF FINANCIAL INSTITUTIONS
The merger also requires the approval of the Ohio Division of Financial
Institutions pursuant to Section 1115.06 of the Ohio Revised Code. The Ohio
Division of Financial Institutiones will consider, among other factors, whether
the merger would result in a monopoly in any of the markets served by ANB in
Ohio and whether the financial condition of Old National might jeopardize the
financial stability of ANB, in determining whether to approve the merger. Old
National has filed a copy of the Federal Reserve notice with the Ohio DFI in
satisfaction of its application requirements.
Accounting Treatment for the Merger
Old National and ANB anticipate that the merger will be accounted for
as a pooling of interests transaction under GAAP. Under this method of
accounting, shareholders of Old National and ANB will be deemed to have combined
their existing voting common stock interests by virtue of the exchange of shares
of ANB common stock for shares of Old National common stock. Accordingly, the
book value of the assets, liabilities and shareholders' equity of each of ANB,
as reported on its consolidated balance sheet, will be carried over to the
balance sheet of Old National and no goodwill will be created. The parties have
prepared the unaudited, pro forma financial information contained in this
document using the pooling of interests accounting method to account for the
merger. See "Old National Bancorp Pro Forma Condensed Combined Financial
Information".
Effective Time
The merger will become effective at the close of business on the day
and at the time specified in the Articles of Merger of ANB with and into Old
National as filed with the Indiana Secretary of State. The effective time of the
merger will occur on the later of (1) January 31, 2000 or (2) the last business
day of the month following (a) the fulfillment of all conditions precedent to
the merger set forth in the merger agreement and (b) the expiration of all
waiting periods in connection with the bank regulatory applications filed for
approval of the merger, unless, in each case, otherwise mutually agreed to by
Old National and ANB.
Old National and ANB currently anticipate that merger will be
consummated in February, 2000. However, completion of the merger could be
delayed if there is a delay in obtaining the required regulatory approvals or in
satisfying other conditions to the merger.
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Management, Personnel and Employee Benefits After the Merger
Old National will be the surviving corporation in the merger and, upon
consummation of the merger, the separate corporate existence of ANB will cease.
Consequently, the directors and officers of ANB will no longer serve in such
capacities after the effective time of the merger, except Kelly Stanley will
become a director of Old National.
American National Bank, Peoples Bank, Farmers State Bank and American
National Trust will become wholly-owned subsidiaries of Old National. ANB
Financial Planning will remain a wholly-owned subsidiary of American National
Bank. The Boards of Directors and officers of all of ANB's subsidiaries serving
at the effective time of the merger will continue as the Boards of Directors and
officers of the respective subsidiary after the effective time of the merger.
Following the effective time of the merger, Old National, as the sole
shareholder of each of the subsidiaries, will have the ability to elect the
Boards of Directors and officers of the subsidiaries. The current officers of
the subsidiaries of ANB will continue in their respective positions after the
merger, until the Board of Directors of each of the subsidiaries determines
otherwise. Additionally, Old National has agreed to honor and abide by the terms
of the employment agreements of ANB or its subsidiaries, which were in effect as
of the date of the merger agreement.
Those persons who are full-time officers or employees of the
subsidiaries of ANB as of the effective time of the merger, provided that these
persons continue as full-time officers or employees of the former subsidiaries
of ANB or any other subsidiary of Old National after the effective time of the
merger, will receive substantially the same employee benefits on substantially
the same terms and conditions that Old National may offer to similarly situated
officers and employees of its banking subsidiaries from time to time. In
addition, years of service of an employee of ANB or any of its subsidiaries
prior to the effective time of the merger will be credited to each such employee
for purposes of eligibility under Old National's employee welfare benefit plans
and for purposes of eligibility and vesting, but not for accrual or
contributions, under the Old National Employees' Retirement Plan ("Old National
Pension Plan"), the Old National Employees' Savings and Profit Sharing Plan
("Old National Profit Sharing Plan"), and the Old National Employee Stock
Ownership Plan ("Old National ESOP").
Those officers and employees of ANB or any of its subsidiaries who
otherwise meet the eligibility requirements of the Old National Pension Plan,
Old National Profit Sharing Plan and the Old National ESOP, based upon their age
and years of service to ANB or any of its subsidiaries, will become participants
under the Old National Pension Plan on the January 1st which coincides with or
next follows the effective time of the merger, and will become participants
under the Old National Profit Sharing Plan and the Old National ESOP on the
first day of the calendar month which coincides with or next follows the
effective time of the merger. Those officers and employees who do not meet the
eligibility
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requirements of the Old National Pension Plan, Old National Profit Sharing Plan
or the Old National ESOP on such date will become participants in these plans on
the on the first "plan entry date" (as defined in the Old National Pension Plan,
the Old National Profit Sharing Plan or the Old National ESOP, as the case may
be) which coincides with or next follows the date on which such eligibility
requirements are satisfied.
The ANB Corporation Savings and Incentive Plan ("ANB 401(k)") will be
merged with the Old National Profit Sharing Plan. All account balances
maintained under the ANB 401(k) Plan will become fully vested on the day on
which the 401(k) Plan merger occurs. Until such 401(k) Plans are merged, ANB and
its subsidiaries may continue to make contributions to the ANB 401(k) Plan so
long as the contributions are in comparable amounts to past contributions to
such plan.
The ANB Corporation Employee's Pension Plan will be merged with the Old
National Pension Plan as of the January 1 or July 1 that coincides with or next
follows the effective time of the merger, or as soon as feasible after these
dates. All benefits accrued under the ANB Pension Plan will become fully vested
on the day on which the plan merger occurs. Until the date the pension plans are
merged, ANB and its subsidiaries will contribute to the ANB Pension Plan at
least the amounts necessary to prevent an accumulated funding deficiency, within
the meaning of the Internal Revenue Code.
The ANB Corporation Long Term Disability Plan will be terminated as of
the effective time of the merger or as soon as administratively feasible after
the effective time. The termination will not affect the benefits payable to
employees entitled to disability benefits under the plan.
The ANB Corporation Group Health Plan will be terminated as of the last
day of the month in which the effective time of the merger occurs. Through the
date of the termination of the Group Health Plan, ANB and it subsidiaries will
continue to fund all expenses of the plan attributable to claims incurred on or
prior to the date the Group Health Plan terminates. The ANB Corporation Sec. 125
Plan ("ANB Cafeteria Plan") will be terminated on the same day the ANB
Corporation Group Health Plan is terminated. Until the date the ANB Cafeteria
Plan terminates, ANB and its subsidiaries will continue to contribute to the
plan the pre-tax amounts which the plan participants elect to defer from
compensation in order to pay his or her portion of the cost of coverage under
the ANB's Group Health Plan.
The ANB Corporation Supplemental Executive Retirement Plan ("ANB SERP")
will be terminated as of the effective time of the merger. The accumulated
benefit obligations in the ANB SERP will be transferred to and become benefit
obligations under the Old National Non-Qualified Defined Contribution Plan for
Executive Employees of Old National.
28
<PAGE> 50
The ANB Corporation Group Term Life Insurance Plan will be terminated
as of the first day of the first month following the effective time of the
merger or as soon as administratively feasible after the effective time. ANB and
its subsidiaries will continue to pay the insurance premiums necessary to
continue the plan's death benefits until the plan is terminated.
The ANB Corporation Directors' Deferred Compensation Plan will be
merged with Old National's Directors' Deferred Compensation Plan as of the
effective time of the merger or as administratively feasible thereafter. Until
the plans are merged, ANB and its subsidiaries may continue to allow plan
participants to elect to defer all or a portion of the director fees he or she
would receive and to credit the fees to the director's individual account under
the plan.
The Stock Investment Plan of ANB will remain in effect and continue to
be funded by employee and employer contributions through the effective time of
the merger. As of the effective time of the merger, the shares of ANB common
stock owned by each participant will be converted into whole shares of Old
National common stock in the same manner as outstanding shares of ANB common
stock held outside the plan by application of the exchange ratio. Fractional
share interests resulting from the conversion will be paid in cash. The
administrator of the ANB Stock Investment Plan will transfer the shares of Old
National common stock held on behalf of each participant in the plan to the
administrator of the Old National Direct Stock Purchase Plan and Dividend
Reinvestment Plan. The converted shares will be held, administered and
distributed or surrendered pursuant to the terms of the Old National Direct
Stock Purchase Plan. However, the ANB participants' distribution rights cannot
be materially adversely affected by the transfer of the converted shares to the
Old National Plan.
The ANB Corporation Severance Policy will be terminated as of the
effective time of the merger. Individuals covered by the severance policy on the
date of its termination will receive a severance benefit, if within twelve
months after the effective time of the merger (a) his or her employment is
terminated involuntarily without cause, (b) his or her compensation is
materially reduced, or (c) he or she is assigned duties, without his or her
consent, that are materially inconsistent with his or her duties prior to the
date of the merger agreement. The individual's severance benefit will be a
salary continuation, which will be the greater of (a) the amount the individual
would have received under the terminated ANB Corporation Severance Policy had
the policy not been terminated, or (b) the amount the individual would received
under the Old National Severance Policy, if any, applicable to the individual.
Employment Agreement
James R. Schrecongost, Vice Chairman, President and CEO of ANB, entered
into a two-year employment agreement with Old National which becomes effective
when the merger is completed. This employment agreement with Old National
terminates Mr. Schrecongost's current employment agreement
29
<PAGE> 51
with ANB at the closing of the merger without any further payments or
obligations thereunder. After the effective time of the merger, Mr. Schrecongost
will be employed as the Chairman of Old National Trust Company; Old National
Trust Company-Illinois; Old National Trust Company-Kentucky; and American
National Trust and Investment Management Company, with an initial annual base
salary of $255,000. Mr. Schrecongost also will serve as a member of the
Chairman's Committee of Old National while employed by Old National.
When the merger is completed, Old National will pay Mr. Schrecongost a
signing bonus of $875,000. Additionally, Old National will grant to Mr.
Schrecongost executive performance awards, stock options, stock appreciation
rights, bonuses and other incentive grants at least in equal amounts and
substantially the same as those awarded to other executives of Old National
during the term of Mr. Schrecongost's employment agreement.
In addition to this compensation, if Mr. Schrecongost (1) remains
employed by Old National until the expiration of the employment agreement, (2)
is terminated by Old National without "cause" (as defined in the employment
agreement) during the term of the agreement, or (3) Mr. Schrecongost terminates
his employment for any reason after the first anniversary of the agreement, Old
National will pay Mr. Schrecongost a retention bonus of $65,000. However, if Old
National terminates Mr. Schrecongost's employment for "cause" during the first
year of the employment agreement, Mr. Schrecongost is not entitled to receive
the retention bonus.
If Old National terminates Mr. Schrecongost's employment with Old
National, with or without cause, Old National must pay to Mr. Schrecongost,
among other items, any unpaid portion of his base salary through the term of the
agreement and a single lump sum payment of the amounts he is entitled to receive
under Old National's Short Term Incentive Plan that are earned but unpaid for
the year preceding termination and for the year during which termination occur.
Additionally, Old National must cause all of Mr. Schrecongost's incentive
compensation awards to be nonforfeitable and vested.
Under the terms of the employment agreement, Mr. Schrecongost agrees
not solicit any of Old National's customers or employees for a term of one year
after his employment with Old National ends or the expiration of the term of the
employment agreement. Additionally, Mr. Schrecongost agrees not to compete with
Old National or be employed by Old National's competitors within Indiana and the
counties in other states in which ANB has offices. This restriction is for a
period of one year after Mr. Schrecongost's employment with Old National ends or
the term of the employment agreement ends.
30
<PAGE> 52
Agreement with Larry E. Thomas
Larry E. Thomas, CFO of ANB, entered into an agreement with Old
National which becomes effective when the merger is completed. Mr. Thomas is to
continue employment for a period of 90 days following the closing of the merger
and Old National will pay him at his current rate of salary. This agreement
also provides that Old National will pay to Mr. Thomas $488,219 in a lump sum in
satisfaction of the amounts owed under his current employment agreement with ANB
due to the change of control of ANB resulting from the merger. Additionally, Old
National will pay Mr. Thomas cash in an amount necessary to pay for the income
taxes associated with the transfer to him of his split-dollar life insurance
plan.
Stock Option Agreement
GENERAL. At the time of the execution of the merger agreement, ANB
entered into a stock option agreement which ANB granted Old National an
irrevocable option to purchase from ANB up to 1,083,753 shares of ANB common
stock or a lesser or greater amount of shares that is equal to 19.9% of the
outstanding ANB common stock at the time the option is exercised, subject to
certain adjustments. The exercise price of the ANB option is $27.70 per share,
subject to certain adjustments. The following summary of aspects of the stock
option agreement, which presents its material terms and conditions, is not a
complete description of the terms and conditions of the stock option agreement
and is qualified in its entirety by reference to the stock option agreement,
which is attached to this document as Appendix B and is incorporated herein by
reference.
EXERCISE. The option becomes exercisable, in whole or in part and
subject to regulatory approval, only if one of the following "exercise events"
occurs or has occurred without the prior approval of Old National:
- ANB or any of its subsidiaries accepts a proposal from, regardless
of how conditional the proposal may be, or ANB or any of its
subsidiaries executes a letter of intent, agreement in principle or
other agreement (whether or not binding) with, any entity, person
or group other than Old National to:
1. acquire ANB by merger, consolidation, purchase of all or
substantially all of ANB's or any of its subsidiaries assets or
capital stock or any other similar transaction; or
2. make a tender or exchange offer for any shares of ANB common
stock or the capital stock of any of its subsidiaries.
- Any entity, person or group, other than Old National, acquires the
beneficial ownership of 15% or more of the shares of ANB common
stock or the capital stock of any of its subsidiaries, and if:
31
<PAGE> 53
1. the entity, person or group (a) has publicly announced its
opposition to the merger agreement or the merger or its
intention not to vote the shares of ANB common stock it owns in
favor of the merger agreement or merger and (b) has solicited
or indicated its intention to solicit proxies or votes against
the merger agreement or the merger; or
2. the entity, person or group has proposed, indicated an
intention to propose or entered into an agreement to merge,
consolidate or otherwise combine with ANB or any of its
subsidiaries.
Instead of exercising the option if any of the events listed above
occur, Old National may require ANB to pay it an amount equal to the difference
between the highest price paid or to be paid by any entity, person or group for
any share of ANB common stock (or the total amount of consideration paid for the
assets of ANB or any subsidiary of ANB divided by the number of shares of ANB
common stock outstanding) and Old National's purchase price for the shares
covered by the option agreement.
As of the date of this document, to the knowledge of Old National and
ANB, no event has occurred that would allow Old National to exercise its option.
REPURCHASE OF THE OPTION SHARES. The option agreement permits Old
National to require that ANB repurchase any shares issued to Old National under
the option agreement. The repurchase price is an amount which is equal to the
highest price paid or to be paid by any entity, person or group for any share of
ANB common stock in a transaction that triggers Old National's right to exercise
the option (or the total amount of consideration paid for the assets of ANB
divided by the number of shares of ANB common stock then outstanding) multiplied
by the total number of shares to be repurchased. Additionally, ANB must pay Old
National interest at the rate of 8% per annum from the date Old National
purchases shares under the option agreement through the date of the repurchase
of the shares.
If Old National has purchased any shares under the option agreement and
the merger agreement is terminated in accordance with its terms, ANB has the
right to purchase, and Old National must sell to ANB, all of the shares of ANB
purchased by Old National pursuant to the option agreement. The purchase price
for each share held by Old National is computed in the same manner as if Old
National required ANB to repurchase shares pursuant to the option agreement.
EXPIRATION OF THE OPTION. Old National's ability to purchase shares of
ANB common stock under the option agreement automatically expires:
- at the effective time of the merger with ANB;
- 12 months after the first occurrence of an exercise event listed
above; or
32
<PAGE> 54
- at the termination of the merger agreement prior to the occurrence
of an exercise event; however, if Old National terminates the
merger agreement in accordance with its terms, the option expires
12 months from the date of the termination of the merger agreement
if Old National is not in wilful and material breach of any
representation, warranty or covenant in the merger agreement.
ADJUSTMENT. The option agreement provides for the adjustment to the
number of shares and the exercise price of the option upon the occurrence of
various changes to the capital structure of ANB or certain events or
transactions.
REGULATORY MATTERS. Some rights and obligations of Old National as the
optionee and ANB as the issuer under the option agreement are subject to the
receipt of the necessary regulatory approvals. Old National must obtain the
approvals of the Federal Reserve Board and the Indiana Department of Financial
Institutions to acquire more than 5% of the outstanding shares of ANB common
stock.
REGISTRATION RIGHTS. If Old National exercises its option and desires
to sell any of the shares it purchased by exercise of the option, ANB must use
its reasonable best efforts to assist Old National in complying with the federal
and state laws that govern the sale of the shares no later than thirty days
after Old National requests assistance. If ANB receives an opinion from its
legal counsel that a registration statement is not required for the proposed
sale of the shares, it then is not required to provide Old National with
assistance in complying with the laws. Old National has additional rights if, at
any time after it has exercised its option for all of the shares covered by the
option agreement, ANB proposes to offer any of its equity securities for sale to
the public. If ANB makes a public offering, it must give notice to Old National
of its intent to do so. If Old National requests ANB to do so, ANB must include
in ANB's registration statement the number of shares of ANB common stock Old
National has acquired through exercise of the option which Old National
identifies in the request. However, ANB does not need to include these shares in
the registration statement if it receives an opinion of its legal counsel the
shares do not need to be included in the registration statement in order for Old
National to sell or distribute the shares.
Indemnification; Directors' and Officers' Liability Insurance
The merger agreement provides that Old National will indemnify, defend
and hold harmless any person who is or has been a director or officer of ANB or
was serving at the request of ANB as a director or officer of any corporation,
joint venture, trust employee benefit plan or other enterprise against all
losses arising out of any claim that is based upon or in any way relates to any
act or omission occurring at or prior to the effective time of the merger in the
person's capacity as a director or officer. Old National will indemnify officers
and directors of the subsidiaries of ANB following the effective time of
33
<PAGE> 55
the merger to the same extent it indemnifies other persons working in similar
capacities for Old National or its subsidiaries. The merger agreement also
provides that Old National will maintain in effect for not less than two years
from the effective time of the merger the directors' and officers' liability
insurance policies carried by ANB. However, Old National may substitute other
liability insurance policies if the policies provide substantially similar
coverage.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax
consequences to holders of ANB common stock who hold such stock as a "capital
asset" within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended. Special tax consequences may be applicable to particular classes of
taxpayers, such as financial institutions, insurance companies, tax-exempt
organizations, broker-dealers, traders in securities that elect to apply a
mark-to-market method of accounting, persons that hold ANB common stock as part
of a hedge, straddle or conversion transaction, persons who are not citizens or
residents of the United States and shareholders who acquired their shares of ANB
common stock through the exercise of an employee stock option or otherwise
received as compensation. The following represents general information only and
is based on the Code, its legislative history, existing and proposed regulations
thereunder, published rulings and decisions, all as currently in effect as of
the date hereof, and all of which are subject to change possibly with
retroactive effect. Tax considerations under state, local and foreign laws are
not addressed in this document.
Tax Opinion
Old National has requested the law firm of Krieg DeVault Alexander &
Capehart, LLP and ANB has requested the law firm of Sullivan & Cromwell to
render opinions that the merger to be effected pursuant to the merger agreement
constitutes a tax-free reorganization under the Code to each party thereto and
to the shareholders of ANB, except with respect to cash received by ANB's
shareholders for fractional share interests of Old National common stock.
In rendering their opinions, Krieg DeVault Alexander & Capehart, LLP
and Sullivan & Cromwell may require and rely upon representations contained in
letters received from Old National and ANB, and may rely on customary
assumptions of certain facts. Under the merger agreement, the obligations of
each of Old National and ANB to consummate the merger is conditioned upon the
receipt of an opinion of their respective counsel substantially to the effect as
set forth above. However, these legal opinions will not bind the Internal
Revenue Service, which could take a different view.
34
<PAGE> 56
Tax Consequences to Old National and ANB
Assuming the merger of ANB with and into Old National is consummated as
described in the merger agreement and constitutes a statutory merger under
Indiana law, then for United States federal income tax purposes, the merger of
ANB with and into Old National will constitute a tax-free reorganization. As a
result, Old National and ANB will recognize neither gain nor loss as a result of
the merger for federal income tax purposes.
Tax Consequences to ANB Shareholders
- ANB SHAREHOLDERS RECEIVING SOLELY OLD NATIONAL COMMON STOCK
An ANB shareholder who receives solely Old National common stock in
exchange for shares of ANB common stock will not recognize any gain or loss upon
such exchange for federal income tax purposes. See the later paragraph for a
discussion of the tax consequences of the receipt of cash in lieu of fractional
share interests of Old National common stock.
The aggregate adjusted tax basis of the shares of Old National common
stock received in the exchange (including fractional shares deemed received and
redeemed as described below) will be equal to the aggregate adjusted tax basis
of the shares of ANB common stock surrendered, and the holding period of the Old
National common stock (including fractional shares deemed received and redeemed
as described below) will include the holding period of such surrendered shares.
- CASH RECEIVED FOR FRACTIONAL SHARES
An ANB shareholder who receives cash for a fractional share interest of
Old National common stock will be treated as having received such fraction of a
share of Old National common stock and then as having received cash in
redemption of the fractional share interest, subject to the provisions of
Section 302 of the Code. That deemed redemption will be treated as a sale of the
fractional share, unless it is both "essentially equivalent to a dividend" and
is not "substantially disproportionate" with respect to the ANB shareholder. If
treated as a sale and not a dividend, the ANB shareholder will recognize capital
gain or loss equal to the difference between the amount of cash received and the
portion of the basis of the shares of ANB common stock allocable to the
fractional interest. This capital gain or loss will be long term gain or loss
if, as of the date of the merger, the holding period for the shares of ANB
common stock is greater than one year.
35
<PAGE> 57
- BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of cash to a person surrendering shares of ANB common stock
may be subject to information reporting and "backup" withholding at a rate of
31% of the cash payable, unless such person furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that the number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions. Any
amounts withheld from payments under the backup withholding rules will be
allowed as a refund or credit against federal income tax liability, provided the
required information is furnished to the Internal Revenue Service.
THE INTERNAL REVENUE SERVICE HAS NOT VERIFIED THE FEDERAL INCOME TAX
CONSEQUENCES DISCUSSION SET FORTH ABOVE. THE DISCUSSION IS INCLUDED FOR GENERAL
INFORMATION ONLY. OLD NATIONAL AND ANB URGE SHAREHOLDERS TO CONSULT WITH THEIR
TAX ADVISOR WITH RESPECT TO ALL TAX CONSEQUENCES OF THE MERGER TO THEM,
INCLUDING THE EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS AND ANY OTHER TAX
CONSEQUENCES.
COMPARATIVE PER SHARE DATA
Nature of Trading Market
- OLD NATIONAL
Shares of Old National common stock are traded in the over-the-counter
market and share prices are reported by the Nasdaq National Market System under
the symbol OLDB. On July 29, 1999, the business day immediately preceding the
public announcement of the merger, the closing price of Old National common
stock reported by the Nasdaq National Market System was $28.51 per share. On
_______________, 2000, the closing price of Old National common stock reported
by the Nasdaq National Market System was $_____ per share. The following table
sets forth, for the periods indicated, the high and low per share closing prices
of Old National common stock as reported by the Nasdaq National Market System.
The prices shown below have been adjusted for all stock splits and stock
dividends paid by Old National.
36
<PAGE> 58
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
HIGH LOW
---- ---
<S> <C> <C>
1997
----
First Quarter $ 21.74 $ 20.88
Second Quarter 25.63 21.59
Third Quarter 26.21 25.19
Fourth Quarter 28.65 25.63
1998
----
First Quarter $ 28.87 $ 27.22
Second Quarter 29.63 28.87
Third Quarter 33.70 28.91
Fourth Quarter 35.37 30.39
1999
----
First Quarter $ 35.00 $ 28.57
Second Quarter 33.57 28.57
Third Quarter 30.00 26.43
Fourth Quarter 32.08 27.50
</TABLE>
- ANB
Shares of ANB common stock also are traded in the over-the-counter
market and share prices are reported by the Nasdaq National Market System under
the symbol ANBC. On July 29, 1999, the closing price of ANB common stock
reported by the Nasdaq National Market System was $28.25. On _______________,
2000, the closing price of ANB common stock was $__________, as reported by the
Nasdaq National Market System. The table below sets forth, for the periods
indicated, the high and low per share closing prices of ANB common stock as
reported by the Nasdaq National Market System.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
HIGH LOW
---- ---
<S> <C> <C>
1997
----
First Quarter $ 19.75 18.50
Second Quarter 19.50 18.00
Third Quarter 21.88 19.50
Fourth Quarter 26.25 21.50
</TABLE>
37
<PAGE> 59
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
HIGH LOW
---- ---
<S> <C> <C>
1998
----
First Quarter $ 28.63 26.00
Second Quarter 29.00 27.88
Third Quarter 28.13 25.63
Fourth Quarter 25.75 22.50
1999
----
First Quarter $ 23.88 20.00
Second Quarter 23.13 19.44
Third Quarter 35.75 23.38
Fourth Quarter 40.75 34.19
</TABLE>
Dividends
The following table sets forth the per share cash dividends paid on
shares of Old National common stock and ANB common stock since January 1, 1997.
All dividends have been adjusted to give effect to their respective stock
dividends and stock splits (if any).
<TABLE>
<CAPTION>
OLD NATIONAL ANB
COMMON COMMON
STOCK (1) STOCK (2)
------------ ----------
<S> <C> <C>
1997
----
First Quarter $ 0.13 $ 0.15
Second Quarter 0.13 0.15
Third Quarter 0.13 0.17
Fourth Quarter 0.14 0.17
1998
----
First Quarter $ 0.13 $ 0.17
Second Quarter 0.14 0.17
Third Quarter 0.14 0.19
Fourth Quarter 0.14 0.19
</TABLE>
38
<PAGE> 60
<TABLE>
<CAPTION>
OLD NATIONAL ANB
COMMON COMMON
STOCK (1) STOCK (2)
------------ ----------
<S> <C> <C>
1999
----
First Quarter $ 0.15 $ 0.19
Second Quarter 0.16 0.19
Third Quarter 0.16 0.19
Fourth Quarter 0.16 0.19
</TABLE>
(1) The timing and amount of future dividends will depend upon earnings,
cash requirements, the financial condition of Old National and its
subsidiaries, applicable government regulations and other factors the
Old National Board considers relevant. The dividend policies are
subject to the discretion of the Old National Board. For certain
restrictions on the payment of dividends on shares of Old National
common stock, see "Comparison of Common Stock -- Dividend Rights."
(2) The merger agreement provides that ANB may continue to pay its
customary quarterly dividends of up to $0.19 per share. Certain
subsidiaries may pay cash dividends to ANB in the ordinary course of
business for payment of reasonable and necessary business and operating
expenses of ANB and to provide funds for ANB's dividends.
EXISTING AND PRO FORMA PER SHARE INFORMATION
The following table sets forth certain historical, pro forma and
equivalent information. The data is based on historical financial statements and
the pro forma financial information included on pages ___ through ____ and has
been restated to give effect to all stock dividends, including the 5% stock
dividend issued by Old National on January 28, 1999, the 5% stock dividend
declared by Old National on December 9, 1999 and a three-for-two stock split
paid on May 24, 1999. Equivalent per share data is calculated by multiplying the
pro forma Old National information by the exchange ratio of 1.3125 provided by
the merger agreement.
<TABLE>
<CAPTION>
As Reported
------------------------------------------------
Cash Book Value
Old National Net Income (1) Dividends at Period End
- ------------------------------------ ------------- ----------- -------------
<S> <C> <C> <C>
Nine months ended September 30, 1999 1.30 0.47 10.75
Year Ended December 31,
1998 1.54 0.55 10.86
1997 1.40 0.53 10.41
1996 1.25 0.50 9.77
</TABLE>
39
<PAGE> 61
<TABLE>
<CAPTION>
As Reported
-----------------------------------------------
Cash Book Value
ANB Net Income (1) Dividends at Period End
- ------------------------------------ ------------- ---------- -------------
<S> <C> <C> <C>
Nine months ended September 30, 1999 $ 1.15 0.57 13.41
Year ended December 31,
1998 1.57 0.72 13.04
1997 1.50 0.64 12.26
1996 1.31 0.55 11.30
</TABLE>
<TABLE>
<CAPTION>
Net Income (1)
------------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma (2) Equivalent(2) Pro Forma(3) Equivalent(3)
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Nine months ended September 30, 1999 $ 1.24 1.63 1.24 1.63
Year ended December 31,
1998 1.49 1.96 1.49 1.96
1997 1.37 1.80 1.37 1.80
1996 1.22 1.60 1.22 1.60
</TABLE>
<TABLE>
<CAPTION>
Cash Dividends
------------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma(2) Equivalent(2) Pro Forma(3) Equivalent(3)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Nine months ended September 30, 1999 $ 0.47 0.62 0.47 0.62
Year ended December 31,
1998 0.55 0.72 0.55 0.72
1997 0.53 0.70 0.53 0.70
1996 0.50 0.66 0.50 0.66
</TABLE>
<TABLE>
<CAPTION>
Shareholders' Equity
----------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma(2) Equivalent(2) Pro Forma(3) Equivalent(3)
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
As of September 30, 1999 $ 10.68 14.02 10.64 13.96
As of December 31, 1998 10.71 14.06 10.63 13.95
</TABLE>
40
<PAGE> 62
<TABLE>
<CAPTION>
Market Value of Common Stock
--------------------------------------
Old National ANB Equivalent
------------ --------------
<S> <C> <C>
As of July 29, 1999 (4) $ 28.63 37.58
</TABLE>
- -----------------------------------------------
(1) Only includes net income from continuing operations for Old National. Old
National's and ANB's basic earnings per share.
(2) Considers the pending merger with ANB. See "Pro Forma Condensed Combined
Financial Information."
(3) Considers the pending merger with ANB and the pending merger as of
September 30, 1999 with Heritage Financial Services, Inc. See "Pro Forma
Condensed Combined Financial Information."
(4) Represents the last business day prior to the public announcement of the
proposed merger of ANB and Old National.
41
<PAGE> 63
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The accompanying financial statements present a Pro Forma Condensed
Combined Balance Sheet of Old National as of September 30, 1999 and Pro Forma
Condensed Combined Statements of Income for the nine months ended September 30,
1999 and for the years ended December 31, 1998, 1997, and 1996.
The Pro Forma Condensed Combined Statements of Income for the nine
months ended September 30, 1999 and the years ended December 31, 1998, 1997 and
1996 are presented giving effect to the pending merger as of January 1 of each
of the years presented.
The pro forma information is based upon historical financial
statements. The assumptions give effect to the proposed merger under the pooling
of interests method of accounting. The information has been prepared in
accordance with the rules and regulations of the SEC and is provided for
comparative purposes only. The information does not purport to be indicative of
the results that actually would have occurred had the merger been effected on
January 1 of the years presented.
42
<PAGE> 64
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 1999
(Unaudited - Dollars in Thousands)
<TABLE>
<CAPTION>
ANB
ASSETS Old National Corporation Adjustments Pro Forma
- ------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Cash and due from banks.......................... $ 156,439 $ 27,104 $ 183,543
Money market investments......................... 11,917 5,877 17,794
Investment securities............................ 1,725,378 116,832 1,842,210
Loans............................................ 4,796,556 653,678 5,450,234
Reserve for loan losses.......................... (58,117) (5,532) (63,649)
Excess cost over assets acquired................. 14,077 11,220 25,297
Other intangibles 0 0 0
Premises and equipment........................... 90,880 13,601 104,481
Other assets..................................... 226,177 11,096 237,273
--------------- --------------- --------------- ---------------
$ 6,963,307 $ 833,876 $ 0 $ 7,797,183
=============== =============== =============== ===============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits......................................... $ 5,025,330 $ 676,642 $ 5,791,972
Medium term notes................................ 96,300 0 96,300
Subordinated debentures.......................... 17,808 0 17,808
Other borrowings................................. 1,220,824 77,991 1,298,815
Other liabilities................................ 88,110 5,668 93,778
--------------- --------------- --------------- ---------------
Total liabilities....................... 6,448,372 760,301 0 7,208,673
--------------- --------------- --------------- ---------------
Common stock..................................... 45,635 5,485 1,714(a) 52,834
Capital surplus.................................. 331,711 13,622 (1,714)(a) 343,619
Retained earnings................................ 154,632 55,097 209,729
Net unrealized gain.............................. (17,043) (629) (17,672)
--------------- --------------- --------------- ---------------
Total shareholders' equity.............. 514,935 73,575 0 588,510
--------------- --------------- --------------- ---------------
$ 6,963,307 $ 833,876 $ 0 $ 7,797,183
=============== =============== =============== ===============
Outstanding common shares........................ 47,917 55,116
=============== ===============
Shareholders' equity per share................... 10.75 10.68
=============== ===============
<CAPTION>
ASSETS Heritage Adjustments Pro Forma
- ------------------------------------------------- --------------- ---------------- ---------------
<S> <C> <C> <C>
Cash and due from banks.......................... $ 9,063 $ 192,606
Money market investments......................... 2,040 19,834
Investment securities............................ 27,649 1,869,859
Loans............................................ 182,777 5,633,011
Reserve for loan losses.......................... (2,650) (66,299)
Excess cost over assets acquired................. 16 25,313
Other intangibles 412 412
Premises and equipment........................... 11,187 115,668
Other assets..................................... 3,540 240,813
--------------- ---------------- ---------------
$ 234,034 $ 0 $ 8,031,217
=============== ================ ===============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits......................................... $ 198,861 $ 5,900,833
Medium term notes................................ 0 96,300
Subordinated debentures.......................... 0 17,808
Other borrowings................................. 13,701 1,312,516
Other liabilities................................ 2,533 96,311
--------------- ---------------- ---------------
Total liabilities....................... 215,095 0 7,423,768
--------------- ---------------- ---------------
Common stock..................................... 1,210 791(b) 54,835
Capital surplus.................................. 6,671 (791)(b) 349,499
Retained earnings................................ 11,305 221,034
Net unrealized gain.............................. (247) (17,919)
--------------- ---------------- ---------------
Total shareholders' equity.............. 18,939 0 607,449
--------------- ---------------- ---------------
$ 234,034 $ 0 $ 8,031,217
=============== ================ ===============
Outstanding common shares........................ 57,117
===============
Shareholders' equity per share................... 10.64
===============
</TABLE>
- -----------------------------------------------------
See "Notes to Pro Forma Condensed Combined financial Information."
