<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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>
<S> <C> <C>
INDIANA 6021 35-1539838
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</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)
<TABLE>
<S> <C> <C>
JEFFREY L. KNIGHT, ESQ. TIMOTHY M. HARDEN, ESQ. JEFFREY M. WERTHAN, P.C.
CORPORATE SECRETARY & GENERAL MICHAEL J. MESSAGLIA, ESQ. CRAIG M. SCHEER, ESQ.
COUNSEL KRIEG DEVAULT ALEXANDER & SILVER FREEDMAN &
OLD NATIONAL BANCORP CAPEHART, LLP TAFF, LLP
420 MAIN STREET ONE INDIANA SQUARE, SUITE 2800 1100 NEW YORK AVENUE, NW,
EVANSVILLE, INDIANA 47708 INDIANAPOLIS, INDIANA 46204-2017 SEVENTH FLOOR
(812) 464-1363 (317) 636-4341 WASHINGTON, DC 20005
(AGENT FOR SERVICE) (COPY TO) (202) 414-6100
(COPY TO)
</TABLE>
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE(2)
- --------------------------------------------------------------------------------------------------------------------------
up to 3,532,100
Common Stock, no par value............. shares $N/A $97,100,000 $25,635
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</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
purchase price of $97.1 million.
(2) 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> 2
[PERMANENT BANCORP, INC. LETTERHEAD]
Your Board of Directors and the Board of Directors of Old National Bancorp
have agreed that Old National will acquire Permanent Bank and Permanent Bancorp
through the merger of Permanent Bank into Old National Bank followed by the
merger of Permanent Bancorp into a wholly-owned subsidiary of Old National. Your
Board of Directors believes that the mergers are in the best interests of
Permanent Bancorp as a whole, including your interests, and that the mergers
will result in a combined company with expanded opportunities for profitable
growth and enhancement of shareholder value.
The merger agreement provides for a fixed transaction price to be paid in
shares of Old National common stock, with the exchange ratio of Old National
shares for Permanent Bancorp shares to be based on the average per share closing
price of Old National common stock for the ten trading days immediately
preceding the time of the closing of the mergers, subject to adjustment. If the
company merger is approved by the shareholders of Permanent Bancorp and all
other closing conditions are satisfied, you will receive shares of Old National
common stock with a value of approximately $20.75, subject to adjustment, for
each share of Permanent Bancorp common stock you own on the date the company
merger is completed. Old National's common stock is traded on the Nasdaq
National Market System under the symbol "OLDB." For an explanation of how the
exchange ratio will work, see "Proposed Mergers -- Merger Consideration" in the
accompanying Proxy Statement-Prospectus.
Permanent Bancorp's financial advisor, Capital Resources Group, Inc., has
issued its opinion to the Board of Directors of Permanent Bancorp that the
consideration to be paid in the proposed company merger is fair, from a
financial point of view, to Permanent Bancorp's shareholders. Your Board of
Directors unanimously approved the merger agreement and recommends that the
shareholders of Permanent Bancorp adopt it. The company merger cannot be
completed unless the holders of at least a majority of the outstanding shares of
Permanent Bancorp adopt the merger agreement. The special meeting of Permanent
Bancorp shareholders to vote on the merger agreement will be held on:
, , 2000
.m. (local time)
Evansville, Indiana 47708
Your vote is very important. Whether or not you plan to attend the special
meeting, please take the time to vote by completing and returning the enclosed
proxy card in the pre-addressed envelope provided. The enclosed proxy
statement-prospectus provides you with detailed information about the meeting
and the mergers. We encourage you to read this entire document carefully.
Sincerely,
Donald P. Weinzapfel
Chairman and Chief Executive Officer
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES
COMMISSION 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 PERMANENT BANCORP SHAREHOLDERS ON THE SAME DATE.
<PAGE> 3
PERMANENT BANCORP, INC.
101 SE THIRD STREET
EVANSVILLE, INDIANA 47708
(812) 428-6800
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
To Our Shareholders:
We will hold a special meeting of shareholders of Permanent Bancorp, Inc.
on:
, , 2000
.m. (local time)
Evansville, Indiana 47708
The purposes of the special meeting are:
1. To consider and vote upon the Agreement of Affiliation and Merger, dated as
of December 20, 1999, by and among Old National Bancorp, Permanent Bancorp,
Merger Corporation I (a wholly owned subsidiary of Old National), Old
National Bank and Permanent Bank, pursuant to which Permanent Bank will merge
with and into Old National Bank, and Permanent Bancorp will merge immediately
thereafter with Merger Corporation I. Under the terms of the merger
agreement, each outstanding share of Permanent Bancorp common stock will be
converted into the right to receive shares of Old National common stock with
a value of $20.59 per share, subject to adjustment, as described in the
accompanying Proxy Statement-Prospectus; and
2. To transact such other business which may properly be presented at the
special meeting or any adjournment or postponement of the special meeting.
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. Adoption
of the merger agreement requires the affirmative vote of at least the majority
of the outstanding shares of Permanent Bancorp common stock.
The merger agreement, which describes the terms of the mergers 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 mergers are
completed, we will send you instructions regarding the surrender of your stock
certificates.
BY ORDER OF THE BOARD OF DIRECTORS
Robert A. Cern
Secretary
, 2000
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
ADOPTION 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> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Questions and Answers About the Mergers.....................
Summary.....................................................
The Parties to the Merger.................................
The Mergers...............................................
Interests of Certain Persons in the Mergers...............
Special Shareholders' Meeting.............................
Comparative Per Share Market Price Information............
Recent Developments.......................................
Comparative Per Share Data................................
Summary of Selected Financial Data -- Old National
Bancorp...................................................
Summary of Selected Financial Data -- Permanent Bancorp.....
Special Meeting.............................................
General...................................................
Matters to be Considered..................................
Proxies...................................................
Solicitation of Proxies...................................
Record Date and Voting Rights.............................
Recommendation of Permanent Bancorp Board of Directors....
Proposed Mergers............................................
General...................................................
Merger Consideration......................................
Description of the Mergers................................
Background of the Mergers.................................
Reasons for the Mergers...................................
Recommendation of the Permanent Bancorp Board of
Directors..............................................
Fairness Opinion of Permanent Bancorp's Financial
Advisor................................................
Conversion of Permanent Bancorp Common Stock..............
Treatment of Permanent Bancorp Stock Options..............
Exchange of Certificates; Fractional Shares...............
Dissenters' Rights........................................
Resale of Old National Common Stock by Affiliates of
Permanent Bancorp......................................
Conditions to the Completion of the Mergers...............
Termination Fee...........................................
Termination of the Merger Agreement.......................
Restrictions Affecting Permanent Bancorp..................
Regulatory Approvals Required for the Mergers.............
Accounting Treatment for the Mergers......................
Effective Time............................................
Management, Personnel and Employee Benefits After the
Mergers................................................
Interest of Certain Persons in the Mergers................
Indemnification; Directors' and Officers' Liability
Insurance..............................................
Federal Income Tax Consequences.............................
Tax Opinion...............................................
Tax Consequences to Old National and Permanent Bancorp....
Tax Consequences to Permanent Bancorp Shareholders........
Comparative Per Share Data..................................
Nature of Trading Market..................................
Dividends.................................................
Existing and Pro Forma Per Share Information..............
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Pro Forma Condensed Combined Financial Information..........
Description of Old National.................................
Overview..................................................
Supervision and Regulation................................
Recent Developments.......................................
Incorporation of Certain Information by Reference.........
Description of Permanent Bancorp............................
Business..................................................
Additional Information and Incorporation of Certain
Information by Reference...............................
Comparison of Common Stock..................................
Authorized But Unissued Shares............................
Preemptive Rights.........................................
Dividend Rights...........................................
Voting Rights.............................................
Charter and Bylaw Amendments..............................
Special Meetings of Shareholders..........................
Number of Directors and Term of Office....................
Removal of Directors......................................
Dissenters' Rights........................................
Liquidation Rights........................................
Redemption and Assessment.................................
Anti-Takeover Provisions..................................
Director Liability........................................
Director Nominations......................................
Legal Opinions..............................................
Experts.....................................................
Other Matters...............................................
Shareholder Proposals.......................................
Forward-Looking Statements..................................
Where You Can Find More Information.........................
APPENDIX A..................................................
APPENDIX B..................................................
</TABLE>
ii
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT THE MERGERS
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 Permanent Bancorp 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. If you fail to instruct your broker to
vote your shares, your shares will not be voted. If you do not vote or if
you abstain from voting, the effect will be a vote against the merger
agreement.
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 Permanent Bancorp prior to the shareholders' meeting. Any
earlier proxies will be revoked. Third, you may attend the Permanent
Bancorp 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.
Permanent Bancorp shareholders will exchange their Permanent Bancorp common
stock certificates for Old National common stock certificates after the
company merger is completed. Old National will send you instructions for
exchanging your Permanent Bancorp common stock certificates promptly after
the company merger is completed.
Q: WHAT IS THE "EXCHANGE RATIO?"
A: The exchange ratio is the number of shares of Old National common stock
into which each share of Permanent Bancorp common stock will be converted
when the company merger is completed. Based on a projected purchase price
of the transaction of $92 million, you will receive shares of Old National
common stock with the value of $20.75 for each share of Permanent Bancorp
common stock you own on the date the company merger is completed. Please
note that the share price of Old National common stock may fluctuate before
and after the mergers are completed. As a result of the possible
adjustments to the exchange ratio, you will not be sure of the market value
of the Old National common stock you will receive until the time the
company merger is completed.
Q: HOW WILL THE EXCHANGE RATIO BE DETERMINED?
A: The exchange ratio will be based on the average per share closing price of
Old National common stock for the ten trading days immediately preceding
the effective time of the company merger. The exchange ratio will be
determined under one of the three possible scenarios described below.
SCENARIO 1: If the average pre-closing Old National share price is greater
than or equal to $26.60 but less than or equal to $34.20, the exchange
ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected to be exchanged for cash or shares
of Old National common stock, as described below under "Treatment of
Permanent Stock Options," divided by 4,432,742 which is the approximate
total of the
iii
<PAGE> 7
number of outstanding shares of Permanent Bancorp common stock and the
number of shares underlying Permanent Bancorp stock options.
Step 2: Divide the number resulting from Step 1 by the average Old National
share price.
Depending upon the average Old National share price, and assuming that no
Permanent stock options are elected for exchange, the exchange ratio would
range between a low of .6069 shares of Old National at an Old National
price of $34.20 to a high of .7802 shares at an Old National price of
$26.60.
SCENARIO 2: If the average pre-closing Old National share price is less
than $26.60, the exchange ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected for exchange, divided by $26.60.
Step 2: Divide the number resulting from Step 1 by 4,432,742.
Assuming that no Permanent stock options are elected for exchange, the
exchange ratio would be .7802. If, however, the average Old National share
price is less than $24.70 (in which case the minimum transaction value
would fall below $85.4 million), Permanent Bancorp may terminate the merger
agreement if Old National elects not to increase the minimum transaction
value to $85.4 million through an increase in the exchange ratio.
SCENARIO 3: If the average pre-closing Old National share price is greater
than $34.20, the exchange ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected for exchange, divided by $34.20.
Step 2: Divide the number resulting from Step 1 by 4,432,742.
Assuming that no Permanent stock options are elected for exchange, the
exchange ratio would be .6069. If, however, the average Old National share
price is greater than $36.10 (in which case the minimum transaction value
would be greater than $97.1 million), then unless Old National has entered
into an agreement with another entity before the effective time of the
company merger providing for the sale of Old National in a stock-for-stock
exchange, Old National may request to renegotiate the exchange ratio. If
Old National and Permanent Bancorp are unable to agree to a new exchange
ratio, Old National may terminate the merger agreement. If Old National
enters into such an agreement before the effective time and the average Old
National share price is greater than $36.10, Old National will not have the
right to request renegotiation of the exchange ratio, and the exchange
ratio will be determined by completing Steps 1 and 2 of this Scenario 3.
As noted above, the minimum transaction value of $92 million may increase
by up to approximately $1.9 million, and the exchange ratio may increase,
depending upon the number of Permanent Bancorp stock options elected for
exchange prior to closing. It is uncertain as to how many, if any, stock
options will be elected for exchange.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE COMPANY MERGER?
A: For U.S. federal income tax purposes, the conversion of your Permanent
Bancorp 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 company 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 Permanent Bancorp common stock and your holding
period for the Old National common stock received in the company merger,
including the fractional shares you are deemed to have received and then
are redeemed for cash, generally will include the
iv
<PAGE> 8
holding period of your Permanent Bancorp common stock exchanged in the
company merger. For a more complete description of federal income tax
considerations, see page .
This tax treatment may not apply to certain Permanent Bancorp shareholders,
including shareholders who are non-U.S. persons or dealers in securities.
Determining the actual tax consequences of the company 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 company merger's tax consequences.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE MEETING?
A: Permanent Bancorp does not expect that any matter other than the merger
agreement will be voted on at the meeting.
Q: WILL MY SHAREHOLDER RIGHTS CHANGE AS A RESULT OF THE COMPANY MERGER?