43
<PAGE> 65
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
-------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Interest income ................................................. $362,574 $ 41,947 $404,521 $ 13,905 $418,426
Interest expense ................................................ 183,722 18,402 202,124 5,930 208,054
-------- -------- -------- -------- --------
Net interest income ............................................. 178,852 23,545 202,397 7,975 210,372
Provision for loan losses ....................................... 8,437 1,090 9,527 1,079 10,606
-------- -------- -------- -------- --------
Net interest income after provision for loan losses ............. 170,415 22,455 192,870 6,896 199,766
Noninterest income .............................................. 50,186 8,299 58,485 3,063 61,548
Noninterest expense ............................................. 134,696 20,941 155,637 6,464 162,101
-------- -------- -------- -------- --------
Income before income taxes ...................................... 85,905 9,813 95,718 3,495 99,213
Provision for income taxes ...................................... 23,057 3,568 26,625 1,209 27,834
-------- -------- -------- -------- --------
Net income from continuing operations ........................... 62,848 6,245 69,093 2,286 71,379
Discontinued operations ......................................... 3,483 0 3,483 0 3,483
-------- -------- -------- -------- --------
Net income ...................................................... $ 66,331 $ 6,245 $ 72,576 $ 2,286 $ 74,862
======== ======== ======== ======== ========
Net income from continuing operations per common share: (c)
Assuming no dilution ................................... $ 1.30 $ 1.24 $ 1.24
======== ======== ========
Assuming full dilution ................................. $ 1.26 $ 1.21 $ 1.21
======== ======== ========
Weighted average common shares outstanding: (c)
Assuming no dilution ................................... 48,393 55,526 57,450
======== ======== ========
Assuming full dilution ................................. 50,232 57,486 59,413
======== ======== ========
</TABLE>
See "Notes to Pro Forma Condensed Combined financial Information."
44
<PAGE> 66
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
-------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Interest income ................................................. $ 456,528 $ 50,174 $ 506,702 $ 16,813 $ 523,515
Interest expense ................................................ 231,614 22,665 254,279 7,411 261,690
--------- --------- --------- --------- ---------
Net interest income ............................................. 224,914 27,509 252,423 9,402 261,825
Provision for loan losses ....................................... 12,160 1,502 13,662 1,325 14,987
--------- --------- --------- --------- ---------
Net interest income after provision for loan losses ............. 212,754 26,007 238,761 8,077 246,838
Noninterest income .............................................. 58,891 10,282 69,173 3,952 73,125
Noninterest expense ............................................. 167,937 23,628 191,565 7,553 199,118
--------- --------- --------- --------- ---------
Income before income taxes ...................................... 103,708 12,661 116,369 4,476 120,845
Provision for income taxes ...................................... 29,573 4,205 33,778 1,624 35,402
--------- --------- --------- --------- ---------
Net income from continuing operations ........................... 74,135 8,456 82,591 2,852 85,443
Discontinued operations ......................................... (9,854) 0 (9,854) 0 (9,854)
--------- --------- --------- --------- ---------
Net income ...................................................... $ 64,281 $ 8,456 $ 72,737 $ 2,852 $ 75,589
========= ========= ========= ========= =========
Net income from continuing operations per common share: (c)
Assuming no dilution ................................... $ 1.54 $ 1.49 $ 1.49
========= ========= =========
Assuming full dilution ................................. $ 1.49 $ 1.45 $ 1.46
========= ========= =========
Weighted average common shares outstanding: (c)
Assuming no dilution ................................... 48,204 55,274 57,161
========= ========= =========
Assuming full dilution ................................. 50,373 57,594 59,489
========= ========= =========
</TABLE>
See "Notes to Pro Forma Condensed Combined financial Information."
45
<PAGE> 67
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Interest income .......................................... $ 435,038 $ 46,862 $ 481,900 $ 13,616 $ 495,516
Interest expense ......................................... 216,868 20,785 237,653 5,922 243,575
--------- --------- --------- --------- ---------
Net interest income ...................................... 218,170 26,077 244,247 7,694 251,941
Provision for loan losses ................................ 13,562 1,027 14,589 676 15,265
--------- --------- --------- --------- ---------
Net interest income after provision for loan losses ...... 204,608 25,050 229,658 7,018 236,676
Noninterest income ....................................... 51,104 7,944 59,048 3,476 62,524
Noninterest expense ...................................... 158,631 20,851 179,482 6,869 186,351
--------- --------- --------- --------- ---------
Income before income taxes ............................... 97,081 12,143 109,224 3,625 112,849
Provision for income taxes ............................... 28,998 4,102 33,100 1,323 34,423
--------- --------- --------- --------- ---------
Net income from continuing operations .................... 68,083 8,041 76,124 2,302 78,426
Discontinued operations .................................. (5,005) 0 (5,005) 0 (5,005)
--------- --------- --------- --------- ---------
Net income ............................................... $ 63,078 $ 8,041 $ 71,119 $ 2,302 $ 73,421
========= ========= ========= ========= =========
Net income from continuing operations per common share: (c)
Assuming no dilution.................... ........ $ 1.40 $ 1.37 $ 1.37
========= ========= =========
Assuming full dilution........................... $ 1.36 $ 1.33 $ 1.33
========= ========= =========
Weighted average common shares outstanding: (c)
Assuming no dilution............................. 48,488 55,510 57,343
========= ========= =========
Assuming full dilution........................... 51,135 58,290 60,143
========= ========= =========
</TABLE>
See "Notes to Pro Forma Condensed Combined financial Information."
46
<PAGE> 68
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
As Reported As Reported
------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Interest income .......................................... $405,669 $ 44,431 $450,100 $ 10,846 $460,946
Interest expense ......................................... 196,289 19,848 216,137 4,629 220,766
-------- -------- -------- -------- --------
Net interest income ...................................... 209,380 24,583 233,963 6,217 240,180
Provision for loan losses ................................ 11,082 1,156 12,238 485 12,723
-------- -------- -------- -------- --------
Net interest income after provision for loan losses ...... 198,298 23,427 221,725 5,732 227,457
Noninterest income ....................................... 47,402 7,362 54,764 3,372 58,136
Noninterest expense ...................................... 156,720 20,344 177,064 5,780 182,844
-------- -------- -------- -------- --------
Income before income taxes ............................... 88,980 10,445 99,425 3,324 102,749
Provision for income taxes ............................... 26,293 3,375 29,668 1,219 30,887
-------- -------- -------- -------- --------
Net income from continuing operations .................... 62,687 7,070 69,757 2,105 71,862
Discontinued operations .................................. 494 0 494 0 494
-------- -------- -------- -------- --------
Net income ............................................... $ 63,181 $ 7,070 $ 70,251 $ 2,105 $ 72,356
======== ======== ======== ======== ========
Net income from continuing operations per common share: (c)
Assuming no dilution.................... $ 1.25 $ 1.22 $ 1.22
======== ======== ========
Assuming full dilution.................. $ 1.22 $ 1.19 $ 1.19
======== ======== ========
Weighted average common shares outstanding: (c)
Assuming no dilution.................... 50,134 57,211 58,982
======== ======== ========
Assuming full dilution.................. 52,772 59,973 61,785
======== ======== ========
</TABLE>
See "Notes to Pro Forma Condensed Combined financial Information."
47
<PAGE> 69
OLD NATIONAL BANCORP
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) Exchange of 100% of ANB common stock for 7,198,671 shares of Old National
common stock.
(b) Exchange of 100% of Heritage Financial Services, Inc. common stock for
2,001,166 of Old National common stock.
(c) Net income per share on a fully diluted basis assumes the conversion of Old
National's convertible subordinated debentures.
48
<PAGE> 70
DESCRIPTION OF OLD NATIONAL
Overview
Old National is a bank holding company that operates 119 banking
offices and 174 ATM locations in Indiana, Illinois and Kentucky through its bank
subsidiaries. These banks provide a wide range of financial services, including:
- commercial, consumer and real estate loans;
- deposit products;
- issuing and servicing credit cards;
- leasing;
- letters of credit; and
- safe deposit facilities.
Old National also owns nonbank subsidiaries which provide additional
financial services incidental to its operations, including:
- securities brokerage services;
- fiduciary and trust services;
- investment services; and
- issuance and reinsurance of credit life, accident, health,
life, property and casualty insurance.
Old National was incorporated in 1982 in the State of Indiana. It began
its acquisition program in 1985 and has acquired 38 financial institutions since
that time. Old National continues to explore opportunities to acquire banks,
savings associations and nonbank companies and is currently reviewing and
analyzing potential acquisitions, as well as engaging in discussions or
negotiations concerning potential acquisitions. It is possible that none of
these discussions or negotiations will result in definitive agreements or
consummated acquisitions. Any acquisitions may be pending or completed prior to
the completion of the merger.
Old National's principal office is located at 420 Main Street,
Evansville, Indiana 47708. Its telephone number is (812) 464-1434.
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<PAGE> 71
Supervision and Regulation
As a bank holding company, Old National is subject to regulation,
supervision and examination by the Board of Governors of the Federal Reserve
System under the Bank Holding Company Act of 1956, as amended. For a discussion
of certain of the material elements of the regulatory framework applicable to
bank holding companies and their subsidiaries and certain specific information
relevant to Old National, see Old National's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 which is incorporated by referenced into
this document.
This regulatory framework is intended primarily for the protection of
depositors and the federal deposit insurance funds and not for the protection of
security holders or creditors. The various government rules, regulations and
requirements that apply to Old National impact its business and activities. A
change in applicable statutes, rules, regulations and requirements that apply to
Old National impact its business and activities may have a material effect on
Old National's business and earnings. In addition, Old National's business and
earnings are affected by general economic conditions, legislation and actions of
regulatory authorities.
Under policy of the Federal Reserve, a bank holding company is expected
to act as a source of financial strength for its bank subsidiaries and to commit
resources to support such banks. As a result, the Federal Reserve may require
Old National to commit resources to its bank subsidiaries.
On November 12, 1999, the President signed into law comprehensive
legislation that modernizes the financial services industry for the first time
in decades. The legislation permits bank holding companies to conduct
essentially unlimited securities and insurance activities, in addition to other
activities determined by the Federal Reserve to be related to financial
services. As a result, Old National would be able to underwrite and sell
securities and insurance. It would also be able to acquire, or be acquired by,
brokerage firms and insurance underwriters. Old National has not had an
opportunity to assess the impact of the legislation on its operations, but at
the present time does not anticipate significant changes in its products or
services.
Recent Developments
On September 22, 1999, Old National registered $200 million in capital
securities of wholly-owned business trusts. Following the effective date of the
registration statement related to those securities, Old National may begin
selling these securities.
50
<PAGE> 72
On December 9, 1999, Old National declared a 5% stock dividend to its
shareholders of record on January 7, 2000 and payable on January 28, 2000.
References to the exchange ratio contained in this document have been adjusted
from 1.25 to 1.3125 pursuant to the merger agreement to give effect to the stock
dividend and references to Old National's per share information have been
adjusted to give effect to the stock dividend.
On December 20, 1999, Old National announced that it had agreed to
acquire Permanent Bancorp and Permanent Bank, each located in Evansville,
Indiana, in a stock exchange for stock transaction valued at approximately $92
million. Permanent Bancorp has assets of approximately $500 million.
On December 31, 1999, Old National, through a subsidiary bank of Old
National, acquired Sycamore Agency, located in Terre Haute, Indiana, through a
share exchange valued at approximately $10.8 million. Sycamore operates a
general insurance agency with a focus on commercial property and casualty
business.
Incorporation of Certain Information by Reference
The foregoing information concerning Old National does not purport to
be complete. Certain information relating to the executive compensation, various
benefit plans (including stock option plans), voting securities, including the
principal holders of those securities, certain relationships and related
transactions and other matters as to Old National is incorporated by reference
from or set forth in Old National's Annual Report on Form 10-K for the year
ended December 31, 1998 and other documents filed by Old National and listed
under "Where You Can Find More Information" in this document, which are
specifically incorporated herein by reference. If you desire copies of any of
these documents, you may contact Old National at its address or telephone number
indicated under "Where You Can Find More Information."
DESCRIPTION OF ANB
Business
ANB is a multibank company with a trust company and three affiliate
banks located in Indiana and Ohio and engages in the business of commercial
banking and trust and asset management. ANB provides its commercial banking,
trust and asset management products and services through 33 affiliated offices
throughout northeastern Indiana and western Ohio. As of September 30, 1999, ANB
had consolidated assets of approximately $834 million. ANB conducts its business
through its financial
51
<PAGE> 73
institutions and trust subsidiaries, American National Bank and Trust, American
National Trust and Investment Management Company, Peoples Loan and Trust Bank
and Farmers State Bank. These subsidiaries provide a broad range of financial
services to their customers.
ANB's principal office is located at 120 West Charles Street, Muncie,
Indiana 47305. Its telephone number is (765) 747-7600.
Incorporation of Certain Information by Reference
The foregoing information concerning ANB does not purport to be
complete. Certain information relating to the executive compensation, various
benefit plans (including stock option plans), voting securities, including the
principal holders of those securities, certain relationships and related
transactions and other matters as to ANB is incorporated by reference from or
set forth in ANB's Annual Report on Form 10-K for the year ended December 31,
1998 and other documents filed by ANB and listed under "Where You Can Find More
Information" in this document, which are specifically incorporated herein by
reference. If you desire copies of any of these documents, you may contact ANB
at its address or telephone number indicated under "Where You Can Find More
Information."
COMPARISON OF COMMON STOCK
Following the merger, the rights of former ANB shareholders will be
governed by the laws of the State of Indiana, the state in which Old National is
incorporated, and by Old National's Articles of Incorporation, as amended and
Old National's By-Laws, as amended. The rights of the shareholders of ANB are
presently governed by the laws of the State of Indiana, the state in which ANB
is incorporated, and by ANB's Articles of Incorporation, as amended and By-Laws,
as amended. The rights of the shareholders of ANB differ in certain respects
from the rights they will have as Old National shareholders, including for
anti-takeover measures and the vote required for the amendment of significant
provisions of the articles of incorporation and for the approval of significant
corporate transactions. The following summary comparison of Old National common
stock and ANB common stock includes all material differences in the rights
accruing to holders of such shares but does not purport to be complete and is
qualified in its entirety by reference to Old National's and ANB's Articles of
Incorporation and their By-Laws.
52
<PAGE> 74
Authorized But Unissued Shares
- OLD NATIONAL
Old National's Articles of Incorporation authorize the issuance of
75,000,000 shares of Old National Common Stock, of which approximately 47.9
million shares were outstanding as of September 30, 1999. The remaining
authorized but unissued shares of common stock may be issued upon authorization
of the Board of Directors of Old National without prior shareholder approval.
Old National has 2,000,000 shares of preferred stock authorized. These shares
are available to be issued, without prior shareholder approval, in classes with
relative rights, privileges and preferences determined for each class by the
Board of Directors of Old National. No shares of preferred stock are presently
outstanding.
The Board of Directors of Old National has authorized a series of
preferred stock designated as Series A preferred stock. The Board of Directors
of Old National has designated 200,000 shares of Series A preferred stock in
connection with the shareholder rights plan of Old National. The Old National
Series A preferred stock may not be issued except upon exercise of certain
rights ("Rights") pursuant to such shareholder rights plan. No shares of Series
A preferred stock have been issued as of the date of this Proxy Statement. See
"Comparison of Common Stock -- Anti-Takeover Provisions -- Old National's
Shareholder Rights Plan" below.
As of September 30, 1999, Old National had approximately 500,000 shares
of Old National common sock reserved for issuance under Old National's Stock
Purchase and Discounted Dividend Reinvestment Plan and 1.4 million shares of its
common stock reserved for issuance upon conversion of its outstanding 8%
convertible subordinated debentures. Such debentures are convertible at any time
prior to maturity, unless previously redeemed, into shares of Old National
common stock at a conversion rate of 81.39 shares per $1,000 principal amount of
debentures (equivalent to a conversion price of approximately $12.29 per share),
subject to adjustment in certain events.
The issuance of additional shares of Old National common stock or the
issuance of Old National preferred stock may adversely affect the interests of
Old National shareholders.
- ANB
ANB's Articles of Incorporation authorizes the issuance of 20,000,000
shares of ANB common stock, of which 5,484,702 were issued and outstanding as of
September 30, 1999. ANB has 250,000 shares of preferred stock authorized. No
shares of preferred stock are presently outstanding. Following the merger, each
outstanding share of ANB common stock will convert to the right to receive
1.3125
53
<PAGE> 75
shares of Old National common stock, as adjusted for the 5% stock dividend
declared by Old National on December 9, 1999, and subject to further adjustment
for stock dividends and stock splits. See "Proposed Merger -- Conversion of ANB
Common Stock."
Preemptive Rights
As permitted by Indiana law, Old National's Articles of Incorporation
do not provide for preemptive rights to subscribe for any new or additional Old
National common stock or other securities. Preemptive rights may be granted to
Old National's shareholders if Old National's Articles of Incorporation are
amended accordingly. Under ANB's Articles of Incorporation, shareholders of ANB
do not have preemptive rights to subscribe for any new or additional ANB common
stock or other securities.
Dividend Rights
The holders of common stock of Old National and ANB are entitled to
dividends and other distributions when, as and if declared by their respective
boards of directors out of funds legally available therefor. Old National or ANB
may not pay a dividend if, after giving it effect, (1) Old National or ANB,
respectively, would not be able to pay its debts as they become due in the usual
course of business, or (2) Old National's or ANB's respective total assets would
be less than the sum of its total liabilities plus, unless Old National's or
ANB's respective Articles of Incorporation permitted otherwise, the amount that
would be needed to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
dividend if Old National or ANB respectively were to be dissolved at the time of
the dividend.
The amount of dividends, if any, that may be declared by Old National
in the future will necessarily depend upon many factors, including, without
limitation, future earnings, capital requirements, business conditions and
capital levels of subsidiaries (since Old National is primarily dependent upon
dividends paid by its subsidiaries for its revenues), the discretion of Old
National's Board of Directors and other factors that may be appropriate in
determining dividend policies.
Cash dividends paid to Old National by its Illinois-chartered affiliate
banks are limited by Illinois law to the bank's net profits then on hand, less
losses and statutorily-defined bad debts. Cash dividends paid to Old National by
its Kentucky-chartered affiliate banks are limited by Kentucky law to so much of
the net profits of the banks, after deducting all expenses, losses, bad or
suspended debts and interest and taxes accrued or due from the banks, as the
boards of directors of the banks deem expedient. In addition, the approval of
the Kentucky Commissioner of Banks is required if the total of all dividends
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<PAGE> 76
declared by a Kentucky bank in any calendar year exceeds the bank's net profit
for that year and the net retained profits from the preceding two years, less
any transfers to surplus or a fund for retirement of preferred stock or debt.
Old National's national affiliate banks and Indiana-chartered affiliate banks
may pay cash dividends on their common stock only out of adjusted retained net
profits for the year in which the dividend is paid and the two preceding years.
Cash dividends paid to ANB by Farmers State Bank, as an Ohio-chartered bank, are
limited by Ohio law to the undivided profits of the Farmers. However, prior to
the declaration of any dividend, the Bank must have made all required
allocations to reserves for losses or contingencies. In addition, the approval
of the Ohio Superintendent of Financial Institutions is required if the total
dividends declared by Farmers in any year exceeds the total of its net income
for that year combined with its retained net income of the preceding two years.
Dividends paid by Old National's affiliate banks will ordinarily be
restricted to a lesser amount than is legally permissible because of the need
for the banks to maintain adequate capital consistent with the capital adequacy
guidelines promulgated by the banks' principal federal regulatory authorities.
If a bank's capital levels are deemed inadequate by the regulatory authorities,
payment of dividends to its parent holding company may be prohibited without
prior regulatory approval. None of Old National's affiliate banks are currently
subject to such a restriction.
Voting Rights
The holders of the outstanding shares of Old National common stock and
ANB common stock are entitled to one vote per share on all matters presented for
shareholder vote. Shareholders of Old National and ANB do not have cumulative
voting rights in the election of directors. Under cumulative voting, the number
of shares a shareholder is entitled to vote is multiplied by the number of
directors to be elected to the Board, which number represents the number of
votes a shareholder may cast at such election. A shareholder may cast all his or
her votes for one candidate or distribute them among any two or more candidates.
The absence of cumulative voting rights in the election of directors may make it
more difficult for a minority shareholder to elect a nominee as a director.
Indiana law generally require that mergers, consolidations, sales,
leases, exchanges or other dispositions of all or substantially all of the
assets of a corporation be approved by the affirmative vote of a majority of the
issued and outstanding shares entitled to vote at the shareholders meeting,
subject in each case to provisions in the corporation's articles of
incorporation requiring a higher percentage vote for certain transactions. Old
National's Articles of Incorporation and ANB's Articles of Incorporation provide
that certain business combinations may, under certain circumstances, require
approval of more than a simple majority of the issued and outstanding shares of
Old National common stock. See "Comparison of Common Stock -- Anti-Takeover
Provisions".
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<PAGE> 77
Indiana law requires shareholder approval by a majority of a quorum
present at a shareholders' meeting (and, in certain cases, a majority of all
shares held by any voting group entitled to vote) for most amendments to a
corporation's articles of incorporation. Indiana law permits a corporation in
its articles of incorporation to prescribe a higher shareholder vote for certain
amendments to the articles of incorporation. Old National's Articles of
Incorporation require a super-majority shareholder vote of eighty percent (80%)
of the outstanding shares of Old National common stock for the amendment of
certain significant provisions.
Dissenters' Rights
The holders of shares of Indiana business corporations possess
dissenters' rights in connection with certain mergers and other significant
corporate actions. Under Indiana law, a shareholder is entitled to dissent from
and obtain payment of the fair value of the shareholder's shares in the event of
(1) consummation of a plan of merger, if shareholder approval is required and
the shareholder is entitled to vote thereon, (2) consummation of a plan of share
exchange by which the shareholder's shares will be acquired, if the shareholder
is entitled to vote thereon, (3) consummation of a sale or exchange of all, or
substantially all, the property of the corporation other than in the usual
course of business, if the shareholder is entitled to vote thereon, (4) approval
of a control share acquisition under Indiana law, and (5) any corporate action
taken pursuant to a shareholder vote to the extent the articles of
incorporation, by-laws or a resolution of the board of directors provides that
voting or non-voting shareholders are entitled to dissent and obtain payment for
their shares.
The dissenters' rights provisions described above do not apply,
however, to the holders of shares of any class or series with respect to a
merger, share exchange or sale or exchange of property if the shares of that
class or series were registered on a United States securities exchange
registered under the Exchange Act or traded on the Nasdaq National Market System
or a similar market. As of the date of this Proxy Statement, shares of Old
National common stock and ANB common stock are traded on the Nasdaq National
Market System and, therefore, Old National and ANB shareholders presently are
not entitled to assert dissenters' rights under Indiana law with respect to any
of the transactions discussed above.
Liquidation Rights
In the event of any liquidation or dissolution of Old National, the
holders of shares of Old National common stock are entitled to receive pro rata
with respect to the number of shares held by them any assets distributable to
shareholders, subject to the payment of Old National's liabilities and any
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rights of creditors and holders of shares of Old National preferred stock then
outstanding. Shareholders of ANB have similar liquidation rights.
Redemption and Assessment
Under Indiana law, shares of Old National common stock and ANB common
stock are not liable to further assessment. Old National may redeem or acquire
shares of Old National common stock with funds legally available therefor, and
shares so acquired constitute authorized but unissued shares. The Old National
Board of Directors authorized the purchase or redemption of up to the number of
shares to be issued to the shareholders of Permanent Bancorp relating to Old
National's acquisition of Permanent Bancorp. Old National may not redeem or
acquire shares of Old National common stock if, after giving such redemption or
acquisition effect, Old National would not be able to pay its debts as they
become due in the usual course of business, or Old National's total assets would
be less than the sum of its total liabilities plus, unless Old National's
Articles of Incorporation permitted otherwise, the amount that would be needed
to satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those whose stock is being redeemed or
acquired if Old National were to be dissolved at the time of the redemption or
acquisition. ANB has similar redemption rights and limitations under Indiana
law.
In addition, Old National and ANB must give prior notice to the Federal
Reserve if the consideration to be paid by them for any redemption or
acquisition of their respective shares, when aggregated with the consideration
paid for all redemptions or acquisitions for the preceding twelve (12) months,
equals or exceeds 10% of their respective consolidated net worth.
Anti-Takeover Provisions
The anti-takeover measures applicable to Old National as described
below, may have the effect of discouraging or rendering it more difficult for a
person or other entity to acquire control of Old National. These measures may
have the effect of discouraging certain tender offers for shares of Old National
common stock which might otherwise be made at premium prices or certain other
acquisition transactions which might be viewed favorably by a significant number
of shareholders.
INDIANA LAW. Under the business combinations provision of Indiana law,
any 10% shareholder of an Indiana corporation, with a class of voting shares
registered under Section 12 of the Exchange Act or which has specifically
adopted this provision in the corporation's articles of incorporation, is
prohibited for a period of five (5) years from completing a business combination
with the corporation unless, prior to the acquisition of such 10% interest, the
board of directors of the corporation approved
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either the acquisition of such interest or the proposed business combination.
Further, the corporation and a 10% shareholder may not consummate a business
combination unless all provisions of the articles of incorporation of the
corporation are complied with and a majority of disinterested shareholders
approve the transaction or all shareholders receive a price per share determined
in accordance with the business combinations provision of Indiana law.
An Indiana corporation may elect to remove itself from the protection
provided by the Indiana business combinations provision, but such an election
remains ineffective for eighteen (18) months and does not apply to a combination
with a shareholder who acquired a 10% ownership position prior to the effective
time of the election. Old National and ANB are subject to the business
combinations provision of Indiana law, but such provision does not apply to the
merger between Old National and ANB. The constitutional validity of the business
combinations provision of Indiana law has in the past been challenged and has
been upheld by the United States Supreme Court.
In addition to the business combinations provision, Indiana law also
contains a "control share acquisition" provision which, although different in
structure from the business combinations provision, may have a similar effect of
discouraging or making more difficult a hostile takeover of an Indiana
corporation. This provision also may have the effect of discouraging premium
bids for outstanding shares. Indiana law provides that, unless otherwise
provided in an Indiana corporation's articles of incorporation or by-laws,
certain acquisitions of shares of the corporation's common stock will be
accorded voting rights only if a majority of the disinterested shareholders
approves a resolution granting the potential acquiror the ability to vote such
shares. Upon disapproval of the resolution, the shares held by the acquiror
shall be redeemed by the corporation at the fair value of the shares as
determined by the control share acquisition provision.
This provision does not apply to a plan of merger or share exchange, if
the corporation complies with the applicable merger or exchange provisions and
is a party to the plan of merger or plan of share exchange. Old National and ANB
are subject to the control share acquisition provision, but such provision does
not apply to the merger between Old National and ANB.
OLD NATIONAL'S ARTICLES OF INCORPORATION. In addition to the
protections provided by Indiana law, Old National's Articles of Incorporation
require the affirmative vote of the holders of at least eighty percent (80%) of
the issued and outstanding shares of capital stock for any business combination
which is not recommended by the vote of two-thirds or more of the members of the
Board of Directors of Old National. For purposes of Old National's Articles of
Incorporation, "business combination" is defined to include: (1) a merger or
consolidation of Old National with or into any other corporation, (2) any sale,
lease, exchange or other disposition of any material part of the assets of Old
National, or (3) any
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liquidation or dissolution of Old National or any material subsidiary of Old
National. Further, this provision cannot be altered, amended or repealed without
the affirmative vote of the holders of at least eighty percent (80%) of the
issued and outstanding shares of Old National common stock entitled to vote
thereon.
Old National's Articles of Incorporation also include provisions
requiring (1) the Board of Directors to consider non-financial factors in the
evaluation of business combinations and tender or exchange offers, and (2) any
person acquiring fifteen percent (15%) of the then issued and outstanding stock
of Old National to pay equal consideration in connection with the acquisition of
any further shares. These provisions require an eighty percent (80%) affirmative
vote of the issued and outstanding shares of Old National common stock entitled
to vote thereon in order to be altered, amended or repealed.
OLD NATIONAL PREFERRED STOCK. The shares of Old National Series A
preferred stock are nonredeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
all other series of preferred stock of Old National. Each share of Old National
Series A preferred stock will be entitled to receive, when, as and if declared,
a quarterly dividend in an amount equal to the greater of $1.00 per share or 100
times the quarterly cash dividend declared on Old National common stock. In
addition, the Old National Series A preferred stock is entitled to 100 times any
non-cash dividends (other than dividends payable in equity securities) declared
on the Old National common stock, in like kind. In the event of liquidation, the
holders of Old National Series A preferred stock will be entitled to receive a
liquidation payment in an amount equal to the greater of $100.00 per share or
100 times the liquidation payment made per share of Old National common stock.
Each share of Old National Series A preferred stock will have 100 votes, subject
to adjustment, voting together with the Old National common stock and not as a
separate class unless otherwise required by law or Old National's Articles of
Incorporation. In the event of any merger, consolidation or other transaction in
which common shares are exchanged, each share of Old National Series A preferred
stock will be entitled to receive 100 times the amount received per share of Old
National common stock. The rights of the Old National Series A preferred stock
as to dividends, voting rights and liquidation are protected by antidilution
provisions.
OLD NATIONAL'S SHAREHOLDER RIGHTS PLAN. On January 25, 1990, the Board
of Directors of Old National declared a dividend of one (1) right for each
issued and outstanding share of Old National common stock ("Right"). See
"Comparison of Common Stock -- Authorized But Unissued Shares". The dividend was
payable on March 15, 1990 to holders of record of Old National common stock at
the close of business on March 1, 1990. Each Right entitles the registered
holder to purchase from Old National one-hundredth (1/100) of a share of Old
National Series A preferred stock at an initial Purchase Price of
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$60.00, subject to adjustment. The terms and conditions of the Rights are
contained in a Rights Agreement between Old National and Old National Bank in
Evansville, as Rights Agent.
The foregoing information concerning Old National's shareholder Rights
Plan does not purport to be complete. For additional information, see The Rights
Agreement, dated March 1, 1990, between Old National and Old National Bank in
Evansville, as Trustee, which is specifically incorporated herein by reference.
See "Incorporation of Certain Documents by Reference." The shares of Old
National common stock to be received by ANB shareholders in the merger will be
subject to the rights under the Old National Shareholder Rights Plan.
ANB'S ARTICLES OF INCORPORATION. In addition to the protections
provided by Indiana law, ANB's Articles of Incorporation include the business
combinations provision of Indiana law which was discussed above. This provision
cannot be altered, amended or repealed without the affirmative vote of the
holders of at least two-thirds of the issued and outstanding shares of ANB
common stock entitled to vote thereon, unless the Board of Directors unanimously
approves the amendment.
ANB's Articles of Incorporation also include a provision requiring the
ANB Board of Directors to consider non-financial factors in the evaluation of
business combinations and tender or exchange offers. This provision requires
two-thirds affirmative vote of the issued and outstanding shares of ANB common
stock entitled to vote thereon in order to be altered, amended or repealed,
unless the ANB Board of Directors unanimously recommends the amendment.
Director Liability
Under Indiana law, a director of Old National or ANB will not be liable
to shareholders for any action taken as a director, or any failure to take any
action, unless (1) the director has breached or failed to perform his duties as
a director in good faith with the care an ordinarily prudent person in a like
position would exercise under similar circumstances and in a manner the director
reasonably believes to be in the best interests of the corporation and (2) such
breach or failure to perform constitutes willful misconduct or recklessness.
Director Nominations
Old National's By-Laws require that all nominations for election as
directors of Old National shall be made by the Board of Directors of Old
National in accordance with the By-Laws. Under the ByLaws, the Nominating
Committee of the Board of Directors of Old National ("Nominating Committee") is
required to submit to the entire Board of Directors its recommendation of
nominees for election as
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directors of Old National prior to each annual or special meeting of
shareholders at which directors will be elected.
The Nominating Committee is comprised of five (5) directors of Old
National, none of whom is an officer or employee of Old National. The Nominating
Committee maintains the responsibility to recruit potential director candidates,
recommend changes to the entire Board of Directors concerning the size,
composition and responsibilities of the Board of Directors, review proxy
documents received from shareholders relating to the Board of Directors and
review suggestions of shareholders regarding nominees for election as directors.
All such suggestions of shareholders with respect to director nominations must
be submitted in writing to the Nominating Committee not less than 120 days prior
to the date of the annual or special meeting of shareholders at which directors
will be elected.
ANB's By-Laws require that all nominations for election as directors of
ANB will be made in accordance with the By-Laws. Under the By-Laws, a
shareholder who desires to nominate an individual for election to the Board of
Directors must make the nomination in writing and deliver or mail the nomination
to ANB's President not less than 10 days no more than 50 days prior to any
meeting at which directors will be elected.