A: Yes. As a Permanent Bancorp shareholder, your rights are governed by
Delaware law, the state in which Permanent Bancorp is incorporated, and by
Permanent Bancorp's Certificate of Incorporation and By-Laws. After the
company merger, you will become an Old National shareholder, and your
rights will be governed by Indiana law, the state in which Old National is
incorporated, and by Old National's Articles of Incorporation and By-Laws.
For a summary of some of the differences between the rights of Permanent
Bancorp shareholders and the rights of Old National shareholders, see page
.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You should call Donald P. Weinzapfel, Chairman and Chief Executive Officer,
Permanent Bancorp, at (812) 437-2265.
v
<PAGE> 9
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 Bancorp is a bank holding company, incorporated under Indiana
law and headquartered in Evansville, Indiana. Through its 7 full-service banking
subsidiaries, including Old National Bank, Old National operates a general
banking business from 149 banking offices and 259 ATM locations located
throughout Indiana, Illinois, Kentucky, Ohio and Tennessee. In addition, Old
National provides trust services and additional financial services through other
subsidiaries. At December 31, 1999, on a consolidated basis, Old National had
assets of approximately $7 billion, deposits of approximately $5 billion, and
shareholders' equity of approximately $493 million. Old National's common stock
is traded on the Nasdaq National Market under the symbol "OLDB."
PERMANENT BANCORP, INC.
101 SE Third Street
Evansville, Indiana 47708
(812) 437-2265
Permanent Bancorp is a unitary savings and loan holding company,
incorporated under Delaware law and headquartered in Evansville, Indiana.
Permanent Bancorp owns and operates one affiliate bank, Permanent Bank, with 11
affiliated offices and 18 ATM locations in Indiana. At December 31, 1999,
Permanent Bancorp, on a consolidated basis, had assets of approximately $497
million, deposits of approximately $344 million and shareholders' equity of
approximately $40 million. Permanent Bancorp's common stock is traded on the
Nasdaq National Market under the symbol "PERM."
THE MERGERS
Description of the mergers. We propose mergers in which Permanent Bank will
merge into Old National Bank, and Permanent Bancorp will merge immediately
thereafter into Merger Corporation I, an Indiana corporation and wholly-owned
subsidiary of Old National. Old National Bank will survive the bank merger and
Merger Corporation I will survive the company merger. Old National will issue
shares of its common stock to shareholders of Permanent Bancorp in exchange for
their shares of Permanent Bancorp common stock.
Recommendation of the Board of Directors of Permanent Bancorp. The Board of
Directors of Permanent Bancorp believes that the mergers are in the best
interests of Permanent Bancorp and its shareholders, and unanimously recommends
that you vote "FOR" the proposal to adopt the merger agreement. See "Proposed
Mergers -- Recommendation of the Board of Directors" on page . The Board of
Directors of Permanent Bank and Permanent Bancorp, as the sole shareholder of
Permanent Bank, have approved the bank merger.
Permanent Bancorp shareholders will receive Old National common stock in
the mergers. If the mergers are completed, based on a projected purchase price
of the transaction of $92 million, you will receive shares of Old National
common stock with a value of $20.75, subject to adjustment, for each share of
Permanent Bancorp common stock you own on the date the company merger is
completed. The purchase price of the transaction may increase by up to
approximately $1.9 million depending upon the
1
<PAGE> 10
number of Permanent Bancorp stock options elected to be exchanged prior to
closing. See "Treatment of Permanent Bancorp Stock Options." Please note that
the share price of Old National common stock may fluctuate before the mergers
are completed. Moreover, as a result of the possible adjustments to the exchange
ratio, you will not be sure of the market value of the Old National common stock
you will receive until the time the mergers are completed. For an explanation of
how the exchange ratio will work, see "Proposed Mergers -- Merger
Consideration," on page .
You will have to surrender your Permanent Bancorp common stock certificates
to receive new stock certificates representing Old National common stock. You
will receive written instructions on how to surrender your shares after we
complete the company merger. If you hold your shares of Permanent Bancorp common
stock in "street name" through a bank or broker, your bank or broker is
responsible for ensuring that the certificate or certificates representing your
shares are properly surrendered and that the appropriate number of Old National
shares are credited to your account. See "Proposed Mergers -- Conversion of
Permanent Bancorp Common Stock" on page and "Proposed Mergers -- Exchange of
Certificates; Fractional Shares" on page .
Treatment of Permanent Bancorp Stock Options. Holders of options to
purchase Permanent Bancorp common stock may choose one of three alternatives for
the treatment of their options. A Permanent Bancorp option holder may elect to
(1) exchange his or her option for cash, (2) exchange his or her option for
shares of Old National common stock or (3) have his or her option converted into
an option to purchase Old National common stock, with adjustments to the number
of shares and exercise price based on the exchange ratio. A Permanent Bancorp
option holder wishing to select alternative 1 or 2 must make his or her election
by written notice delivered to Old National at least five business days prior to
the closing of the company merger. See "Proposed Merger -- Treatment of
Permanent Bancorp Stock Options."
Payments of dividends on shares of Permanent Bancorp common stock. After
the mergers become effective, your stock certificates for shares of Permanent
Bancorp 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 Permanent Bancorp 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 average closing price per share of Old National's common stock during the
ten trading days preceding the closing of the company merger.
Company Merger generally tax-free for Permanent Bancorp
shareholders. Permanent Bancorp and Old National expect that your exchange of
shares of Permanent Bancorp 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 a taxable 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 Permanent Bancorp will not be obligated to complete the
company merger unless they each receive a legal opinion, dated as of the closing
date, from Old National's legal counsel that the company and bank mergers will
be treated as transactions of a type that are generally tax-free for U.S.
federal income tax purposes. In that case, the U.S. federal income tax treatment
of the mergers will be as described above. However, this legal opinion will not
bind the Internal Revenue Service, which could take a different view.
Tax matters are very complicated, and the tax consequences of the company
merger to you will depend on the facts of your own situation. Old National and
Permanent Bancorp urge you to consult with your personal tax advisor for a full
understanding of the tax consequences of the company merger to you.
2
<PAGE> 11
No Dissenters' rights. As a shareholder of Permanent Bancorp, you do not
have any rights under Delaware law to dissent from the company merger.
Our reasons for the mergers. Permanent Bancorp and Old National are
proposing to affiliate because they believe that by combining the companies they
can create a stronger and more diversified company that will provide significant
benefits to Permanent Bancorp's shareholders and customers. The Board of
Directors of Permanent Bancorp 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
Permanent Bancorp Board of Directors also believes that in the rapidly changing
environment of the banking industry, Permanent Bancorp's long-term goal of
enhancing shareholder value will be reached by affiliating with Old National.
You can find a more detailed discussion of the background to the merger
agreement and Permanent Bancorp's and Old National's reasons for the mergers
under "Proposed Mergers -- Reasons for the Mergers" on page .
Permanent Bancorp's financial advisor believes the merger consideration is
fair, from a financial point of view, to Permanent Bancorp's shareholders. Among
other factors considered in deciding to approve the mergers, the Permanent
Bancorp Board of Directors received the oral opinion, which was subsequently
delivered in writing, of its financial advisor, Capital Resources Group, Inc.,
that, as of December 20, 1999, the consideration payable to the holders of
Permanent Bancorp common stock was fair from a financial point of view. Capital
Resources Group, Inc. re-confirmed its opinion in writing as of the date of this
document. The opinion of Capital Resources Group is attached to this document as
Appendix B. You should read this opinion completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Capital Resources Group, Inc. See "Proposed Mergers -- Fairness Opinion of
Permanent Bancorp's Financial Advisor" on page .
Conditions to completion of the mergers. The completion of the mergers
depend 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 Permanent Bancorp common stock.
- Regulatory approval required under federal banking laws is received and
the waiting periods have expired.
See "Proposed Mergers -- Conditions to Completion of the Mergers" on page
.
Regulatory approvals of the mergers. As noted above, one of the conditions
to completion of the mergers is the receipt of the regulatory approvals required
under the federal banking laws. The bank merger requires the prior approval of
the Office of the Comptroller of the Currency and the Office of Thrift
Supervision. Applications for the approvals have been filed with these agencies.
We cannot assure you as to when or whether the approvals will be received. See
"Proposed Mergers -- Regulatory Approvals Required for the Mergers" on page .
We may decide not to complete the mergers. Old National and Permanent
Bancorp can agree at any time not to complete the mergers, even if the
shareholders of Permanent Bancorp have adopted the merger agreement. Also, Old
National and Permanent Bancorp may, under certain conditions and without the
consent of the parties to the merger agreement, terminate the merger agreement
if, among other reasons:
- The other party or its subsidiary breaches any representation or warranty
contained in the merger agreement and the breach is not cured within 30
days.
- The other party or its subsidiary materially breaches any covenant
contained in the merger agreement and the breach is not cured within 30
days.
- Certain claims, proceedings or litigation are commenced or threatened.
- Old National experiences a material adverse change in financial condition
or results of operations from September 30, 1999, in which case Permanent
Bancorp may terminate.
3
<PAGE> 12
- Permanent Bancorp experiences a material adverse change in financial
condition or results of operations from December 20, 1999, in which case
Old National may terminate.
- The mergers are not completed by September 30, 2000.
Additionally, Permanent Bancorp may terminate the merger agreement if the
average price per share of Old National common stock is less than $24.70 and Old
National elects not to increase the transaction value to $85.4 million. If the
share price of Old National is greater than $36.10, then, unless Old National
has entered into an agreement with another entity before the effective time of
the company merger providing for the sale of Old National in a stock-for-stock
exchange, Old National may request to renegotiate the exchange ratio. If Old
National and Permanent Bancorp are unable to agree to a new exchange ratio, Old
National may terminate the merger agreement.
Termination Fee. Permanent Bancorp and Permanent Bank have agreed to pay to
Old National a termination fee in the amount of $4,600,000 upon the occurrence
of certain actions by Permanent Bancorp or the subsidiaries of Permanent
Bancorp. See "Termination Fee" on page .
Effective time of the mergers. Old National and Permanent Bancorp
anticipate that the mergers will be completed in July, 2000. See "Proposed
Mergers -- Effective Time" on page .
Comparative shareholder rights. As a Permanent Bancorp shareholder, your
rights are governed by Delaware law, the state in which Permanent Bancorp is
incorporated, and by Permanent Bancorp's Certificate of Incorporation and
By-Laws. After the mergers, you will become an Old National shareholder, and
your rights will be governed by Indiana law, the state in which Old National is
incorporated, and by Old National's Articles of Incorporation and By-Laws. See
"Comparison of Common Stock" on page .
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
Certain individuals associated with Permanent Bancorp or Permanent Bank may
be deemed to have certain interests in the mergers in addition to their
interests generally as shareholders of Permanent Bancorp.
Interest of Mr. Donald P. Weinzapfel. On December 20, 1999, Old National
and Donald P. Weinzapfel, Chairman and Chief Executive Officer of Permanent
Bancorp, entered into a consulting agreement which provides for Mr. Weinzapfel
to provide consulting services to Old National Bank following the mergers. The
agreement is effective at the time the mergers are completed, is for a term of
eighteen months and provides for a monthly consulting fee of $14,500. See
"Proposed Mergers -- Consulting Agreement" on page .
Interest of Mr. Murray J. Brown. Under his employment agreement, Mr. Murray
J. Brown, Chairman and Chief Executive Officer of Permanent Bank, will be
entitled to receive a lump sum cash payment of approximately $729,885 if, as
expected, he is not employed by Old National or Old National Bank in an
equivalent capacity after the mergers. See "Proposed Mergers -- Interest of
Murray J. Brown" on page .
For a more detailed discussion of these and other interests of certain
persons in the mergers, see "Proposed Mergers -- Interests of Certain Persons in
the Mergers."
SPECIAL SHAREHOLDERS' MEETING
Date, time and place of special meeting. The special shareholders' meeting
will be held on , , 2000, at .m., local time, at
the , , Evansville, Indiana 47708.
Purposes of special meeting. At the Permanent Bancorp special meeting, you
will be asked:
- to adopt the merger agreement; and
- to act upon any other items that may be submitted to a vote at the
special meeting.
4
<PAGE> 13
As of the date of this document, the Permanent Bancorp 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 Mergers" on pages and ,
respectively.
Required shareholder vote. In order to adopt the merger agreement, the
holders of at least a majority of the issued and outstanding shares of Permanent
Bancorp common stock must vote in favor of the merger agreement. The bank merger
has been approved by Permanent Bank as the sole shareholder of Permanent Bank.
Proxies. You can revoke your proxy at any time before it is exercised by
delivering a later dated proxy to the person to whom you returned your prior
proxy (i.e., Permanent Bancorp, if you are the "record holder" of your shares,
or your bank or broker, if your shares are held in "street name"), by written
notice delivered to the person to whom you returned your prior proxy, or by
attending the special meeting and voting in person. Note, however, that if your
shares are held in "street name" with a bank, broker or other nominee, you will
need to obtain an authorizing proxy from the record holder of your shares
indicating that you were the beneficial owner of those shares as of
, 2000, the record date for voting at the special meeting. Contact
your bank or broker as soon as possible if your shares are held and "street
name" and you wish to vote in person at the special meeting rather than by
proxy. You are encouraged to vote by proxy prior to the special meeting even if
you plan to attend the special meeting. See "Special Meeting -- Proxies" on page
.