LEGAL OPINIONS
The validity of the shares of Old National common stock to be issued in
the merger will be passed upon by Krieg DeVault Alexander & Capehart, LLP, One
Indiana Square, Suite 2800, Indianapolis, Indiana 46204. Certain tax
consequences of the merger will be passed upon for Old National by Krieg DeVault
Alexander & Capehart, LLP and for ANB by Sullivan & Cromwell, 125 Broad Street,
New York, New York 10004-2490.
EXPERTS
The consolidated financial statements of Old National and affiliates
incorporated into this document have been audited by Arthur Andersen LLP,
independent public accountants, to the extent and for the years indicated in
their report thereon, and have been so incorporated into this document in
reliance upon the report of Arthur Andersen LLP and upon the authority of such
firm as experts in auditing and accounting.
The consolidated financial statements of ANB incorporated into this
document have been audited by Olive LLP, independent auditors, to the extent and
for the years indicated in their report thereon. Such
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consolidated financial statements have been so incorporated into this document
in reliance upon the report of Olive LLP and upon the authority of such firm as
experts in auditing and accounting.
Representatives of Olive LLP are not expected to be at the special
meeting.
OTHER MATTERS
The special meeting is called for the purposes set forth in the Notice
attached to this Proxy Statement. The Board of Directors of ANB knows of no
other matters for action by shareholders at the special meeting other than the
matters described in the Notice. However, the enclosed proxy will confer
discretionary authority to the persons named therein with respect to any such
matters, none of which are known to the Board of Directors of ANB as of the date
hereof, which may properly come before the Special Meeting. It is the intention
of the persons named in the proxy to vote pursuant to the proxy with respect to
such matters in accordance with the best judgment of the person named in the
proxy.
FORWARD-LOOKING STATEMENTS
This document (including information included or incorporated by
reference herein) contains certain forward-looking statements with respect to
the financial condition, results of operations, plans, objectives, future
performance and business of each of Old National and ANB, as well as certain
information relating to the merger, including, without limitation statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "estimates" or similar expressions. These forward-looking
statements involve certain risks and uncertainties. Actual results may differ
materially from those contemplated by such forward-looking statements due to,
among others, the following factors: (a) expected cost savings from the merger
may not be fully realized or realized within the expected time frame; (b)
revenues following the merger may be lower than expected, or deposit attrition,
operating costs or customer loss and business disruption following the merger
may be greater than expected; (c) competitive pressures among depository and
other financial institutions may increase significantly; (d) changes in the
interest rate environment may reduce margins; (e) general economic or business
conditions, either nationally or in the states in which Old National is doing
business, may be less favorable than expected resulting in, among other things,
a deterioration in credit quality or a reduced demand for credit; (f)
legislative or regulatory changes may adversely affect the business in which Old
National is engaged; (g) technological changes (including "Year 2000" data
systems compliance issues) may be more difficult or expensive than anticipated;
and (h) changes may occur in the securities markets.
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WHERE YOU CAN FIND MORE INFORMATION
Old National and ANB are subject to the reporting requirements of the
Exchange Act and in accordance therewith file reports, proxy statements and
other information with the SEC. Such reports, proxy statements and other
information may be inspected and copied at prescribed rates at the following
locations of the SEC:
Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661-2511
Copies of such material may also be obtained at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding Old National and ANB, and the address of that site is
http://www.sec.gov. You may obtain information about Old National on its
Internet site. The address of the site is http://www.oldnational.com. Old
National and ANB common stock is quoted on the Nasdaq National Market System and
reports, proxy statements and other information concerning Old National and ANB
are available for inspection and copying at prescribed rates at the office of
the National Association of Securities Dealers, Inc., 1735 K Street, Washington,
D.C. 20006.
Old National has filed with the SEC a Registration Statement on Form
S-4 under the Securities Act with respect to the shares of Old National common
stock to be issued in connection with its merger with ANB. This Proxy Statement
- - Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is made to the Registration
Statement, including the exhibits filed as a part thereof or incorporated
therein by reference, which can be inspected and copied at prescribed rates at
the public reference facilities maintained by the SEC at the addresses set forth
above.
The SEC allows Old National and ANB to "incorporate by reference"
information into this document. This means that the companies can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this document, except for any information that is superseded by
information that is included directly in this document. This document
incorporates by reference the documents listed
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below that Old National and ANB have previously filed with the SEC. They contain
important information about the companies and their financial condition.
The following documents previously filed by Old National (SEC File No.
0-10888) with the SEC pursuant to the Exchange Act are incorporated herein by
reference:
- Old National's Quarterly Report on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999.
- Old National's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
- Old National's Annual Report to Shareholders for the fiscal year
ended December 31, 1998.
- The description of Old National's common stock contained in Old
National's Current Report on Form 8-K, dated January 6, 1983, and
the description of Old National's Preferred Stock Purchase Rights
contained in Old National's Form 8-A, dated March 1, 1990,
including the Rights Agreement, dated March 1, 1990, between Old
National and Old National Bank in Evansville, as Trustee.
- The Current Report on Form 8-K filed on July 29, 1999.
- The Current Report on Form 8-K filed on December 1, 1999.
The following documents previously filed by ANB (SEC File No. 0-18925)
with the SEC pursuant to the Exchange Act are incorporated herein by reference:
- ANB's Quarterly Report on Form 10-Q for the quarters ended March
31, 1999, June 30, 1999 and September 30, 1999.
- ANB's Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 1998.
- ANB's Annual Report to Shareholders for the fiscal year ended
December 31, 1998.
- ANB's Current Report on Form 8-K filed on May 7, 1999.
- ANB's Current Report on Form 8-K filed on January 6, 2000.
Old National and ANB incorporate by reference additional documents that
either company may file with the SEC between the date of this document and the
dates of the ANB special meeting. These documents include periodic reports, such
as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as proxy statements.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this document to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this document.
Old National has supplied all information contained or incorporated by
reference in this Old National Proxy Statement-Prospectus relating to Old
National, as well as all pro forma financial information, and ANB has supplied
all relevant information relating to ANB.
You can obtain any of the documents incorporated by reference in this
document through Old National or ANB, as the case may be, or from the SEC
through the SEC's Internet world wide web site at the address listed above.
Documents incorporated by reference are available from the companies without
charge, excluding any exhibits to those documents, unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
Old National Bancorp ANB Corporation
420 Main Street 120 West Charles Street
P. O. Box 718 Muncie, Indiana 47305
Evansville, Indiana 47705 Attn: Larry E. Thomas, Chief
Attn: Jeffrey L. Knight, Corporate Financial Officer
Secretary and General Counsel (765) 747-7575
(812) 464-1363
If you would like to request documents, please do so by _______________, 2000 to
receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, promptly after we receive your request.
Old National and ANB have not authorized anyone to give any information
or make any representation about the merger or our companies that is different
from, or in addition to, that contained in this document or any of the materials
that we have incorporated into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful
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to direct these types of activities, then the offer presented in this document
does not extend to you. The information contained in this document speaks only
as of the date of this document unless the information specifically indicates
that another date applies.
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LIST OF APPENDICES
<TABLE>
<S> <C>
Agreement of Affiliation and Merger, dated July 29, 1999, between Old
National Bancorp and ANB Corporation Appendix A
Stock Option Agreement, dated July 29, 1999 between Old National Bancorp
and ANB Corporation Appendix B
Fairness Opinion of Sandler O'Neill & Partners, L.P. Appendix C
</TABLE>
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APPENDIX A
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement") is made and
entered into effective as of the 29th day of July, 1999, by and between OLD
NATIONAL BANCORP ("ONB") and ANB CORPORATION ("ANB").
W I T N E S S E T H:
WHEREAS, ONB is an Indiana corporation registered as a bank holding
company under the federal Bank Holding Company Act of 1956, as amended ("BHC
Act"), with its principal office located in Evansville, Vanderburgh County,
Indiana; and
WHEREAS, ANB is an Indiana corporation registered as a bank holding
company under the BHC Act, with its principal office located in Muncie, Delaware
County, Indiana; and
WHEREAS, ANB is the sole owner of all of the outstanding capital stock
of (i) American National Bank and Trust Company of Muncie, a national banking
association ("American National Bank"), (ii) Peoples Loan & Trust Bank, an
Indiana state-chartered bank ("Peoples Bank"), (iii) Farmers State Bank of Union
City, Ohio, an Ohio state-chartered bank ("Farmers State Bank") and (iv)
American National Trust and Investment Management Company, a national trust
company ("ANTIM"); and
WHEREAS, ONB and ANB seek to affiliate through a corporate
reorganization whereby ANB will merge with and into ONB and each of American
National Bank, Peoples Bank, Farmers State Bank and ANTIM will thereby become a
wholly-owned subsidiary of ONB, and ANB Financial Planning Services, Inc. ("ANB
Financial") (American National Bank, Peoples Bank, Farmers State Bank, ANTIM and
ANB Financial are herein referred to collectively as the "Subsidiaries") will
continue to be a wholly-owned subsidiary of American National Bank; and
WHEREAS, ONB and ANB intend that the Merger (as hereinafter defined)
constitute a tax-free reorganization pursuant to Section 368 of the Internal
Revenue Code of 1986, as amended ("Code"); and
WHEREAS, as a condition to, and concurrently with the execution of,
this Agreement, ONB and ANB are entering into a certain Stock Option Agreement
(the "Stock Option Agreement"), attached hereto as Exhibit A; and
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WHEREAS, the Board of Directors of each of ONB and ANB has determined
that it is in the best interests of its respective corporation to consummate the
strategic business combination provided for herein and has approved this
Agreement, authorized its execution and designated this Agreement a plan of
reorganization and a plan of merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, ONB and ANB hereby make this Agreement and prescribe the terms and
conditions of the affiliation of ONB and ANB and the mode of carrying such
merger into effect as follows:
SECTION 1
THE MERGER
1.01. General Description. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 10 hereof), ANB
shall merge with and into and under the Articles of Incorporation of ONB
("Merger"). ONB shall survive the Merger ("Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Indiana pursuant
to the provisions of and with the effect provided in the Indiana Business
Corporation Law, as amended. Upon consummation of the Merger, each of American
National Bank, Peoples Bank, Farmers State Bank and ANTIM shall become a
wholly-owned subsidiary of ONB.
1.02. Name, Officers, Directors and Management. (a) The name of the
Surviving Corporation shall be "Old National Bancorp." Its principal office
shall be located at 420 Main Street, Evansville, Indiana 47708.
(b) The officers of ONB serving at the Effective Time shall continue to
serve as the officers of the Surviving Corporation, until such time as their
successors shall have been duly elected and have qualified or until their
earlier resignation, death or removal from office. At the Effective Time, James
R. Schrecongost shall become the Chairman of each of following wholly-owned
subsidiaries of ONB: Old National Trust Company, Old National Trust
Company-Illinois and Old National Trust Company-Kentucky.
(c) The directors of ONB as of the Effective Time and Kelly Stanley
shall be the directors of the Surviving Corporation, until such time as their
successors have been duly elected and have been qualified or until their earlier
resignation, death or removal from office.
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1.03. Capital Structure. The capital of the Surviving Corporation shall
be not less than the capital of ONB immediately prior to the Effective Time.
1.04. Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of ONB in existence at the Effective Time shall remain
the Articles of Incorporation and By-Laws of the Surviving Corporation following
the Effective Time, until such Articles of Incorporation and By-Laws shall be
further amended as provided by applicable law.
1.05. Assets and Liabilities. At the Effective Time, the title to all
assets, real estate and other property owned by ANB shall vest in ONB without
reversion or impairment. At the Effective Time, all liabilities of ANB shall be
assumed by ONB.
1.06. Tax-Free Reorganization and Accounting Treatment. ONB and ANB
intend for the Merger to qualify as a reorganization within the meaning of
Section 368 and related sections of the Code, and for the Merger to be accounted
for as a pooling of interests transaction. ONB and ANB agree to cooperate and to
take such action as may be reasonably necessary to achieve such results.
SECTION 2
MANNER AND BASIS OF EXCHANGE OF STOCK
2.01. Exchange Ratio. Upon and by virtue of the Merger becoming
effective at the Effective Time, each issued and outstanding share of ANB Common
Stock (as defined in Section 5.03 hereof) shall be converted into the right to
receive One and Twenty-Five One-Hundredths (1.25) shares of ONB common stock
("Exchange Ratio"), subject to adjustment, if any, pursuant to the provisions of
Section 2.03 hereof.
2.02. No Fractional Shares. Certificates for fractional shares of ONB
common stock shall not be issued for fractional interests resulting from
application of the Exchange Ratio. Each shareholder of ANB who would otherwise
have been entitled to a fraction of a share of ONB common stock shall be paid in
cash following the Effective Time an amount equal to such fraction multiplied by
the average of the per share closing price of ONB common stock as reported on
the Nasdaq National Market System for the final five (5) business days on which
shares of ONB common stock were traded immediately preceding the Effective Time.
2.03. Recapitalization. If, between the date of this Agreement and the
Effective Time, the record date occurs for the distribution or issuance by ONB
of a stock dividend with respect to its shares of common stock, or a
combination, subdivision, reclassification or split of ONB's issued and
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outstanding shares of common stock, such that the number of issued and
outstanding shares of ONB common stock is increased or decreased, then the
Exchange Ratio shall be adjusted so that ANB's shareholders shall receive, in
the aggregate, such number of shares of ONB common stock representing the same
percentage of outstanding shares of ONB common stock at the Effective Time as
would have been represented by the number of shares of ONB common stock such
shareholders would have received if any of the foregoing actions had not
occurred.
2.04. Distribution of ONB Common Stock and Cash. (a) Immediately
following the Effective Time, ONB shall mail to each ANB shareholder a letter of
transmittal providing instructions as to the transmittal to ONB of certificates
representing shares of ANB Common Stock and the issuance of shares of ONB common
stock in exchange therefor pursuant to the terms of this Agreement.
(b) Following the Effective Time, distribution of stock certificates
representing shares of ONB common stock and any cash payment, without interest,
for fractional shares, if any, shall be made by ONB to each former shareholder
of ANB as soon as practical following delivery to ONB of the shareholder's
certificate(s) representing its shares of ANB Common Stock accompanied by a
properly completed and executed letter of transmittal, all in form and substance
reasonably satisfactory to ONB.
(c) As of the Effective Time, stock certificates representing shares of
ANB Common Stock shall be deemed to evidence ownership of ONB common stock for
all corporate purposes other than the payment of dividends or other
distributions. No dividends or other distributions otherwise payable subsequent
to the Effective Time on shares of ONB common stock shall be paid to any ANB
shareholder entitled to receive the same until such shareholder has surrendered
to ONB his or her certificate or certificates representing ANB Common Stock in
exchange for a certificate or certificates representing ONB common stock. Upon
surrender of the certificates representing shares of ANB Common Stock, there
shall be paid in cash to the record holder of the new certificate or
certificates evidencing shares of ONB common stock the amount of all dividends
and other distributions, without interest thereon, withheld with respect to such
shares of ONB common stock.
(d) ONB shall be entitled to rely upon the stock transfer books of ANB
to establish the persons entitled to receive shares of ONB common stock pursuant
to this Agreement, which books shall be conclusive with respect to the ownership
of shares of ANB Common Stock.
(e) With respect to any certificate for shares of ANB Common Stock
which has been lost, stolen or destroyed, ONB shall be authorized to issue
common stock (and to pay cash as to fractional shares) to the registered owner
of such certificate upon receipt by ONB of an agreement to indemnify ONB against
loss from such lost, stolen or destroyed certificate and an affidavit of lost,
stolen or
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destroyed stock certificate, both in form and substance reasonably satisfactory
to ONB, and upon compliance by the ANB shareholder with all other reasonable
requirements of ONB in connection with lost, stolen or destroyed stock
certificates.
SECTION 3
DISSENTING SHAREHOLDERS
Shareholders of ANB are not entitled to any dissenters' rights under
Chapter 44 of the Indiana Business Corporation Law, as amended, since ANB Common
Stock is quoted and traded on Nasdaq. ANB shall take no action which would
result in the loss of such listing prior to the Effective Time.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF ANB
On or prior to the date hereof, ANB has delivered to ONB a schedule
(the "Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one
or more representations or warranties contained in this Section 4 or to one or
more of its covenants contained in Section 6; provided, that the mere inclusion
of an item in the Disclosure Schedule as an exception to a representation or
warranty shall not be deemed an admission by ANB that such item represents a
material exception or fact, event or circumstance or that such item is
reasonably likely to result in a Material Adverse Effect (as defined below).
For the purpose of this Agreement, and in relation to ANB and the
Subsidiaries, a "Material Adverse Effect" means any effect that (i) is material
and adverse to the financial position, results of operations or business of ANB
and the Subsidiaries taken as a whole, or (ii) would materially impair the
ability of ANB to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the
other transactions contemplated by this Agreement; provided, however, that
Material Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and their holding companies generally, (c) any modifications or changes to
valuation policies and practices in connection with the Merger or restructuring
charges taken in connection with the Merger, in each case in accordance with
generally accepted accounting principles, (d) effects of any action taken with
the prior written consent of ONB and (e) changes in general level of interest
rate or conditions or circumstances that affect the banking industry generally.
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No representation or warranty of ANB contained in this Section 4,
except Sections 4.03 and 4.21, shall be deemed untrue or incorrect, and ANB
shall not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstances or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in this Section 4, has had or is reasonably likely to have a Material
Adverse Effect on ANB.
ANB accordingly hereby represents and warrants to ONB as follows:
4.01. Organization and Authority. (a) ANB is a corporation duly
organized and validly existing under the laws of the State of Indiana. ANB has
full power and authority (corporate and otherwise) to own and lease its
properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof. ANB has a class of stock
registered pursuant to Section 12, and is subject to the reporting requirements,
of the Securities Exchange Act of 1934, as amended ("1934 Act"). Except as set
forth in the Disclosure Schedule, ANB's only direct subsidiaries are American
National Bank, Peoples Bank, Farmers State Bank and ANTIM and it has no other
subsidiaries and owns no voting stock or equity securities of any corporation,
partnership, association or other entity.
(b) American National Bank is a national banking association duly
organized and validly existing under the laws of the United States of America.
American National Bank has no subsidiaries, except for ANB Financial. American
National Bank is subject to primary regulatory supervision and examination by
the Office of the Comptroller of the Currency ("OCC"). American National Bank
has full power and authority (corporate and otherwise) to own and lease its
properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
(c) Peoples Bank is an Indiana state-chartered bank duly organized and
validly existing under the laws of the State of Indiana. Peoples Bank has no
subsidiaries. Peoples Bank is subject to primary regulatory supervision and
examination by the Indiana Department of Financial Institutions ("DFI"). Peoples
Bank has full power and authority (corporate and otherwise) to own and lease its
properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
(d) Farmers State Bank is an Ohio state-chartered bank duly organized
and validly existing under the laws of the State of Ohio. Farmers State Bank has
no subsidiaries. Farmers State Bank is subject to primary regulatory supervision
and examination by the Ohio Division of Financial Institutions ("ODFI"). Farmers
State Bank has full power and authority (corporate and otherwise) to own and
lease
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its properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
(e) ANTIM is a national trust association duly organized and validly
existing under the laws of the United States of America. ANTIM has no
subsidiaries, except ANTIM owns 3,531 shares (15%) of the common stock of
Indiana Trust & Investment Management Company, an Indiana state-chartered trust
company, and has the obligation, subject to conditions, to purchase the
remaining shares in accordance with the terms of a Stock Acquisition Agreement
dated August 8, 1997. Under the terms of such agreement, assuming ONB is a
Permitted Successor to ANB, ONB shall succeed to its rights and obligations
thereunder subject to the price adjustment contemplated by Section 2.4(c) of the
Stock Acquisition Agreement. ANTIM is subject to primary regulatory supervision
and examination by the OCC. ANTIM has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and leased and to
conduct its business in the manner and by the means utilized as of the date
hereof.
(f) ANB Financial is an Indiana corporation duly organized and validly
existing under the laws of the State of Indiana. ANB Financial has no
subsidiaries. ANB Financial has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and leased and to
conduct its business in the manner and by the means utilized as of the date
hereof.
4.02. Authorization. (a) ANB has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder,
subject to the fulfillment of the conditions precedent set forth in Section
8.02(e) and (f) hereof. As of the date hereof, ANB is not aware of any reason
why the approvals set forth in Section 8.02(e) will not be received in a timely
manner and without the imposition of a condition, restriction or requirement of
the type described in Section 8.02(e). This Agreement and its execution and
delivery by ANB have been duly authorized and approved by the Board of Directors
of ANB and, assuming due execution and delivery by ONB, constitutes a valid and
binding obligation of ANB, subject to the fulfillment of the conditions
precedent set forth in Section 8.02 hereof, and is enforceable in accordance
with its terms, except to the extent limited by general principles of equity and
public policy and by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights.
(b) Except as set forth in the Disclosure Schedule, neither the
execution of this Agreement nor consummation of the Merger contemplated hereby:
(i) conflicts with or violates ANB's Articles of Incorporation or By-Laws; (ii)
conflicts with or violates any local, state, federal or foreign law, statute,
ordinance, rule or regulation (provided that the approvals of or filings with
applicable government
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regulatory agencies or authorities required for consummation of the Merger are
obtained) or any court or administrative judgment, order, injunction, writ or
decree; (iii) conflicts with, results in a breach of or constitutes a default
under any note, bond, indenture, mortgage, deed of trust, license, lease,
contract, agreement, arrangement, commitment or other instrument to which ANB or
any Subsidiary is a party or by which ANB or any Subsidiary is subject or bound;
(iv) results in the creation of or gives any person, corporation or entity the
right to create any lien, charge, claim, encumbrance or security interest, or
results in the creation of any other rights or claims of any other party (other
than ONB) or any other adverse interest, upon any right, property or asset of
ANB or any Subsidiary; or (v) terminates or gives any person, corporation or
entity the right to terminate, accelerate, amend, modify or refuse to perform
under any note, bond, indenture, mortgage, agreement, contract, lease, license,
arrangement, deed of trust, commitment or other instrument to which ANB or any
Subsidiary is bound or with respect to which ANB or any Subsidiary is to perform
any duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions of
the applicable federal and state banking, securities, and corporation statutes,
all as amended, and the rules and regulations promulgated thereunder, no notice
to, filing with, exemption by or consent, authorization or approval of any
governmental agency or body is necessary for consummation of the Merger by ANB
or any Subsidiary.
4.03. Capitalization. (a) The authorized capital stock of ANB as of the
date hereof consists, and at the Effective Time will consist, of 250,000 shares
of preferred stock, no par value, none of which shares are issued or outstanding
and 20,000,000 shares of common stock, $1.00 par value per share, 5,445,995 of
which shares are issued and outstanding, which number of issued shares of ANB
Common Stock is subject to increase to a total of 5,837,619 shares (not
including any shares of ANB Common Stock which may be granted under the Stock
Option Agreement and ANB (1994) Dividend Reinvestment and Stock Purchase Plan
(the "DRIP")) pursuant to the exercise of options (collectively, the "Stock
Options") granted under the ANB Corporation 1996 Directors' Stock Option Plan,
ANB Corporation Stock Option Plan and ANB Corporation 1995 Stock Option Plan
(collectively, the "Stock Option Plans") to purchase an aggregate of 391,624
shares of common stock of ANB (such issued and outstanding shares are referred
to herein as "ANB Common Stock"). Such issued and outstanding shares of ANB
Common Stock have been duly and validly authorized by all necessary corporate
action of ANB, are validly issued, fully paid and nonassessable and have not
been issued in violation of any pre-emptive rights of any present or former ANB
shareholder. ANB has no capital stock authorized, issued or outstanding other
than as described in this Section 4.03(a) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of ANB
Common Stock, except pursuant to the terms (as of the date of this Agreement) of
the ANB DRIP.
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(b) The authorized capital stock of American National Bank as of the
date hereof consists, and at the Effective Time will consist, of 160,000 shares
of common stock, $20.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"American National Bank Common Stock"). Such issued and outstanding shares of
American National Bank Common Stock have been duly and validly authorized by all
necessary corporate action of American National Bank, are validly issued, fully
paid and nonassessable (except to the extent provided by 12 U.S.C. ss. 55, as
amended), and have not been issued in violation of any pre-emptive rights of any
present or former American National Bank shareholder. All of the issued and
outstanding shares of American National Bank Common Stock are owned by ANB free
and clear of all liens, pledges, charges, claims, encumbrances, restrictions,
security interests, options and pre-emptive rights and of all other rights or
claims of any other person, corporation or entity with respect thereto. American
National Bank has no capital stock authorized, issued or outstanding other than
as described in this Section 4.03(b) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of American
National Bank Common Stock.
(c) The authorized capital stock of Peoples Bank as of the date hereof
consists, and at the Effective Time will consist, of 130,000 shares of common
stock, $10.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Peoples Bank Common Stock"). Such issued and outstanding shares of Peoples Bank
Common Stock have been duly and validly authorized by all necessary corporate
action of Peoples Bank, are validly issued, fully paid and nonassessable, and
have not been issued in violation of any pre-emptive rights of any present or
former Peoples Bank shareholder. All of the issued and outstanding shares of
Peoples Bank Common Stock are owned by ANB free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. Peoples Bank has no capital stock
authorized, issued or outstanding other than as described in this Section
4.03(c) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of Peoples Bank Common Stock.
(d) The authorized capital stock of Farmers State Bank as of the date
hereof consists, and at the Effective Time will consist, of 1,000 shares of
common stock, $2,500.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Farmers State Bank Common Stock"). Such issued and outstanding shares of
Farmers State Bank Common Stock have been duly and validly authorized by all
necessary corporate action of Farmers State Bank, are validly issued, fully paid
and nonassessable, and have not been issued in violation of any pre-emptive
rights of any present or former Farmers State Bank shareholder. All of the
issued and outstanding shares of Farmers State Bank Common Stock are owned by
ANB free and clear of all liens, pledges, charges, claims, encumbrances,
restrictions, security interests, options and pre-emptive rights
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and of all other rights or claims of any other person, corporation or entity
with respect thereto. Farmers State Bank has no capital stock authorized, issued
or outstanding other than as described in this Section 4.03(d) and has no
intention or obligation to authorize or issue any other capital stock or any
additional shares of Farmers State Bank Common Stock.
(e) The authorized capital stock of ANTIM as of the date hereof
consists, and at the Effective Time will consist, of 100,000 shares of common
stock, $100.00 par value per share, 21,000 of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as "ANTIM
Common Stock"). Such issued and outstanding shares of ANTIM Common Stock have
been duly and validly authorized by all necessary corporate action of ANTIM, are
validly issued, fully paid and nonassessable (except to the extent provided by
12 U.S.C. ss. 55, as amended), and have not been issued in violation of any
pre-emptive rights of any present or former ANTIM shareholder. All of the issued
and outstanding shares of ANTIM Common Stock are owned by ANB free and clear of
all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and pre-emptive rights and of all other rights or claims of
any other person, corporation or entity with respect thereto. ANTIM has no
capital stock authorized, issued or outstanding other than as described in this
Section 4.03(e) and has no intention or obligation to authorize or issue any
other capital stock or any additional shares of ANTIM Common Stock.
(f) The authorized capital stock of ANB Financial as of the date hereof
consists, and at the Effective Time will consist, of 1,000 shares of common
stock, no par value, all of which shares are issued and outstanding (such issued
and outstanding shares are referred to herein as "ANB Financial Common Stock").
Such issued and outstanding shares of ANB Financial Common Stock have been duly
and validly authorized by all necessary corporate action of ANB Financial, are
validly issued, fully paid and nonassessable, and have not been issued in
violation of any pre-emptive rights of any present or former ANB Financial
shareholder. All of the issued and outstanding shares of ANB Financial Common
Stock are owned by American National Bank free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. ANB Financial has no capital stock
authorized, issued or outstanding other than as described in this Section
4.03(f) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of ANB Financial Common Stock.
(g) Except as set forth in the Disclosure Schedule and except for
options granted under the Stock Option Agreement and the Stock Option Plans,
there are no options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to any shares of
ANB Common Stock, or any securities convertible into or representing the right
to purchase or otherwise
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acquire any common stock or debt securities of ANB, by which ANB is or may
become bound. ANB does not have any outstanding contractual or other obligation
to repurchase, redeem or otherwise acquire any of the issued and outstanding
shares of ANB Common Stock.
(h) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to any
shares of common stock of the Subsidiaries, or any securities convertible into
or representing the right to purchase or otherwise acquire any common stock or
debt securities of a Subsidiary, by which a Subsidiary is or may become bound.
None of the Subsidiaries has any outstanding contractual or other obligation to
repurchase, redeem or otherwise acquire any of the issued and outstanding shares
of its common stock.
(m) Except as set forth in the Disclosure Schedule, ANB has no
knowledge of any person or entity which beneficially owns 5% or more of its
outstanding shares of common stock.
4.04. Organizational Documents. The respective Articles of
Incorporation and By-Laws of ANB, Peoples Bank, Farmers State Bank and ANB
Financial, and the respective Articles of Association and By-Laws of American
National Bank and ANTIM, representing true, accurate and complete copies of such
corporate documents in effect as of the date of this Agreement, have been
delivered to ONB.
4.05. Compliance with Law. (a) Neither ANB nor any Subsidiary has
engaged in any activity nor taken or omitted to take any action which has
resulted in the violation of any local, state, federal or foreign law, statute,
regulation, rule, ordinance, order, restriction or requirement, nor are they in
violation of any order, injunction, judgment, writ or decree of any court or
government agency or body. ANB and each Subsidiary possess and hold all
licenses, franchises, permits, certificates and other authorizations necessary
for the continued conduct of their business without interference or
interruption, and such licenses, franchises, permits, certificates and
authorizations are transferable (to the extent required) to ONB at the Effective
Time without any restrictions or limitations thereon or the need to obtain any
consents of government agencies or other third parties other than as set forth
in this Agreement.
(b) Except as set forth in the Disclosure Schedule, neither ANB nor any
of the Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits (including, without limitation, the OCC,
the Federal Reserve Board and Federal Deposit Insurance Corporation) or the
supervision or regulation of ANB or any of its Subsidiaries. There are no
uncured violations, or violations with respect to which refunds or restitutions
may be required, cited in any
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examination report of ANB or any Subsidiary as a result of an examination by any
regulatory agency or body, or set forth in any accountant's or auditor's report
to ANB or any Subsidiary.
4.06. Accuracy of Statements Made and Materials Provided to ONB. (a) No
representation, warranty in this Section 4 or other statement made, or any
information provided, by ANB or any Subsidiary in this Agreement or the
Disclosure Schedule (and any update thereto), and no written report, statement,
list, certificate, materials or other information furnished or to be furnished
by ANB or any Subsidiary to ONB through and including the Effective Time in
connection with this Agreement or the Merger contemplated hereby (including,
without limitation, any written information which has been or shall be supplied
by ANB and the Subsidiaries with respect to their financial condition, results
of operations, business, assets, capital or directors and officers for inclusion
in the proxy statement-prospectus and registration statement relating to the
Merger), contains or shall contain (in the case of information relating to the
proxy statement-prospectus at the time it is mailed to ANB's shareholders) any
untrue statement of material fact or omits or shall omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not false or misleading.
4.07. Litigation and Pending Proceedings. (a) Except as set forth in
the Disclosure Schedule and lawsuits involving collection of delinquent
accounts, there are no claims, actions, suits, proceedings, mediations,
arbitrations or investigations pending or to the best knowledge of ANB after due
inquiry, threatened in any court or before any government agency or authority,
arbitration panel or otherwise (nor does ANB have any knowledge of a basis for
any claim, action, suit, proceeding, litigation, arbitration or investigation)
against, by or affecting ANB or any Subsidiary or which would prevent the
performance of this Agreement, declare the same unlawful or cause the rescission
hereof.
(b) Except as set forth in the Disclosure Schedule, neither ANB nor any
Subsidiary is: (i) subject to any outstanding judgment, order, writ, injunction
or decree of any court, arbitration panel or governmental agency or authority;
(ii) presently charged with or, to the best knowledge of ANB after due inquiry,
under governmental investigation with respect to any actual or alleged
violations of any law, statute, rule, regulation or ordinance; or (iii) the
subject of any pending or, to the best knowledge of ANB after due inquiry,
threatened proceeding by any government regulatory agency or authority having
jurisdiction over its respective business, assets, capital, properties or
operations.
4.08. Financial Statements and Reports. ANB has delivered to ONB copies
of the following financial statements and reports of ANB and the Subsidiaries,
including the notes thereto (collectively, the "ANB Financial Statements"):
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(a) Consolidated Balance Sheets and the related Consolidated Statements
of Income and Consolidated Statements of Changes in Shareholders' Equity of ANB
as of and for the years ended December 31, 1996, 1997 and 1998, and as of and
for the fiscal quarter ended March 31, 1999;
(b) Consolidated Statements of Cash Flows of ANB for the years ended
December 31, 1996, 1997 and 1998, and for the fiscal quarter ended March 31,
1999;
(c) Consolidated Statements of Changes in Financial Position of ANB for
the years ended December 31, 1997 and 1998, and for the fiscal quarter ended
March 31, 1999;
(d) Reports of Condition and Income ("Call Reports") for American
National Bank and Peoples Bank as of the close of business on December 31, 1995,
1996, 1997 and 1998; and
(e) Financial Statements of ANB on Form FRY-9LP and Form FRY-9C filed
with the Board of Governors of the Federal Reserve System at the close of
business on December 31, 1997 and 1998.
The ANB Financial Statements present fairly the consolidated financial
position of ANB as of and at the dates shown and the consolidated results of
operations for the periods covered thereby. The ANB Financial Statements
described in clauses (a), (b) and (c) above for completed fiscal years are
audited financial statements and have been prepared in conformance with
generally accepted accounting principles applied on a consistent basis, except
as may otherwise be indicated in any accountants' notes or reports with respect
to such financial statements. The ANB Financial Statements do not include any
assets, liabilities or obligations or omit to state any assets, liabilities or
obligations, absolute or contingent, or any other facts which inclusion or
omission would render any of the ANB Financial Statements false, misleading or
inaccurate in any respect.