Shares outstanding and entitled to vote. As of , 2000, there
were shares of Permanent Bancorp common stock outstanding. You can vote at
the special meeting of Permanent Bancorp if you owned Permanent Bancorp common
stock at the close of business on that date. You can cast one vote for each
share of Permanent Bancorp common stock you owned on that date.
As of the record date, directors and executive officers of Permanent
Bancorp owned approximately shares of Permanent Bancorp common stock,
entitling them to exercise % of the voting power of the Permanent Bancorp
common stock entitled to vote at the special meeting. The shares do not
include shares of Permanent Bancorp common stock underlying unexercised
stock options held by directors and executive officers of Permanent Bancorp as
of the record date; these option shares may not be voted at the special meeting
even if the options are exercised prior to the special meeting. On the basis of
the unanimous approval of the merger agreement by the Board of Directors of
Permanent Bancorp, we currently expect that each director and executive officer
of Permanent Bancorp will vote the shares of Permanent Bancorp common stock
owned by him or her for adoption of the merger agreement. As of the record date,
the banking, trust and investment management subsidiaries of Permanent Bancorp,
as fiduciaries, custodians or agents, held a total of shares of Permanent
Bancorp common stock. These entities maintained sole or shared voting power with
respect to of these shares of Permanent Bancorp common stock.
As of the record date, directors and executive officers of Old National
owned approximately shares of Permanent Bancorp common stock, entitling
them to exercise % of the voting power of the Permanent Bancorp common stock
entitled to vote at the special meeting.
See "Special Meeting -- Record Date and Voting Rights" on page .
Old National and Permanent Bancorp expect purchase accounting
treatment. Old National plans to account for the mergers using the purchase
method of accounting. See "Proposed Mergers -- Accounting Treatment for the
Mergers" on page .
5
<PAGE> 14
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Old National common stock and Permanent Bancorp common stock trade on the
Nasdaq National Market System under the symbols "OLDB" and "PERM." Some examples
of recent closing prices for Old National common stock and Permanent Bancorp
common stock are as follows:
<TABLE>
<CAPTION>
OLD NATIONAL PERMANENT
BANCORP BANCORP
------------ ---------
<S> <C> <C>
December 17, 1999........................................... $31.548 $15.375
, 2000.......................................... $ $
</TABLE>
Based on the exchange ratio in the company merger, which could range from
0.6069 to 0.7802, depending on average closing price per share price of Old
National common stock during the ten trading days immediately preceding the
effective time of the company merger, the market value of the consideration that
Permanent Bancorp shareholders will receive in the mergers for each share of
Permanent Bancorp common stock would be:
<TABLE>
<S> <C>
December 17, 1999........................................... $24.61
, 2000.......................................... $
</TABLE>
In addition, recently declared per share dividend information for Old
National common stock and Permanent Bancorp common stock (on a calendar year
basis) is as follows:
<TABLE>
<CAPTION>
OLD NATIONAL PERMANENT
BANCORP BANCORP
------------ ---------
<S> <C> <C>
3rd Quarter 1999............................................ $0.16 $0.07
4th Quarter 1999............................................ $0.16 $0.07
1st Quarter 2000............................................ $0.17 $0.07
</TABLE>
Of course, the market prices of Old National and Permanent Bancorp common
stock will fluctuate prior to the completion of the mergers, and Old National
common stock will continue to fluctuate after the mergers. You should obtain
current stock price quotations for Old National common stock and Permanent
Bancorp common stock. You can get these quotations from a newspaper, on the
Internet or by calling your broker.
RECENT DEVELOPMENTS
On March 14, 2000, Old National Bancorp completed an offering of 2,000,000
of 9.50% trust preferred securities due March 15, 2030, at a price and with a
liquidation value of $25 per security. The securities were sold through ONB
Capital Trust I, a business trust formed by Old National for the purpose of
offering the securities. Net of underwriting commissions, the proceeds to Old
National from the offering were approximately $48.4 million.
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
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 have been adjusted to give effect to the stock dividend.
See "Description of Old National -- Recent Developments" on page .
6
<PAGE> 15
COMPARATIVE PER SHARE DATA
The table below shows historical information about Old National's and
Permanent Bancorp'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 Permanent Bancorp
assumed that the companies had been merged throughout those periods. See "Old
National Bancorp Pro Forma Condensed Combined Financial Information" on page .
The acquisition of Permanent Bancorp by the Old National pursuant to the
merger agreement will be accounted for by using the purchase method of
accounting. Under the purchase method of accounting, all of the assets and
liabilities of Permanent Bancorp acquired by the Old National will be adjusted
to their estimated fair market value as of the closing date, and the resultant
discounts and premiums will be accredited into or amortized against income over
the expected economic lives of the related assets and liabilities. The purchase
price for Permanent Bancorp will exceed the net fair market value of the assets
acquired and the liabilities assumed in the acquisition of Permanent Bancorp by
approximately $52 million. This number is an estimation and Permanent Bancorp's
assets and liabilities will be marked to market at the time of the closing of
the mergers. The difference will be recorded as goodwill on Old National's
consolidated financial statements and will be amortized against income over a
period not to exceed twenty years using the straight-line method.
The information listed as equivalent share basis was obtained by
multiplying the pro forma amounts by the exchange ratio of .7802. Old National
and Permanent Bancorp present this information to reflect the amount of shares
of Old National common stock that Permanent Bancorp shareholders will receive in
the company merger for each share of Permanent Bancorp common stock exchanged.
Old National expects that it will incur merger and restructuring expenses
as a result of acquiring Permanent Bancorp. Old National also anticipates that
the company 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 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 Permanent Bancorp have presented in their
prior SEC filings. Old National and Permanent Bancorp are incorporating this
historical financial information into this document by reference. See "Where You
Can Find More Information" on page .
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP PERMANENT BANCORP
---------------------- -----------------------------
EQUIVALENT SHARE
HISTORICAL PRO FORMA HISTORICAL BASIS
---------- --------- ---------- ----------------
<S> <C> <C> <C> <C>
Earnings per share(1)
Twelve months ended December 31:
1999....................................... $ 1.63 $ 1.53 $ 0.72 $1.19
Dividends declared per share
Twelve months ended December 31:
1999....................................... $ 0.63 $ 0.63 $0.235 $0.49
Book value per share
At December 31, 1999.......................... $10.35 $11.32 $10.27 $8.83
</TABLE>
- ---------------
(1) Old National's and Permanent Bancorp's basic earnings per share.
7
<PAGE> 16
SUMMARY OF SELECTED FINANCIAL DATA -- OLD NATIONAL BANCORP
(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 Old National's financial statements and notes incorporated
herein by reference. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income -- tax equivalent(1)......... $ 583,791 $ 539,391 $ 510,786 $ 476,304 $ 455,107
Interest expense............................. 284,763 261,688 243,580 220,775 214,502
---------- ---------- ---------- ---------- ----------
Net interest income -- tax equivalent(1)..... 299,028 277,703 267,206 255,529 240,605
Provision for loan losses.................... 14,798 14,987 15,265 12,273 9,009
---------- ---------- ---------- ---------- ----------
Net interest income after provision for loan
losses..................................... 284,230 262,716 251,941 242,806 231,956
Noninterest income........................... 82,974 72,643 62,505 59,487 51,465
Noninterest expense.......................... 223,583 198,644 186,345 184,288 177,636
---------- ---------- ---------- ---------- ----------
Income before income taxes................... 143,621 136,715 128,101 118,005 105,425
Income taxes................................. 50,364 51,272 49,675 46,143 40,568
---------- ---------- ---------- ---------- ----------
Net income from continuing operations........ 93,257 85,443 78,426 71,862 64,857
Discontinued operations...................... 4,101 (9,854) (5,005) 494 --
---------- ---------- ---------- ---------- ----------
Net income................................... $ 97,358 $ 75,589 $ 73,421 $ 72,356 $ 64,857
========== ========== ========== ========== ==========
BALANCE SHEET DATA
Total assets................................. $8,109,285 $7,333,386 $6,715,787 $6,320,187 $5,966,574
Total loans, net............................. 5,714,543 5,058,370 4,526,521 4,171,851 3,862,799
Total deposits............................... 5,962,499 5,436,276 5,147,271 5,080,775 4,932,296
Shareholders' equity......................... 584,995 605,849 579,599 552,403 549,239
PER SHARE DATA(2)
Net income -- basic.......................... $ 1.63 $ 1.49 $ 1.37 $ 1.22 $ 1.07
Net income -- diluted(3)..................... 1.59 1.45 1.33 1.19 1.05
Cash dividends paid.......................... 0.63 0.56 0.53 0.50 0.48
Book value at year-end....................... 10.35 9.77 9.20 9.51 9.16
SELECTED PERFORMANCE RATIOS
Return on assets............................. 1.20% 1.23% 1.21% 1.19% 1.12%
Return on equity(4).......................... 15.16 14.33 14.02 13.26 12.23
Equity to assets............................. 7.90 8.56 8.64 9.09 9.13
Dividend payout.............................. 38.13 35.73 36.93 40.98 44.04
Primary capital to assets.................... 8.72 9.39 9.45 9.91 9.97
Net charge-offs to average loans............. 0.17 0.24 0.21 0.28 0.24
Allowance for loan losses to average loans... 1.21 1.25 1.29 1.24 1.28
</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 35% 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.
(2) Restated for all stock splits and stock dividends.
(3) Assumes the conversion of Old National's subordinated debentures.
(4) Excludes unrealized gains (losses) on investment securities.
8
<PAGE> 17
SUMMARY OF SELECTED FINANCIAL DATA -- PERMANENT BANCORP
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
The following table presents financial data for Permanent Bancorp. The
financial data below includes amounts previously reported by Permanent Bancorp.
This summary should be read in conjunction with the consolidated financial
statements and the notes thereto of Permanent Bancorp which are incorporated
herein.
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS ENDED
DECEMBER 31, AT OR FOR YEAR ENDED MARCH 31,
------------------- ----------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income.................. $ 25,308 $ 24,680 $ 32,886 $ 30,521 $ 29,689 $ 25,892 $ 22,705
Interest expense................. 15,347 15,054 19,909 19,342 18,724 16,354 13,352
-------- -------- -------- -------- -------- -------- --------
Net interest income.............. 9,961 9,626 12,977 11,179 10,965 9,538 9,353
Provision for loan losses........ 217 225 300 177 113 207 410
-------- -------- -------- -------- -------- -------- --------
Net interest income after
provision for loan losses...... 9,744 9,401 12,677 11,002 10,852 9,331 8,943
Noninterest income............... 2,274 2,259 3,031 2,092 1,624 1,437 1,378
Noninterest expense.............. 9,868 8,061 10,903 8,631 10,169 8,857 8,203
-------- -------- -------- -------- -------- -------- --------
Income before income taxes....... 2,150 3,599 4,805 4,463 2,307 1,911 2,118
Income taxes..................... 712 1,423 1,945 1,818 1,003 662 874
-------- -------- -------- -------- -------- -------- --------
Net income....................... $ 1,438 $ 2,176 $ 2,860 $ 2,645 $ 1,304 $ 1,249 $ 1,244
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA
Total assets..................... $497,158 $497,975 $492,327 $439,115 $423,698 $395,903 $342,678
Total loans, net................. 328,759 310,289 321,018 225,349 210,189 206,910 195,278
Total deposits................... 343,939 346,449 345,341 282,942 280,753 280,008 267,520
Federal Home Loan Bank
advances....................... 105,798 98,997 96,504 99,353 98,484 68,303 68,303
Shareholders' equity............. 40,492 40,464 40,864 42,683 39,095 41,494 43,488
PER SHARE DATA
Net income -- basic.............. $ 0.37 $ 0.54 $ 0.72 $ 0.65 $ 0.31 $ 0.57 $ 0.54
Net income -- diluted............ 0.34 0.51 0.70 0.62 0.30 0.56 0.52
Cash dividends paid.............. 0.20 0.175 0.235 0.1925 0.1375 0.075
Book value at year-end........... 9.73 10.45 10.27 10.41 9.52 9.72 9.36
SELECTED PERFORMANCE RATIOS
Return on assets................. 0.38 0.60% 0.60% 0.62% 0.31% 0.34% 0.36%
Return on equity................. 4.61 6.94 6.86 6.45 3.25 2.95 2.92
Equity to assets................. 8.15 8.30 8.30 9.72 9.23 10.48 12.69
Net charge-offs to average
loans.......................... 0.18 0.08 0.12 0.15 0.11 0.03 0.22
Allowance for loan losses to
average loans.................. 0.70 0.81 0.84 0.87 1.00 1.07 1.08
</TABLE>
- ---------------
(1) Current annualized dividend is $0.28 per share.
9
<PAGE> 18
SPECIAL MEETING
GENERAL
This document is first being mailed by Permanent Bancorp to the holders of
Permanent Bancorp common stock on , 2000 and is accompanied by the
notice of the Permanent Bancorp special meeting and a form of proxy that is
solicited by the Board of Directors of Permanent Bancorp for use at the special
meeting. The special meeting will be held on , , 2000 at
.m., local time, at the , , ,
Evansville, Indiana 47708.