4.09. Properties, Contracts, Employees and Other Agreements. (a) Set
forth in the Disclosure Schedule are a true, accurate and complete copy of the
following:
(i) A brief description and the location of all real property
owned by ANB and the Subsidiaries and the principal buildings
and structures located thereon and each lease of real property
to which ANB or any Subsidiary is a party, identifying the
parties thereto, the annual rental payable, the expiration
date of the lease and a brief description of the property
covered;
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(ii) a list of all agreements, contracts, leases, licenses, lines
of credit, understandings, commitments or obligations of ANB
or any Subsidiary which individually or in the aggregate:
(A) involve payment or receipt by ANB or any Subsidiary
(other than as disbursements of loan proceeds to
customers, loan payments by customers or customer
deposits) of more than $100,000;
(B) involve payments based on profits of ANB or any
Subsidiary;
(C) relate to the purchase of goods, products, supplies
or services in excess of $100,000;
(D) were not made in the ordinary course of business; or
(E) may not be terminated without penalty within one (1)
year from the date of this Agreement; and
(iii) The name and current annual salary of each director, officer
and employee of ANB or any Subsidiary whose current annual
salary is in excess of $50,000, and the profit sharing, bonus
or other form of compensation (other than salary) paid or
payable by ANB or any Subsidiary to or for the benefit of each
such person for the year ended December 31, 1998, and any
employment, severance or deferred compensation agreement or
arrangement with respect to each such person.
(b) Each of the agreements, contracts, commitments, leases, instruments
and documents set forth in the Disclosure Schedule relating to this Section 4.09
is valid and enforceable in accordance with its terms, except to the extent
limited by general principles of equity and public policy or by bankruptcy,
insolvency, fraudulent transfer, readjustment of debt or other laws of general
application relative to or affecting the enforcement of creditor's rights, and
ANB and the Subsidiaries are, and, to the best knowledge of ANB after due
inquiry, all other parties thereto are, in compliance with the provisions
thereof, and ANB and the Subsidiaries are not in default in the performance,
observance or fulfillment of any obligation, covenant or provision contained
therein. None of the foregoing requires the consent of any party to its
assignment in connection with the Merger contemplated by this Agreement. Other
than as disclosed pursuant to this Section 4.09, to the best knowledge of ANB
after due inquiry, no circumstances exist resulting from transactions effected
or to be effected, from events which have occurred or may occur or from any
action taken or omitted to be taken which could reasonably be
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expected to result in the creation of any agreement, contract, obligation,
commitment, arrangement, lease or document described in or contemplated by this
Section 4.09.
(c) Neither ANB nor any Subsidiary is, to the best knowledge of ANB
after due inquiry, in default under or in breach of or, alleged to be in default
under or in breach of, any loan or credit agreement, conditional sales contract
or other title retention agreement, security agreement, bond, indenture,
mortgage, license, contract, lease, commitment or any other instrument or
obligation.
4.10. Absence of Undisclosed Liabilities. Except as provided in the ANB
Financial Statements, Subsequent ANB Financial Statements and in the Disclosure
Schedule, except for unfunded loan commitments and obligations on letters of
credit to customers of American National Bank, Peoples Bank and Farmers State
Bank (collectively, the "Banks"), except for trade payables incurred in the
ordinary course of ANB's and the Banks' business, and except for the transaction
contemplated by this Agreement, neither ANB nor any Subsidiary has, nor will
have at the Effective Time, any obligation, agreement, contract, commitment,
liability, lease or license which exceeds $50,000 individually, or any
obligation, agreement, contract, commitment, liability, lease or license made
outside of the ordinary course of business, nor does there exist any
circumstances resulting from transactions effected or events occurring on or
prior to the date of this Agreement or from any action omitted to be taken
during such period which could reasonably be expected to result in any such
obligation, agreement, contract, commitment, liability, lease or license.
4.11. Title to Assets. Except as described in this Section 4.11: (a)
ANB or the Subsidiaries, as the case may be, has good and marketable title in
fee simple absolute to all real property (including, without limitation, all
real property used as bank premises and all other real estate owned) which is
reflected in the ANB Financial Statements as of March 31, 1999; good title to
all personal property reflected in the ANB Financial Statements as of March 31,
1999, other than personal property disposed of in the ordinary course of
business since March 31, 1999; good title to or right to use by valid and
enforceable lease or contract all other properties and assets (whether real or
personal, tangible or intangible) which ANB and the Subsidiaries purports to own
or which ANB or any Subsidiary uses in its business; good title to, or right to
use by terms of a valid and enforceable lease or contract, all other property
used in their respective businesses; and good title to all property and assets
acquired and not disposed of or leased since March 31, 1999. All of such
properties and assets are owned by ANB or a Subsidiary free and clear of all
land or conditional sales contracts, mortgages, liens, pledges, restrictions,
security interests, charges, claims, rights of third parties or encumbrances of
any nature except: (i) as set forth in the Disclosure Schedule; (ii) as
specifically noted in the ANB Financial Statements; (iii) statutory liens for
taxes not yet delinquent or being contested in good faith by appropriate
proceedings; (iv) pledges or liens required to be granted in connection with the
acceptance of government deposits or
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granted in connection with repurchase or reverse repurchase agreements; and (v)
easements, encumbrances and liens of record, imperfections of title and other
limitations which are not material in amounts to ANB on a consolidated basis and
which do not materially detract from the value or materially interfere with the
present or contemplated use of any of the properties subject thereto or impair
the use thereof for the purposes for which they are held or used. All real
property owned or leased by ANB or any Subsidiary is in compliance with all
applicable zoning and land use laws.
(b) ANB and the Subsidiaries have conducted their respective business
in compliance with all federal, state, county and municipal laws, statutes,
regulations, rules, ordinances, orders, directives, restrictions and
requirements relating to, without limitation, responsible property transfer,
underground storage tanks, petroleum products, air pollutants, water pollutants
or storm water or process waste water or otherwise relating to the environment
or toxic or hazardous substances or to the manufacturing, recycling, handling,
processing, distribution, use, generation, treatment, storage, disposal or
transport of any hazardous or toxic substances or petroleum products (including
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, without
limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency, the Army
Corp of Engineers, the Department of Interior, the United States Fish and
Wildlife Service and any state department of natural resources or state
environmental protection agency now (collectively, "Environmental Laws"). Except
as set forth in the Disclosure Schedule, there are no pending or, to the best
knowledge of ANB after due inquiry, threatened, claims, actions or proceedings
by any local municipality, sewage district or other governmental entity against
ANB or any Subsidiary with respect to the Environmental Laws. No environmental
clearances or other governmental approvals are required for the conduct of the
business of ANB or any Subsidiary as presently conducted. Neither ANB nor any
Subsidiary is the owner, and has not been in the chain of title or the operator
or lessee, of any property on which any substances have been released, which
substances if known to be present on, at or under such property would require
clean-up, removal or any other remedial action under any Environmental Law, and
there is no reasonable basis or grounds for any such claim, action or
proceeding. ANB and the Subsidiaries own, operate, lease and control, and have
owned, operated, leased and controlled, all real property in compliance with the
Environmental Laws. Neither ANB nor any Subsidiary has any liability for any
clean-up or remediation under any of the Environmental Laws with respect to any
real property.
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4.12. Loans. (a) Except as set forth in the Disclosure Schedule, there
is no loan by any Bank in excess of $50,000 that has been classified by bank
regulatory examiners or management as "Other Loans Specially Mentioned,"
"Substandard," "Doubtful" or "Loss" or in excess of $50,000 that has been
identified by accountants or auditors (internal or external) as having a
significant risk of uncollectability. The most recent loan watch list of each
Bank and a list of all loans in excess of $50,000 which any Bank has determined
to be thirty (30) days or more past due with respect to principal or interest
payments or has placed on nonaccrual status has been provided to ONB.
(b) All loans reflected in the ANB Financial Statements as of March 31,
1999 and which have been made, extended, renewed, restructured, approved,
amended or acquired since March 31, 1999: (i) to the best knowledge of ANB after
due inquiry, constitute the legal, valid and binding obligation of the obligor
and any guarantor named therein, except to the extent limited by general
principles of equity and public policy or by bankruptcy, insolvency, fraudulent
transfer, reorganization, liquidation, moratorium, readjustment of debt or other
laws of general application relative to or affecting the enforcement of
creditors' rights; (ii) are evidenced by notes, instruments or other evidences
of indebtedness which are true, genuine and what they purport to be; and (iii)
are secured, to the extent that ANB or any Subsidiary has a security interest in
collateral or a mortgage securing such loans, by perfected security interests or
recorded mortgages naming ANB or a Subsidiary as the secured party or mortgagee
(unless by written agreement to the contrary).
(c) The reserves, the allowance for possible loan and lease losses and
the carrying value for real estate owned which are shown on the ANB Financial
Statements are adequate in all respects under the requirements of generally
accepted accounting principles applied on a consistent basis to provide for
possible losses on items for which reserves were made, on loans and leases
outstanding and real estate owned as of the respective dates.
4.13. Shareholder Rights Plan. Except as otherwise provided in this
Agreement, the Disclosure Schedule and ANB's Articles of Incorporation and
By-Laws, ANB has no shareholder rights plan or any other plan, program or
agreement involving, restricting, prohibiting or discouraging a change in
control or merger of ANB or which may be considered an anti-takeover mechanism.
4.14. Employee Benefit Plans. (a) With respect to the employee benefit
plans, as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), sponsored or otherwise maintained by ANB or any
Subsidiary, whether written or oral, in which ANB or any Subsidiary participates
as a participating employer; to which ANB or any Subsidiary contributes and
including any such plans which within the preceding six years have been
terminated, merged into another plan of ANB or any Subsidiary, frozen or
discontinued (collectively, "ANB Plans") except as set forth on
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the Disclosure Schedule: (i) all such ANB Plans have been, in all respects,
maintained in compliance with the requirements prescribed by all applicable
statutes, orders and governmental rules or regulations, including, without
limitation, ERISA, the Code, and Treasury and Labor Regulations promulgated
thereunder, (ii) all ANB Plans intended to constitute tax-qualified plans under
Section 401(a) of the Code have received favorable determination letters from
the Internal Revenue Service ("Service") with respect to "TRA" (as defined in
Section 1 of Rev. Proc. 93-39), and ANB is not aware of any circumstances likely
to result in revocation of any such favorable determination letter; (iii) except
for the ANB Common Stock held by its trustee as an asset of the ANB Pension
Plan, no ANB Plan (or its related trust) holds any stock or other securities of
ANB or any related or affiliated person or entity; (iv) ANB has not engaged in
any transaction that may subject ANB, or any ANB Plan, to a civil penalty
imposed by Section 502 of ERISA; (v) no prohibited transaction (as defined in
Section 406 of ERISA and as defined in Section 4975(c) of the Code) has occurred
with respect to any ANB Plan; (vi) there are no actions, suits, proceedings or
claims pending (other than routine claims for benefits) or, to the best
knowledge of ANB after due inquiry, threatened, against ANB, any Subsidiary, any
ANB Plan, any fiduciary of any ANB Plan or the assets of any ANB Plan as to
which ANB or any Subsidiary would have liability.
(b) ANB has made available to ONB true, accurate and complete copies of
the following (including all plans and programs which have been terminated): (i)
pension, retirement, profit-sharing, savings, stock purchase, stock bonus, stock
ownership, stock option and stock appreciation right plans and all amendments
thereto and all summary plan descriptions thereof (including any modifications
thereto); (ii) all employment, deferred compensation (whether funded or
unfunded), salary continuation, consulting, bonus, severance and collective
bargaining agreements, arrangements or understandings; (iii) all executive and
other incentive compensation plans, programs and agreements; (iv) all group
insurance and health insurance contracts, policies or plans; and (v) all other
incentive, welfare or employee benefit plans, or agreements, maintained or
sponsored, participated in, or contributed to by ANB or any Subsidiary for its
current or former directors, officers or employees.
(c) Except as set forth on the Disclosure Schedule, no current or
former director, officer or employee of ANB or any Subsidiary is entitled to any
benefit under any welfare benefit plans (as defined in Section 3(1) of ERISA)
after termination of employment with ANB, except that such individuals may be
entitled to continue their group health care coverage pursuant to the retiree
health coverage provisions of the ANB Corporation Group Health Plan or pursuant
to Section 4980B of the Code if they pay the cost of such coverage pursuant to
the applicable requirements of the Plan or the Code with respect thereto,
whichever is applicable.
(d) With respect to any group health plan (as defined in Section 607(1)
of ERISA) sponsored or maintained by ANB or any Subsidiary, in which ANB or any
Subsidiary participates as a
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participating employer or to which ANB or any Subsidiary contributes, no
director, officer, employee or agent of ANB or any Subsidiary has engaged in any
action or failed to act in such a manner that, as a result of such action or
failure to act, would cause a tax to be imposed on ANB or any Subsidiary under
Code Section 4980B(a). With respect to all such plans, all applicable provisions
of Section 4980B of the Code and Section 601 of ERISA have been complied with in
all respects by ANB and the Subsidiaries.
(e) Except as set forth on the Disclosure Schedule, there are no
collective bargaining, employment, management, consulting, deferred
compensation, reimbursement, indemnity, retirement, early retirement, severance
or similar plans or agreements, under discussion or negotiation by management
with any employee or group of employees, any member of management or any other
person.
4.15. Obligations to Employees. All contributions required to be made
under the terms of any ANB Plan have been timely made or have been reflected on
the Audited Financial Statements or the Preliminary Financial Statements.
Neither any ANB Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (a "Pension Plan") nor any single-employer plan
or any entity which is considered one employer with ANB under Section 4001 of
ERISA or section 414 of the Code (an "ERISA Affiliate") has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Neither ANB nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer plan
of any ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
4.16. Taxes, Returns and Reports. Except as set forth in the Disclosure
Schedule, ANB and each Subsidiary has since January 1, 1995 (a) duly filed all
federal, state, local and foreign tax returns of every type and kind required to
be filed, and each such return is true, accurate and complete in all respects;
(b) paid or otherwise adequately reserved in accordance with generally accepted
accounting principles for all taxes, assessments and other governmental charges
due or claimed to be due upon ANB or any Subsidiary or any of their income,
properties or assets; and (c) not requested an extension of time for any such
payments (which extension is still in force). ANB has established, and shall
establish in the Subsequent ANB Financial Statements, in accordance with
generally accepted accounting principles, a reserve for taxes in the ANB
Financial Statements adequate to cover all of ANB's and the Subsidiaries' tax
liabilities (including, without limitation, income taxes, payroll taxes and
withholding, and franchise fees) for the periods then ending. Neither ANB nor
any Subsidiary has, nor will any one of them have, any liability for taxes of
any nature for or with respect to the operation of their respective businesses,
including the business of any subsidiary, or ownership of their assets,
including the assets of any subsidiary, from the date hereof up to and including
the Effective Time, except to the extent set forth in
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the Subsequent ANB Financial Statements (as hereinafter defined) or as accrued
or reserved for on the books and records of ANB. Neither ANB nor any Subsidiary
is currently under audit by any state or federal taxing authority. No federal,
state or local tax returns of ANB have been audited by any taxing authority
during the past five (5) years.
4.17. Deposit Insurance. The deposits of the Banks are insured by the
FDIC in accordance with the Federal Deposit Insurance Act, as amended, and ANB
and each Bank have paid or properly reserved or accrued for all current premiums
and assessments with respect to such deposit insurance.
4.18. Insurance. Set forth in the Disclosure Schedule is a list and
brief description of all policies of insurance (including, without limitation,
bankers' blanket bond, directors' and officers' liability insurance, property
and casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by ANB or any Subsidiary on the
date hereof or with respect to which ANB or any Subsidiary pays any premiums.
Each such policy is in full force and effect and all premiums due thereon have
been paid when due, and a true, accurate and complete copy thereof has been made
available to ONB prior to the date hereof.
4.19. Books and Records. The books and records of ANB and the
Subsidiaries have been fully, properly and accurately maintained.
4.20. Broker's, Finder's or Other Fees. Except for reasonable fees of
ANB's attorneys, accountants and investment bankers, all of which shall be paid
by ANB prior to the Effective Time, no agent, broker or other person acting on
behalf of ANB or any Subsidiary or under any authority of ANB or any Subsidiary
is or shall be entitled to any commission, broker's or finder's fee or any other
form of compensation or payment from any of the parties hereto relating to this
Agreement and the Merger contemplated hereby.
4.21. Interim Events. (a) Except as set forth in the Disclosure
Schedule, between the period from March 31, 1999 to the date of this Agreement,
no event has occurred and no fact or circumstance shall have come to exist or
come to be known which, directly or indirectly, individually or taken together
with all other facts, circumstances and events, has had, or is reasonably likely
to have, a Material Adverse Effect.
(b) Except as set forth in the Disclosure Schedule, between the period
from March 31, 1999 to the date of this Agreement, ANB and the Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices (excluding the incurrence of fees and
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expenses of professional advisors related to this Agreement and the transactions
contemplated hereby) and there has not been:
(i)) any declaration, setting aside or payment of
any dividend or other distribution (whether
in cash, stock or property) with respect to
ANB Common Stock; or
(ii) any split, combination or reclassification
of any capital stock of ANB or any
subsidiary or any issuance or the
authorization of any issuance of any other
securities in respect of, or in lieu of or
in substitution for shares of ANB Common
Stock, except for issuances of ANB Common
Stock upon the exercise of the Options
awarded prior to the date hereof in
accordance with the terms of the Stock
Option Plans.
4.22. Regulatory Filings. ANB and the Subsidiaries have filed and will
continue to file in a timely manner all required filings with the Securities and
Exchange Commission ("SEC"), including, but not limited to, all reports on Form
8-K, Form 10-K and Form 10-Q and proxy statements, and with all federal and
state regulatory agencies and authorities as required by applicable law. All
such filings with the SEC and with all other federal and state regulatory
agencies were and will be true, accurate and complete as of the dates of the
filings and have been complied or will comply in all respects as to form with
the applicable requirements and prepared in conformity with generally accepted
regulatory accounting principles applied on a consistent basis, and no such
filing contained or will contain any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements, at
the time and in light of the circumstances under which they were made, not false
or misleading.
4.23. Indemnification Agreements. (a) Neither ANB nor any Subsidiary is
a party to any indemnification, indemnity or reimbursement agreement, contract,
commitment or understanding to indemnify any present or former director,
officer, employee, shareholder or agent against liability or hold the same
harmless from liability other than as expressly provided in the Articles of
Incorporation or ByLaws of ANB, Peoples Bank, Farmers State Bank and ANB
Financial and the Articles of Association and By-Laws of American National Bank
and ANTIM.
(b) No claims have been made against or filed with ANB or any
Subsidiary nor have, to the best knowledge of ANB after due inquiry, any claims
been threatened against ANB or any Subsidiary, for indemnification against
liability or for reimbursement of any costs or expenses incurred in connection
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with any legal or regulatory proceeding by any present or former director,
officer, shareholder, employee or agent of ANB or any Subsidiary.
4.24. Year 2000. (a) All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(collectively, the "Systems") necessary for ANB to carry on its business as
presently conducted and as contemplated to be conducted in the future are Year
2000 Compliant or will be Year 2000 Compliant within a period of time calculated
to result in no disruption of any of ANB's business operations. Neither ANB nor
any of the Subsidiary has received, or reasonably expects to receive, a
deficiency notice for any federal or state regulator relating to their failure
to be Year 2000 Compliant. For purposes of this Section 4.24, "Year 2000
Compliant" means that such Systems are designed to be used prior to, during and
after the Gregorian calendar year 2000 A.D. and will operate during each such
time period without error relating to date data, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century.
(b) ANB has:
(i) undertaken a detailed inventory, review, and
assessment of all areas within its business and
operations that could be adversely affected by the
failure of ANB to be Year 2000 Compliant on a timely
basis;
(ii) developed a detailed plan and timeline for becoming
Year 2000 Compliant on a timely basis; and
(iii) to date, implemented that plan in accordance with that
timetable.
4.25. Shareholder Approval. The affirmative vote of the holders of a
majority of the ANB Common Stock (which are issued and outstanding on the record
date relating to the meeting of shareholders) is required for shareholder
approval of this Agreement and the Merger.
4.26. Nonsurvival of Representations and Warranties. The
representations and warranties of ANB contained in this Agreement shall expire
at the earlier of the termination of this Agreement and the Effective Time, and
thereafter ANB and all directors, officers and employees of ANB shall have no
further liability with respect thereto, except for fraud or for false or
misleading statements made intentionally or knowingly in connection with such
representations and warranties.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF ONB
On or prior to the date hereof, ONB has delivered to ANB a schedule
(the "ONB Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate as an exception to one or more
representations or warranties contained in this Section 5 or to one or more of
its covenants contained in Section 7; provided, that the mere inclusion of an
item in the ONB Disclosure Schedule as an exception to a representation or
warranty shall not be deemed an admission by ONB that such item represents a
material exception or fact, event or circumstance or that such item is
reasonably likely to result in a Material Adverse Effect (as defined below).
For the purpose of this Agreement, and in relation to ONB and its
subsidiaries, a Material Adverse Effect means any effect that (i) is material
and adverse to the financial position, results of operations or business of ONB
and its subsidiaries taken as a whole, or (ii) would materially impair the
ability of ONB to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the
other transactions contemplated by this Agreement; provided, however, that
Material Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and their holding companies generally, (c) any modifications or changes to
valuation policies and practices in connection with the Merger or restructuring
charges taken in connection with the Merger, in each case in accordance with
generally accepted accounting principles, and (d) changes in general level of
interest rate or conditions or circumstances that affect the banking industry
generally.
No representation or warranty of ONB contained in this Section 5, shall
deemed untrue or incorrect, and ONB shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstances or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in this Section 5, has had or is reasonably
likely to have a Material Adverse Effect on ONB.
ONB accordingly hereby represents and warrants to ANB as follows:
5.01. Organization and Authority. ONB is a corporation duly organized
and validly existing under the laws of the State of Indiana, is a registered
bank holding company under the BHC Act, and has full power and authority
(corporate and otherwise) to own and lease its properties as presently owned and
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leased and to conduct its business in the manner and by the means utilized as of
the date hereof. ONB's common stock is registered pursuant to Section 12, and
ONB is subject to the reporting requirements, of the 1934 Act. Each of ONB's
direct subsidiaries has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its organization, and has full
power and authority to own and lease its properties as presently owned and
leased and to conduct its business in the manner and by the means utilized as of
the date hereof.
5.02. Authorization. (a) ONB has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, subject to the fulfillment of the conditions precedent set forth in
Section 8.01 (d), (e) and (f) hereof. As of the date hereof, ONB is not aware of
any reason why the approvals set forth in Section 8.01(e) will not be received
in a timely manner and without the imposition of a condition, restriction or
requirement of the type described in Section 8.01(e). This Agreement and its
execution and delivery by ONB have been duly authorized by its Board of
Directors. Assuming due execution and delivery by ANB, this Agreement
constitutes a valid and binding obligation of ONB, subject to the conditions
precedent set forth in Section 8.01 hereof, and is enforceable in accordance
with its terms, except to the extent limited by general principles of equity and
public policy and by bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application relating
to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger contemplated hereby: (i) conflicts with or violates ONB's Articles of
Incorporation or By-Laws; (ii) conflicts with or violates in any respect any
local, state, federal or foreign law, statute, ordinance, rule or regulation
(provided that the approvals of or filings with applicable government regulatory
agencies or authorities required for consummation of the Merger are obtained) or
any court or administrative judgment, order, injunction, writ or decree; (iii)
conflicts with, results in a breach of or constitutes a default under any note,
bond, indenture, mortgage, deed of trust, license, contract, lease, agreement,
arrangement, commitment or other instrument to which ONB is a party or by which
ONB is subject or bound; (iv) results in the creation of or gives any person,
corporation or entity the right to create any lien, charge, claim, encumbrance
or security interest, or results in the creation of any other rights or claims
of any other party (other than ANB) or any other adverse interest, upon any
right, property or asset of ONB; or (v) terminates or gives any person,
corporation or entity the right to terminate, accelerate, amend, modify or
refuse to perform under any note, bond, indenture, mortgage, agreement,
contract, lease, license, arrangement, deed of trust, commitment or other
instrument to which ONB is bound or with respect to which ONB is to perform any
duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with applicable federal
and state banking, securities and corporation statutes, all as amended, and the
rules and regulations promulgated thereunder,
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no notice to, filing with, exemption by or consent, authorization or approval of
any governmental agency or body is necessary for the consummation by ONB of the
Merger contemplated by this Agreement.
5.03. Capitalization. (a) The authorized capital stock of ONB as of the
date hereof consists of (i) 75,000,000 shares of common stock, no par value per
share, of which approximately 46,158,663 shares were issued and outstanding as
of June 30, 1999, and (ii) 2,000,000 shares of preferred stock, no shares of
which have been or are presently intended to be issued, other than in connection
with any obligations of ONB to issue such preferred stock under its
shareholders' rights plan. Such issued and outstanding shares of ONB capital
stock have been duly and validly authorized by all necessary corporate action of
ONB, are validly issued, fully paid and nonassessable, and have not been issued
in violation of any pre-emptive rights of any present or former ONB shareholder.
All of the issued and outstanding shares of common stock of ONB's subsidiaries
are owned by ONB free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights or claims of any other person, corporation or entity
with respect thereto. Except as described in this Section 5.03, ONB has no other
authorized capital stock. Except for shares of ONB common stock to be issued in
connection with: (i) ONB's dividend reinvestment and stock purchase plan; (ii)
ONB's outstanding convertible subordinated debentures; (iii) acquisitions by ONB
of other financial institutions or holding companies; and (iv) ONB's restricted
stock plan and other employee benefit plans, ONB has no intention or obligation
to authorize or issue any other capital stock or any additional shares of ONB
capital stock.
(b) Except for shares of ONB common stock beneficially owned by its
trust affiliates, ONB has no knowledge of any person or entity who beneficially
owns 5% or more of its issued and outstanding shares of common stock.
5.04. Organizational Documents. The Articles of Incorporation and
By-Laws of ONB in force as of the date of this Agreement have been delivered to
ANB and represent true, accurate and complete copies of such corporate documents
of ONB in effect as of the date of this Agreement.
5.05. Compliance With Law. Neither ONB nor any of its subsidiaries has
engaged in any activity nor taken or omitted to take any action which has
resulted or could result in the violation of any local, state, federal or
foreign law, statute, rule, regulation, ordinance, order, restriction or
requirement or of any order, injunction, judgment, writ or decree of any court
or government agency or body. ONB and each of its subsidiaries possesses and
holds all licenses, franchises, permits, certificates and other authorizations
necessary for the continued conduct of their business without interference or
interruption.
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5.06. Regulatory Filings. ONB and each of its subsidiaries have filed
and will continue to file in a timely manner all required filings with the SEC,
including, but not limited to, all reports on Form 8-K, Form 10-K and Form 10-Q
and proxy statements, and with all other federal and state regulatory agencies
as required by applicable law. All filings by ONB with the SEC and with all
other federal and state regulatory agencies complied or will comply in all
respects as to form with the applicable requirements and were and will be true,
accurate and complete in all respects as of the dates of the filings, and no
such filings contained or will contain any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements,
at the time and in the light of the circumstances under which they were made,
not false or misleading.
5.07. Litigation and Pending Proceedings. (a) There are no claims,
actions, suits, proceedings, investigations or arbitrations pending or, to the
best knowledge of ONB after due inquiry, threatened in any court or before or by
any government agency or authority, arbitration panel or otherwise (nor is there
any basis for any claim, action, suit, proceeding, litigation, investigation or
arbitration) against, by or affecting ONB or its subsidiaries which would
prevent the performance of this Agreement, declare the same unlawful or cause
the rescission hereof.
(b) Neither ONB nor any of its subsidiaries is: (i) subject to any
outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority; (ii) presently charged
with or, to the best knowledge of ONB, under governmental investigation with
respect to any actual or alleged violations of any law, statute, rule,
regulation or ordinance; or (iii) the subject of any pending or, to the best
knowledge of ONB after due inquiry, threatened proceeding by any government
regulatory agency or authority having jurisdiction over its business, assets,
capital, properties or operations.
5.08. Financial Statements and Reports. (a) ONB or its agents have
delivered to ANB copies of the following financial statements and reports of ONB
and its subsidiaries, including the notes thereto (collectively, the "ONB
Financial Statements"):
(i) Consolidated Balance Sheets and related Consolidated
Statements of Income and Consolidated Statements of Changes in
Shareholders' Equity of ONB as of and for the years ended
December 31, 1996, 1997 and 1998, and for the fiscal quarter
ended March 31, 1999; and
(ii) Consolidated Statements of Cash Flows of ONB for the years
ended December 31, 1996, 1997 and 1998 and for the fiscal
quarter ended March 31, 1999.
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(b) The ONB Financial Statements present fairly the consolidated
financial position of ONB and its subsidiaries as of and at the dates shown and
the consolidated results of operations for the periods covered thereby. The ONB
Financial Statements described in clauses (i) and (ii) above, which consist of
fiscal year-end information, are audited financial statements and have been
prepared in conformance with generally accepted accounting principles applied on
a consistent basis except as may otherwise be indicated in any accountants'
notes or reports with respect to such financial statements. The ONB Financial
Statements do not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, absolute or contingent, or any
other facts, which inclusion or omission would render any of the ONB Financial
Statements false, misleading or inaccurate in any respect.
5.09. Shares to be Issued in Merger. The shares of ONB common stock
which ANB shareholders will be entitled to receive upon consummation of the
Merger pursuant to this Agreement will, at the Effective Time, be duly
authorized and will, when issued in accordance with this Agreement, be validly
issued, fully paid and nonassessable and will have been registered under the
Securities Act of 1933, as amended ("1933 Act") and listed for trading on the
Nasdaq National Market System.
5.10. Shareholder Approval. Approval by ONB's shareholders of the
Merger or for any other actions contemplated by this Agreement is not required.
5.11. Accuracy of Statements Made to ANB. No representation, warranty
or other statement made, or any information provided or to be provided, by ONB
in this Agreement, and no written report, statement, list, certificate,
materials or other information furnished or to be furnished by ONB to ANB
through and including the Effective Time in connection with this Agreement or
the Merger contemplated hereby (including, without limitation, any written
information which has been or shall be supplied by ONB with respect to its
financial condition, results of operations, business, assets, capital or
directors and officers for inclusion in the proxy statement-prospectus and
registration statement relating to the Merger), contains or shall contain (in
the case of information relating to the proxy statement-prospectus at the time
it is mailed to ANB's shareholders) any untrue or misleading statement of
material fact or omits or shall omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they are made, not false or misleading.
5.12. Broker's, Finder's or Other Fees. Except for reasonable fees of
ONB's attorneys and accountants and investment bankers, no agent, broker or
other person acting on behalf of ONB or under any authority of ONB is or shall
be entitled to any commission, broker's or finder's fee or any other form of
compensation or payment from any of the parties hereto relating to this
Agreement and the Merger contemplated hereby.
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5.13. Accounting Treatment. As of the date of this Agreement, it is
aware of no reason why the Merger will fail to qualify for "pooling of
interests" accounting treatment.
5.14 Taxes, Returns and Reports. Except as set forth in the Disclosure
Schedule, ONB has since January 1, 1995 (a) duly filed all federal, state, local
and foreign tax returns of every type and kind required to be filed, and each
such return is true, accurate and complete in all respects; (b) paid or
otherwise adequately reserved in accordance with generally accepted accounting
principles for all taxes, assessments and other governmental charges due or
claimed to be due upon ONB or its income, properties or assets; and (c) not
requested an extension of time for any such payments (which extension is still
in force). ONB has established, and shall establish in its subsequent financial
statements, in accordance with generally accepted accounting principles, a
reserve for taxes in the ONB Financial Statements adequate to cover all of its
tax liabilities (including, without limitation, income taxes, payroll taxes and
withholding, and franchise fees) for the periods then ending. ONB does not have,
nor will it have, any liability for taxes of any nature for or with respect to
the operation of their respective businesses, including the business of any
subsidiary, or ownership of their assets, including the assets of any
subsidiary, from the date hereof up to and including the Effective Time, except
to the extent set forth in its subsequent financial statements or as accrued or
reserved for on the books and records of ONB. ONB is not currently under audit
by any state or federal taxing authority. No federal, state or local tax returns
of ONB have been audited by any taxing authority during the past five (5) years.
5.14. Employee Benefit Plans. (a) With respect to the employee benefit
plans, as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), sponsored or otherwise maintained by ONB or any
of its subsidiaries, whether written or oral, in which ONB or any of its
subsidiaries participates as a participating employer; to which ONB or any of
its subsidiaries contributes and including any such plans which within the
preceding six years have been terminated, merged into another plan of ONB or any
of its subsidiaries, frozen or discontinued (collectively, "ONB Plans"): (i) all
such ONB Plans have been, in all respects, maintained in compliance with the
requirements prescribed by all applicable statutes, orders and governmental
rules or regulations, including, without limitation, ERISA, the Code, and
Treasury and Labor Regulations promulgated thereunder, (ii) all ONB Plans
intended to constitute tax-qualified plans under Section 401(a) of the Code have
received favorable determination letters from the Internal Revenue Service
("Service") with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39),
and ONB is not aware of any circumstances likely to result in revocation of any
such favorable determination letter; (iii) except for the ONB common stock held
by its trustee as an asset of the ONB Employee Stock Ownership Plan and the ONB
Employees' Retirement Plan, no ONB Plan (or its related trust) holds any stock
or other securities of ONB or any related or affiliated person or entity;(iv)
ONB has not engaged in any transaction that may subject ONB, or any ONB Plan, to
a civil penalty imposed by Section 502 of ERISA; (v) no prohibited
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transaction (as defined in Section 406 of ERISA and as defined in Section
4975(c) of the Code) has occurred with respect to any ONB Plan; (vi) to the best
knowledge of ONB, there are no actions, suits, proceedings or claims pending
(other than routine claims for benefits) or threatened, against ONB, any of its
subsidiaries, any ONB Plan, any fiduciary of any ONB Plan or the assets of any
ONB Plan as to which ONB would have liability.
(b) ONB has made available to ANB true, accurate and complete copies of
the following (including all plans and programs which have been terminated): (i)
pension, retirement, profit-sharing, savings, stock purchase, stock bonus, stock
ownership, stock option and stock appreciation right plans and all amendments
thereto and all summary plan descriptions thereof (including any modifications
thereto); (ii) all employment, deferred compensation (whether funded or
unfunded), salary continuation, consulting, bonus, severance and collective
bargaining agreements, arrangements or understandings; (iii) all executive and
other incentive compensation plans, programs and agreements; (iv) all group
insurance and health insurance contracts, policies or plans; and (v) all other
incentive, welfare or employee benefit plans, or agreements, maintained or
sponsored, participated in, or contributed to by ONB or any of its subsidiaries
for its current or former directors, officers or employees.
(c) No current or former director, officer or employee of ONB or any of
its subsidiaries is entitled to any benefit under any welfare benefit plans (as
defined in Section 3(1) of ERISA) after termination of employment with ANB,
except that such individuals may be entitled to continue their group health care
coverage pursuant to the retiree health coverage provisions of the ONB
Corporation Group Health Plan or pursuant to Section 4980B of the Code if they
pay the cost of such coverage pursuant to the applicable requirements of the
Plan or the Code with respect thereto, whichever is applicable.
(d) With respect to any group health plan (as defined in Section 607(1)
of ERISA) sponsored or maintained by ONB or any of its subsidiaries, in which
ONB or any of its subsidiaries participates as a participating employer or to
which ONB or any of its subsidiaries contributes, no director, officer, employee
or agent of ONB or any of its subsidiaries has engaged in any action or failed
to act in such a manner that, as a result of such action or failure to act,
would cause a tax to be imposed on ONB or any of its subsidiaries under Code
Section 4980B(a). With respect to all such plans, all applicable provisions of
Section 4980B of the Code and Section 601 of ERISA have been complied with in
all respects by ONB and its subsidiaries.
5.16 Books and Records. The books and records of ONB have been fully,
properly and accurately maintained.
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5.17 Year 2000. (a) All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(collectively, the "Systems") necessary for ONB to carry on its business as
presently conducted and as contemplated to be conducted in the future are Year
2000 Compliant or will be Year 2000 Compliant within a period of time calculated
to result in no disruption of any of ONB's business operations. Neither ONB nor
any of its banking subsidiaries has received, or reasonably expects to receive,
a deficiency notice for any federal or state regulator relating to their failure
to be Year 2000 Compliant. For purposes of this Section 5.17, "Year 2000
Compliant" means that such Systems are designed to be used prior to, during and
after the Gregorian calendar year 2000 A.D. and will operate during each such
time period without error relating to date data, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century.
(b) ONB has:
(i) undertaken a detailed inventory, review, and
assessment of all areas within its business and
operations that could be adversely affected by the
failure of ONB to be Year 2000 Compliant on a timely
basis;
(ii) developed a detailed plan and timeline for becoming
Year 2000 Compliant on a timely basis; and
(iii) to date, implemented that plan in accordance with
that timetable.
5.18. Nonsurvival of Representations and Warranties. The
representations and warranties of ONB contained in this Agreement shall expire
at the earlier of the termination of this Agreement and the Effective Time and,
thereafter, ONB and all directors, officers and employees of ONB shall have no
further liability with respect thereto, except for fraud or for false or
misleading statements made intentionally or knowingly in connection with such
representations and warranties.
SECTION 6
COVENANTS OF ANB
ANB covenants and agrees with ONB, and covenants and agrees to cause
the Subsidiaries, to act as follows:
6.01. Shareholder Approval. Subject to Section 6.06 hereof, ANB shall
submit this Agreement to its shareholders for approval and adoption at a meeting
to be called and held in accordance with
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applicable law and the Articles of Incorporation and By-Laws of ANB at the
earliest possible reasonable date. Subject to Section 6.06 hereof, the Board of
Directors of ANB shall recommend to ANB's shareholders that such shareholders
approve and adopt this Agreement and the Merger contemplated hereby and shall
solicit proxies voting in favor of this Agreement from ANB's shareholders.
6.02. Other Approvals. (a) ANB and the Subsidiaries shall proceed
expeditiously, cooperate fully and use its best efforts to assist ONB in
procuring upon reasonable terms and conditions all consents, authorizations,
approvals, registrations and certificates, in completing all filings and
applications and in satisfying all other requirements prescribed by law which
are necessary for consummation of the Merger on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
(b) Any materials or information provided by ANB or any Subsidiary to
ONB for use by ONB in any filing with any state or federal regulatory agency or
authority shall not contain any untrue or misleading statement of material fact
or shall omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
false or misleading.
6.03. Conduct of Business. (a) On and after the date of this Agreement
and until the Effective Time or until this Agreement shall be terminated as
herein provided, neither ANB nor any Subsidiary shall, without the prior written
consent of ONB:
(i) make any changes in its capital stock accounts
(including, without limitation, any stock split,
stock dividend, recapitalization or
reclassification), except for the ANB DRIP and the
issuance of up to 391,624 shares of ANB Common Stock
under the Stock Option Plans;
(ii) authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to
the issued and outstanding common stock as set forth
in Section 4.03 hereof;
(iii) distribute or pay any dividends on its shares of
common stock, or make any other distribution to its
shareholders except that (A) American National Bank,
Peoples Bank, Farmers State Bank and ANTIM may pay
cash dividends to ANB in the ordinary course of
business for payment of reasonable and necessary
business and operating expenses of ANB and to provide
funds for ANB's
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dividends to its shareholders in accordance with this
Agreement, and (B) ANB may pay to its shareholders
its usual and customary quarterly cash dividend of no
greater than nineteen cents ($0.19) per share for any
quarterly period, provided that no dividend may be
paid for the quarterly period in which the Merger is
consummated if, during such period, ANB shareholders
will become entitled to receive dividends on their
shares of ONB common stock received pursuant to this
Agreement;
(iv) redeem any of its outstanding shares of common stock;
(v) merge, combine or consolidate or effect a share
exchange with or sell its assets or any of its
securities to any other person, corporation or entity
or enter into any other similar transaction not in
the ordinary course of business;
(vi) purchase any assets or securities or assume any
liabilities of another bank holding company, bank,
corporation or other entity, except in the ordinary
course of business necessary to manage their
investment portfolios;
(vii) make any loan or commitment to lend money, issue any
letter of credit or accept any deposit, except in the
ordinary course of business in accordance with its
existing banking practices;
(viii) except for the acquisition or disposition in the
ordinary course of business of other real estate
owned, acquire or dispose of any real or personal
property (excluding the investment portfolio of the
Banks) or fixed asset constituting a capital
investment in excess of $100,000 individually or
$200,000 in the aggregate;
(ix) subject any of its properties or assets to a
mortgage, lien, claim, charge, option, restriction,
security interest or encumbrance, except for tax and
other liens which arise by operation of law and with
respect to which payment is not past due or is being
contested in good faith by appropriate proceedings
and except for pledges or liens: (i) required to be
granted in connection with acceptance by ANB or any
Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase
agreements; or (iii) otherwise incurred in the
ordinary course of the conduct of its business;
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(x) promote to a new position or increase the rate of
compensation or enter into any agreement to promote
to a new position or increase the rate of
compensation, of any director, officer or employee of
ANB or any Subsidiary (except for promotions and
compensation increases in the ordinary course of
business and in accordance with past practices and
established employment policies of ANB and the
Subsidiaries and other than pursuant to an employee
retention program, which has been disclosed to ONB);
(xi) execute, create, institute, modify, amend or
terminate (except with respect to any amendments to
the ANB Plans required by law, rule or regulation)
any pension, retirement, savings, stock purchase,
stock bonus, stock ownership, stock option, stock
appreciation or depreciation rights or profit sharing
plans; any employment, deferred compensation,
consulting, bonus or collective bargaining agreement;
any group insurance or health contract or policy; or
any other incentive, retirement, welfare or employee
welfare benefit plan, agreement or understanding for
current or former directors, officers or employees of
ANB or any Subsidiary; or change the level of
benefits or payments under any of the foregoing or
increase or decrease any severance or termination of
pay benefits or any other fringe or employee benefits
other than as required by law or regulatory
authorities or the terms of any of the foregoing;
(xii) modify, amend or institute new employment policies or
practices, or enter into, renew or extend any
employment, indemnity, reimbursement, consulting,
compensation or severance agreements with respect to
any present or former directors, officers or
employees of ANB or any Subsidiary;
(xiii) hire or employ any new or additional employees of ANB
or any Subsidiary, except those which are reasonably
necessary for the proper operation of their
respective businesses;
(xiv) elect or appoint any executive officers or directors
of ANB or any Subsidiary who are not presently
serving in such capacities;
(xv) amend, modify or restate ANB's, Peoples Bank's,
Farmers State Bank's, or ANB Financial's Articles of
Incorporation or By-Laws or American National Bank's
or ANTIM's Articles of Association or By-Laws from
those in effect on the date of this Agreement and as
delivered to ONB hereunder;
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(xvi) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option to or right to acquire any
shares of common stock or substantially all of the
assets, of ANB or any Subsidiary, or enter into any
agreement or commitment relative to the foregoing;
(xvii) fail to continue to make additions to in accordance
with the Banks' past practices and to otherwise
maintain in all respects the Banks' reserve for loan
and lease losses, or any other reserve account, in
accordance with safe, sound, and prudent banking
practices and in accordance with generally accepted
accounting principles applied on a consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but
not limited to, trade payables, incurred in the
regular and ordinary course of business as such
debts, liabilities, obligations and expenses become
due;
(xix) except for obligations disclosed within this
Agreement or the Disclosure Statement, trade payables
and similar liabilities and obligations incurred in
the ordinary course of business and the payment,
discharge or satisfaction in the ordinary course of
business of liabilities reflected in the ANB
Financial Statements or the Subsequent ANB Financial
Statements, (A) borrow any money (except for capital
purposes related to the Subsidiaries), (B) incur any
indebtedness including, without limitation, through
the issuance of debentures, or (C) incur any
liability or obligation (whether absolute, accrued,
contingent or otherwise), in an aggregate amount
exceeding $50,000 (other than as contemplated by
Section 6.03(a)(vii) hereof and legal, accounting and
fees related to the Merger);
(xx) open, close, move or, in any material respect,
expand, diminish, renovate, alter or change any of
its offices or branches; or
(xxi) pay or commit to pay any management or consulting or
other similar type of fees other than in the ordinary
course of business.
(b) ANB and the Subsidiaries shall maintain, or cause to be maintained,
in full force and effect, insurance on their assets, properties and operations,
fidelity coverage and directors' and officers' liability insurance on their
directors, officers and employees in such amounts and with regard to such
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liabilities and hazards as are currently insured by ANB and the Subsidiaries as
of the date of this Agreement.
6.04. Preservation of Business. On and after the date of this Agreement
and until the Effective Time or until this Agreement is terminated as herein
provided, ANB and the Subsidiaries shall: (a) carry on their business
substantially in the manner as is presently being conducted and in the ordinary
course of business; (b) use their reasonable best efforts to preserve their
business organization intact, keep available the services of the present
officers and employees and preserve their present relationships with customers
and persons having business dealings with it; (c) maintain all of the properties
and assets that each of them owns or utilizes in good operating condition and
repair, reasonable wear and tear excepted, and maintain insurance upon such
properties and assets in amounts and kinds comparable to that in effect on the
date of this Agreement; (d) maintain their books, records and accounts in the
usual, regular and ordinary manner, on a basis consistent with prior years and
in compliance with all material respects with all statutes, laws, rules and
regulations applicable to them and to the conduct of their business; and (e) not
knowingly do or fail to do anything which will cause a breach of, or default in,
any contract, agreement, commitment, obligation, understanding, arrangement,
lease or license to which any one of them is a party or by which any one of them
is or may be subject or bound.
6.05. Restrictions Regarding Affiliates. ANB shall, within thirty (30)
days after the date of this Agreement and promptly thereafter until the
Effective Time to reflect any changes, provide ONB with a list identifying each
person who may be deemed to be an affiliate of ANB for purposes of Rule 145
under the 1933 Act. On or prior to the date of this Agreement, and thereafter as
may be required for a person who may be deemed an affiliate of ANB following the
date of this Agreement, ANB shall obtain from each director, executive officer
and other person who may be deemed to be such an affiliate of ANB to deliver to
ONB on or prior to the date of this Agreement, and thereafter as may be required
for any other person who may be deemed an affiliate of ANB following the date of
this Agreement, a written agreement, substantially in the form as attached
hereto as Exhibit B, providing that such person: (a) shall not sell, pledge,
transfer, dispose of or otherwise reduce his or her market risk with respect to
the shares of ANB Common Stock directly or indirectly owned or held by such
person during the thirty (30) day period prior to the Effective Time; and (b)
will not sell, pledge, transfer, dispose of or otherwise reduce his or her
market risk with respect to the shares of ONB common stock to be received by
such person pursuant to this Agreement: (i) until such time as financial results
covering at least 30 days of combined operations of ONB and ANB have been
published as and when required and within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, and (ii) unless such sales
are pursuant to an effective Registration Statement under the 1933 Act or
pursuant to Rule 145 under the 1933 Act or another exemption from registration
under the 1933 Act. On or prior to the Effective Time, ANB shall use its best
efforts to obtain from each director, executive officer and other
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person who may be deemed to be an affiliate of ANB for purposes of Rule 145
under the 1933 Act to deliver to ONB at the Effective Time a certificate signed
by each such person certifying to the effect that such person has complied with
the terms and conditions of their written agreement delivered to ONB pursuant to
this Section 6.05.
6.06. Other Negotiations. (a) On and after the date of this Agreement
and until the Effective Time or until this Agreement is terminated as herein
provided, except with the prior written approval of ONB, neither ANB nor any
Subsidiary shall permit or authorize their respective directors, officers,
employees, agents or representatives to, directly or indirectly, initiate,
solicit or encourage, or provide information to, any corporation, association,
partnership, person or other entity or group concerning any merger,
consolidation, share exchange, combination, purchase or sale of substantial
assets, sale of shares of common stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing the right to acquire, capital stock) or similar transaction relating
to ANB or any Subsidiary or to which ANB or any Subsidiary may become a party
(all such transactions are hereinafter referred to as "Acquisition
Transactions").
(b) ANB and the Subsidiaries shall promptly communicate to ONB the
terms of any proposal or offer which any one of them may receive with respect to
an Acquisition Transaction. ANB or any Subsidiary may, in response to an
unsolicited written proposal with respect to an Acquisition Transaction from a
third party, furnish information to, and negotiate, explore or otherwise engage
in substantive discussions with such third party, and enter into any such
agreement, arrangement or understandings, in each case only if ANB's Board of
Directors determines in good faith by majority vote, after consultation with its
financial advisors and outside legal counsel, that failing to take such action
would be a breach of the fiduciary duties of ANB's Board of Directors.
6.07. Press Releases. Except as required by law, neither ANB nor any
Subsidiary shall issue any press releases or make any other public announcements
or disclosures relating to the Merger without the prior consent of ONB, which
consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. ANB shall promptly supplement, amend
and update, upon the occurrence of any change prior to the Effective Time, and
as of the Effective Time, the Disclosure Schedule with respect to any matters or
events hereafter arising which, if in existence or having occurred as of the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule or this Agreement and including, without limitation, any
fact which, if existing or known as of the date hereof, would have made any of
the representations or warranties of ANB contained herein incorrect, untrue or
misleading.
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6.09. Information, Access Thereto, Confidentiality. ONB and its
respective representatives and agents shall, on reasonable notice and during
normal business hours prior to the Effective Time, have full and continuing
access to the properties, facilities, operations, books and records of ANB and
the Subsidiaries. ONB and its respective representatives and agents may, prior
to the Effective Time, make or cause to be made such reasonable investigation of
the operations, books, records and properties of ANB and the Subsidiaries and of
their financial and legal condition as deemed necessary or advisable to
familiarize themselves with such operations, books, records, properties and
other matters; provided, however, that such access or investigation shall not
interfere with the normal business operations of ANB and the Subsidiaries. Upon
request, ANB and the Subsidiaries shall furnish ONB or its respective
representatives or agents, their attorneys' responses to external auditors
requests for information, management letters received from their external
auditors and such financial, loan and operating data and other information
reasonably requested by ONB which has been or is developed by ANB or any
Subsidiary, their auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by ANB or any
Subsidiary of any claim of attorney-client privilege), and will permit ONB and
its respective representatives or agents to discuss such information directly
with any individual or firm performing auditing or accounting functions for ANB
and the Subsidiaries, and such auditors and accountants shall be directed to
furnish copies of any reports or financial information as developed to ONB or
its respective representatives or agents. No investigation by ONB shall affect
the representations and warranties made by ANB herein. ONB shall not use any
such information obtained pursuant to this Agreement for any purpose unrelated
to the Merger. Any confidential information or trade secrets received by ONB or
its representatives or agents in the course of such examination (whether
conducted prior to or after the date of this Agreement) shall be treated
confidentially, and any correspondence, memoranda, records, copies, documents
and electronic or other media of any kind containing such confidential
information or trade secrets or both shall be destroyed by ONB or, at ANB's
request, returned to ANB in the event this Agreement is terminated as provided
in Section 9 hereof. This Section 6.09 shall not require the disclosure of any
information to ONB which would be prohibited by law.
6.10. Subsequent ANB Financial Statements. As soon as reasonably
available after the date of this Agreement, ANB shall deliver to ONB the monthly
unaudited consolidated balance sheets and profit and loss statements of ANB
prepared for its internal use, Call Reports of the Banks and ANTIM for each
quarterly period completed prior to the Effective Time, and all other financial
reports or statements submitted to regulatory authorities after the date hereof,
to the extent permitted by law (collectively, "Subsequent ANB Financial
Statements"). The Subsequent ANB Financial Statements shall be prepared on a
basis consistent with past accounting practices and generally accepted
accounting principles applied on a consistent basis to the extent applicable and
shall present fairly the financial condition and results of operations as of the
dates and for the periods presented, subject to year end audit adjustments and
the
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absence of footnotes for interim statements. The Subsequent ANB Financial
Statements, including the notes thereto, will not include any assets,
liabilities or obligations or omit to state any assets, liabilities or
obligations, absolute or contingent, or any other facts, which inclusion or
omission would render such financial statements inaccurate, incomplete or
misleading in any respect.
6.11. Employee Benefits. Neither the terms of Section 7.03 hereof nor
the provision of any employee benefits by ONB or any of its subsidiaries to
employees of ANB shall: (a) create any employment contract, agreement or
understanding with or employment rights for, or constitute a commitment or
obligation of employment to, any of the officers or employees of ANB; or (b)
prohibit or restrict ONB or its subsidiaries, whether before or after the
Effective Time, from changing, amending or terminating any employee benefits
provided to its employees from time to time.
6.12. Merger of ANB Corporation Savings and Incentive Plan. As soon as
administratively feasible after the Effective Time, the ANB Corporation Savings
and Incentive Plan ("ANB 401(k) Plan") shall be merged with and into the ONB
Savings Plan. All account balances maintained under the ANB 401(k) Plan shall
become fully vested and nonforfeitable on the day on which the plan merger
occurs. From the date of this Agreement through the date on which the ANB 401(k)
Plan is merged into the ONB Savings Plan, ANB and the Subsidiaries may continue
to make contributions to the ANB 401(k) Plan so long as such contributions are
comparable in amount to any past contributions to such plan.
6.13. Merger of ANB Corporation Employees' Pension Plan. As of the
first January 1 or July 1 coinciding with or next following the Effective Time,
or as soon as administratively feasible thereafter, the ANB Corporation
Employee's Pension Plan ("ANB Pension Plan") shall be merged with and into the
ONB Employees' Retirement Plan ("ONB Pension Plan"). All benefits accrued under
the ANB Pension Plan shall be fully vested and non-forfeitable on the day on
which the plan merger occurs. From the date of this Agreement through the date
on which the ANB Pension Plan is merged into the ONB Pension Plan, ANB and its
Subsidiaries shall contribute to the ANB Pension Plan at least the amounts
calculated by the plan's actuary to be necessary to prevent an accumulated
funding deficiency within the meaning of the Section 412 of the Code.
6.14 Termination of Group Health Plan. The ANB Corporation Group Health
Plan ("ANB Health Plan") shall be terminated as of the last day of the calendar
month in which the Effective Time occurs. From the date of this Agreement
through the date as of which the ANB Health Plan terminates, ANB and the
Subsidiaries shall continue to fund all expenses of the plan, including but not
limited to, benefits, stop loss insurance premiums and administrative fees,
attributable to claims incurred on or prior to the date the ANB Health Plan
terminates. As of the date the ANB Health Plan terminates, ANB and the
Subsidiaries shall have funded a reserve account for the purpose of paying
covered claims incurred,
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but not yet paid, as of the plan termination date. The amount of such reserve
account shall not be less than twenty-five percent (25%) of the total claims
paid for the plan year ending September 30, 1999.
6.15 Termination of Long Term Disability Plan. The ANB Corporation Long
Term Disability Plan ("ANB LTD Plan") shall be terminated as of the Effective
Time, or as soon as administratively feasible thereafter, but such termination
shall not affect the benefits payable to any ANB covered employee who became
entitled to a disability benefit under the ANB LTD Plan prior to the termination
of said plan. From the date of this Agreement through the date as of which the
ANB LTD Plan terminates, ANB and the Subsidiaries shall continue to pay the
insurance premiums necessary to continue the ANB LTD Plan benefits.
6.16 Termination of Sec. 125 Plan. The ANB Corporation Sec. 125 Plan
("ANB Cafeteria Plan') shall be terminated as of same date the ANB Health Plan
is terminated. From the date of this Agreement through the date as of which the
ANB Cafeteria Plan terminates, ANB and the Subsidiaries shall continue to
contribute to such plan the pre-tax amounts which the ANB Cafeteria Plan
participants elect to defer from compensation in order to pay the employee
portion of the cost of coverage under the ANB Health Plan.
6.17 Termination of ANB Corporation Group Life Plan. The ANB
Corporation Group Term Life Insurance Plan ("ANB Group Life Plan") shall be
terminated as of the first day of the first calendar month following the
Effective Time or as soon as administratively feasible thereafter. From the date
of this Agreement through the date on which the ANB Group Life Plan terminates,
ANB and the Subsidiaries shall continue to pay the insurance premiums necessary
to continue the death benefits provided by such plan.
6.18 Termination of the ANB Corporation SERP. The ANB Corporation
Supplemental Executive Retirement Plan (the "ANB SERP") shall be terminated as
of the day on which the Effective Time occurs. No employee of ANB or the
Subsidiaries who has been designated as an eligible participant under the ANB
SERP shall accrue any additional benefits thereunder subsequent to the December
31 coincident with or next preceding the date the ANB SERP terminates. The
accumulated benefit obligations in the ANB Corporation SERP shall, upon the
Effective Time, be transferred to, and shall become a benefit obligation under
the ONB Non-Qualified Defined Contribution Plan For Executive Employees of ONB.
Such transferred benefit shall thereafter be administered pursuant to the terms
and conditions of the transferee plan.
6.19 Termination of the ANB Corporation Directors' Plan. The ANB
Corporation Directors' Deferred Compensation Plan (the "ANB Directors' Plan"),
and all participation agreements in effect
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thereunder, shall be terminated as of the Effective Time. From the date of this
Agreement through the date on which the ANB Directors' Plan is terminated, ANB
and the Subsidiaries may continue to allow participants thereunder to elect to
defer the receipt of all or a portion of the director fees he or she would
otherwise receive and to credit such fees to the director's individual account
under the plan. Upon the termination of the ANB Directors' Plan the balance in
each individual account thereunder shall be distributed in a lump sum payment to
the participant entitled thereto. The Board of Directors of ANB, and the Board
of Directors of each of the Subsidiaries which is participating in the ANB
Directors' Plan, shall, prior to the day on which the Effective Time occurs,
amend or cause the amendment of such plan to provide that upon the termination
of such plan the accrued benefits thereunder shall be immediately paid in a lump
sum payment to the individuals entitled to such accrued benefits, subject,
however, to the terms of the ANB Directors' Plan.
6.20 Disposition of the ANB Corporation Stock Investment Plan. From the
date of this Agreement through the day on which the Effective Time occurs, the
Stock Investment Plan of ANB Corporation ("ANB Stock Investment Plan") shall
remain in effect, shall continue to be funded by both employer and employee
contributions, and shall continue to be administered, all in accordance with its
current provisions. As of the day on which the Effective Time occurs, the shares
of ANB Common Stock owned by each participant under said plan shall be converted
into whole shares of ONB common stock pursuant to the applicable provisions of
Section 2 of this Agreement. Fractional share interests resulting from such
conversion shall be paid in cash at such time and in such amount determined
under Section 2.02 of this Agreement. ANB shall cause the administrator of the
ANB Stock Investment Plan to thereafter transfer the shares of ONB common stock
held on behalf of each participant in the ANB Stock Investment Plan to the
administrator of the ONB Direct Stock Purchase Plan and Dividend Reinvestment
Plan ("ONB Stock Purchase Plan"). Upon receipt of such shares the administrator
of the ONB Stock Purchase Plan shall credit the number of such shares, on a per
participant basis, to the individual account established on the participant's
behalf under the ONB Stock Purchase Plan by the administrator thereof.
Thereafter such converted shares shall be held, administered and distributed or
surrendered pursuant to the applicable provisions of the ONB Stock Purchase
Plan; provided, however, that the distribution rights of the participants under
the ANB Stock Investment Plan shall not be materially adversely affected by the
transfer of the converted shares to the ONB Stock Purchase Plan.
6.21 Termination of ANB Corporation Severance Policy. The ANB
Corporation Severance Policy, covering eligible employees of ANB, American
National Bank and ANTIM, shall be terminated as of the Effective Time. With
respect to an individual covered by such severance policy on the date of its
termination, in the event that he or she incurs, within twelve months from the
Effective Time, (i) the involuntary termination of employment for reasons other
than cause, (ii) a material reduction in compensation or (iii) without the prior
written consent of such person, the assignment to him or her of
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any duties materially inconsistent with his or her duties and responsibilities
prior to the date of this Agreement, he or she shall be entitled to receive a
severance benefit. The severance benefit shall be a salary continuation the
amount of which shall be the greater of (i) the amount payable to such
individual under the salary continuation provisions of the terminated ANB
Corporation Severance Policy had such policy not been terminated, or (ii) the
amount payable to such individual under the salary continuation provisions of
the ONB Severance Policy, if any, then applicable to such individual. An
individual who is entitled to a benefit under the ONB Severance Policy shall
also be entitled to a continuation of employee benefits as determined solely by
the applicable provisions of the ONB Severance Policy. The Board of Directors of
each of ANB, American National Bank and ANTIM, shall, prior to the execution of
this Agreement, amend, or cause the amendment of, the ANB Severance Policy to
provide that the sole events for which a severance benefit is payable thereunder
shall be (i) the involuntary termination of a covered individual's employment
for reasons other than cause, (ii) a material reduction in compensation or (iii)
without the prior written consent of an employee, the assignment to him or her
of any duties materially inconsistent with his or her duties and
responsibilities prior to the date of this Agreement.
6.22. Disposition of Farmers State Bank Plans. ANB shall use its best
efforts to complete the merger of the Farmers State Bank of Union City, Ohio,
Employees' 401(k) Plan with and into the ANB 401(k) Plan, and shall complete the
merger of the Farmers State Bank of Union City, Ohio Employees' Pension Plan
with and into the ANB Pension Plan, no later than December 31, 1999 with respect
to each such plan merger.
6.23. Disposition of ANB Stock Option Plans. At or prior to the
Effective Time, ANB shall use its best efforts, including using its best efforts
to obtain any necessary consents from optionees, with respect to the Stock
Option Plans to permit the conversion of each outstanding option to acquire
shares of common stock of ANB Corporation which was properly granted pursuant to
a stock option agreement executed in accordance with the provisions of the Stock
Option Plans by ONB pursuant to Section 7.05 of this Agreement, and to permit
ONB to assume the sponsorship and administration of the Stock Option Plans. ANB
shall also take all action necessary to amend the Stock Option Plans to
eliminate additional automatic or discretionary grants or awards under such
plans subsequent to the Effective Time.
6.24. Year 2000. ANB shall:
(a) Additional Information. Furnish such additional information,
statements and other reports with respect to ANB's Year 2000 compliance (and its
approach to and progress towards achieving compliance) discussed in Section 4.24
hereof as ONB may reasonably request from time to time.
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(b) Notice of Changes. In the event of any change in circumstances that
causes or will likely cause any of ANB's representations and warranties set
forth in Section 4.24 hereof ("Year 2000 Compliance") to no longer be true and
would result in a Material Adverse Effect (hereinafter referred to as a "Change
in Circumstances"), then ANB shall promptly, and in any event within ten (10)
days of receipt of information regarding a Change in Circumstances, provide ONB
with written notice ("Notice") that describes in reasonable detail the Change in
Circumstances and how such Change in Circumstances caused or will likely cause
ANB's representations and warranties set forth in Section 4.24 hereof to no
longer be true. ANB shall, within ten (10) days of a request, also provide ONB
with any additional information ONB reasonably requests of ANB in connection
with the Notice and/or a Change in Circumstances.
(c) Audits. Give any representative of ONB reasonable access during all
business hours to, and permit such representative to examine, copy or make
excerpts from, any and all books, records and documents in the possession of ANB
and the Subsidiaries and relating to their affairs, and to inspect any of the
properties and Systems of ANB and the Subsidiaries, and to project test the
Systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of ONB.
6.25. SEC and Other Reports. Promptly upon its becoming available,
furnish to ONB one (1) copy of each financial statement, report, notice, or
proxy statement sent by ANB to its shareholders generally and of each regular or
periodic report, registration statement or prospectus filed by ANB with Nasdaq
or the SEC or any successor agency, and of any order issued by any Governmental
Authority in any proceeding to which ANB is a party. For purposes of this
provision, "Governmental Authority" shall mean any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental entity having or asserting jurisdiction over ANB or any of its
business, operations or properties.
6.26. Adverse Actions. ANB shall not (a) take any action while knowing
that such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b) knowingly
take any action that is intended or is reasonably likely to result in (i) any of
its representations and warranties set forth in this Agreement being or becoming
untrue, subject to the standard set out in the second paragraph to Section 4, in
any respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Section 8 not being satisfied, (iii) a
material violation of any provision of this Agreement or (iv) a delay in the
consummation of the Merger except, in each case, as may be required by
applicable law or regulation.
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SECTION 7
COVENANTS OF ONB
ONB covenants and agrees with ANB as follows:
7.01. Approvals. ONB shall have primary responsibility for the
preparation, filing and costs of all bank holding company and bank regulatory
applications required for consummation of the Merger. ONB shall file all bank
holding company and bank regulatory applications as soon as practicable after
the execution of this Agreement. ONB shall provide to ANB's legal counsel a
reasonable opportunity to review such applications prior to their filing and
shall provide to ANB's legal counsel copies of all applications filed and copies
of all material written communications with all state and federal bank
regulatory agencies relating to such applications. ONB shall proceed
expeditiously, cooperate fully and use its best efforts to procure, upon terms
and conditions reasonably acceptable to ONB, all consents, authorizations,
approvals, registrations and certificates, to complete all filings and
applications and to satisfy all other requirements prescribed by law which are
necessary for consummation of the Merger on the terms and conditions provided in
this Agreement at the earliest possible reasonable date.
7.02. SEC Registration. (a) ONB shall file with the SEC as soon as
practicable after the execution of this Agreement a Registration Statement on an
appropriate form under the 1933 Act covering the shares of ONB common stock to
be issued pursuant to this Agreement and shall use its best efforts to cause the
same to become effective and thereafter, until the Effective Time or termination
of this Agreement, to keep the same effective and, if necessary, amend and
supplement the same. Such Registration Statement and any amendments and
supplements thereto are referred to in this Agreement as the "Registration
Statement". The Registration Statement shall include a proxy
statement-prospectus reasonably acceptable to ONB and ANB, prepared for use in
connection with the meeting of shareholders of ANB referred to in Section 6.01
hereof, all in accordance with the rules and regulations of the SEC. ONB shall,
as soon as practicable after filing the Registration Statement, make all filings
required to obtain all Blue Sky exemptions, authorizations, consents or
approvals required for the issuance of ONB common stock. In advance of filing
the Registration Statement and all other filings described in Section 7.01
hereof, ONB shall provide ANB and its counsel with a copy of the Registration
Statement and each such other filing and provide an opportunity to comment
thereon.
(b) Any materials or information provided by ONB in any filing with any
state or federal regulatory agency or authority shall not contain any untrue or
misleading statement of material fact or shall omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances in which they are made, not false or misleading.
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(c) All filings by ONB with the SEC and with all other federal and
state regulatory agencies shall be true, accurate and complete in all material
respects as of the dates of the filings, and no such filings shall contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements, at the time and in light of the circumstances
under which they were made, not false or misleading.
(d) ONB will use reasonable best efforts to list for trading on the
Nasdaq National Market System (subject to official notice of issuance) prior to
the Effective Time, the shares of ONB common stock to be issued in the Merger.