MATTERS TO BE CONSIDERED
The purposes of the special meeting are to consider and vote upon adoption
of the merger agreement, and to consider and vote upon any other matters that
may properly come before the special meeting or any adjournment or postponement
of 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
Permanent Bancorp 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 Permanent Bancorp, Inc.,
101 SE Third Street, Evansville, Indiana 47708, Attn: Robert A. Cern, Secretary.
To be effective, Permanent Bancorp 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 Permanent
Bancorp giving the proxies. If you make no specification as to your vote on the
proxy, your proxy will be voted in favor of adoption of the merger agreement.
Please note that if your shares are held in "street name" with a bank, broker or
other nominee, and you wish to revoke your proxy, any later dated proxies or
other written notices of revocation should be sent to your bank, broker or other
nominee and not to Permanent Bancorp.
The Board of Directors of Permanent Bancorp 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
Permanent Bancorp will bear the entire cost of soliciting proxies from
shareholders. In addition to the solicitation of proxies by mail, Permanent
Bancorp will request that banks, brokers and other record holders send proxies
and proxy material to the beneficial owners of stock held by them and secure
their voting instructions, if necessary. These banks, brokers and other record
holders will be reimbursed by Permanent Bancorp for their reasonable expenses
incurred. Additionally, proxies may be solicited personally or by telephone by
directors, officers and certain employees of Permanent Bancorp, who will not be
specifically compensated for such soliciting. Permanent Bancorp will bear its
own expenses in connection with the solicitation of proxies for the special
meeting.
RECORD DATE AND VOTING RIGHTS
Permanent Bancorp has fixed , 2000 as the record date for
determining those Permanent Bancorp shareholders entitled to notice of, and to
vote at, the special meeting. Accordingly, only Permanent Bancorp shareholders
of record at the close of business on , 2000 will be entitled to
notice of and to vote at the special meeting. If you are not the record holder
of your shares and instead hold your shares in "street name" through a bank,
broker or other record holder, that person will vote your shares in accordance
with the instructions you provide them on the enclosed proxy card. Each share of
Permanent Bancorp common stock you own on the record date entitles you to one
vote on each matter
10
<PAGE> 19
presented for a vote at the special meeting. At the close of business on the
record date, there were approximately shares of Permanent Bancorp common
stock outstanding held by approximately holders of record. The
presence, in person or by proxy, of shares of Permanent Bancorp common stock
representing at least one-third of those shares outstanding and entitled to vote
on the record date is necessary to constitute a quorum at the special meeting.
Shares of Permanent Bancorp common stock held by persons attending the
special meeting but not voting, and shares of Permanent Bancorp common stock for
which Permanent Bancorp 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
Permanent Bancorp 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 adopted by the affirmative vote of the holders
of at least a majority of the outstanding shares of Permanent Bancorp common
stock entitled to vote at the special meeting.
BECAUSE ADOPTION OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF PERMANENT
BANCORP COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND
BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST ADOPTION OF THE
MERGER AGREEMENT. ACCORDINGLY, THE PERMANENT BANCORP 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 Permanent
Bancorp owned approximately shares of Permanent Bancorp common stock,
entitling them to exercise % of the voting power of the Permanent Bancorp
common stock entitled to vote at the special meeting. The shares do not
include shares of Permanent Bancorp common stock underlying unexercised
stock options held by directors and executive officers of Permanent Bancorp as
of the record date; these option shares may not be voted at the special meeting
even if the options are exercised prior to the special meeting. On the basis of
the unanimous approval of the merger agreement by the Board of Directors of
Permanent Bancorp, we currently expect that each director and executive officer
of Permanent Bancorp will vote the shares of Permanent Bancorp common stock
owned by him or her for adoption of the merger agreement. As of the record date,
the banking, trust and investment management subsidiaries of Permanent Bancorp,
as fiduciaries, custodians or agents, held a total of shares of Permanent
Bancorp common stock. These entities maintained sole or shared voting power with
respect to of these shares of Permanent Bancorp common stock.
As of the record date, directors and executive officers of Old National
owned approximately shares of Permanent Bancorp common stock, entitling
them to exercise % of the voting power of the Permanent Bancorp common stock
entitled to vote at the special meeting.
Additional information with respect to the beneficial ownership of
Permanent Bancorp common stock by individuals and entities owning more than 5%
of that stock and more detailed information with respect to beneficial ownership
of Permanent Bancorp common stock by directors and executive officers of
Permanent Bancorp is incorporated by reference to the Annual Report on Form 10-K
of Permanent Bancorp for the year ended March 31, 1999. See "Where You Can Find
More Information."
RECOMMENDATION OF PERMANENT BANCORP BOARD OF DIRECTORS
The Board of Directors of Permanent Bancorp has unanimously approved the
merger agreement and the transactions contemplated by the merger agreement. The
Permanent Bancorp Board believes that the merger agreement is in the best
interests of Permanent Bancorp as a whole, including the interests of Permanent
Bancorp shareholders, and recommends that the Permanent Bancorp shareholders
vote "FOR"
11
<PAGE> 20
adoption of the merger agreement. See "Proposed Mergers -- Background of the
Mergers, -- Reasons for the Mergers, -- Recommendation of the Permanent Bancorp
Board of Directors."
PROPOSED MERGERS
At the special meeting, the shareholders of Permanent Bancorp will consider
and vote upon adoption of the merger agreement, certain features of which are
summarized below. The following summary of aspects of the merger agreement and
the transactions contemplated by the merger agreement does not completely
describe the terms and conditions of the merger agreement 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 each party to the merger agreement has
unanimously approved it, and the mergers provided for therein. Old National and
Permanent Bancorp expect that the mergers will be completed in July, 2000.
MERGER CONSIDERATION
Based on a projected purchase price of the transaction of $92 million, you
will receive shares of Old National common stock with the value of $20.59,
subject to adjustment, for each share of Permanent Bancorp common stock you own
on the date the company merger is completed.
The exchange ratio will be based on the average per share closing price of
Old National common stock for the ten trading days immediately preceding the
effective time of the company merger. Provided below are potential scenarios
which would affect the consideration to be exchanged in the mergers.
SCENARIO 1: If the average pre-closing Old National share price is greater
than or equal to $26.60 but less than or equal to $34.20, the exchange ratio
will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected to be exchanged for cash or shares
of Old National common stock, as described below under "Treatment of
Permanent Stock Options," divided by 4,432,742 which is the appropriate
total of the number of outstanding shares of Permanent Bancorp common stock
and the number of shares underlying Permanent Bancorp stock options.
Step 2: Divide the number resulting from Step 1 by the average Old
National share price.
Depending upon the average Old National share price, and assuming that no
Permanent stock options are elected for exchange, the exchange ratio would range
between a low of .6069 shares of Old National at an Old National price of $34.20
to a high of .7802 shares at an Old National price of $26.60.
SCENARIO 2: If the average pre-closing Old National share price is less
than $26.60, the exchange ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected for exchange, divided by $26.60.
Step 2: Divide the number resulting from Step 1 by 4,432,742.
Assuming that no Permanent stock options are elected for exchange, the
exchange ratio would be .7802. If, however, the average Old National share price
is less than $24.70 (in which case the minimum transaction value would fall
below $85.4 million), Permanent Bancorp may terminate the merger agreement if
Old National elects not to increase the minimum transaction value to $85.4
million through an increase in the exchange ratio. See "Summary -- The Merger-We
May Decide Not to Complete the Merger" and "Proposed Merger -- Termination of
the Merger Agreement."
12
<PAGE> 21
SCENARIO 3: If the average pre-closing Old National share price is greater
than $34.20, the exchange ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of the Permanent
Bancorp stock options that are elected for exchange, divided by $34.20.
Step 2: Divide the number resulting from Step 1 by 4,432,742.
Assuming that no Permanent stock options are elected for exchange, the
exchange ratio would be .6069. If, however, the average Old National share price
is greater than $36.10 (in which case the minimum transaction value would be
greater than $97.1 million), then unless Old National has entered into an
agreement with another entity before the effective time of the company merger,
providing for the sale of Old National in a stock-for-stock exchange, Old
National may request to renegotiate the exchange ratio. If Old National and
Permanent Bancorp are unable to agree to a new exchange ratio, Old National may
terminate the merger agreement. See "Summary -- The Merger-We May Decide Not to
Complete the Merger" and "Proposed Merger -- Termination of the Merger
Agreement." If Old National enters into an agreement before the effective time
and the average Old National share price is greater than $36.10, Old National
will not have the right to request renegotiation of the exchange ratio, and the
exchange ratio will be completed by completing Steps 1 and 2 of this Scenario 3.
As noted above, the minimum transaction value of $92 million may increase
by up to $1.9 million, and the exchange ratio may increase, depending upon the
number of Permanent Bancorp stock options elected for exchange prior to closing.
It is uncertain as to how many, if any, stock options will be elected for
exchange.
DESCRIPTION OF THE MERGERS
In the bank merger, Permanent Bank will merge into Old National Bank with
Old National Bank as the surviving institution. The separate corporate existence
of Permanent Bancorp will cease. In the company merger, which will occur
immediately following the bank merger, Permanent Bancorp will merge into Merger
Corporation I, an Indiana corporation and a wholly-owned subsidiary of Old
National. Merger Corporation I will be the surviving corporation in the company
merger and the separate corporate existence of Permanent Bancorp will cease.
As of December 31, 1999, Permanent Bancorp had consolidated assets of
approximately $497 million, consolidated deposits of approximately $344 million,
consolidated shareholders' equity of approximately $40.4 million and
consolidated net income for the nine months then ended of approximately $1.4
million. Based upon the pro forma financial information included elsewhere in
this document and assuming that the merger had been consummated on December 31,
1999, Permanent Bancorp represented as of such date 6% of the consolidated
assets of Old National, 5% of its consolidated deposits, 6% of its consolidated
shareholders' equity and, for the twelve month period then ended, 2% of its
consolidated net income. See "Pro Forma Condensed Combined Financial
Information".
BACKGROUND OF THE MERGERS
Permanent Bancorp was incorporated in 1993 to serve as the holding company
for Permanent Bank in connection with Permanent Bank's conversion from
mutual-to-stock form. Since its predecessor's formation in 1885 and for most of
its history, Permanent Bank operated as a traditional thrift organization.
During the past several years, Permanent Bank has sought to transform itself
into a community bank, increasing its commercial and consumer lending activities
and decreasing higher-cost certificate accounts as a percentage of its deposit
base. In the course of pursuing this plan of becoming a community bank,
Permanent Bancorp's Board and senior management had, from time to time,
discussed the continuing consolidation in the banking and financial services
industries and the increasing competition faced by Permanent Bank from larger
institutions which have entered Permanent Bank's market areas through
13
<PAGE> 22
acquisitions. Based on Permanent Bancorp's steady asset and earnings growth,
however, the Board and management believed that remaining independent and
continuing to pursue their community banking strategy was in the long-term best
interests of shareholders.
On February 22, 1999, Donald P. Weinzapfel, Permanent Bancorp's Chairman
and Chief Executive Officer, received a telephone call from James A. Risinger,
Chairman and Chief Executive Officer of Old National. During this call, Mr.
Weinzapfel and Mr. Risinger discussed the Evansville banking market in general
and Mr. Risinger indicated that Old National was interested in exploring a
merger of the two companies. On March 12, 1999, Mr. Weinzapfel received a letter
from Mr. Risinger in which Mr. Risinger reiterated Old National's interest in a
merger and said that based on its preliminary evaluation, Old National would be
prepared to offer to acquire Permanent Bancorp at a price of $17.00 per share in
a combination of Old National common stock and cash. At that time, Permanent
common stock was trading in the $12 per share range.
At a regular meeting of the Permanent Bancorp Board of Directors held on
March 17, 1999, Mr. Weinzapfel informed the directors of Old National's interest
in acquiring Permanent Bancorp and the price which Mr. Risinger indicated Old
National was prepared to pay. After discussing the advantages and disadvantages
of combining with Old National and the proposed acquisition price, the Board
determined that, at that time, shareholder value would be furthest enhanced by
remaining independent and continuing to pursue Permanent Bank's community
banking strategy. Shortly after the Board meeting, Mr. Weinzapfel sent a letter
to Mr. Risinger informing him of the Board's decision.
In October 1999, a senior representative of Capital Resources Group met
with a senior officer of Old National for the purpose of discussing a broad
range of issues affecting the financial institutions industry. In the course of
this meeting, the Old National officer learned that Capital Resources Group
served as the investment banker for Permanent Bancorp for its 1994 initial
public offering and had since the IPO regularly been consulted by Permanent
Bancorp's Board as part of its strategic planning efforts. The Old National
officer told the Capital Resources Group representative that Old National had at
one time expressed an interest in acquiring Permanent Bancorp, but that
Permanent Bancorp chose not to pursue the transaction.
Shortly after his meeting with the Old National officer, the Capital
Resources Group representative called Mr. Weinzapfel and informed him of the
meeting and that Old National could potentially be interested in pursuing a
transaction with Permanent Bancorp. In subsequent telephone conversations in
mid-October, 1999, the Old National officer indicated to the Capital Resources
Group representative that Old National remained interested in a merger with
Permanent Bancorp and that it might be prepared to raise its offer price. The
Capital Resources Group representative relayed this information to Mr.
Weinzapfel. At a meeting of the Permanent Bancorp Board of Directors on October
19, 1999, Mr. Weinzapfel informed the Board that Old National remained
interested in a merger and might be prepared to raise the price above the amount
proposed in March 1999. The Board determined that it should allow preliminary
discussions to proceed to see if Old National would propose a new offer that
would deliver greater long-term value to shareholders than remaining
independent. The Board then authorized Capital Resources Group to begin
discussions with Old National on behalf of Permanent Bancorp.
On October 21, 1999, Capital Resources Group informed Old National that it
had been authorized by Permanent Bancorp to begin discussions on a combination
of the two companies. On November 2, 1999, Old National executed a
confidentiality agreement with Permanent Bancorp. On November 19, 1999, Capital
Resources Group informed Mr. Weinzapfel that Old National had proposed an offer
of $90 million payable in Old National stock and that Capital Resources Group
had requested Old National to improve the offer. On November 22, 1999, Old
National informed Capital Resources Group that it was prepared to increase its
offer to $92 million. This was followed by a non-binding letter of interest sent
to Permanent Bancorp by Old National offering to acquire Permanent Bancorp in an
all-stock transaction at that price.
On December 7, 1999, a special meeting of the Permanent Bancorp Board was
held for the purpose of discussing the letter of interest. Attending the meeting
were representatives of Capital Resources Group
14
<PAGE> 23
and Permanent Bancorp's special counsel. The Capital Resources Group
representative explained the offer terms proposed by Old National, and counsel
reviewed with the directors their fiduciary obligations in considering a sale of
Permanent Bancorp. After discussing the offer, the Board determined to proceed
toward a transaction with Old National, and authorized senior management and
counsel to negotiate a definitive merger agreement.
Soon after this meeting, Permanent Bancorp received a draft definitive
agreement prepared by Old National's counsel, and the parties and their
respective advisors began negotiating the terms of the agreement. From December
10-12, 1999, Old National and its representatives conducted on-site due
diligence of Permanent Bancorp, and from December 13-14, 1999, Permanent Bancorp
and its representatives conducted on-site due diligence of Old National. On
December 17, 1999, following increases in the price and trading volume of
Permanent Bancorp common stock, Permanent Bancorp issued a press release
announcing that it was involved in negotiations that could lead to a
stock-for-stock transaction. That same day, Permanent Bancorp received an
unsolicited indication of interest from a prospective acquiror interested in
acquiring Permanent. The price was not competitive with the price level being
negotiated between Permanent and Old National.
A special meeting of the Permanent Bancorp Board was convened on December
19, 1999, with representatives of Capital Resources Group and counsel in
attendance. At this meeting, the Board first compared the unsolicited offer with
Old National's offer and agreed after discussions with Capital Resources Group
that Old National's offer was superior. The Board then discussed the proposed
Old National transaction. Capital Resources Group reported the results of the
due diligence investigation of Old National which they had conducted together
with members of Permanent Bancorp's senior management team. They then reviewed
and discussed with the Board the price to be paid by Old National and how the
exchange ratio, walk aways, and caps and collars would operate. Capital
Resources Group orally advised the Board that in its opinion, based on its
analyses discussed under "Proposed Mergers -- Fairness Opinion of Permanent
Bancorp's Financial Advisor," the consideration proposed by Old National was
fair, from a financial point of view, to Permanent's shareholders. Counsel then
reviewed and discussed with the Board the other provisions of the merger
agreement and the conditions to completion of the mergers, including shareholder
and regulatory approvals.
After thoroughly discussing the terms of the proposed merger agreement, and
comparing the benefits of remaining independent with the advantages of combining
with Old National, for the reasons listed below under "Proposed
Mergers -- Reasons for the Mergers," the Permanent Bancorp Board unanimously
approved the merger agreement and the mergers, and authorized execution of the
merger agreement. The merger agreement was executed on December 20, 1999.
REASONS FOR THE MERGERS
In reaching its decision to approve the merger agreement, the Permanent
Bancorp Board consulted with management of Permanent Bancorp, as well as its
financial and legal advisors, and it considered a variety of factors, including
the following:
- The Permanent Bancorp 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 Permanent Bancorp Board's evaluation of the financial terms of the
mergers and the effect of the financial terms on Permanent Bancorp's
shareholders, including the exchange ratio which represented a 35%
premium over the closing price of Permanent Bancorp common stock on
December 17, 1999 and a 83% premium to the average closing price of
Permanent Bancorp common stock for the 30 trading days preceding the
approval of the merger agreement by Permanent Bancorp's Board;
15
<PAGE> 24
- The Permanent Bancorp Board's belief that the financial terms of the
mergers are fair and in the best interests of Permanent Bancorp as a
whole and Permanent Bancorp's shareholders and are consistent with
Permanent Bancorp's long term strategy of maximizing shareholder value;
- The business, operations, financial condition, earnings and prospects of
Permanent Bancorp and Old National. In making its determination, the
Permanent Bancorp Board took into account the results of Permanent
Bancorp'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 Permanent Bancorp and
Old National;
- The complimentary nature of the businesses of Permanent Bancorp and Old
National and the earnings potential of the combined companies in varying
economic and market climates relative to Permanent Bancorp on a
stand-alone basis as a result of greater geographic, asset and line-of-
business diversification;
- The Permanent Bancorp Board's belief that the merger represents:
- an opportunity to leverage Permanent Bancorp'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 mergers and the terms of the merger agreement,
including the fact that the merger consideration consists of shares of
common stock of Old National to be issued in the company merger, and that
the mergers are intended to qualify as a transaction of a type that is
generally tax-free for U.S. federal income tax purposes;
- The opinion of Capital Resources Group, Inc. to the Permanent Bancorp
Board that, based upon and subject to the considerations set forth in the
opinion, the consideration to be paid to Permanent Bancorp's shareholders
was fair from a financial point of view (see "-- Fairness Opinion of
Permanent Bancorp's Financial Advisor");
- The Permanent Bancorp Board's belief that, while no assurances could be
given, the business and financial advantages contemplated in connection
with the mergers were likely to be achieved within a reasonable time
frame;
- Consideration of the effect of the mergers on Permanent Bancorp's other
constituencies, including Permanent Bancorp's employees and the customers
and communities served by Permanent Bancorp, 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 Permanent Bancorp Board's analysis of alternatives to affiliating
with Old National, including merging with other potential acquirors and
Permanent Bancorp's analysis of relevant price information from recent
comparable financial institution mergers which occurred in the Midwest
and across the United States.
This discussion of the information and factors considered by the Permanent
Bancorp Board is not intended to be exhaustive, but it does include certain
material factors considered by the Permanent Bancorp Board. In reaching its
decision to approve and recommend the merger, the Permanent Bancorp 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 Permanent
Bancorp concluded that it was in the best interests of Permanent Bancorp and its
shareholders to affiliate with Old National.
16
<PAGE> 25
RECOMMENDATION OF THE PERMANENT BANCORP BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF PERMANENT BANCORP HAS CAREFULLY CONSIDERED AND
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGERS AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS OF PERMANENT BANCORP VOTE "FOR" ADOPTION OF THE
MERGER AGREEMENT.
FAIRNESS OPINION OF PERMANENT BANCORP'S FINANCIAL ADVISOR
Permanent Bancorp retained Capital Resources Group, Inc. as its financial
advisor in connection with the merger and requested that Capital Resources Group
render its opinion with respect to the fairness, from a financial point of view,
of the merger consideration to be paid to the stockholders of the Company. In
its opinion letter, dated December 20, 1999, Capital Resources Group noted that
all issued and outstanding shares of Permanent Bancorp common stock will be
exchanged for Old National common stock. Capital Resources Group indicated that,
based on 4,103,095 Company common shares and 364,144 Company stock options
outstanding as of December 20, 1999, each share of Company common stock will be
exchanged for and converted into a fraction of a share of Old National common
stock having a market value, or consideration, between $20.59 and $21.28,
depending on the exchange option chosen by Company option holders. However,
Capital Resources Group also noted that the market value of Old National shares
received could vary below or above the $20.59 to $21.28 range depending upon the
level of trading price fluctuations of Old National common stock until the time
of closing of the transaction. Capital Resources Group rendered its written
opinion to Permanent Bancorp's Board that, as of December 20, 1999, the merger
consideration was fair, from a financial point of view, to the stockholders of
the Company. Capital Resources Group has consented to the inclusion of this
opinion as Appendix B and the related disclosure in this Proxy Statement.
THE FULL TEXT OF THE OPINION OF CAPITAL RESOURCES GROUP, WHICH IS ATTACHED
AS APPENDIX B TO THIS PROXY STATEMENT, SETS FORTH CERTAIN ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY CAPITAL RESOURCES
GROUP, AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY OF THE OPINION OF CAPITAL
RESOURCES GROUP SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE OPINION. CAPITAL RESOURCES GROUP'S OPINION SHOULD NOT BE
CONSTRUED BY HOLDERS OF PERMANENT BANCORP SHARES AS A RECOMMENDATION AS TO HOW
SUCH HOLDERS SHOULD VOTE AT THE SPECIAL MEETING. CAPITAL RESOURCES GROUP HAS
CONSENTED TO THE INCLUSION AND DESCRIPTION OF ITS WRITTEN OPINION IN THIS PROXY
STATEMENT.
Capital Resources Group is an investment banking and financial consulting
firm which, as part of its specialization in financial institutions, is
regularly engaged in providing financial valuations and analyses of business
enterprises and securities in connection with mergers, acquisitions,
mutual-to-stock conversions, initial and secondary stock offerings and other
corporate transactions. The Permanent Bancorp Board chose Capital Resources
Group because of its expertise, experience and familiarity with Permanent
Bancorp, the financial institutions industry, and mergers and acquisitions.
Capital Resources Group reviewed the terms of the merger agreement and the
related financial data and reviewed these issues with the Board of Directors and
executive management of Permanent Bancorp. No limitations were imposed on
Capital Resources Group by the Permanent Bancorp Board with respect to the
investigation made or procedures followed by it in rendering its opinion. In the
ordinary course of its business, Capital Resources Group may trade the equity
securities of Permanent Bancorp and Old National Bancorp for its own accounts,
its principals, proprietary accounts it manages, and for the accounts of
customers and, may at any time hold long or short positions in such securities.
In the course of rendering its fairness opinion, the following factors were
considered by Capital Resources Group:
(1) The proposed terms of the merger agreement;
(2) The audited financial statements of Permanent Bancorp for the
fiscal years ended March 31, 1995 through 1999, the unaudited financial
statements of Permanent Bancorp through September 30, 1999 as reported in
its reports on Form 10-Q, Permanent Bank's quarterly reports to the OTS
17
<PAGE> 26
covering the period through September 30, 1999, the latest available
asset/liability reports and other miscellaneous internally-generated
management information reports and business plan, as well as other publicly
available information;
(3) Annual Report to Stockholders for 1999, which provides a
discussion of Permanent Bancorp's business and operations and a review of
various financial data and trends;
(4) Discussions with executive management of Permanent Bancorp
regarding the business, operations, recent financial condition and
operating results and future prospects of Permanent Bancorp;
(5) Comparisons of Permanent Bancorp's financial condition and
operating results with those of similarly sized thrift institutions
operating in Indiana and throughout the United States;
(6) Comparisons of Permanent Bancorp's financial condition and
operating performance with the published financial statements and market
price data of publicly traded thrift institutions in general and publicly
traded thrift institutions in Permanent Bancorp's region of the United
States specifically;
(7) The relevant market information regarding the shares of common
stock of Permanent Bancorp, including trading activity and information on
options to purchase shares of common stock;
(8) Other financial and pricing analyses and investigations as deemed
necessary, including a comparative financial analysis and review of the
financial terms of other pending and completed acquisitions of companies
considered to be generally similar to Permanent Bancorp;
(9) Examination of Permanent Bancorp's economic operating environment
and the competitive environment of Permanent Bancorp's market area; and
(10) Available financial reports and financial data for Old National
Bancorp, including the annual report to stockholders and Form 10-K report
covering the fiscal year ended through December 31, 1998, quarterly reports
through September 30, 1999, other published financial data and other
regulatory and internal financial reports provided by management of Old
National, including pro forma financial statements reflecting the impact of
pending acquisitions; Old National's banking office network; and the
pricing trends of Old National's common stock and dividend payment history;
and other information provided in interviews with management of Old
National, which included lending programs and business strategies.
The fairness opinion states that Capital Resources Group has relied on the
accuracy and completeness of the information provided by the parties to the
merger agreement and obtained by it from public sources and the representations
and warranties in the merger agreement, without independent verification.
Capital Resources Group did not make an independent evaluation or appraisal of
the assets and liabilities of Permanent Bancorp and Old National Bancorp.
The summary set forth below describes the approaches utilized by Capital
Resources Group in support of its fairness opinion. It does not purport to be a
complete description of the analyses performed by Capital Resources Group in
this regard.