7.03. Employee Benefit Plans. (a) As of the Effective Time, ONB will
make available to the employees of ANB and the Subsidiaries who continue as
employees of ONB or any subsidiary of ONB after the Effective Time and, further,
subject to Section 7.03(b), (c) and (d) hereof, substantially the same employee
benefits on substantially the same terms and conditions as ONB offers to
similarly situated officers and employees. Until such time as the employees of
ANB and the Subsidiaries become covered by the ONB welfare benefit plans, the
employees of ANB and the Subsidiaries shall remain covered by the ANB Plans
which cover such employees, subject to the terms of such plans. Except as
otherwise provided in Sections 6.13, 6.18 and 6.21, ONB will honor in accordance
with their terms (i) all employee benefit obligations to current and former
officers and employers and employees of ANB and the Subsidiaries accrued as of
the Effective Time and (ii) to the extent set forth in the Disclosure Schedule,
all employee severance plans in existence on the date hereof and all employment
or severance agreements entered into prior to the date hereof to the extent set
forth in the Disclosure Schedule.
(b) Subject to the provisions of subsection (c) hereof, years of
service (as defined in the applicable ONB plan) of an officer or employee of ANB
or any Subsidiary prior to the Effective Time shall be credited, effective as of
the date on which such employees become covered by a particular ONB plan, to
each such officer or employee eligible for coverage under Section 7.03(a) hereof
for purposes of: (i) eligibility under ONB's employee welfare benefit plans;
(ii) eligibility and vesting, but not for purposes of benefit accrual or
contributions, under the ONB Employees' Retirement Plan ("ONB Pension Plan") or
under the ONB Employees' Savings and Profit Sharing Plan ("ONB Profit Sharing
Plan"); and (iii) eligibility and vesting, but not for purposes of benefit
accrual or contributions, under the ONB Employee Stock Ownership Plan ("ESOP").
Those officers and employees of ANB or any Subsidiary who otherwise meet the
eligibility requirements of the ONB Profit Sharing Plan and ESOP, based on their
age and years of service to ANB or any Subsidiary, shall become participants
thereunder on the first day of the calendar month which coincides with or next
follows the Effective Time. Those officers and employees of ANB or any
Subsidiary who otherwise meet the eligibility requirements of the ONB Pension
Plan, based upon their age and years of ANB or any Subsidiary service, shall
become
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participants thereunder no later than the January 1st which coincides with or
next follows the Effective Time. Those officers or employees who do not meet the
eligibility requirements of the ONB Pension Plan, ONB Profit Sharing Plan or
ESOP on such dates shall become participants thereunder on the first plan entry
date under the ONB Pension Plan, the ONB Profit Sharing Plan or ESOP, as the
case may be, which coincides with or next follows the date on which such
eligibility requirements are satisfied.
(c) No full-time officer or employee of ANB or any Subsidiary serving
as of the Effective Time shall be subject to any pre-existing condition
exclusions under any of ONB's welfare benefit plans if such officer, employee or
individual was covered by the corresponding ANB welfare benefit plan on the day
immediately preceding the Effective Time.
(d) Neither the terms of this Section 7.03 nor the provision of any
employee benefits by ONB or any of its subsidiaries to employees of ANB or any
Subsidiary shall: (i) create any employment contract, agreement or understanding
with or employment rights for, or constitute a commitment or obligation of
employment to, any of the officers or employees of ANB or any Subsidiary; or
(ii) prohibit or restrict ONB or its subsidiaries, whether before or after the
Effective Time, from changing, amending or terminating any employee benefits
provided to its employees from time to time.
(e) ONB shall take any and all actions reasonably necessary to
effectuate the disposition of the ANB Plans provided by Section 6.12 through
6.23.
7.04. Employment Agreements. Following the Effective Time, ONB agrees
to honor and abide by the terms of the written employment agreements set forth
in the Disclosure Schedule, except as may be otherwise required by any
government regulatory agency.
7.05. Stock Options. (a) At the Effective Time, the obligations of ANB
with respect to each outstanding option to purchase shares of ANB Common Stock
(pursuant to the Stock Options) which was properly granted pursuant to a stock
option agreement executed in accordance with a Stock Option Plan shall be
assumed by ONB as hereinafter provided. In connection therewith, each Stock
Option shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Stock Option at the Effective Time,
that number of shares of ONB common stock, rounded to the nearest whole share,
as the holder of such Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such Option in full (after giving effect
to accelerated vesting) immediately prior to the Effective Time and, immediately
thereafter, exchanged such shares solely for ONB common stock based upon the
Exchange Ratio at an exercise price per share equal to (A) the aggregate
exercise price for ANB Common Stock otherwise purchasable pursuant to such Stock
Option divided by (B) the number of shares of ONB common stock, rounded to the
nearest whole share, deemed
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purchasable pursuant to such Stock Option; provided, however, that in the case
of any Stock Option to which Section 422 of the Code applies, the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in accordance with the
foregoing, subject to such adjustments as are necessary in order to satisfy the
requirements of Section 424(a) of the Code. By way of example and illustration
only, if any option holder has been granted and is vested in options to acquire
1,000 shares of ANB Common Stock for $20.00 per share, then after the Effective
Time, such option holder's same option would be converted into the option to
acquire, 1250 shares of ONB common stock at $16.00 per share. In no event shall
ONB be required to issue fractional shares of ONB common stock pursuant to the
Stock Options.
(b) As soon as practicable after the Effective Time, ONB shall deliver
to each holder of a Stock Option an appropriate notice or agreement which sets
forth such holder's rights pursuant to the Stock Option, and the agreements
evidencing the grants of such Stock Options shall continue in effect on the same
terms and conditions (subject to the conversion required by this Section 7.05
after giving effect to the Merger and the assumption by ONB as set forth above);
provided, however, to the extent necessary to effectuate the provisions of this
Section 7.05, ONB may deliver new or amended Stock Option agreements which
reflect the terms of each Stock Option assumed by ONB. With respect to each
Stock Option, the optionee shall be solely responsible for any and all tax
liability (other than the employer's one-half share of any employment taxes)
which may be imposed upon the optionee as a result of the provisions of this
Section 7.05 and as a result of the grant and exercise of such Stock Options.
(c) As soon as practicable after the Effective Time, ONB shall file
with the SEC a registration statement on an appropriate form with respect to the
shares of ONB common stock subject to such options and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses with respect thereto) for so long as such options remain
outstanding.
7.06. Press Releases. Except as required by law, ONB shall not issue
any press releases or make any other public announcements or disclosures
relating primarily to ANB with respect to the Merger without the prior consent
of ANB, which consent shall not be unreasonably withheld.
7.07. Indemnification. (a) From and after the Effective Time, ONB shall
indemnify, defend and hold harmless to the fullest extent permitted by
applicable federal and state law each person who is on the date hereof, or has
been at any time prior to the date hereof or who becomes prior to the Effective
Time, a director or officer of ANB or was serving at the request of ANB as a
director or officer of any domestic or foreign corporation, joint venture,
trust, employee benefit plan or other enterprise
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(collectively, the "Indemnitees") arising out of ANB's Articles of Incorporation
or By-Laws in effect at the Effective Time against any and all losses in
connection with or arising out of any claim which is based upon, arises out of
or in any way relates to any actual or alleged act or omission occurring at or
prior to the Effective Time in the Indemnitee's capacity as a director or
officer (whether elected or appointed), of ANB. Indemnification of officers and
directors of the Subsidiaries following the Effective Time will be provided to
the same extent it is provided from time to time to other persons working in
similar capacities for ONB or its subsidiaries following the Effective Time.
(b) In the event ONB or any of its successors or assigns (i)
consolidates with or merges into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
ONB assume the obligations set forth in this Section 7.07.
(c) ONB shall maintain in effect for not less than two (2) years from
the Effective Time the policies of directors' and officers' liability insurance
most recently maintained by ANB; provided, however, that ONB may substitute
therefor policies with reputable and financially sound carriers for
substantially similar coverage containing terms and conditions which are no less
advantageous for so long as such substitution does not result in gaps or lapses
in coverage with respect to claims arising from or relating to matters occurring
prior to the Effective Time. ONB shall pay all expenses, including attorneys'
fees, that may be incurred by any Indemnitee in enforcing the indemnity and
other obligations provided for in this Section 7.07.
(d) The provisions of this Section 7.07 are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee and their respective
heirs and representatives.
7.08 Adverse Actions. ONB shall not (a) take any action while knowing
that such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b) knowingly
take any action that is intended or is reasonably likely to result in (i) any of
its representations and warranties set forth in this Agreement being or becoming
untrue, subject to the standard set out in the second paragraph to Section 5, in
any respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Section 8 not being satisfied, (iii) a
material violation of any provision of this Agreement or (iv) a delay in the
consummation of the Merger except, in each case, as may be required by
applicable low or regulation.
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SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
8.01. ONB. The obligation of ONB to consummate the Merger is subject to
the satisfaction and fulfillment of each of the following conditions on or prior
to the Effective Time, unless waived in writing by ONB:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of ANB with respect to itself and the
Subsidiaries contained in this Agreement shall, subject to the standard set out
in the second paragraph to Section 4, be true, and correct at and as of the
Effective Time as though such representations and warranties had been made or
given on and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of ANB shall have
been fulfilled or complied with from the date of this Agreement through and as
of the Effective Time.
(c) Deliveries at Closing. ONB shall have received from ANB at the
Closing (as hereinafter defined) the items and documents, in form and content
reasonably satisfactory to ONB, set forth in Section 11.02(b) hereof.
(d) Registration Statement Effective. ONB shall have registered its
shares of common stock to be issued to shareholders of ANB in accordance with
this Agreement with the SEC pursuant to the 1933 Act, and all state securities
and Blue Sky approvals, authorizations and exemptions required to offer and sell
such shares shall have been received by ONB. The Registration Statement with
respect thereto shall have been declared effective by the SEC and no stop order
shall have been issued or threatened.
(e) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the board of directors of ONB
reasonably determines in good faith would (i) following the Effective Time, have
a Material Adverse Effect on ONB and its subsidiaries taken as a whole or (ii)
reduce the benefits of the transactions contemplated hereby to such a degree
that ONB would not have entered into this Agreement had such conditions,
restrictions or requirements been known at the date hereof.
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(f) Shareholder Approval. The shareholders of ANB shall have approved
and adopted this Agreement as required by applicable law and its Articles of
Incorporation.
(g) Officers' Certificate. ANB shall have delivered to ONB a
certificate signed by its Chairman or President and its Secretary, dated as of
the Effective Time, certifying: (i) to the effect set out in Section 8.01(a);
(ii) that all the covenants of ANB have been complied with from the date of this
Agreement through and as of the Effective Time; and (iii) that ANB has satisfied
and fully complied with all conditions necessary to make this Agreement
effective as to ANB.
(h) Tax Opinion. The Board of Directors of ONB shall have received a
written opinion of the law firm of Krieg DeVault Alexander & Capehart, LLP,
dated as of the Effective Time, in form and content satisfactory to ONB, to the
effect that the Merger to be effected pursuant to this Agreement will constitute
a tax-free reorganization under the Code (as described in Section 1.06 hereof)
to each party hereto and to the shareholders of ANB, except with respect to cash
received by ANB's shareholders for fractional shares resulting from application
of the Exchange Ratio. In rendering such opinion, counsel may require and rely
upon customary representation letters of ONB and ANB and rely upon customary
assumptions.
(i) Pooling of Interests Opinion. The Board of Directors of ONB shall
have received a written opinion from its independent auditors, dated as of the
Effective Time, in form and content satisfactory to ONB, to the effect that the
Merger to be effected pursuant to this Agreement will qualify for pooling of
interests accounting treatment for ONB.
8.02. ANB. The obligation of ANB to consummate the Merger is subject to
the satisfaction and fulfillment of each of the following conditions on or prior
to the Effective Time, unless waived in writing by ANB:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of ONB contained in this Agreement shall, subject
to the standards set out in the second paragraph of Section 5, be true and
correct on and as of the Effective Time as though the representations and
warranties had been made or given at and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of ONB shall have
been fulfilled or complied with from the date of this Agreement through and as
of the Effective Time.
(c) Deliveries at Closing. ANB shall have received from ONB at the
Closing the items and documents, in form and content reasonably satisfactory to
ANB, listed in Section 11.02(a) hereof.
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(d) Registration Statement Effective. ONB shall have registered its
shares of common stock to be issued to shareholders of ANB in accordance with
this Agreement with the SEC pursuant to the 1933 Act, and all state securities
and Blue Sky approvals, authorizations and exemptions required to offer and sell
such shares shall have been received by ONB. The Registration Statement with
respect thereto shall have been declared effective by the SEC and no stop order
shall have been issued or threatened. In addition, such shares of ONB common
stock shall be listed on the Nasdaq National Market System.
(e)) Regulatory Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby, shall have
been obtained and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions,
restrictions or requirements which the board of directors of
ANB reasonably determines in good faith would (i) following
the Effective Time, have a Material Adverse Effect on ANB and
its subsidiaries taken as a whole or (ii) reduce the benefits
of the transactions contemplated hereby to such a degree that
ANB would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the
date hereof.
(f) Shareholder Approval. The shareholders of ANB shall have approved
and adopted this Agreement as required by applicable law and its Articles of
Incorporation.
(g) Officers' Certificate. ONB shall have delivered to ANB a
certificate signed by its Chairman or President and its Secretary, dated as of
the Effective Time, certifying that: (i) to the effect set out in Section
8.02(a); (ii) that all the covenants of ONB have been complied with from the
date of this Agreement through and as of the Effective Time; and (iii) ONB has
satisfied and fully complied with all conditions necessary to make this
Agreement effective as to it.
(h) Tax Opinion. The Board of Directors of ANB shall have received a
written opinion of the law firm of Sullivan & Cromwell, dated as of the
Effective Time, in form and content satisfactory to ANB, to the effect that the
Merger to be effected pursuant to this Agreement will constitute a tax-free
reorganization under the Code (as described in Section 1.06 hereof) to each
party hereto and to the shareholders of ANB, except with respect to cash
received by ANB's shareholders for fractional shares resulting from application
of the Exchange Ratio. In rendering such opinion, counsel may require and rely
upon customary representation letters of ONB and ANB and rely upon customary
assumptions.
(i) Fairness Opinion. ANB's investment bank shall have issued its
written fairness opinion stating that the Exchange Ratio relating to the Merger
is fair to the shareholders of ANB from a financial
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point of view. Such written fairness opinion shall be (i) in form and substance
reasonably satisfactory to ANB and (ii) dated as of a date not later than the
mailing date of the proxy statement-prospectus relating to the Merger to be
mailed to shareholders of ANB.
SECTION 9
TERMINATION OF MERGER
9.01. Manner of Termination. This Agreement and the Merger may be
terminated at any time prior to the Effective Time by written notice delivered
by ONB to ANB, or by ANB to ONB as follows:
(a) By ONB or ANB, if:
(i) the Merger contemplated by this Agreement has not
been consummated by March 31, 2000; or
(ii) the respective Boards of Directors of ONB and ANB
mutually agree to terminate this Agreement.
(b) By ONB, if:
(i) the Merger will not qualify for pooling of interests
accounting treatment for ONB; or
(ii) at any time prior to the Effective Time, ONB's Board
of Directors so determines, in the event of either
(A) a breach by ANB of any representation or
warranty contained herein, which breach
cannot be or has not been cured within
thirty (30) days after the giving of written
notice to ANB of such breach; or
(B) a breach by ANB of any of the covenants or
agreements contained herein, which breach
cannot be or has not been cured within
thirty (30) days after the giving of written
notice to ANB of such breach; provided that
a breach under this clause (B) would be
reasonably likely, individually or in the
aggregate with other breaches, to result in
a Material Adverse Effect; or
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(iii) it shall reasonably determine that the Merger
contemplated by this Agreement has become
impracticable by reason of commencement or threat of
any claim, litigation or proceeding against ONB, ANB,
any Subsidiary or any subsidiary of ONB, or any
director or officer of any of such entities relating
to this Agreement or the Merger; or
(iv) there has been a material adverse change in the
business, assets, capitalization, financial condition
or results of operations of ANB and its Subsidiaries
taken as a whole subsidiary as of the Effective Time
as compared to that in existence as of the date of
this Agreement other than any change resulting
primarily by reason of changes in banking and similar
laws of general applicability or interpretations
thereof by courts or governmental authorities,
changes in generally accepted accounting principles
or regulatory accounting requirements applicable to
banks and their holding companies generally, any
modifications or changes to valuation policies and
practices in connection with the Merger or
restructuring charges taken in connection with the
Merger, in each case in accordance with generally
accepted accounting principles, effects of any action
taken with the prior written consent of ONB and
changes in the general level of interest rate or
conditions or circumstances that affect the banking
industry generally; or
(v) ANB fulfills the requirements of Section 6.01 hereof
but the shareholders of ANB do not approve and adopt
the Merger and this Agreement.
(c) By ANB, if:
(i) at any time prior to the Effective Time, ANB's Board
of Directors so determines, in the event of either
(A) a breach by ONB of any representation or
warranty contained herein, which breach
cannot be or has not been cured within
thirty (30) days after the giving of written
notice to ONB of such breach; or
(B) a breach by ONB of any of the covenants or
agreements contained herein, which breach
cannot be or has not been cured within
thirty (30) days after the giving of written
notice to ONB of such breach; provided that
a breach under this clause (B) would be
reasonably likely,
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individually or in the aggregate with other
breaches, to result in a Material Adverse
Effect; or
(ii) there has been a material adverse change in the
financial condition, results of operations, business,
assets or capitalization of ANB on a consolidated
basis as of the Effective Time as compared to that in
existence on March 31, 1999, other than any change
resulting primarily by reason of changes in banking
laws or regulations (or interpretations thereof),
changes in banking and similar laws of general
applicability or interpretations thereof by courts or
governmental authorities, changes in generally
accepted accounting principles or regulatory
accounting requirements applicable to banks and their
holding companies generally, any modifications or
changes to valuation policies and practices in
connection with the Merger or restructuring charges
taken in connection with the Merger, in each case in
accordance with generally accepted accounting
principles, effects of any action taken with the
prior written consent of ANB and changes in the
general level of interest rate or conditions or
circumstances that affect the banking industry
generally; or
(iii) it shall reasonably determine that the Merger
contemplated by this Agreement has become
impracticable by reason of commencement or threat of
any material claim, litigation or proceeding against
ONB (A) relating to this Agreement or the Merger or
(B) which is likely to have a Material Adverse Effect
on ONB; or
(iv) ANB fulfills the requirements of Section 6.01 hereof
but the shareholders of ANB do not approve and adopt
the Merger and this Agreement; or
(v) prior to the approval by the shareholders of ANB of
the Merger contemplated in this Agreement, if,
without breaching Section 6.06, ANB shall
contemporaneously enter into a definitive agreement
with a third party providing for an Acquisition
Transaction on terms determined in good faith by the
board of directors of ANB, after consulting with and
considering the advice of ANB's independent counsel
and financial advisors, to be more favorable to the
shareholders of ANB than the Merger and with respect
to which the board of directors has determined after
such consultation and consideration that to proceed
with the Merger would violate the fiduciary duties of
the board of directors to the ANB's shareholders; or
(vi) at any time during the five-day period commencing
with the Determination Date if both of the following
conditions are satisfied:
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(A) the number obtained by dividing the Average Closing Price
by the Starting Price (the "ONB Ratio") shall be less than 0.80; and
(B) the ONB Ratio shall be less than the number obtained by
dividing the Final Index Value by the Index Value on the Starting Date
and subtracting 0.15 from the quotient in this clause (B) (such number
being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If ANB elects to exercise
its termination right pursuant to this Section 9.01(c)(vi), it shall give
written notice to ONB (provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned five-day period). During the
five-day period commencing with its receipt of such notice, ONB shall have the
option to increase the consideration to be received by the holders of ANB Common
Stock hereunder, by adjusting the Exchange Ratio (calculated to the nearest one
one-thousandth) to equal the lesser of (x) a number (rounded to the nearest
thousandth) obtained by dividing (A) the product of the Starting Price, 0.80 and
the Exchange Ratio (as then in effect) by (B) the Average Closing Price and (y)
a number (rounded to the nearest one one-thousandth) obtained by dividing (A)
the product of the Index Ratio and the Exchange Ratio (as then in effect) by (B)
the ONB Ratio. If ONB so elects within such five-day period, it shall give
prompt written notice to ANB of such election and the revised Exchange Ratio.
Whereupon no termination shall have occurred pursuant to this Section
9.01(c)(vi) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified).
For purposes of Section 9.01(c)(vi), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the closing
price of a share of ONB Common Stock on the Nasdaq National Market
System (as reported in The Wall Street Journal, or if not reported
therein, in another authoritative source) during the period of 20
consecutive trading days ending on the trading day prior to the
Determination Date, rounded to the nearest whole cent.
"Determination Date" shall mean the date on which the last
required approval required under Section 8.01(e) and 8.02(e) hereof is
obtained, without regard to any requisite waiting period in respect
thereof.
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"Final Index Value" shall mean the average of the Index Value
for the 20 consecutive trading days ending on the trading day prior to
the Determination Date.
"Index Value," on a given date, shall mean the index value on
such date of the Nasdaq Bank Index, as such index value is reported by
Bloomberg News Service on such date.
"Starting Date" shall mean the last trading day immediately
preceding the date of the first public announcement of entry to this
Agreement.
"Starting Price" shall mean the closing price of a share of
ONB common stock on the Nasdaq National Market System (as reported in
The Wall Street Journal, or if not reported therein, in another
authoritative source) on the Starting Date.
9.02. Effect of Termination. Upon termination by written notice, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of ONB or ANB and
their respective directors, officers, employees, agents and shareholders, except
as provided in compliance with the confidentiality provisions of this Agreement
set forth in Section 6.09 hereof and the payment of expenses set forth in
Section 12.09 hereof; provided, however, that termination will not in any way
release a breaching party from liability for any willful breach of this
Agreement giving rise to such termination.
SECTION 10
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this
Agreement, the Merger shall become effective at the close of business on the day
and at the time specified in the Articles of Merger of ANB with and into ONB as
filed with the Indiana Secretary of State ("Effective Time"). Unless otherwise
mutually agreed to by the parties hereto, the Effective Time shall occur on the
later of (i) January 31, 2000 or (ii) the last business day of the month
following (a) the fulfillment of all conditions precedent to the Merger set
forth in Section 8 of this Agreement and (b) the expiration of all waiting
periods in connection with the bank regulatory applications filed for the
approval of the Merger.
SECTION 11
CLOSING
11.01. Closing Date and Place. So long as all conditions precedent set
forth in Section 8 hereof have been satisfied and fulfilled, the closing of the
Merger ("Closing") shall take place on the Effective
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Time at the law offices of Krieg DeVault Alexander & Capehart, LLP, One Indiana
Square, Suite 2800, Indianapolis, Indiana 46204.
11.02. Deliveries. (a) At the Closing, ONB shall deliver to ANB the
following:
(i) the officers' certificate contemplated by Section
8.02(g) hereof;
(ii) copies of all approvals by government regulatory
agencies necessary to consummate the Merger;
(iii) copies of the resolutions of the Board of Directors
of ONB certified by the Secretary of ONB, relative to
the approval of this Agreement and the Merger; and
(iv) such other documents as ANB or its legal counsel may
reasonably request.
(b) At the Closing, ANB shall deliver to ONB the following:
(i) the officers' certificate contemplated by Section
8.01(g) hereof;
(ii) a list of ANB's shareholders as of the Effective Time
certified by the President and Secretary of ANB;
(iii) copies of the resolutions adopted by the Board of
Directors of ANB certified by the Secretary of ANB,
relative to the approval of this Agreement and the
Merger; and
(iv) such other documents as ONB or its legal counsel may
reasonably request.
SECTION 12
MISCELLANEOUS
12.01. Effective Agreement. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties hereto; provided, further, that no such extension, waiver or amendment
agreed to after authorization of this Agreement by the shareholders of ANB shall
affect the rights of such shareholders in any manner
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which is materially adverse to such shareholders. The representations,
warranties, covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and their successors and assigns, and they
shall not be construed as conferring any rights on any other persons except as
specifically set forth in Sections 7.03, 7.04, 7.05 and 7.07 hereof.
12.02. Waiver; Amendment. (a) The parties hereto may by an instrument
in writing: (i) extend the time for the performance of or otherwise amend any of
the covenants, conditions or agreements of the other parties under this
Agreement, except that the consideration to be received by the ANB shareholders
shall not be decreased by such an amendment following the adoption and approval
of the Merger and this Agreement by the ANB shareholders; (ii) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant hereto or thereto; (iii)
waive the performance by the other party of any of the covenants or agreements
to be performed by it or them under this Agreement; or (iv) waive the
satisfaction or fulfillment of any condition, the nonsatisfaction or
nonfulfillment of which is a condition to the right of the party so waiving to
consummate the Merger. The waiver by any party hereto of a breach of or
noncompliance with any provision of this Agreement shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only by a
written agreement executed by the parties hereto.
12.03. Notices. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand and receipted for,
sent by certified United States Mail, return receipt requested, first class
postage pre-paid, delivered by overnight express receipted delivery service or
telecopied if confirmed immediately thereafter by also mailing a copy of such
notice, request or other communication by certified United States Mail, return
receipt requested, with first class postage pre-paid as follows:
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<PAGE> 146
<TABLE>
<S> <C>
If to ONB: with a copy to (which shall not
constitute notice):
Old National Bancorp Krieg DeVault Alexander & Capehart, LLP
420 Main Street One Indiana Square, Suite 2800
P.O. Box 718 Indianapolis, Indiana 46204-2017
Evansville, Indiana 47705 ATTN: Karol K. Sparks, Esq.
ATTN: Jeffrey L. Knight, Secretary Telephone: (716) 264-0118
and General Counsel Telecopier: (317) 636-1507
Telephone: (812) 464-1363
Telecopier: (812) 464-1567
If to ANB: with a copy to (which shall not
constitute notice):
ANB Corporation Sullivan & Cromwell
ATTN: James R. Schrecongost, President 125 Broad Street
120 W. Charles Street New York, New York 10004
Muncie, Indiana 47305 ATTN: David M. Huggin, Esq.
Telephone: (765) 747-7600 Telephone: (212) 558-3526
Telecopier: (765) 741-0290 Telecopier: (212) 558-3588
</TABLE>
or such substituted address or person as any of them have given to the other in
writing. All such notices, requests or other communications shall be effective:
(a) if delivered by hand, when delivered; (b) if mailed in the manner provided
herein, five (5) business days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
business day after deposit with such service; and (d) if by telecopier, on the
next business day if also confirmed by mail in the manner provided herein.
12.04. Headings. The headings in this Agreement have been inserted
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
12.05. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
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12.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
12.07. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana and applicable federal laws,
without regard to principles of conflicts of law.
12.08. Entire Agreement. This Agreement supersedes all other prior or
contemporaneous understandings, commitments, representations, negotiations or
agreements, whether oral or written, among the parties hereto relating to the
Merger or matters contemplated herein and constitutes the entire agreement
between the parties hereto. Upon the execution of this Agreement by all the
parties hereto, the preliminary non-binding Indication of Interest letter, dated
July 14, 1999, from ONB and any and all other prior writings of either party
relating to the Merger, except for the Confidentiality Agreement dated July 28,
1999 by and between ONB and ANB, shall terminate and shall be rendered of no
further force or effect. The parties hereto agree that each party and its
counsel reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
12.09. Expenses. ONB shall pay its expenses incidental to the Merger
contemplated hereby. ANB shall pay its expenses incidental to the Merger
contemplated hereby.
12.10 Certain References. Whenever in this Agreement a singular word is
used, it also shall include the plural wherever required by the context and
vice-versa. Except expressly stated otherwise, all references in this Agreement
to periods of days shall be construed to refer to calendar, not business, days.
The term "business day" shall mean any day except Saturday and Sunday when Old
National Bank in Evansville, the lead bank of ONB, is open for the transaction
of business.
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IN WITNESS WHEREOF, ONB and ANB have made and entered into this
Agreement as of the day and year first above written and have caused this
Agreement to be executed, attested in counterparts and delivered by their duly
authorized officers.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
---------------------------------
Ronald B. Lankford, President and
Chief Operating Officer
ATTEST:
By: /s/ JEFFREY L. KNIGHT
--------------------------------------
Jeffrey L. Knight, Corporate Secretary
ANB CORPORATION
By: /s/ JAMES R. SCHRECONGOST
---------------------------------
James R. Schrecongost, President
ATTEST:
By: /s/ JAMES W. CONVY
-------------------------
James W. Convy, Secretary
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APPENDIX B
STOCK OPTION AGREEMENT
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.
THIS STOCK OPTION AGREEMENT ("Agreement"), is made and entered into as
of the 29th day of July, 1999, by and between OLD NATIONAL BANCORP ("ONB"), an
Indiana corporation, and ANB CORPORATION ("ANB"), an Indiana corporation,
W I T N E S S E T H:
WHEREAS, ONB and ANB have entered into an Agreement of Affiliation and
Merger ("Merger Agreement") dated of even date herewith contemporaneously with
the execution of this Agreement. The Merger Agreement provides for, among other
items, the conversion of each issued and outstanding share of common stock of
ANB at the Effective Time (as defined in the Merger Agreement) into the right to
receive one and twenty-five one-hundredths (1.25) shares of common stock of ONB,
as may be adjusted under the Agreement, from ONB; and
WHEREAS, ONB has paid to ANB the sum of One Thousand Dollars ($1,000)
in consideration for the grant of the Option (as hereinafter defined) by ANB to
ONB, which has been granted to further induce ONB to enter into the Merger
Agreement; and
WHEREAS, ONB has advised ANB that the grant by ANB of the Option
pursuant to this Agreement is a condition to ONB agreeing to the terms of the
Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the cash
payment referenced therein, the receipt of which is hereby acknowledged, the
mutual covenants and obligations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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Section 1. Grant of Option.
ANB hereby grants to ONB an irrevocable option (the "Option") to
purchase up to 1,083,753 shares ("Option Shares") of common stock of ANB (the
"Common Stock") at a price per Option Share of $27.70 (the "Purchase Price");
provided, however, that this Agreement and the Option shall automatically expire
and be of no further force or effect (i) at the Effective Time (as defined in
the Merger Agreement); (ii) 12 months after the first occurrence of an event set
forth in Section 3 hereof (an "Exercise Event"); and (iii) at the termination of
the Merger Agreement in accordance with the terms thereof prior to the
occurrence of an Exercise Event (provided that if the Merger Agreement is
terminated by ONB pursuant to Section 9.01 of the Merger Agreement, then the
Option shall expire 12 months from the date of termination of the Merger
Agreement and provided further that if ONB is in willful and material breach of
any representation, warranty or covenant in the Merger Agreement then the Option
shall expire immediately).
Section 2. Exercise of Option. Subject to Sections 1 and 3 hereof, the
Option may be exercised by ONB, in whole or in part, at any time, and from time
to time, prior to its expiration pursuant to Section 1 hereof. In the event ONB
wishes to exercise the Option, ONB shall deliver a written notice(s) to ANB
specifying the total number of Option Shares that it will purchase and a place
and date not earlier than ten (10) days and not later than sixty (60) days from
the date of delivery of such notice for the closing ("Closing") of such
purchase; provided, however, that if the approval of any governmental authority
required for purchasing the Option Shares shall not have been obtained prior to
the Closing, the date of the Closing shall be postponed to a date five (5)
business days following receipt of all such required governmental approvals;
provided, further, that ONB, at any time prior to the Closing, may rescind such
notice of intent to purchase the Option Shares and shall not thereafter be
obligated to purchase any or all of the Option Shares.
Section 3. Conditions to Exercise of Option. ONB may exercise the
Option only if any of the following events occurs or has occurred without the
prior written consent of ONB:
(a) The acquisition, following the date of this Agreement, by any
entity, person or group, other than ONB, of beneficial ownership of fifteen
percent (15%) or more (in the aggregate) of the shares of ANB Common Stock or
the capital stock of any Subsidiary (as defined in the Merger Agreement) (for
purposes of this Section 3, the terms "group" and "beneficial ownership" shall
have the same meanings ascribed to them in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the regulations promulgated thereunder),
but only if (i) such entity, person or group has publicly announced its
opposition to the Merger Agreement or the Merger (as defined in the Merger
Agreement) or its intention not to vote the common stock beneficially owned by
the entity, person or group in favor of the
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<PAGE> 151
Merger Agreement or the Merger and has solicited or indicated its intention to
solicit proxies or votes against the Merger Agreement or the Merger; or (ii)
such entity, person or group has proposed, indicated an intention to propose, or
entered into an agreement to effect a merger, consolidation, share exchange or
other combination with ANB or any Subsidiary.
(b) The acceptance by ANB or any Subsidiary of any proposal (however
conditional or future) of, or the execution by ANB or any Subsidiary of any
letter of intent, agreement in principle or other agreement (whether binding or
non-binding) with, any entity, person or group, other than ONB, to (i) acquire
ANB by merger, consolidation, share exchange, combination, purchase of all or
substantially all of ANB's or any of the Subsidiaries' assets or capital stock
or any other similar transaction, or (ii) make a tender or exchange offer for
any shares of ANB Common Stock or the capital stock of any Subsidiary.
Section 4. Payment and Delivery of Certificate(s). At any Closing
hereunder (a) ONB shall pay to ANB the aggregate purchase price for the Option
Shares so purchased by delivery of a cashier's or certified check or other
immediately available funds payable to the order of ANB, and (b) ANB shall
promptly thereafter issue the Option Shares in compliance with all applicable
laws and regulations and deliver to ONB a certificate or certificates
representing Option Shares as purchased, free and clear of all liens, claims,
pledges, security interests, charges and rights of any third parties.
Section 5. Representations, Warranties and Covenants of ANB. ANB
hereby represents, warrants and covenants to ONB as follows:
(a) This Agreement and the consummation by ANB of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action on the part of ANB, have been duly executed and delivered by an
authorized officer of ANB and constitute a valid and binding obligation of ANB.