Overview of Valuation Methodology. In preparing its fairness opinion,
Capital Resources Group has evaluated whether the financial proposal for the
acquisition is fair from a financial point of view to the stockholders of
Permanent Bancorp. The fairness of the acquisition offer is determined by
comparing the offer to acquisition offers received by other comparable types of
companies over a time-frame that reflects a similar economic environment. The
comparison included an examination of key financial characteristics of the
comparative acquisition companies, including balance sheet, earnings and credit
risk characteristics. In its comparative analysis, Capital Resources Group
utilized financial data of Permanent Bancorp at or for the 12 months ended
September 30, 1999.
Permanent Bancorp's key operating statistics and ratios were compared to a
select group of thrift institutions that have also been the subject of a
proposed or completed acquisition. The comparative group
18
<PAGE> 27
utilized in the fairness opinion was comprised only of thrift institutions
(rather than commercial banks), given the distinctive financial, operating and
regulatory characteristics of the thrift industry. These thrift institutions
were divided into two broad categories for purposes of the analysis: (1)
institutions that were recently acquired; and (2) institutions subject to a
pending acquisition. Capital Resources Group reviewed relevant acquisition
pricing ratios, notably offer price-to-earnings, offer price-to-book value (and
offer price-to-tangible book value), offer price-to-deposits, offer
price-to-assets, and offer price-to-market value (or trading price, before the
announcement, where available) premium of the comparative group and compared
these ratios to those of Permanent Bancorp. The analysis included a review and
comparison of the mean and median pricing ratios represented by a sample of 14
comparative group thrifts concentrated in the midwestern United States.
Pricing Comparison. Based on consideration of $21.28 in Old National
Bancorp common stock for each outstanding share of Permanent Bancorp common
stock, there resulted the following acquisition pricing ratios for Permanent
Bancorp relative to those of the comparative group. Permanent Bancorp's
acquisition pricing ratios stated below are not impacted by Old National's 5%
stock dividend which was subsequently payable to shareholders of record as of
January 6, 2000:
- Permanent Bancorp's price/earnings multiple of 27.63x exceeded the
average and median price/earnings multiples of the comparative group. The
average and median price/earnings multiples of the comparative group were
25.43x and 21.21x, respectively.
- Permanent Bancorp's price/book value ratio of 207.8 percent compared to
average and median price/book value ratios of 208.0 and 194.3 percent,
respectively, for the comparative group.
- Permanent Bancorp's price/tangible book value ratio of 266.7 percent
compared favorably to the average and median price/tangible book value
ratios of 220.3 and 198.8 percent, respectively, for the comparative
group.
- Permanent Bancorp's price/deposits ratio of 24.0 percent compared to an
average and median price/deposits ratio of 30.5 and 33.6 percent,
respectively, for the comparative group.
- Permanent Bancorp's price/assets ratio of 16.9 percent compared to an
average and median price/ assets ratio of 21.7 and 22.7 percent,
respectively, for the comparative group.
- Permanent Bancorp's offer price/trading price premium of 93.4 percent
(based on a $11.00 per share recent trading price for Permanent Bancorp)
compared to average and median offer price/ trading price premiums of the
comparative group of 36.6 and 46.0 percent, respectively.
In analyzing the reasonableness of Permanent Bancorp's acquisition pricing
ratios relative to those of the comparative group, Capital Resources Group
considered the following factors:
- Permanent Bancorp reported a lower level of profitability compared to
that of the comparative group. The Company's reported return on assets
("ROA") of 62 basis points compared to an average ROA of 98 basis points
for the comparative group.
- Permanent Bancorp's lower level of profitability was attributable to a
moderately lower net interest margin and a higher non-interest operating
expense ratio, partially offset by a modestly higher non-interest income
level relative to the comparative group. The Company's lower net interest
margin reflected a similar yield/cost spread but a lower net earning
asset position relative to the comparative group.
- Permanent Bancorp also recorded a lower return on equity ("ROE"). The
Company's reported ROE of 7.59 percent compared to an average and median
ROE for the peer group of 9.58 and 9.03 percent, respectively.
- A review of other important financial ratios, indicated that Permanent
Bancorp's non-performing asset level compared favorably to that of the
peer group.
19
<PAGE> 28
Therefore, based on the above financial comparisons, Capital Resources
Group believed that, on balance, Permanent Bancorp's acquisition pricing ratios
were reasonable when compared to the comparative group's acquisition pricing
ratios.
Also, Capital Resources Group noted that at the time of Permanent Bancorp's
initial public offering in March 1994, Permanent Bancorp's conversion price was
$5.00 per share (as adjusted for a 2 for 1 stock split in April 1998). Between
December 1, 1998 and December 1, 1999, which was 20 days prior to the public
announcement of the Permanent Bancorp's agreement to be acquired by Old National
Bancorp, Permanent Bancorp's stock was traded in a price range of $8 to $14 per
share. Thus, the acquisition price per share to be received by Permanent Bancorp
shareholders was significantly above the Company's recent historical trading
prices. Based on an acquisition price of $21.28 per share, this results in
average annual return of approximately 27 percent on the original conversion
price of $5.00 per share. In addition, cumulative cash dividends paid by
Permanent Bancorp have totaled $0.84 per share since fiscal 1996.
Discounted Dividend Stream and Terminal Value Analysis. Capital Resources
Group also performed an analysis of potential returns to shareholders of
Permanent Bancorp, which was based on an estimate of Permanent Bancorp's future
cash dividend streams to shareholders and the Company's future stock price and
sell-out price (terminal value). This analysis assumed Permanent Bancorp was not
acquired but remained independent for at least three to five years. The analysis
utilized certain key assumptions for Permanent Bancorp, including the most
likely asset growth and earnings level scenarios. Annual retail asset growth of
4 percent and net income growth of 10 percent per year is assumed for the
Company. The analysis also incorporated stock repurchases by Permanent Bancorp
of 5 percent annually and assumed 10 percent growth in regular, periodic
dividend payments.
To approximate the range of terminal values of Permanent Bancorp common
stock at the end of a three year and five year period, Capital Resources Group
applied a price-to-earnings multiple of 24.0x and a price/tangible book value
ratio of 220 percent. The resulting terminal values and dividend streams were
then discounted to present values using a discount rate of 11 percent, and a
range of discount rates above and below 11 percent were also chosen to reflect
different assumptions regarding required rates of return of holders or
prospective buyers of Permanent Bancorp common stock.
The analysis indicated a present value for Permanent Bancorp common stock
and future dividend payments of $19.03, based on a 11 percent discount rate,
assuming the Bank is acquired after three years and a present value of $19.34,
based on a 11 percent discount rate, assuming the Bank is acquired after five
years.
The results of the above described analysis confirmed that the
consideration being offered by Old National Bancorp to Permanent Bancorp
stockholders was fair and reasonable.
In preparing its analyses, Capital Resources Group made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Capital
Resources Group and Permanent Bancorp. The analyses performed by Capital
Resources Group are not necessarily indicative of future results, which may be
significantly more or less favorable than suggested by such analyses.
CONVERSION OF PERMANENT BANCORP COMMON STOCK
Under the terms of the merger agreement, upon completion of the company
merger, it is expected that shareholders of Permanent Bancorp will be entitled
to receive from 0.6069 to 0.7802 shares of Old National common stock with a
value ranging from of $26.60 to $34.20 for each share of Permanent Bancorp
common stock, as adjusted for the 5% stock dividend paid by Old National on
January 28, 2000 and subject to further adjustment, if any, for additional stock
dividends or for stock splits or any similar recapitalization of Old National.
The consideration to be exchanged in the mergers also is subject to adjustment
if Old National elects to increase such consideration following Permanent
Bancorp's exercise of its right to terminate the merger agreement due to a
decline in the pre-closing value of Old National common stock or if Permanent
Bancorp and Old National renegotiate the exchange ratio following a
20
<PAGE> 29
request by Old National to renegotiate because the average pre-closing Old
National share price has surpassed $36.10. See "Proposed Mergers -- Exchange
Ratio" and "Proposed Mergers -- Termination of the Merger Agreement." Because
the market price of Old National common stock prior to the effective time of the
mergers may fluctuate, the value of the shares of Old National common stock that
you will receive if and when the mergers are completed may increase or decrease
prior to and following the mergers.
TREATMENT OF PERMANENT BANCORP STOCK OPTIONS
Holders of options to purchase Permanent Bancorp common stock may choose
one of three alternatives for the treatment of their options-exchange the
options for cash, exchange the options for Old National common stock or allow
the options to be converted into options to purchase Old National common stock,
with adjustments to the number of shares and exercise prices based on the
exchange ratio.
Exchange for Cash. By providing written notice to Old National at least
five business days before the effective time of the company merger, a Permanent
Bancorp option holder may elect to exchange his or her option for cash, to be
paid by Old National after the mergers, in an amount determined as follows:
Step 1: Multiply the number of Permanent Bancorp shares subject to the
option by the exchange ratio, and then multiply the result by the average
closing price per share of Old National common stock during the ten trading
days immediately preceding the effective time of the company merger.
Step 2: Subtract the aggregate exercise price of the option (that is,
the total cost to the option holder of exercising the option in full for
all shares) from the number resulting from Step 1.
The resulting amount after completing steps 1 and 2 is referred to as the
option holder's "option value."
Exchange for Stock. By providing written notice to Old National at least
five business days before the effective time of the company merger, a Permanent
Bancorp option holder may elect to exchange his or her option for the number of
shares of Old National common stock, to be issued by Old National after the
mergers, determined by dividing the option holder's option value by the average
closing price per share of Old National common stock during the ten trading days
immediately preceding the effective time of the company merger.
Convert to Old National Options. Any Permanent Bancorp stock option which
will not be exchanged for cash or Old National stock and which is unexercised
immediately prior to the effective time of the company merger will be assumed by
Old National and converted automatically at the effective time into an option to
purchase shares of Old National common stock. The terms of the option will
remain the same after its conversion, with adjustments to the number of
underlying shares and exercise price based on the exchange ratio.
The number of shares of Old National common stock subject to the converted
option will be equal to the product of the number of Permanent Bancorp shares
subject to the option prior to its conversion times the exchange ratio, rounded
to the nearest whole share. The exercise price per share of the converted option
will be equal to the aggregate exercise price for Permanent Bancorp shares prior
to the conversion divided by the number of Old National shares, rounded to the
nearest whole share, deemed purchasable pursuant to the converted option. Stock
options that are "incentive stock options" under the Internal Revenue Code will
be subject to further adjustments to the extent required by the Code.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Immediately after the effective time of the mergers, Old National will mail
a letter of transmittal to Permanent Bancorp shareholders. This transmittal
letter will contain instructions with respect to the surrender of certificates
representing shares of Permanent Bancorp common stock. YOU SHOULD NOT RETURN
YOUR PERMANENT BANCORP STOCK CERTIFICATES WITH THE ENCLOSED PROXY AND SHOULD NOT
FORWARD THEM TO OLD NATIONAL UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL FROM OLD
NATIONAL. If you hold your shares of
21
<PAGE> 30
Permanent Bancorp common stock in "street name" through a bank or broker, your
bank or broker is responsible for ensuring that the certificate or certificates
representing your shares are properly surrendered and that the appropriate
number of Old National shares are credited to your account.
If your certificate for your shares of Permanent Bancorp 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 mergers, stock certificates previously
representing Permanent Bancorp 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 mergers and prior to the surrender by
holders of Permanent Bancorp 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 company merger, there
will be no transfers on the stock transfer books of Permanent Bancorp of shares
of Permanent Bancorp issued and outstanding immediately prior to the effective
time. Following the effective time of the mergers, the shares of Permanent
Bancorp common stock will no longer be traded on the Nasdaq National Market. If,
after the effective time of the mergers, you present certificates representing
shares of Permanent Bancorp 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 Permanent Bancorp in connection with the mergers. Each
shareholder of Permanent Bancorp 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 ten days on which shares
of Old National common stock were traded immediately before the effective time
of the mergers.
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 Permanent Bancorp as soon as
practical following the shareholder's delivery to Old National of the
certificate(s) representing the shareholder's shares of Permanent Bancorp common
stock.
DISSENTERS' RIGHTS
Holders of shares of Permanent Bancorp common stock are not entitled to
dissent to the company merger under Delaware law since Permanent Bancorp common
stock is quoted and traded on the Nasdaq National Market and because Permanent
Bancorp shareholders will receive shares of Old National common stock, with cash
in lieu of fractional shares, in exchange for their Permanent Bancorp shares.
RESALE OF OLD NATIONAL COMMON STOCK BY AFFILIATES OF PERMANENT BANCORP
Shares of Old National common stock to be issued to Permanent Bancorp
shareholders in the company merger have been registered under the Securities Act
of 1933, as amended. These shares may be traded freely and without restriction
by those shareholders not considered to be affiliates (as defined below) of
Permanent Bancorp. However, shares held by any person who is an affiliate of
Permanent Bancorp at the time of the mergers is submitted for a vote at the
special meeting will not, under existing law, be permitted to sell or transfer
those shares without:
- the further registration under the Securities Act of the shares of Old
National common stock to be transferred;
22
<PAGE> 31
- 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 Permanent Bancorp is a person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, Permanent Bancorp. These restrictions are expected to apply
to the directors and executive officers of Permanent Bancorp and any holders of
10% or more of the Permanent Bancorp common stock. The same restrictions apply
to certain relatives or the spouses 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 Permanent Bancorp 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.
Each affiliate of Permanent Bancorp delivered to Old National on December
20, 1999, a written agreement to the effect that the affiliate (1) will not
sell, exchange, pledge, transfer, or otherwise dispose of the shares of Old
National common stock to be received by such person pursuant to the merger
agreement, unless such shares of Old National common stock are made in a manner
and to the extent permitted by Rule 145 under the Securities Act of 1933 or are
made pursuant to an effective registration statement under, or an exemption from
the registration requirements of, the Securities Act of 1933; (2) will not sell,
exchange, pledge, transfer, or otherwise dispose of the shares of Old National
common stock which would prevent or impede the mergers from qualifying as a
reorganization within the meaning of Section 368 of the Internal Revenue Code;
and (3) will deliver a written certificate to Old National as of the effective
time of the mergers certifying to effect that the undersigned has complied with
the terms and conditions of the merger agreement. The merger agreement requires
that any person who becomes an affiliate of Permanent Bancorp after December 20,
1999 deliver a similar agreement to Old National, and that all such persons who
have delivered these agreements confirm, at the effective time of the mergers,
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
company merger. Therefore, those shareholders of Permanent Bancorp who may be
deemed to be affiliates of Permanent Bancorp should consult with their legal
counsel regarding the resale restrictions that may apply to them.
CONDITIONS TO THE COMPLETION OF THE MERGERS
Permanent Bancorp's and Old National's obligations to complete the mergers
are subject to the satisfaction of the certain conditions at or prior to the
effective time of the mergers, including the following:
- The merger agreement has been adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of Permanent
Bancorp common stock;
- Old National and Permanent Bancorp have received all regulatory approvals
required for the mergers;
- Old National and Permanent Bancorp have each received an opinion of Old
National's counsel dated as of the effective time of the company merger,
with respect to the fact that the mergers will be treated as tax-free for
U.S. federal income tax purposes to each party to the merger agreement
and to the shareholders of Permanent, except for cash paid in lieu of
fractional shares;
- 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 Permanent Bancorp have received certain officers'
certificates and other closing documents;
23
<PAGE> 32
- The representations and warranties contained in the merger agreement are
accurate at the effective time of the mergers; and
- Certain covenants set forth in the merger agreement have been fulfilled.
In addition to the conditions listed above, Old National's obligation to
complete the mergers is contingent upon the repayment in full by Permanent of
its $3 million in indebtedness owed to an unaffiliated financial institution,
and the release of that institution's security interest in Permanent Bank's
common stock.
The conditions to consummation of the mergers, 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 Mergers -- Resale of Old National Common Stock by
Affiliates of Permanent Bancorp," "-- Regulatory Approvals Required for the
Merger", "Federal Income Tax Consequences" and Appendix A.
TERMINATION FEE
Permanent Bancorp and Permanent Bank have agreed to pay Old National a
termination fee in the amount of $4,600,000 if any of the following events
occurs without the prior written consent of Old National:
(i) following the date of the merger agreement, any entity, person or
group, other than Old National, acquires beneficial ownership, or the right
to acquire beneficial ownership, of 15% or more (in the aggregate) of any
shares of voting capital stock of Permanent Bancorp, including, without
limitation, shares of Permanent common stock, or any shares of capital
stock of any of the Permanent Bancorp subsidiaries and the acquirer has (a)
publicly announced its opposition to the merger agreement or its intention
not to vote its Permanent Bancorp shares in favor of the merger agreement,
(b) proposed or entered into a letter of intent or other agreement relating
to an acquisition of Permanent Bancorp or any subsidiary or (c) commenced
or indicated its intention to commence a tender, exchange or other offer
for any stock of Permanent Bancorp or its subsidiaries; or
(ii) the Board of Directors of Permanent Bancorp, has (a) failed to
unanimously recommend to Permanent Bancorp shareholders approval and
adoption of the merger agreement; or (b) withdrawn or conditioned its
unanimous recommendation to Permanent Bancorp shareholders of adoption of
the merger agreement; or (c) modified or changed its unanimous
recommendation to Permanent Bancorp shareholders of adoption of the merger
agreement in a manner adverse in any respect to the interests of Old
National; or (d) failed to solicit proxies in favor of the merger agreement
from the shareholders of Permanent Bancorp; or
(iii) the acceptance or approval by Permanent Bancorp or any of its
subsidiaries of any proposal of, or the execution by Permanent Bancorp or
any of its subsidiaries of any letter of intent, agreement in principle or
other agreement with, any entity, person or group, other than Old National,
(a) to acquire Permanent Bancorp by merger, consolidation, share exchange,
combination, purchase of all or substantially all of Permanent Bancorp's or
any of its subsidiaries' assets or capital stock or any other similar
acquisition or transaction, or (b) in connection with any tender, exchange
or other offer for any shares of capital stock of Permanent Bancorp
(including, without limitation, shares of Permanent Bancorp common stock)
or any shares of capital stock of any of its subsidiaries; or
(iv) the Board of Directors of Permanent Bancorp shall have accepted
or approved, and any entity, person or group shall have filed an
application, notice, registration statement, proxy statement or other
materials or documents with the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, the SEC or any
other federal or state government agency, authority or body with respect
to, (a) any merger, consolidation, share exchange or other combination
involving, or any purchase of all or substantially all of the assets or
capital stock of, Permanent Bancorp or any of its subsidiaries, or any
similar acquisition or transaction, or (b) any tender, exchange or other
offer for
24
<PAGE> 33
any shares of capital stock of Permanent Bancorp (including, without
limitation, shares of Permanent Bancorp capital stock) or any shares of the
capital stock of any of its subsidiaries; or
(v) notwithstanding any fiduciary duties of Permanent Bancorp's Board
of Directors, the meeting at which Permanent Bancorp's stockholders will
vote with respect to the merger agreement shall not have occurred on or
before September 27, 2000, unless such vote shall not have occurred because
the SEC has not authorized for mailing to Permanent Bancorp's stockholders
Permanent Bancorp's proxy statement relating to the merger agreement and
the company merger on a timely basis in order to permit such meeting to
occur on or before September 27, 2000.
The termination fee will be payable immediately to Old National upon the
occurrence of any of the events described above. If the termination fee is not
immediately paid as required, then Old National will be entitled to be paid
interest at the highest prime rate set forth in The Wall Street Journal (Midwest
Edition) under the section entitled "Money Rates" on the unpaid amount of the
termination fee from the time that the termination fee is due until
paid-in-full, together with all costs of collection of the termination fee,
including reasonable attorneys' fees and expenses.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated by Old National or Permanent
Bancorp, before or after the shareholders of Permanent Bancorp have adopted the
merger agreement, if one of the events which gives a party the right to
terminate occurs. The merger agreement may be terminated:
- by the mutual consent of the Boards of Directors of Old National and
Permanent Bancorp;
- by either Old National or Permanent Bancorp if the mergers have not been
completed by September 30, 2000;
- by Old National or Permanent Bancorp in the event that Old National
requests to renegotiate the exchange ratio because the average closing
price per share of Old National common stock during the ten trading days
preceding the effective time is greater than $36.10, and Old National and
Permanent Bancorp are unable to renegotiate to their mutual satisfaction;
- by either Old National or Permanent Bancorp if there has been a breach of
any representation or warranty contained in the merger agreement by
Permanent Bancorp or Permanent Bank, in the case of termination by Old
National, or by Old National, in the case of termination by Permanent
Bancorp, and the breach has not been cured within 30 days after written
notice to the breaching party of the breach;
- by either Old National or Permanent Bancorp if there has been a breach of
any of the covenants or agreements contained in the merger agreement by
Permanent Bancorp or Permanent Bank, in the case of termination by Old
National, or by Old National, Old National Bank or Merger Corporation, in
the case of termination by Permanent Bancorp, 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 Permanent Bancorp if the terminating party
reasonably determines that the mergers have become impracticable because
of (1) the commencement or threat of any claim or litigation against Old
National, Permanent Bancorp, any subsidiary of Old National or Permanent
Bancorp, or any director or officer of any of these companies relating to
the mergers 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, Old National Bank, or Merger Corporation
I which relates to the mergers or merger agreement and which is likely to
have a material adverse effect on Old National, if the terminating party
is Permanent Bancorp; or
- by either Old National or Permanent Bancorp if Permanent Bancorp fulfills
its obligation to submit the merger agreement to a vote by its
shareholders and the shareholders vote not to adopt the merger agreement.
25
<PAGE> 34
Additionally, Old National may terminate the merger agreement if:
- there has been a material adverse change in the business, assets,
capitalization, financial condition or results of operations of Permanent
Bancorp or any of its subsidiaries (considered as a whole) as of the
effective time of the mergers compared to that in existence as of
December 20, 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 mergers.
Further, Permanent Bancorp may terminate the merger agreement 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 September 30, 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 mergers; or
- the average closing price per share of Old National common stock during
the ten trading days immediately preceding the effective time of the
company merger is less than $24.70, subject, however, to the conditions
described in the following three sentences. If Permanent Bancorp elects
to exercise its termination right, it must give written notice to Old
National, which notice of election to terminate may be withdrawn at any
time within the five-day period described in the following sentence.
During the five-day period commencing with its receipt of such notice,
Old National will have the option to increase the consideration to be
received by the holders of Permanent Bancorp common stock, by adjusting
the exchange ratio (calculated to the nearest one ten-thousandth) to
equal the quotient arrived at by dividing (a) the quotient arrived at by
dividing (x) the sum of $85,427,011 plus the aggregate strike price of
the Permanent Bancorp stock options, the holders of which elected to
exchange the options for cash or shares of Old National common stock, (y)
by the total outstanding shares of Permanent Bancorp common stock plus
all shares of Permanent Bancorp common stock underlying then outstanding
Permanent Bancorp stock options by (b) the average closing price per
share of Old National common stock during the ten trading days
immediately preceding the effective time of the company merger. If Old
National makes this election, it must give prompt written notice to
Permanent Bancorp of the election and the revised exchange ratio. If Old
National gives this notice, the merger agreement will not be terminated
and will remain in effect in accordance with its terms except for the
revision to the exchange ratio.
Otherwise, upon termination for any of these reasons, the merger agreement will
be of no further force or effect.
RESTRICTIONS AFFECTING PERMANENT BANCORP
The merger agreement contains a number of restrictions regarding the
conduct of business of Permanent Bancorp until the mergers are completed. Among
other items, Permanent Bancorp or any subsidiary of Permanent Bancorp may not,
without the prior written consent of Old National:
- change its capital stock accounts, except for the issuance of up to
364,144 shares of Permanent Bancorp common stock under the Permanent
Bancorp 1999 Omnibus Incentive Plan and Permanent Bancorp 1993 Stock
Option and Incentive 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;
- pay any dividends or make any other distributions to its shareholders
except that (1) Permanent Bank may pay cash dividends to Permanent
Bancorp in the ordinary course of business and to provide funds for
repayment of its $3 million indebtedness to an unaffiliated financial
institution and for Permanent Bancorp's dividends to Permanent Bancorp's
shareholders; and (2) Permanent
26
<PAGE> 35
Bancorp may pay a quarterly cash dividend of no more than $0.07 per share
for any quarter prior to the effective time of the company merger, except
that no dividend may be paid during the quarter in which the mergers are
completed, if, during this quarter, Permanent Bancorp shareholders will
be entitled to receive dividends on their shares of Old National common
stock received pursuant to the merger agreement;
- 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;
- make any loan or commitment to lend money or accept any deposit except in
accordance with existing banking practices;
- amend or restate its Certificate of Incorporation or By-Laws or the
Articles of Incorporation, charter or By-Laws of any of its subsidiaries;
- open, close or alter any of its offices or facilities;
- fail to maintain Permanent Bank's reserve for loan and lease losses;
- elect or appoint any new executive officers or directors of Permanent
Bancorp or any of its subsidiaries;
- hire or employ additional employees, except those which are reasonably
necessary for the proper operation of its business; or
- negotiate or discuss with third parties a possible sale, merger or
combination of Permanent Bancorp, unless the failure to do so would be
breach of the fiduciary duties of the Permanent Bancorp Board.
This discussion of the restrictions imposed by the merger agreement is not
intended to be exhaustive, but includes the material restrictions imposed on
Permanent Bancorp. Please refer to the merger agreement, attached as Appendix A,
for a complete listing of the restrictions.
REGULATORY APPROVALS REQUIRED FOR THE MERGERS
Old National and Permanent Bancorp have agreed to use their best efforts to
obtain all regulatory approvals required to complete the transactions
contemplated in the merger agreement. The bank merger requires the prior
approval of the Office of the Comptroller of the Currency (the "OCC") and the
Office of Thrift Supervision. Old National Bank and Permanent Bank have filed
the required application with the OCC for approval of the bank merger. Approval
of the bank merger by the OCC is not to be interpreted as the opinion of the OCC
that the bank merger are favorable to the shareholders of Permanent Bancorp from
a financial point of view or that the OCC has considered the adequacy of the
terms of the bank merger. An approval by the OCC in no way constitutes an
endorsement or a recommendation of the bank merger by the OCC. Assuming the OCC
approves the bank merger, Old National Bank and Permanent Bank may not complete
the bank merger until 30 days after the approval.