ANB is an Indiana corporation duly organized and validly existing under the laws
of the State of Indiana and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
(c) ANB has taken all necessary corporate and other action to authorize
and reserve and to permit it to issue the Option Shares pursuant hereto. At all
times from the date hereof until such time as the obligation to deliver the
Option Shares hereunder terminates, ANB will have reserved for issuance upon
exercise of the Option by ONB sufficient shares of common stock of ANB, all of
which, upon issuance pursuant hereto, shall be duly authorized, validly issued,
fully paid and nonassessable, shall be free and clear of all liens, claims,
pledges, security interests, charges and rights of any third parties.
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<PAGE> 152
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of or be in conflict with, result in acceleration or termination
of or constitute a default under any term or provision of the Articles of
Incorporation or By-Laws of ANB or of any agreement, note, bond, indenture,
instrument, obligation, judgment, decree, order, binding upon or applicable to
ANB or any Subsidiary or any of their respective properties or assets.
(e) Upon any exercise of the Option, whether in whole or in part, the
Option Shares (i) shall be entitled to vote on all matters to come before the
shareholders of ANB at any meeting thereof, (ii) shall be entitled to the same
preferences, limitations and relative voting and other rights (including
dividend and distribution rights) as possessed by all other holders of ANB
Common Stock.
(f) The representations and warranties of ANB contained herein are
true, accurate and complete on and as of the date hereof in all material
respects, shall survive the execution of this Agreement and shall continue to be
true, accurate and complete during the period that the Option may be exercised
by ONB. ANB shall comply with the covenants applicable to it contained herein
from the date of this Agreement through and until such time as the Option
terminates.
Section 6. Representations and Warranties of ONB. ONB hereby
represents and warrants to ANB as follows:
(a) This Agreement and the consummation by ONB of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action on the part of ONB, have been duly executed and delivered by an
authorized officer of ONB and constitute a valid and binding obligation of ONB.
ONB is a corporation duly organized and validly existing under the laws of the
State of Indiana and has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) ONB is purchasing the Option, and any shares of common stock of ANB
issued upon exercise of the Option, for its own account and not with a view to
the public distribution thereof and will not sell, assign or transfer the Option
or any such shares of common stock issued to ONB upon exercise of the Option
except in compliance with all applicable laws and regulations and a legend to
such effect shall be noted on the certificate or certificates representing the
Option Shares issued upon exercise of the Option and stock transfer restrictions
may be given will respond thereto any transfer agent.
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<PAGE> 153
(c) The representations and warranties of ONB contained herein are
true, accurate and complete on and as of the date hereof, shall survive the
execution of this Agreement and shall continue to be true, accurate and complete
during the period that the Option may be exercised by ONB.
Section 7. Certain Rights.
(a) In the event that ONB exercises the Option and desires to sell any
of the Option Shares, and so requests in writing, ANB agrees to use its
reasonable best efforts to assist ONB (at ONB's expense) in complying with all
applicable federal laws relating to such sale and any applicable state laws
(including, without limitation, providing ONB with appropriate information
relating to ANB to be included in no more than one registration statement filed
by ONB), not later than thirty (30) days after ONB requests such assistance,
with respect to that number of the Option Shares beneficially owned by ONB for
which ONB requests such assistance, unless, in the opinion of counsel to ANB
addressed to ONB, which opinion shall be in form and substance reasonably
satisfactory to ONB and its counsel, a registration statement is not required
for the proposed sale or distribution of such Option Shares. All registration
statements and all actions relating to compliance with federal and state law
pursuant to this Section 7(a) shall be completed at ONB's expense except for any
fees and disbursements of counsel for ANB, which shall be paid by ANB.
(b) In addition to the foregoing rights, if at any time after exercise
by ONB of the Option for all of the Option Shares, ANB proposes to offer for
sale for cash in an offering to the general public any of its equity securities,
ANB at such time will provide written notice to ONB of its intention to do so.
Upon written request of ONB, given within fifteen (15) days after the providing
of any such notice to ONB by ANB (which request shall state the intended method
of disposition of such shares), ANB shall cause that number of the Option Shares
as to which ONB identifies in such request to be included in ANB's registration
statement in compliance with all applicable federal and state securities laws.
Such Option Shares so identified by ONB shall be included in ANB's registration
statement proposed to be filed by ANB, unless, in the opinion of counsel to ANB
addressed to ONB, which opinion shall be in form and substance reasonably
satisfactory to ONB and its counsel, inclusion of such shares in such
registration statement is not required for any proposed sale or distribution of
such Option Shares by ONB. All registration statements and all actions relating
to compliance with federal and state law pursuant to this Section 7(b) shall be
completed at ANB's expense except for any fees and disbursements of counsel for
ONB, which shall be paid by ONB. ANB would have the right not to include such
shares if in the reasonable opinion of the underwriters to do so would adversely
affect the proposed offering by ANB.
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<PAGE> 154
Section 8. Adjustment Upon Changes in Capitalization. (a) In the event
of any change in, or distributions in respect of, the Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, issuance of additional shares or
the like (including any stock dividend split-up or subdivision announced prior
to the date hereof but not yet effective), the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of Option Shares that remain subject to the Option shall be increased
so that, after such issuance and together with Option Shares previously issued
pursuant to the exercise of the Option (as adjusted on account of any of the
foregoing changes in the Common Stock), it equals 19.9% of the number of shares
of Common Stock then issued and outstanding. Nothing contained in this Section
8(b) or elsewhere in this Agreement shall be deemed to authorize ANB to breach
any provision of the Merger Agreement.
(b) Whenever the number of Option Shares purchasable upon exercise
hereof is adjusted as provided in this Section 8, the Purchase Price shall be
adjusted by multiplying the Purchase Price by a fraction, the numerator of which
shall be equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
purchasable after the adjustment.
Section 9. Right of Repurchase.
(a) In the event that ONB has purchased any of the Option Shares
pursuant to this Agreement, and ONB so requests in writing, ANB shall repurchase
all the Option Shares held by ONB at a price equal to the highest price paid or
to be paid by any entity, person or group referenced in Section 3 hereof for any
share of ANB Common Stock (or the aggregate consideration paid for the assets of
ANB divided by the number of shares of ANB Common Stock then outstanding), as
the case may be, multiplied by the total number of Option Shares to be redeemed
under this Section 9(a), plus interest at the rate of 8% per annum from the date
of the purchase of the Option Shares through the repurchase contemplated hereby
(the value of any such price or consideration other than cash to be determined,
in the case of consideration with a readily-ascertainable market value, on the
basis of such market value and, in the case of any other consideration, by
mutual agreement of ONB and ANB in good faith less the amount of any dividends
received or to be received on the Option Shares).
(b) In the event that (i) ONB has purchased any of the Option Shares
pursuant to this Agreement and (ii) the Merger Agreement has been duly executed
and delivered but subsequently has been terminated in accordance with the terms
thereof, then ANB shall have the right to purchase, and
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<PAGE> 155
ONB shall be obligated to sell to ANB, for cash, all, but not less than all, of
the Option Shares theretofore purchased by ONB pursuant to this Agreement. If
ANB exercises its right to purchase, the Option Shares so held ANB shall give
written notice of its intention to so exercise its right to ONB within fifteen
(15) days after the event giving rise to such right. The purchase price for each
Option Share held by ONB shall be a cash amount equal to the highest price paid
or to be paid by any entity, person or group referenced in Section 3 hereof for
any share of ANB Common Stock (or the aggregate consideration paid for the
assets of ANB divided by the number of shares of ANB Common Stock then
outstanding), as the case may be, multiplied by the total number of Option
Shares to be redeemed under this Section 9(b), plus interest at the rate of 8%
per annum from the date of the purchase of the Option Shares through the
repurchase contemplated hereby (the value of any such price or consideration
other than cash to be determined, in the case of consideration with a
readily-ascertainable market value, on the basis of such market value and, in
the case of any other consideration, by ONB in good faith).
(c) In lieu of exercising the Option if any of the events specified in
Section 3 hereof shall occur during the period in which ONB is entitled to
exercise the Option, ONB may, upon not less than 90 days written notice, require
ANB to pay to ONB an amount in cash equal to the difference between the highest
price paid or to be paid by any entity, person or group for any share of ANB
Common Stock (or the aggregate consideration paid for the assets of ANB or any
Subsidiary divided by the number of shares of ANB Common Stock then outstanding)
and the Purchase Price, multiplied by the total number of Option Shares to be
redeemed under this Section 9(c) (the value of any such price or consideration
other than cash to be determined, in the case of consideration with a
readily-attainable market value, on the basis of such market value and, in the
case of any other consideration, by determination by ONB in good faith). If ONB
exercises its rights under this Section 9(c), then the rights granted to ONB
under Sections 9(a) and 9(b) hereof and the rights to exercise the Option shall
terminate.
(d) The closing of any of the transactions contemplated by this Section
9 shall be made within ten (10) business days of any request made pursuant to
this Section 9. Payment for the Option Shares shall be made by ANB to ONB at the
closing by delivery of cash or immediately available funds. Any closing pursuant
to this Section 9 may be delayed to a date no later than ten (10) business days
after the receipt of any applicable regulatory clearance, and ANB shall promptly
file any notice or application for such clearance simultaneously with such
closing this Agreement shall terminate.
Section 10. Injunction; Specific Performance. Each of the parties
hereto hereby acknowledges that the other party will suffer irreparable damage
and injury and will not have an adequate remedy at law in the event of any
breach of any of its obligations under this Agreement. Accordingly, in the event
of such a breach or of a threatened or attempted breach, in addition to all
other remedies to which each party hereto is entitled to at law, each party
shall be entitled to a temporary and
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<PAGE> 156
permanent injunction (without the necessity of showing any actual damage) or a
decree of specific performance of the provisions hereof, and no bond or other
security shall be required in that connection. The remedies described in this
Section 10 shall not be exhaustive and shall be in addition to all other
remedies that either party may have at law, in equity or otherwise.
Section 11. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that neither party may assign this Agreement without the prior written
consent of the other party.
(b) This Agreement may be modified, amended or supplemented only by a
written agreement executed by the parties hereto.
(c) All notices, requests and other communications hereunder shall be
in writing and shall be delivered by hand, by certified United States mail
(return receipt requested, first-class postage pre-paid) or by overnight express
receipted delivery service (i) to Old National Bancorp, at 420 Main Street,
Evansville, Indiana 47708, attention: Jeffrey L. Knight, Corporate Secretary and
General Counsel, and (ii) to ANB Corporation, at 120 W. Charles Street, Muncie,
Indiana 47305, attention: James R. Schrecongost, President.
(d) In case any one or more of the provisions contained herein shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein.
(e) This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
(f) The headings in this Agreement have been inserted solely for
convenience and ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana without giving effect to the choice of law
principles thereof.
(h) This Agreement supersedes all other prior understandings,
commitments, representations, negotiations or agreements, whether oral or
written, between the parties hereto relating
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<PAGE> 157
to the matters contemplated by this Agreement and constitutes the entire
agreement between the parties hereto relating to the subject matter hereof.
(i) No waiver by any party hereto of any right or provision of this
Agreement shall be effective unless the same shall be in writing and signed by
the waiving party. The failure in one or more instances of any party to enforce
any term or provision of this Agreement or to exercise any right or remedy shall
not prohibit any subsequent enforcement or exercise thereof or constitute a
waiver of any such term, provision, right or remedy. The waiver by any party
hereto of a breach of or noncompliance with any term, covenant, restriction or
provision of this Agreement shall not operate or be construed as a continuing
waiver or as a waiver of any other or subsequent breach or noncompliance
hereunder.
* * * * * * *
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<PAGE> 158
IN WITNESS WHEREOF, the undersigned have executed, entered into and
delivered this Agreement as of the day and year first above written.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
-------------------------------
Ronald B. Lankford, President
ATTEST:
By: /s/ JEFFREY L. KNIGHT
--------------------------------------
Jeffrey L. Knight, Corporate Secretary
ANB CORPORATION
By: /s/ JAMES R. SCHRECONGOST
-------------------------------
James R. Schrecongost, President
ATTEST:
By: /s/ JAMES W. CONVEY
--------------------------------------
James W. Convy, Secretary
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<PAGE> 159
APPENDIX C
__________, 2000
Board of Directors
ANB Corporation
120 West Charles Street
Muncie, IN 47305
Ladies and Gentlemen:
ANB Corporation ("ANB") and Old National Bancorp ("ONB") have entered
into an Agreement of Affiliation and Merger, dated as of July 29, 1999 (the
"Agreement"), pursuant to which ANB will be merged with and into ONB (the
"Merger"). Upon consummation of the Merger, each share of ANB common stock, par
value $1.00 per share, issued and outstanding immediately prior to the Merger
(the "ANB Shares") will be converted into the right to receive 1.3125 shares
(the "Exchange Ratio") of ONB common stock, no par value (together with the
rights attached thereto issued pursuant to the Rights Agreement, dated as of
March 1, 1990, between ONB and Old National Bank in Evansville, as Rights
Agent). The terms and conditions of the Merger are more fully set forth in the
Agreement. You have requested our opinion as to the fairness, from a financial
point of view, of the Exchange Ratio to the holders of ANB Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated as of July 29, 1999, by and between ANB and ONB; (iii) certain publicly
available financial statements of ANB and other historical financial information
provided by ANB that we deemed relevant; (iv) certain publicly available
financial statements of ONB and other historical financial information provided
by ONB that we deemed relevant; (v) certain internal financial analyses and
forecasts of ANB prepared by and reviewed with management of ANB and the views
of senior management of ANB, based on certain limited discussions with certain
members of senior management, regarding ANB's past and current business,
financial condition, results of operations and future prospects; (vi) certain
internal financial analyses and forecasts of ONB prepared by and reviewed with
management of ONB, (vii) the views of senior management of ONB, based on certain
limited discussions with certain members of senior management, regarding ONB's
past and current business, financial condition, results of operations and future
prospects, including the pro forma impact of ONB's acquisitions of Sycamore
Agency, Inc., Permanent Bancorp, Inc. and Heritage Financial Services; (viii)
the
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<PAGE> 160
pro forma impact of the Merger; (ix) the publicly reported historical price and
trading activity for ANB's and ONB's common stock, including a comparison of
certain financial and stock market information for ANB and ONB with similar
publicly available information for certain other companies the securities of
which are publicly traded; (x) the financial terms of recent business
combinations in the commercial banking industry, to the extent publicly
available; (xi) the current market environment generally and the banking
environment in particular; and (xii) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
considered relevant.
In performing our review, we have assumed and relied upon the accuracy
and completeness of all the financial information, analyses and other
information that was publicly available or otherwise furnished to, reviewed by
or discussed with us, and we do not assume any responsibility or liability for
independently verifying the accuracy or completeness thereof. We did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities (contingent or otherwise) of ANB or ONB or
any of their subsidiaries, or the collectibility of any such assets, nor have we
been furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of ANB
or ONB nor have we reviewed any individual credit files relating to ANB and ONB
and, with your permission, we have assumed that the respective allowances for
loan losses for both ANB and ONB are adequate to cover such losses and will be
adequate on a pro forma basis for the combined entity. With respect to the
financial projections reviewed with management, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of the respective future
financial performance of ANB and ONB and that such performances will be
achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in ANB's or ONB's assets, financial condition, results of
operations, business or prospects since the date of the most recent financial
statements made available to us. We have assumed in all respects material to our
analysis that ANB and ONB will remain as going concerns for all periods relevant
to our analyses, that all of the representations and warranties contained in the
Agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements, that the conditions precedent in the Agreement
are not waived and that the Merger will be accounted for as a pooling of
interests and will qualify as a tax-free reorganization for federal income tax
purposes.
Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the
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<PAGE> 161
value of ONB common stock will be when issued to ANB's shareholders pursuant to
the Agreement or the prices at which ANB's or ONB's common stock will trade at
any time.
We have acted as ANB's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for ANB and have received compensation for such
services.
In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to ANB and ONB. We may also
actively trade the debt and equity securities of ANB and ONB for our own account
and for the accounts of our customers and, accordingly, may at any time hold a
long or short position in such securities.
Our opinion is directed to the Board of Directors of ANB in connection
with its consideration of the Merger and does not constitute a recommendation to
any shareholder of ANB as to how such shareholder should vote at any meeting of
shareholders called to consider and vote upon the Merger. Our opinion is not to
be quoted or referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall this opinion be
used for any other purposes, without Sandler O'Neill's prior written consent;
provided, however, that we hereby consent to the inclusion of this opinion as an
appendix to ANB's and ONB's Joint Proxy Statement/Prospectus dated the date
hereof and to the references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of ANB Shares.
Very truly yours,
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<PAGE> 162
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation provide that the Registrant
will indemnify any person who is or was a director, officer or employee of the
Registrant or of any other corporation for which he is or was serving in any
capacity at the request of the Registrant against all liability and expense that
may be incurred in connection with any claim, action, suit or proceeding with
respect to which such director, officer or employee is wholly successful or
acted in good faith in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Registrant or such other corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. A director, officer or employee of the Registrant
is entitled to be indemnified as a matter of right with respect to those claims,
actions, suits or proceedings where he has been wholly successful. In all other
cases, such director, officer or employee will be indemnified only if the Board
of Directors of the Registrant or independent legal counsel finds that he has
met the standards of conduct set forth above.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following Exhibits are being filed as part of this Registration
Statement:
2 Agreement of Affiliation and Merger (included as Appendix A to
Prospectus)
3(i) Articles of Incorporation of the Registrant (incorporated by
reference to Registrant's Registration Statement on Form S-3,
File No. 333-87573, dated September 22, 1999)
3(ii) By-Laws of the Registrant (incorporated by reference to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, File No. 333-72117, dated May 14, 1999)
4 (a) the description of Registrant's common stock contained in
its Current Report on Form 8-K, dated January 6, 1983
(incorporated by reference thereto), and (b) the description
of Registrant's Preferred Stock Purchase Rights contained in
Registrant's Form 8-A, dated March 1, 1990, including the
Rights Agreement, dated March 1, 1990, between the Registrant
and Old National Bank in Evansville, as Trustee (incorporated
by reference thereto)
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<PAGE> 163
5 Opinion of Krieg DeVault Alexander & Capehart, LLP re:
legality
8.01 Tax Opinion of Krieg DeVault Alexander & Capehart, LLP copy
re: certain federal income tax matters
8.02 Tax Opinion of Sullivan & Cromwell re: certain federal income
tax matters
10.01 Employment Agreement, dated July 29, 1999, by and between
James R. Schrecongost and Old National Bancorp
10.02 Agreement, dated December 21, 1999 by and between
Larry E. Thomas and Old National Bancorp
10.03 Material Contracts (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and the Registrant's Form 10-Q for
the quarter ended March 31, 1999)
21 Subsidiaries of the Registrant
23.01 Consent of Krieg DeVault Alexander & Capehart, LLP (included
in Opinion of Krieg DeVault Alexander & Capehart, LLP re:
legality at Exhibit 5)
23.02 Consent of Sullivan & Cromwell
23.03 Consent of Arthur Andersen LLP
23.04 Consent of Olive LLP
24 Powers of Attorney
99.01 Form of Proxy
99.02 Stock Option Agreement dated July 29, 1999 between Old
National and ANB (included in Part I as Appendix B to the
Proxy Statement-Prospectus included in this Registration
Statement)
99.03 Consent of Sandler O'Neill & Partners, L.P.
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<PAGE> 164
(b) Financial Statement Schedules
Not Applicable
(c) Fairness Opinion.
Included in Part I as Appendix C to the Proxy
Statement-Prospectus included in this Registration Statement
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) (1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
(2) The undersigned registrant hereby undertakes that every
prospectus (i) that is filed pursuant to paragraph (b)(1) immediately preceding
or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act,
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is,
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<PAGE> 165
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE> 166
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Evansville,
State of Indiana, on January 10, 2000.
OLD NATIONAL BANCORP
By: /s/ JAMES A. RISINGER
-----------------------------------------
James A. Risinger, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated below as of January 10, 2000.
Name Title
- ---- -----
/s/ JAMES A. RISINGER Chairman of the Board, Director, President
- --------------------------------- and Chief Executive Officer (Chief
James A. Risinger Executive Officer)
/s/ JOHN S. POELKER Senior Vice President (Chief Financial
- --------------------------------- Officer and Principal Accounting Officer)
John S. Poelker
DAVID L. BARNING* Director
- ---------------------------------
David L. Barning
RICHARD J. BOND* Director
- ---------------------------------
Richard J. Bond
ALAN W. BRAUN* Director
- ---------------------------------
Alan W. Braun
WAYNE A. DAVIDSON* Director
- ---------------------------------
Wayne A. Davidson
LARRY E. DUNIGAN* Director
- ---------------------------------
Larry E. Dunigan
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<PAGE> 167
DAVID E. ECKERLE* Director
- ---------------------------------
David E. Eckerle
PHELPS L. LAMBERT* Director
- ---------------------------------
Phelps L. Lambert
RONALD B. LANKFORD* Director
- ---------------------------------
Ronald B. Lankford
LUCIEN H. MEIS* Director
- ---------------------------------
Lucien H. Meis
LOUIS L. MERVIS* Director
- ---------------------------------
Louis L. Mervis
LAWRENCE D. PRYBIL* Director
- ---------------------------------
Lawrence D. Prybil
JOHN N. ROYSE* Director
- ---------------------------------
John N. Royse
MARJORIE Z. SOYUGENC* Director
- ---------------------------------
Marjorie Z. Soyugenc
CHARLES D. STORMS* Director
- ---------------------------------
Charles D. Storms
*By: /s/ JEFFREY L. KNIGHT
---------------------------------
Attorney-in-Fact
Print Name: Jeffrey L. Knight
--------------------------
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<PAGE> 1
EXHIBIT 5
January 10, 2000
Board of Directors
Old National Bancorp
420 Main Street
P.O. Box 718
Evansville, Indiana 47705
RE: Issuance of Shares of Common Stock of Old National Bancorp in
connection with the Acquisition of ANB Corporation and its
subsidiaries
Ladies and Gentlemen:
We have represented Old National Bancorp ("Old National"), Evansville,
Indiana, as special counsel in connection with the preparation and filing of a
Registration Statement on Form S-4 ("Registration Statement") with the
Securities and Exchange Commission for the purpose of registering shares of Old
National's no par value common stock under the Securities Act of 1933, as
amended ("Shares"). The Shares are to be issued to shareholders of ANB
Corporation ("ANB"), in connection with the proposed merger of ANB into Old
National ("Merger"), as specified in the Agreement of Affiliation and Merger,
dated July 29, 1999 ("Agreement"), by and between Old National and ANB. The
Merger will be accomplished and the Shares will be issued pursuant to the
specific terms of the Agreement. In connection with this opinion, we have
reviewed and are familiar with Old National's Articles of Incorporation and
By-Laws and such other records, documents and information as we have in our
judgment deemed relevant.
Based upon the foregoing, it is our opinion that if and when the merger
is consummated, the Shares will, when issued to shareholders of ANB in
accordance with all of the terms and conditions of the Agreement, be legally
issued, fully paid and non-assessable. This opinion is limited to the matters
stated herein, and no opinion is to be implied or may be inferred beyond the
matters expressly stated.
This opinion is addressed to you and is solely for your use in
connection with the Registration Statement, and we assume no professional
responsibility to any other person whatsoever. Accordingly, the opinion
expressed herein is not to be relied upon, utilized or quoted by or delivered or
disclosed to, in whole or in part, any other person, corporation, entity or
governmental authority without, in each instance, the prior written consent of
this firm.
<PAGE> 2
Board of Directors
January 10, 2000
Page 2
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference made to us in the Registration
Statement and the Prospectus forming a part thereof under the caption "Legal
Opinions". In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
---------------------------------------------
KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
<PAGE> 1
EXHIBIT 8.01
January 10, 1999
Board of Directors
Old National Bancorp
420 Main Street
Evansville, Indiana 47708
RE: Merger of ANB Corporation into Old National Bancorp and the
Exchange of Common Stock of ANB Corporation for Common Stock of
Old National Bancorp
Ladies and Gentlemen:
The Board of Directors of Old National Bancorp ("ONB") has requested
our opinion as to certain federal income tax consequences of a reorganization
involving ONB and ANB.
In summary, the proposed transaction involves the merger of ANB
Corporation ("ANB") with and into ONB ("Merger"), with ONB as the surviving
entity. The surviving entity shall be known as Old National Bancorp. Upon
consummation of the Merger, each of American National Bank & Trust Company of
Muncie, Peoples Loan & Trust Bank, Farmers State Bank of Union City, Ohio and
American National Trust and Investment Management Company will become a
wholly-owned subsidiary of ONB, and ANB Financial Planning Services, Inc. will
continue to be a wholly-owned subsidiary of American National Bank & Trust
Company of Muncie. In consideration of the Merger, ANB shareholders will receive
ONB common stock in exchange for their shares of ANB common stock.
FACTS
In connection with the Merger, the following facts have been provided
to us, and we have relied upon them for purposes of this opinion:
A. OLD NATIONAL BANCORP
ONB has its principal office at 420 Main Street, Evansville,
Vanderburgh County, Indiana 47708. ONB is a corporation duly incorporated and
existing under the laws of the State of Indiana and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended. As of June 30,
1999, ONB had 75,000,000 shares of voting, no par value common stock authorized,
of which
<PAGE> 2
Old National Bancorp
January 10, 2000
Page 2
approximately 46,200,000 shares were issued and outstanding. ONB common stock is
traded, and prices of ONB common stock are reported, on the Nasdaq National
Market System.
ONB also has 2,000,000 shares of Series A, no par value, preferred
stock authorized. The preferred stock has no stated dividend rate. No shares of
ONB preferred stock have been issued, and ONB presently has no intent and no
commitments to issue any of such shares. However, during the first fiscal
quarter of 1990, ONB declared and paid a dividend in the form of rights
("Rights") to purchase shares of its Series A preferred stock pursuant to a
Rights Agreement. One Right was issued for each outstanding share of ONB common
stock. Subsequent issuances of ONB common stock also included such Rights. Each
Right entitles the holder thereof, upon the occurrence of certain events
involving a change in control of ONB, to purchase from ONB 1/100 of a share of
the Series A preferred stock at an initial purchase price equal to $60.00,
subject to adjustment. Unless earlier exercised or redeemed, the Rights will
expire at the close of business on March 1, 2000. A Right is transferred
automatically with a transfer of each underlying share of ONB common stock, and
future issuances of ONB common stock will also include such Rights.
ONB maintains its accounting on a calendar year basis, and computes its
income under the accrual method of accounting. ONB is the parent corporation of
an affiliated group of subsidiaries consisting of three (3) operating banks, one
consumer finance company, one insurance company, one realty company, four (4)
Delaware business trusts and three (3) national trust companies ("ONB Group").
The ONB Group files a consolidated federal income tax return and will continue
to file consolidated federal income tax returns after the effective time of the
Merger.
B. ANB CORPORATION
ANB has its principal office at 120 West Charles Street, Delaware
County, Muncie, Indiana 47305. ANB is a corporation duly incorporated and
existing under the laws of the State of Indiana and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended. As of June 30,
1999, ANB had 20,000,000 shares of voting, $1.00 stated value common stock
authorized, of which approximately 5,445,995 shares were issued and outstanding.
ANB common stock is traded, and prices of ANB common stock are reported, on the
Nasdaq National Market System.
<PAGE> 3
Old National Bancorp
January 10, 2000
Page 3
ANB also has 250,000 shares of preferred stock authorized. The
preferred stock has no stated dividend rate. No shares of ANB preferred stock
have been issued, and ANB presently has no intent and no commitments to issue
any of such shares.
ANB maintains its accounting on a calendar year basis, and computes its
income under the accrual method of accounting. ANB is the parent corporation of
an affiliated group of subsidiaries consisting of three (3) operating banks and
one national trust company ("ANB Group"). The ANB Group files a consolidated
federal income tax return and will be included in the ONB Group consolidated
federal income tax return after the effective time of the Merger.
BUSINESS PURPOSES
The shareholders of ONB and the shareholders of ANB desire to
reorganize their stock interests to accomplish the following business
objectives, among others:
1. To obtain greater financial and managerial strength for future
growth and to achieve economies of scale and other operational
benefits.
2. To provide the shareholders of ANB an interest in a more
widely-held enterprise with potentially more marketable stock.
3. To allow ONB and the ANB Group to compete more effectively with
other banking organizations and to enable the ANB Group to provide
new and broader services to its customers.
PROPOSED TRANSACTION
As used herein, "Code" refers to the Internal Revenue Code of 1986, as
amended, and "Regulations" refers to regulations promulgated thereunder by the
Secretary of the Treasury, all as in effect as of the date of this opinion.
To accomplish the objectives specified above, ONB and ANB entered into
an Agreement of Affiliation and Merger, dated July 29, 1999 ("Agreement"). Under
the terms of the Agreement, ANB will merge with and into ONB. Upon consummation
of the Merger, each of American National Bank &
<PAGE> 4
Old National Bancorp
January 10, 2000
Page 4
Trust Company of Muncie, Peoples Loan & Trust Bank, Farmers State Bank of Union
City, Ohio and American National Trust and Investment Management Company will
become a wholly-owned subsidiary of ONB. At the effective time of the Merger,
each issued and outstanding share of ANB common stock will be converted into the
right to receive 1.3125 shares of ONB common stock, as adjusted for the 5% stock
dividend declared by Old National on December 9, 1999, and subject to further
adjustment, if any, as provided for in the Agreement.
No fractional shares of ONB common stock will be issued with respect to
fractional share interests arising from the exchange ratio specified above.
Rather, any shareholder of ANB entitled to a fractional share interest of ONB
common stock will receive cash in lieu thereof in an amount equal to the
fraction of a share of ONB common stock multiplied by the average of the per
share closing price of ONB common stock reported on the Nasdaq National Market
System for the final five (5) business days on which shares of ONB common stock
were traded immediately preceding the effective time of the Merger. The payment
of cash in lieu of fractional share interests of ONB common stock is solely for
the purpose of avoiding the expense and inconvenience to ONB of issuing
fractional shares of its common stock and does not represent separately
bargained-for consideration. No cash or other property, except for ONB common
stock and cash paid in lieu of fractional shares, will be allocated to the
shareholders of ANB.
The Agreement will be submitted to the shareholders of ANB for their
approval at a special meeting called and held in accordance with applicable law
and with ANB's Articles of Incorporation and By-Laws. The holders of a majority
of the outstanding shares of ANB common stock and a majority of the Board of
Directors of ANB must approve the Merger. Approval of the Merger by the
shareholders of ONB is not required or contemplated.
The Merger requires the prior approval of the Board of Governors of the
Federal Reserve System, The Indiana Department of Financial Institutions and The
Ohio Division of Financial Institutions. As of the date hereof, these approvals
have not been received.
The shares of ONB common stock will, when issued to shareholders of ANB
in accordance with the Agreement, be validly issued, fully paid and
nonassessable and registered under the Securities Act of 1933, as amended.
<PAGE> 5
Old National Bancorp
January 10, 2000
Page 5
ASSUMPTIONS
In connection with the Merger, we have relied upon the following
assumptions for the purpose of issuing this opinion:
1. The fair market value of the ONB common stock and other
consideration received by each ANB shareholder will be approximately equal to
the fair market value of the ANB common stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of ANB who own
five percent (5%) or more of the outstanding shares of ANB common stock and, to
the best knowledge of ANB management, there is no plan or intention on the part
of the remaining shareholders of ANB, to sell, exchange or otherwise dispose of
a number of shares of ONB common stock received in the transaction that would
reduce the ANB shareholders' ownership of ONB common stock to be received in the
Merger to a number of shares having a value, as of the effective time of the
Merger, of less than fifty percent (50%) of the value of all of the formerly
outstanding common stock of ANB. For purposes of this assumption, shares of ANB
common stock exchanged for cash in lieu of fractional shares of ONB common stock
will be treated as outstanding ANB common stock at the effective time of the
Merger. Moreover, shares of ANB common stock and shares of ONB common stock held
by ANB shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger have been considered in making this assumption.
3. ONB has no plan or intention to reacquire any of its common stock
issued in the Merger. ONB may, however, acquire ONB common stock on a periodic
basis through purchases on an anonymous basis on the open market at open market
prices.
4. ONB has no plan or intention to sell or otherwise dispose of any
of the assets of ANB acquired in the Merger, except for dispositions made in the
ordinary course of business or transfers described in Section 368(a)(2)(C) of
the Code.
5. The liabilities of ANB assumed by ONB and the liabilities to which
the transferred assets of ANB are subject were incurred by ANB in the ordinary
course of its business.
<PAGE> 6
Old National Bancorp
January 10, 2000
Page 6
6. Following the Merger, ONB will continue the historic business of
ANB or use a significant portion of ANB's historic business assets in a
business.
7. ONB, ANB, and the shareholders of ANB will pay their respective
expenses, if any, incurred in connection with the Merger.
8. There is no intercorporate indebtedness existing between ONB and
ANB that was issued, acquired or will be settled at a discount.
9. No parties to the Merger are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
10. ANB is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
11. The fair market value of the assets of ANB transferred to ONB will
equal or exceed the sum of the liabilities assumed by ONB plus the amount of
liabilities, if any, to which the transferred assets are subject.
12. The payment of cash in lieu of fractional shares of ONB common
stock resulting from the exchange ratio is solely for the purpose of avoiding
the expense and inconvenience to ONB of issuing fractional shares of ONB common
stock and does not represent separately bargained-for consideration. The total
cash consideration that will be paid in the Merger to the ANB shareholders
instead of issuing fractional shares of ONB common stock will not exceed one
percent (1%) of the total consideration that will be issued in the Merger to the
ANB shareholders in exchange for their shares of ANB common stock. The
fractional share interests of each ANB shareholder will be aggregated, and no
ANB shareholder will receive cash in an amount equal to or greater than the
value of one full share of ONB common stock.
13. None of the compensation received by any shareholder-employee of
ANB will be separate consideration for, or allocable to, any of their shares of
ANB common stock; none of the shares of ONB common stock received by any
shareholder-employee of ANB will be separate consideration for, or allocable to,
any employment agreement; and the compensation paid to any shareholder-employee
<PAGE> 7
Old National Bancorp
January 10, 2000
Page 7
of ANB will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's-length for similar services.
14. The shareholders of ANB (immediately before the Merger) receiving
shares of ONB common stock in the Merger will not own (immediately after the
Merger) more than fifty percent (50%) of the fair market value of ONB common
stock.
OPINION
Based solely upon the facts, assumptions and other information set
forth above, and so long as such facts, assumptions and other information are
true and correct on the date of the consummation of the Merger, it is our
opinion with respect to the Merger that:
1. Provided that the merger of ANB with and into ONB qualifies as a
statutory merger under applicable law, the proposed merger will
constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code.
2. ANB will recognize no gain or loss upon the transfer of all of its
assets to ONB in exchange for ONB common stock issued to ANB
shareholders, cash paid to ANB shareholders in lieu of fractional
shares of ONB common stock, and the assumption by ONB of all of
ANB's liabilities.
3. No gain or loss will be recognized by ONB on the receipt of the
assets of ANB in exchange for common stock of ONB.
4. The shareholders of ANB will recognize no gain or loss upon the
exchange of their shares of ANB common stock solely for shares of
ONB common stock.
5. The statements made under the caption "Federal Income Tax
Consequences" contained in the Proxy Statement Prospectus filed as
part of ONB's Registration Statement on Form S-4 relating to the
Merger, to the extent that they constitute matters of law or legal
conclusions, are correct in all material respects.
<PAGE> 8
Old National Bancorp
January 10, 2000
Page 8
The opinion expressed herein represents our conclusions as to the
application of existing federal income tax law to the facts as presented to us
relating to the Merger, and we give no assurance that changes in such law or any
interpretation thereof will not affect the opinion expressed by us. Moreover,
there can be no assurance that this opinion will not be challenged by the
Internal Revenue Service or that a court considering the issues will not hold
contrary to such opinion. We express no opinion on the treatment of the Merger
under the income tax laws of any state or other taxing jurisdiction. We assume
no obligation to advise you of any changes concerning the above, whether or not
deemed material, which may hereafter come or be brought to our attention. The
opinions expressed herein are a matter of professional judgment and are not a
guarantee of result.
This opinion is addressed to you and is solely for your use in
connection with the Merger and your role as members of your Board of Directors.
We assume no professional responsibility to any other person or entity
whatsoever, including, without limitation, any shareholder of ONB or shareholder
of ANB. Accordingly, the opinion expressed herein is not to be utilized or
quoted by, or delivered or disclosed to, in whole or in part, any other person,
corporation, entity or governmental authority without, in each instance, our
prior written consent.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference made to us in the Registration
Statement and the Prospectus forming a part thereof under the caption "Legal
Opinions". In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
<PAGE> 1
EXHIBIT 8.02
January 10, 2000
ANB Corporation,
120 W. Charles Street,
Muncie, Indiana 47305.
Ladies and Gentlemen:
We have acted as your counsel in connection with your Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
January 10, 2000 (the "Registration Statement"). We hereby confirm to you that
our opinion is as set forth under the caption "Federal Income Tax Consequences"
in the Proxy Statement/Prospectus included in the related Registration
Statement, subject to the limitations therein contained.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE> 1
Exhibit 10.01
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") has been made and entered
into as of the 29th day of July, 1999, by and between Old National Bancorp (the
"Company") and James R. Schrecongost (the "Executive"). At the Effective Time
(as defined below), this Agreement shall terminate the Amended and Restated
Employment Agreement, dated May 10, 1999 (the "ANB Employment Agreement"), by
and between the Executive and ANB Corporation (the "Target"), pursuant to the
terms of Section 20 of this Agreement.
WHEREAS, the Company and Target are entering into an Agreement of
Affiliation and Merger on July 29, 1999 (the "Merger Agreement"), whereby the
Target will be merged with and into the Company (the "Merger");
WHEREAS, the Company and the Executive are entering into this Agreement
on the date set forth above, but this Agreement is contingent on the
consummation of the Merger.
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Executive and the Company agree as follows:
Section 1. Operation of Agreement.
This Agreement shall be effective and operative from and after the
"Effective Time" (as defined in the Merger Agreement) (the "Effective Date").
Section 2. Employment: Period of Employment.
A. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to become employed by the Company, upon and subject to
the terms and conditions set forth herein.
B. The Company shall employ the Executive on a full-time basis during
his employment hereunder (the "Period of Employment"), which shall be deemed to
have commenced on the Effective Date and which shall end two (2) years from the
Effective Date (the "Term").
<PAGE> 2
Section 3. Position, Duties; Responsibilities.
The Executive shall serve as Chairman of Old National Trust Company;
Chairman of Old National Trust Company-Illinois; Chairman of Old National Trust
Company-Kentucky, each a wholly-owned subsidiary of the Company; and Chairman of
American National Trust and Investment Management Company, and shall have such
commensurate responsibilities, duties and authority as may from time to time be
reasonably assigned to the Executive by the Chief Executive Officer or the Chief
Operating Officer of the Company. The Executive shall serve as a Member of the
Chairman's Committee of Old National Bancorp while employed by the Company. The
Executive shall devote substantially all his business efforts, time, energy and
skill during reasonable business hours to the service of the Company and shall
not engage in any other related business. The Executive's office shall be
located at the Company's regional office, which shall be located in Muncie,
Indiana. Without his consent, the Executive will not be required to relocate
outside of Muncie, Indiana.
Section 4. Compensation and Related Matters.
A. For all services rendered by the Executive in any capacity during
the Period of Employment, including, without limitation, services as an
executive officer, director, or member of any committee of the Company or of any
other subsidiary, division, or affiliate of the Company, the Executive shall be
paid as compensation:
(1.) Salary. During the Period of Employment, the Company shall
pay him an annual base salary at a rate of $255,000 (Two Hundred
Fifty-Five Thousand and No/100 Dollars) per year, such salary to be
paid in substantially equal payments in accordance with the Company's
practices for other executive employees in effect from time to time.
Such annual salary shall be subject to increase annually (generally,
effective the first pay period in January) at the discretion of the
Chief Executive Officer of the Company, taking into account the
Executive's performance of his duties during the preceding year and
other relevant factors, and subject to the approval of the Company's
Board of Directors ("Board") Compensation Committee.
(2.) Incentives. The Company shall grant to the Executive,
executive performance awards, stock options, stock appreciation rights,
bonuses, and other incentive grants ("Incentive Compensation Awards")
at least in equal amount, and of substantially the same kind and
subject to substantially the same terms and conditions, as those
awarded to each other executive of the Company during the Term, under
all executive compensation plans, programs, and policies existing on
the Effective Date and all such plans, programs, and policies that may
thereafter be adopted for the benefit of executives of the Company or
employees of the Company generally.
<PAGE> 3
(3.) Signing Bonus. The Company shall pay in cash to the Executive
a "signing bonus" in an amount equal to $875,000.00 (Eight Hundred
Seventy-Five Thousand and No/100 Dollars), payable within five (5) days
following the Effective Date. In addition to the aforementioned
"signing bonus", in the event that the Executive: (i) remains employed
by the Company until the expiration of the Term; (ii) is terminated by
the Company without Cause (as defined below) during the Term; or (iii)
for any reason, terminates his employment at any time following the
first anniversary of the Effective Date, the Company shall pay to the
Executive a "retention bonus" in an amount equal to $65,000.00
(Sixty-Five Thousand and No/100 Dollars) (the "Retention Bonus"),
payable within five (5) days following the Executive's termination of
employment with the Company or expiration of the Term. In the event
that the Company terminates the Executive's employment for Cause at any
time during the first year following the Effective Date, the Executive
shall not be entitled to receive nor shall the Company be required to
pay the Retention Bonus to the Executive.
(a) For purposes of this Section 4(A)(3), the term "Cause"
shall mean: (i) willful and continued failure by the Executive to
substantially perform his duties hereunder other than any such
failure resulting from the Executive's incapacity due to physical
or mental illness which continues after the Company has given
Executive written notice of the same; (ii) willful engaging by the
Executive in an act of fraud, misappropriation, dishonesty,
embezzlement, or similar conduct involving the Company; (iii)
conviction of a felony or any crime involving moral turpitude or
any event requiring the consent of the Federal Deposit Insurance
Company; (iv) engaging in other serious misconduct of such a
nature that the continued employment of the Executive may
reasonably be expected to materially and adversely affect the
business or properties of the Company. For purposes of this
Subsection, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be done,
by him in bad faith or without reasonable belief that his action
or omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board of Directors of the Company
or upon the instructions of the Chief Executive Officer of the
Company or based on the advice of counsel for the Company shall be
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be
deemed to be for "Cause" unless and until there shall have been
delivered to the Executive a Notice of Termination (as defined
below) and a copy of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire
membership of the Board (excluding the Executive if he is a member
of the Board) at a meeting of the Board called and held for such
purposes (after reasonable notice is provided to the
<PAGE> 4
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct
described in (i), (ii), (iii), or (iv) above, and specifying the
particulars thereof in detail.
B. Other Benefits. During the Term, the Executive shall be entitled
to participate in or receive benefits under all employee benefit plans,
arrangements and perquisites made available by the Company now or in the future
to its executives and key management employees, subject to and on a basis
consistent with the terms conditions and overall administration of such plans,
arrangements and perquisites. Without limiting the foregoing, the Company agrees
to pay Executive's initiation fee and monthly dues to the Delaware Country Club
so long as Executive utilizes such membership primarily in furtherance of his
duties under this Agreement. In addition, the Company agrees to provide the
Executive with a company vehicle with a value up to $36,000.00 (Thirty-Six
Thousand and No/100 Dollars). Use of the vehicle and other conditions are
subject to the Company Vehicle Policy. The Executive shall be provided a copy of
the Vehicle Policy prior to the Effective Date. Nothing paid to the Executive
under any plan, arrangement or perquisite presently in effect or made available
in the future shall be deemed to be in lieu of the salary and other compensation
payable to the Executive pursuant to this Section 4.
In addition to the benefits that Executive shall be entitled to
participate in or receive benefits under, Company shall continue to carry
Executive's life insurance policy in the amount of $600,000.00 (Six Hundred
Thousand and No/Dollars) for which Company shall pay all policy premium amounts
during the Term subject to a refund to the Company of the total dollar premium
paid over the life of the policy upon Executive's employment with the Company
during the Term. At such times as shall be necessary and in accordance with the
Target's past practices, the Company shall also pay to the Executive an amount
to enable him to pay all federal, state or local income taxes incurred with
respect to such life insurance policy.
C. Vacation. The Executive shall be entitled to the number of
vacation days in each calendar year determined in accordance with the Company's
vacation plan or policy in effect from time to time for their executives
generally. The Executive shall also be entitled to all paid holidays given by
the Company to their executives.
D. Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive reimbursement for all reasonable and
customary expenses incurred by him in performing services hereunder, including
all expense of travel and living expenses while away from home on business or at
the request of and in the service of the Company; provided, that such expenses
are incurred and accounted for in accordance with the policies and procedures
established by the Company and approved by the Board.
<PAGE> 5
Section 5. Termination by the Company.
A. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in Sections 10, 11 and 12 hereof,
the Executive's employment under this Agreement may be terminated by the Company
upon thirty (30) days prior written notice to the Executive, with or without
Cause. For purposes of this Agreement, a "Notice of Termination" means a written
notice which (a) indicates the specific termination provision of this Agreement
relied upon, (b) sets forth the specific facts and circumstances (including
specific acts and omissions by the Executive) claimed to provide a basis for
termination of the Executive's employment under the provisions so indicated and
(c) specifies the Termination Date (as defined below).
B. Death. The Executive's employment shall terminate upon his death.
C. Termination Date. The effective date of the Executive's
termination from employment, whether for death or with or without cause, shall
be referred to as the "Termination Date" (which date shall not be less than 30
days after receipt of such Notice of Termination, though, in the event of
termination of employment by the Executive, the Company may set an earlier date
following the date of receipt of the Notice of Termination as the Termination
date).
Section 6. Termination by the Executive.
A. The Company shall provide Executive with the benefits set forth in
Section 7 if the Executive terminates his employment for any reason at anytime
following the Effective Date, provided appropriate Notice of Termination is
provided to the Company.
B. The Executive shall be required to give the Company a thirty (30)
day written notice of his intent to resign and to terminate this Agreement.
Section 7. Severance Benefits.
A. In the event of the termination of Executive's employment by the
Company with or without Cause, the Company shall pay the amounts and benefits
described in this Section 7 to the Executive and these payments shall constitute
liquidated damages and shall constitute full settlement of any claim under law
or in equity that he might otherwise assert against the Company with regard to
breach of this Agreement.
(1.) Executive shall be entitled to payment of any unpaid portion
of the Executive's base salary through the Term and to severance pay as
follows;
<PAGE> 6
(2.) The Company shall pay the Executive in accordance with the
Company's normal payroll practices at the time of termination. The
Company shall withhold from this and all other benefits payable under
this Agreement all federal, state, city, county or other taxes as shall
be required pursuant to any law or governmental regulation or ruling;
and
(3.) The Company shall cause to be nonforfeitable and vested in
the Executive's name all Incentive Compensation Awards (including
without limitation those awarded but unvested shares which are held in
the Executive's account in the Old National Bancorp Restricted Stock
Plan, including the shares awarded to the Executive but not yet earned
in the year in which the Executive's employment is terminated). In the
event the Old National Bancorp Restricted Stock Plan does not allow the
Company to treat such Restricted Stock Awards as nonforfeitable and/or
vested, the Company shall pay the Executive an amount of cash
compensation which is equivalent to the value of the Restricted Stock
that otherwise would have been payable to the Executive without those
Plan restrictions.
(4.) The Company shall pay to the Executive in a lump sum single
cash payment of all the amounts the Executive is entitled to receive
under the Company's Short Term Incentive Plan ("STIP") that are earned
but unpaid for the Company's fiscal year preceding the year of
termination and also for the year in which the Executive's employment
is terminated. For purposes of determining the STIP amount to be paid
to the Executive for the year in which Executive's employment is
terminated, the Company will use the Executive's then current
annualized salary multiplied by the greater of the following
percentages:
(a) The Executive's STIP percentage paid for the prior plan
year; or
(b) The Executive's projected STIP percentage as approved by
the Company's Compensation Committee at the time of the
Executive's "Termination Date".
(5.) In the event that Executive's employment with Company is
terminated, Executive shall receive a pro-rata share of any bonus under
the STIP to which Executive was duly entitled pursuant to this
Agreement.
(6.) The Executive's benefit under the Target's Supplement
Executive Retirement Plan and any successor plan shall become fully
vested.
B. Although the parties to this Agreement do not believe payments
made pursuant to Section 7, hereof would constitute "parachute payments" under
Section 280G of the Internal Revenue Code of 1986, as amended, in the event that
the Company receives a notice of deficiency or an opinion of
<PAGE> 7
counsel to the contrary, no payment shall be made to the Executive hereunder to
the extent such payment would constitute a nondeductible "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended, or
similar provisions then in effect. In the event of any question as to whether
any payments otherwise due hereunder constitute excess parachute payments, the
matter shall be determined jointly by the firm of certified public accountants
regularly employed by the Company and the firm of certified public accountants
selected by the Executive, in each case upon the advice of actuaries to the
extent the certified public accountants consider necessary, and, in the event
such accountants are unable to agree upon a resolution of the question, such
matter shall be determined by an independent firm of certified public
accountants selected by both firms of accountants.
Section 8. Mitigation.
The Executive shall not be required to mitigate the amount of any
payments provided for in Section 7 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in Section 7 be reduced by any
compensation earned by the Executive as a result of employment by another
employer after the Date of Termination, or otherwise.
Section 9. Covenant Not to Solicit Company's Customers and Employees.
A. The Executive hereby understands and acknowledges that, by virtue
of his position with the Company, he will have advantageous familiarity and
personal contacts with the Company's customers, wherever located, and the
business, operations and affairs of the Company. Accordingly, while the
Executive is employed by the Company, and at all locations for a period of one
(1) year after termination of the Executive's employment with the Company for
any reason (whether with or without cause or whether by the Company or the
Executive) or the expiration of the Term, the Executive shall not, directly or
indirectly, or individually or jointly, (i) solicit in any manner, seek to
obtain or service the business of any party which is a customer of the Company
at the time of such termination or any party which was a former customer or a
prospective customer of the Company during the one (1) year period immediately
preceding such termination, (ii) request or advise any customers or suppliers of
the Company to terminate, reduce, limit or change their business or relationship
with the Company, or (iii) induce, request or attempt to influence any employee
of the Company to terminate his employment with the Company.
B. For purposes of this Agreement, the term "solicit" means any
direct or indirect communication of any kind whatsoever, regardless of by whom
initiated, inviting, advising, encouraging or requesting any person or equity,
in any manner, to take or refrain from taking any action.
Section 10. Covenant Not to Compete or be Employed by Competitors.
<PAGE> 8
The Executive hereby understands and acknowledges that, by virtue of
his position with the Company, he will have advantageous familiarity and
personal contacts with the Company's customers, wherever located, and the
business, operations and affairs of the Company. Executive also acknowledges and
understands that prior to, during and after the Effective Date, Company and its
affiliates have a significant customer base in the following locations: (i)
Muncie, Indiana; (ii) Delaware County, Indiana and those counties contiguous to
Delaware County, Indiana; (iii) numerous cities and counties throughout the
State of Indiana; and (iv) counties in those states other than Indiana in which
the Company or Company's affiliates are located or will be located or have
offices. Accordingly, while the Executive is employed by the Company and within:
(1.) Muncie, Indiana;
(2.) Delaware County, Indiana, and counties contiguous to Delaware
County, Indiana;
(3.) the State of Indiana; and
(4.) counties in states other than Indiana in which the Company or
Company's affiliates are located or will be located or have offices.
for a period of one (1) year after termination of the Executive's employment
with the Company for any reason (whether with or without cause, or whether by
the Company or the Executive) or the expiration of the Term, the Executive shall
not, directly or indirectly, or individually or jointly, as owner, shareholder,
member, investor, partner, proprietor, principal, director, officer, employee,
agent, representative, consultant or otherwise, engage in, assist another party
in engaging in or provide services to any party engaging in any business,
operation or venture that competes with the business of the Company as conducted
at any time during the Executive's employment by the Company.
Section 11. Confidentiality and Company Records.
A. The Executive agrees not directly or indirectly to disclose, to
any person, firm, company or corporation either while in the Company's employ or
at any time thereafter, to any person, firm, company or corporation not employed
by the Company, or not engaged to render service to the Company, any
confidential information obtained by him while in the employ of the Company,
including, without limitation, any of the Company's policies, plans, procedures,
customers or trade secrets; provided, however, that this provision shall not
preclude the Executive from use or disclosure of information known generally to
the public or of information not considered confidential by persons engaged in
the business conducted by the Company or from disclosure required by law or
Court order.
<PAGE> 9
B. The Executive agrees that all records and copies of the records
pertaining to the financial affairs, operations, customers and business of the
Company and their affiliates, subsidiaries and division, including, but not
limited to, customer lists and trade secrets, that are made or received by the
Executive in the course of his employment by the Company shall be the property
of the Company, and agrees to keep such documents subject to the Company's
custody and control and to surrender to the Company such of those documents as
are still in his possession at the termination of his employment. The Executive
agrees not to disclose or give possession of such documents or records to anyone
except authorized representatives of the Company. The Executive further agrees
to return to the Company, at the Company's Muncie office, any and all such
documents or records and other property of the Company promptly upon termination
of his employment.
Section 12. Effect and Modification.
This Agreement comprises the entire agreement between the parties with
respect to the subject matter hereof and supersedes all earlier agreements
relating to the subject matter hereof; provided that this Agreement is not
intended to and shall not be deemed to be in lieu of any rights, benefits, and
privileges to which the Executive may be entitled as an Executive of the Company
under any retirement, pension, profit sharing, stock ownership, stock option,
insurance, or hospital plan, or other plans, benefits, programs, and policies
which may now be in effect or which may hereafter be adopted. It is understood
that the Executive shall have the same rights and privileges to participate in
such plans, benefits, programs, and policies as any other executive during his
period of employment. No statement or promise, except as herein set forth, has
been made with respect to the subject matter of this Agreement. The headings of
the individual sections herein are for convenience only and shall not be deemed
to be a substantive part of this Agreement. No modification or amendment hereof
shall be effective unless in writing and signed by the Executive and the
Company.
Section 13. Non-Waiver.
The failure or refusal of either party to enforce all or any part of,
or the waiver by either party of any breach of this Agreement shall not be a
waiver of that party's continuing or subsequent rights under this Agreement, nor
shall such failure or refusal or waiver have any effect upon the subsequent
enforceability of this Agreement.
Section 14. Governing Law
This Agreement is being delivered in and shall be governed by the laws
of the State of Indiana without respect to its conflict of laws provisions.
Section 15. Notice
<PAGE> 10
Any notice, request, instruction, or other document to be given
hereunder to any party shall be in writing and delivered by hand, telegram,
facsimile transmission, registered or certified United States mail, return
receipt requested, or other form of receipted delivery, with all expenses of
delivery prepaid, as follows:
If to Executive: If to Company:
James R. Schrecongost Old National Bancorp
201 North Timber Ridge Court Post Office Box 718
Muncie, Indiana 47304-5773 Evansville, Indiana 47705
ATTENTION: Chief Executive Officer
Section 16. Indemnification.
The Company shall indemnify Executive for acts and omissions occurring
while he is employed (and to any Company affiliate to which Executive has
provided services during the Term of the Agreement) hereunder to the fullest
extent permitted under the Articles of Incorporation and By-Laws of the Company.
Section 17. Survival of Severance Provisions.
The provisions of Sections 5(C), 7, 10, 11, 12 and 20 hereof shall
survive the termination or expiration of this Agreement. Moreover, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
agreement.
Section 18. Assignment.
This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided herein. Without limiting the foregoing,
Executive's right to receive compensation hereunder shall not be assignable or
transferable, whether by pledge, creation or a security interest or otherwise,
other than a transfer by his will or by the laws of dissent, and in the event of
any attempted assignment or transfer contrary to this Section, Company shall
have no liability to pay any amounts so attempted to be assigned or transferred.
This Agreement may be assigned to a subsidiary of the Company. The Company shall
guarantee obligations of such subsidiary hereunder.
Section 19. Severability. All provisions of this Agreement are
severable from one another, and the unenforceability or invalidity of any
provision of this Agreement shall not affect the validity or
<PAGE> 11
enforceability of the remaining provisions of this Agreement; provided, however,
that should any judicial body interpreting this Agreement deem any provision to
be unreasonably broad in time, territory, scope or otherwise, the parties intend
for the judicial body, to the greatest extent possible, to reduce the breadth of
the provision to the maximum legally allowable parameters rather than deeming
such provision totally unenforceable or invalid.
Section 20. Termination of the ANB Employment Agreement. (a) The Target
and the Executive agree that the ANB Employment Agreement shall be automatically
terminated in its entirety (without the need for any further action, writing or
notice by the Target, the Company or the Executive) immediately following the
Effective Time and that following the Effective Time, the Target, the Company
and the Executive shall not have any obligation under the ANB Employment
Agreement. In the event that the Merger Agreement is terminated as provided
therein, then this Agreement shall also automatically terminate as of the same
time that the Merger Agreement has been terminated.
(b) The termination of the ANB Employment Agreement pursuant hereto
shall not be deemed a termination by the Target, the Company or the Executive of
the Executive's employment under the ANB Employment Agreement for a reason other
than death, retirement or Cause (as defined in the ANB Employment Agreement), a
termination by the Executive of the Executive's employment under the ANB
Employment Agreement for an Unreasonable Cause (as defined in the ANB Employment
Agreement) or otherwise. Accordingly, the Executive hereby waives any right to
payment or benefits under the ANB Employment Agreement upon termination of such
agreement as provided in this Section 20.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
EXECUTIVE
/s/ JAMES R. SCHRECONGOST
- --------------------------------
James R. Schrecongost
OLD NATIONAL BANCORP
/s/ JAMES A. RISINGER
- --------------------------------
James A. Risinger, Chairman and
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.02
December 21, 1999
Larry E. Thomas
ANB Corporation
120 W. Charles Street
Muncie, IN 47305
RE: Post-Merger Payments to Mr. Thomas
Dear Mr. Thomas:
The purpose of this letter is to set forth the agreement between ONB
Corporation ("ONB") and Larry E. Thomas (the "Executive") in respect of the 1999
Amended and Restated Employment Agreement entered into between the Executive and
ANB Corporation ("ANB") on May 10, 1999 (the "ANB Agreement").
ONB agrees to continue the Executive's employment from the Effective
Time (as defined in the Agreement of Affiliation and Merger between ONB and ANB
dated July 29, 1999 (the "Merger Agreement")) and ending no later than the
ninetieth (90th) day following the Effective Time or such earlier date as
mutually agreed by ONB and the Executive.
ONB agrees that within five (5) days following the Effective Time of
the Merger (each, as defined in the Merger Agreement), ONB shall make a lump sum
cash payment to the Executive in the amount of $488,219.00. The parties hereto
agree that such amount shall be in satisfaction of the amount that the Executive
is entitled to receive pursuant to Article III (E) (2) of the ANB Agreement and
that all other provisions of the ANB Agreement shall remain in effect.
ONB further agrees that, in accordance with ANB's practice prior to the
Effective Time, ONB shall pay to the Executive an additional amount in cash such
that after such payment the Executive shall be in a net after-tax position,
taking into account all federal, state and local taxes, as though the Executive
had not incurred any such taxes with respect to termination and transfer of the
Executive's split-dollar life insurance plan.
To indicate your agreement to the foregoing terms, please sign your
name where indicated below and return one copy of this letter to the
undersigned. Keep the other copy for your records.
Old National Bancorp
/s/ ALLEN R. MOUNTS
----------------------------------------
By: Allen R. Mounts
Title: VP Director of Human Resources
AGREED AND ACCEPTED:
/s/ LARRY E. THOMAS
- ----------------------------
Larry E. Thomas
Dated
-----------------------
cc: Jeff Knight - Old National Bancorp
James Schrecongust - American National Bank
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION OR BUSINESS NAME OF
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARY
- --------------------------------------------- ------------------------------------ ---------------------------
<S> <C> <C>
Old National Bank United States of America Old National Bank
(Lawrenceville, Illinois)
Orange County Bank Indiana Orange County Bank
(Paoli, Indiana)
First National Bank and Trust Company United States of America First National Bank and
(Carbondale, Illinois) Trust Company
Old National Realty Company, Inc. Indiana Old National Realty
(Evansville, Indiana) Company, Inc.
Indiana Old National Insurance Company Arizona Indiana Old National
(Evansville, Indiana) Insurance Company
ONB Finance Company Indiana ONB Finance
(Terre Haute, Indiana)
Old National Trust Company United States of America Old National Trust
(Evansville, Indiana) Company
Old National Trust Company-Kentucky United States of America Old National Trust
(Morganfield, Kentucky) Company-Kentucky
Old National Trust Company-Illinois United States of America Old National Trust
(Mt. Carmel, Illinois) Company-Illinois
ONB Capital Trust I Delaware ONB Capital Trust I
(Evansville, Indiana)
ONB Capital Trust II Delaware ONB Capital Trust II
(Evansville, Indiana)
ONB Capital Trust III Delaware ONB Capital Trust III
(Evansville, Indiana)
ONB Capital Trust IV Delaware ONB Capital Trust IV
(Evansville, Indiana)
</TABLE>
<PAGE> 1
EXHIBIT 23.01
CONSENT OF COUNSEL
The consent of Krieg DeVault Alexander & Capehart, LLP is included in
its opinions attached to this registration statement as Exhibit 5 and Exhibit
8.01.
<PAGE> 1
EXHIBIT 23.02
CONSENT OF COUNSEL
The consent of Sullivan & Cromwell is included in its opinion attached
to this registration statement as Exhibit 8.02.
<PAGE> 1
EXHIBIT 23.03
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation be reference in this registration statement of our report dated
January 27, 1999 (except with respect to the business combination discussed in
Note 2 as to which the date is January 29, 1999) included in Old National
Bancorp's Form 8-K dated January 29, 1999, which supplements the Registrant's
1998 Annual Report and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
January 10, 2000
<PAGE> 1
EXHIBIT 23.04
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report included in ANB
Corporation's Form 8-K filed on January 6, 2000, which supplements ANB
Corporation's 1998 Annual Report and to all references to our Firm included in
this registration statement.
/s/ Olive LLP
-------------------------
Olive LLP
Indianapolis, Indiana,
January 10, 2000
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ DAVID L. BARNING
- -------------------------
DIRECTOR
David L. Barning
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ RICHARD J. BOND
- -------------------------
DIRECTOR
Richard J. Bond
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ ALAN W. BRAUN
- -------------------------
DIRECTOR
Alan W. Braun
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ WAYNE A. DAVIDSON
- -------------------------
DIRECTOR
Wayne A. Davidson
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ LARRY E. DUNIGAN
- -------------------------
DIRECTOR
Larry E. Dunigan
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ DAVID E. ECKERLE
- -------------------------
DIRECTOR
David E. Eckerle
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ PHELPS L. LAMBERT
- -------------------------
DIRECTOR
Phelps L. Lambert
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ RONALD B. LANKFORD
- -------------------------
DIRECTOR
Ronald B. Lankford
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ LUCIEN H. MEIS
- -------------------------
DIRECTOR
Lucien H. Meis
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ LOUIS L. MERVIS
- -------------------------
DIRECTOR
Louis L. Mervis
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as her true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on her behalf and in her
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of the
day and year indicated below.
/s/ LAWRENCE D. PRYBIL
- -------------------------
DIRECTOR
Lawrence D. Prybil
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ JOHN N. ROYSE
- -------------------------
DIRECTOR
John N. Royse
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as her true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on her behalf and in her
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of the
day and year indicated below.
/s/ MARJORIE Z. SOYUGENC
- -------------------------
DIRECTOR
Marjorie Z. Soyugenc
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director of
Old National Bancorp (the "Company"), an Indiana corporation with its principal
office located in Evansville, Indiana, does hereby severally make, constitute
and appoint John S. Poelker, Ronald W. Seib and Jeffrey L. Knight, and each of
them individually, as his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for and on his behalf and in his
name, place and stead, and in all capacities, (a) to execute registration
statements and all amendments, revisions, supplements, exhibits and other
documents in connection therewith relating to the proposed registration,
offering, sale and issuance of securities of the Company with respect to the
Company's acquisition of control of ANB Corporation, an Indiana corporation with
its principal office located in Muncie, Indiana, (b) to file any and all of the
foregoing, in substantially the form which has been presented to me or which any
of the above-named attorneys-in-fact and agents may approve, with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder; and (c) to do, or
cause to be done, any and all other acts and things whatsoever as fully and to
all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
securities under and otherwise comply with the Act and the rules and regulations
promulgated thereunder; hereby approving, ratifying and confirming all actions
heretofore or hereafter lawfully taken, or caused to be taken, by any of the
above-named attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year indicated below.
/s/ CHARLES D. STORMS
- -------------------------
DIRECTOR
Charles D. Storms
- -------------------------
Printed Name
Dated: January 10, 2000
<PAGE> 1
Exhibit 99.01
PROXY
ANB CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
_______________, 2000
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ________________ and ________________,
or either of them, as proxies of the undersigned, each with full power of
substitution and resubstitution, to represent and to vote all of the shares of
common stock of ANB Corporation ("ANB") which the undersigned beneficially holds
of record on ___________, 2000 and would be entitled to vote at the Special
Meeting of Shareholders of ANB, to be held at _____________________, located at
_________________, Muncie, Indiana, 47305, on ___________, 2000, at ___:____
__.m., local time, and at any adjournments thereof, with all of the powers the
undersigned would possess if personally present, on the matters set forth below.
The Board of Directors of ANB recommends a vote FOR approval of
Proposal 1.
Only holders of shares of ANB common stock of record at the close of
business on __________, 2000 are entitled to notice of, and to vote at, the
Special Meeting of Shareholders or any adjournment or postponement thereof.
1. Approval and adoption of the Agreement of Affiliation and Merger
("Agreement"), dated July 29, 1999, between ANB and Old National
Bancorp, pursuant to which ANB will merge with and into Old
National and each outstanding share of ANB common stock will be
converted into the right to receive 1.3125 shares of Old National
common stock, as adjusted for the 5% stock dividend declared by
Old National on December 9, 1999, all as provided for in the
Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, on such other matters as may properly come
before the Special Meeting.
Please sign on reverse side
<PAGE> 2
(continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE SPECIAL MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BEST JUDGMENT OF THE PROXIES NAMED ABOVE. THIS PROXY MAY BE REVOKED AT
ANY TIME PRIOR TO ITS EXERCISE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
DATED: _______________, 2000 ________________________________________
(Signature of Shareholder)
________________________________________
(Signature of Shareholder)
Please sign exactly as your name appears
on your stock certificates and on the
label placed to the left. Joint owners
should each sign personally. Trustees,
guardians, executors and others signing
in a representative capacity should
indicate the capacity in which they
sign.
<PAGE> 1
Exhibit 99.03
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board
of Directors of ANB Corporation (the "Company") as an Appendix to the Proxy
Statement/Prospectus relating to the proposed merger of the Company with and
into Old National Bancorp contained in the Registration Statement on Form S-4 as
filed with the Securities and Exchange Commission on the date hereof, and to the
references to our firm and such opinion in such Proxy Statement/Prospectus. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended (the "Act"), or the rules and regulations of the Securities and Exchange
Commission thereunder (the "Regulations"), nor do we admit that we are experts
with respect to any part of such Registration Statement within the meaning of
the term "experts" as used in the Act or the Regulations.
_______________, 2000