Pursuant to the Bank Merger Act, the Department of Justice has the
authority to review the bank merger. Accordingly, during the 30 day period
following OCC approval, the Department of Justice may challenge the bank merger
with respect to the competitive factors of the bank merger under federal
antitrust laws. The commencement of an antitrust action by the Department of
Justice would stay the effectiveness of OCC approval of the bank merger, unless
a court specifically orders otherwise. The Department of Justice has formally
requested competitive information from Old National and Permanent Bancorp
regarding the effect of the proposed bank merger on the Evansville banking
market. Old National and Permanent Bancorp are cooperating with the Department
of Justice regarding its request for competitive information.
27
<PAGE> 36
Old National and Permanent Bancorp believe that the proposed mergers are
not subject to the prior approval of the Federal Reserve. The Federal Reserve
has requested Old National to file financial information relating to the mergers
and Old National has complied with this request.
ACCOUNTING TREATMENT FOR THE MERGERS
The acquisition of Permanent Bancorp by Old National will be accounted for
by using the purchase method of accounting. Under the purchase method of
accounting, all of the assets and liabilities of Permanent Bancorp acquired by
Old National will be adjusted to their estimated fair market value as of the
closing date, and the resultant discounts and premiums will be credited into or
amortized against income over the expected economic lives of the related assets
and liabilities. The purchase price for Permanent Bancorp will exceed the net
fair market value of the assets acquired and the liabilities assumed in the
acquisition of Permanent Bancorp by at least $52 million. The difference will be
recorded as goodwill on Old National's consolidated financial statements and
will be amortized against income over a period not to exceed twenty years using
the straight-line method.
EFFECTIVE TIME
The company merger will become effective immediately after the bank merger
and at the close of business on the day and at the time specified in the
Articles of Merger of Permanent Bancorp with and into Merger Corporation I as
filed with the Indiana Secretary of State and the Delaware Secretary of State.
The bank merger will become effective on the date and at the time specified in
the Articles of Combination of Permanent Bank into Old National Bank. The
effective time of the mergers will occur on the later of (1) July 31, 2000 or
(2) the last business day of the month following (a) the fulfillment of all
conditions precedent to the mergers 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 mergers, unless, in each case, otherwise
mutually agreed to by Old National and Permanent Bancorp.
Old National and Permanent Bancorp currently anticipate that mergers will
be consummated in July, 2000. However, completion of the mergers could be
delayed if there is a delay in obtaining the required regulatory approvals or in
satisfying other conditions to the mergers.
MANAGEMENT, PERSONNEL AND EMPLOYEE BENEFITS AFTER THE MERGERS
Merger Corporation I will be the surviving corporation in the company
merger and, upon consummation of such merger, the separate corporate existence
of Permanent Bancorp will cease. Consequently, the directors and officers of
Permanent Bancorp will no longer serve in such capacities after the effective
time of the company merger.
Old National Bank will be the surviving institution in the bank merger and,
upon consummation of such merger, the separate corporate existence of Permanent
Bank will cease. Following the mergers, Perma Service Corp., Permanent Insurance
Agency, Inc. and Permanent, Inc. will become wholly-owned subsidiaries of Old
National. The Boards of Directors and officers of all of Permanent Bancorp's
subsidiaries, other than Permanent Bank, serving at the effective time of the
mergers will continue as the Boards of Directors and officers of the respective
subsidiary after the effective time of the mergers. Following the effective time
of the mergers, 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
Permanent Bancorp will continue in their respective positions after the mergers,
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 Permanent Bancorp 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 Permanent Bancorp
and its subsidiaries as of the effective time of the mergers, provided that
these persons continue as full-time officers or employees of the former
subsidiaries of Permanent Bancorp or any other subsidiary of Old National after
the effective time of the mergers, will receive substantially the same employee
benefits on substantially the same terms
28
<PAGE> 37
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 Permanent Bancorp or any of its subsidiaries prior to
the effective time of the company 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 Permanent Bancorp 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 Permanent Bancorp 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
company merger, and will become participants under the Old National Profit
Sharing Plan and the Old National ESOP at the effective time of the mergers.
Those officers and employees who do not meet the eligibility 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 first plan
entry date which coincides with or next follows the date on which such
eligibility requirements are satisfied.
Permanent Bank shall withdraw as a participating employer under the
Financial Institution Retirement Fund (Permanent Bank's multi-employer defined
benefit pension plan) as of the effective time of the mergers. Prior to the
effective time of the mergers, Permanent Bancorp must continue to make
contributions to the Fund, if any, that may be required by the Fund prior to the
effective time of the mergers in order to prevent a minimum funding deficiency,
or to defray reasonable administrative expenses of the Fund owed by or assessed
against Permanent Bancorp prior to the effective time of the mergers. The
non-forfeitable benefits accrued by employees as of the date of withdrawal will
be paid in accordance with the plan.
Permanent Bancorp must terminate as a participating employer under the
Permanent Bancorp Financial Institution Thrift Plan (Permanent Bancorp's 401(k)
plan) as of the day before the effective time of the mergers. Permanent Bancorp
must continue to make all non-discretionary contributions which it is required
to make under the plan prior to the effective time of the company merger. The
non-forfeitable account balances of plan participants as of the date of the
termination will be paid or transferred to a successor plan in accordance with
the plan.
Permanent Bancorp must terminate the Permanent Bancorp Employee Stock
Ownership Plan as of the effective time of the company merger. Permanent Bancorp
must continue to make employer contributions to the plan for each plan year
quarter ending on or before the effective time of the mergers, provided such
contributions are comparable in amount, on a prorated basis, to past employer
contributions to the plan. The merger agreement provides that all account
balances of the plan participants will be fully vested and non-forfeitable as of
the termination date. As soon as administratively feasible following the later
of (1) the date of termination of the Plan, or (2) the receipt by Permanent
Bancorp of a determination letter of the Internal Revenue Service providing that
the termination of the ESOP does not adversely affect the qualification of the
ESOP or the related trust for favorable tax treatment, all vested and
non-forfeitable benefits under the Plan shall be distributed to its participants
pursuant to the Plan provisions.
The welfare benefit plans (e.g., group health, dental, life and long-term
disability plans and policies) sponsored by Permanent Bancorp and Permanent Bank
on behalf of eligible employees will be terminated as of the last day of the
month in which the effective time of the company merger occurs. As of the
effective time of the company merger, each individual who has qualified for
retiree health coverage under the Permanent group health plan, either as a
retiree or a spouse or dependent of a retiree or as a director to whom Permanent
has made, prior to the date of the merger agreement, a commitment to provide
retiree health coverage under such plan upon the retirement of such director or
the termination of his or
29
<PAGE> 38
her directorship, will become covered as of the effective time of the company
merger under the retiree health coverage provided under the Old National group
health plan.
The tuition assistance program currently sponsored by Permanent Bancorp on
behalf of its eligible employees will be terminated as of the last day of the
calendar month in which the company merger occurs.
The cash bonus program currently sponsored by Permanent Bancorp and
Permanent Bank on behalf of eligible employees will be terminated as of the
effective time of the mergers. Prior to the effective time of the company
merger, Permanent Bancorp and Permanent Bank may continue to pay cash bonuses
under the program provided the amounts of such bonuses, individually or in the
aggregate, are comparable to the amounts of any past bonuses under the program
and provided further that Permanent Bancorp has obtained the written consent of
the Old National Chief Financial Officer to pay any such bonus.
As of the effective time of the mergers, all contributions to or under
either Permanent Bancorp's Director Deferred Compensation Master Agreement or
Permanent Bancorp's Second Director Deferred Compensation Plan will cease.
Following the effective time of the mergers, Old National shall continue the
plans, and the grantor (rabbi) trust established by Permanent Bancorp in
connection with the plans, until all benefit liabilities accrued under the plans
as of the effective time of the mergers are distributed to the participants
entitled to such benefits. Upon the distribution of these accrued benefits, the
plans and the trust will terminate and any residual assets of the trust will be
returned to Old National.
As of the effective time of the mergers, Permanent Bancorp must terminate
the Permanent Bancorp Recognition and Retention Plan, the 1993 Stock Option and
Incentive Plan and the 1999 Omnibus Incentive Plan. Under the terms of the
Permanent Bancorp 1999 Omnibus Incentive Plan, stock options granted under the
plan which have not yet vested will vest and become exercisable in full upon
adoption of the merger agreement by Permanent Bancorp's shareholders at the
special meeting. Under the terms of the Permanent Bancorp 1993 Stock Option and
Incentive Plan, upon adoption of the merger agreement at the special meeting,
stock options granted under the plan which have not yet vested will vest and
become exercisable for a period of 60 days, after which the options will revert
to their original vesting schedules. On December 13, 1999, the committee
administering Permanent Bancorp's Recognition and Retention Plan caused all
unvested restricted shares of Permanent Bancorp common stock awarded under the
Recognition and Retention Plan to vest and become free of all restrictions on
such shares. See also "Proposed Mergers -- Interests of Certain Persons in the
Mergers -- Stock Options" and "-- Restricted Stock."
INTEREST OF CERTAIN PERSONS IN THE MERGERS
Donald P. Weinzapfel. Donald P. Weinzapfel, Chairman and Chief Executive
Officer of Permanent Bancorp, entered into a eighteen month consulting agreement
with Old National, which becomes effective when the mergers are completed. By
executing this consulting agreement with Old National, Mr. Weinzapfel
voluntarily terminated his employment and all officer and other positions held
by him at Permanent Bancorp and Permanent Bank, effective as of the effective
time of the company merger.
Under the consulting agreement, Mr. Weinzapfel is to perform the consulting
services reasonably determined by Old National and Old National Bank, not to
exceed 20 hours per month. For his consulting services, Mr. Weinzapfel will be
paid a fee of $14,500 per month. In addition, Old National will transfer and
assign to Mr. Weinzapfel the country club membership currently owned by
Permanent Bancorp for Mr. Weinzapfel's benefit. Mr. Weinzapfel will, however, be
responsible for payment of all dues and other costs of membership. The
consulting agreement may be terminated by Old National or Mr. Weinzapfel at any
time, with or without cause, upon ten days' prior written notice to the other.
If the agreement is terminated by either party for any reason, Old National must
pay to Mr. Weinzapfel (or to Mr. Weinzapfel's estate, in the event of his death)
the consulting fee of $14,500 per month for the remaining term of the agreement.
30
<PAGE> 39
When the mergers are completed, Mr. Weinzapfel will not be entitled to
receive or participate in any salary, bonus, compensation or other payments or
any employee benefits, such as retirement, pension, profit-sharing and insurance
plan and policies, of or from Old National, Old National Bank, Permanent
Bancorp, Permanent Bank or Merger Corporation I, except for (i) the consulting
fee described above, (ii) all fully vested retirement, pension and
profit-sharing benefits properly payable to Mr. Weinzapfel, and (iii) any
insurance coverage under applicable law or under the retiree welfare benefits,
if any, made available by the Old National to its retirees or former directors,
with all premiums and costs for such insurance coverage borne by Mr. Weinzapfel.
Murray J. Brown. Under his employment agreement with Permanent Bank, Murray
J. Brown, Chairman, President and Chief Executive Officer of Permanent Bank,
will be entitled to receive a lump sum cash payment of approximately $729,885
if, as expected, he is not employed by Old National or Old National Bank in an
equivalent capacity after the mergers.
Stock Options. Under the terms of the Permanent Bancorp 1999 Omnibus
Incentive Plan, stock options granted under the plan which have not yet vested
will vest and become exercisable in full upon adoption of the merger agreement
by Permanent Bancorp's shareholders at the special meeting. Unvested options to
purchase an aggregate of 84,000 shares of Permanent Bancorp common stock granted
to directors and executive officers of Permanent Bancorp under the Omnibus
Incentive Plan will vest upon adoption of the merger agreement at the special
meeting.
Under the terms of the Permanent Bancorp 1993 Stock Option and Incentive
Plan, upon adoption of the merger agreement at the special meeting, stock
options granted under the plan which have not yet vested will vest and become
exercisable for a period of 60 days, after which the options will revert to
their original vesting schedules. Unvested options to purchase an aggregate of
12,391 shares of Permanent Bancorp common stock granted to directors and
executive officers of Permanent Bancorp under the 1993 Plan will become
exercisable for 60 days upon adoption of the merger agreement at the special
meeting.
Restricted Stock. On December 13, 1999, the committee administering
Permanent Bancorp's Recognition and Retention Plan caused an aggregate of 6,960
unvested restricted shares of Permanent Bancorp common stock awarded to certain
directors and executive officers to vest and become free of all restrictions on
such shares.
Employee Stock Ownership Plan. Under the Permanent Bancorp Amended and
Restated Employee Stock Ownership Plan, all unvested participant account
balances will vest in full upon completion of the mergers. As of ,
2000, the accounts of Permanent Bancorp executive officers who participate in
the plan contained an aggregate of unvested shares of Permanent
Bancorp common stock that will vest upon completion of the mergers.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The merger agreement provides that for a period of six years after the
effective time of the company merger, Old National will indemnify, defend and
hold harmless the present directors, officers and employees of Permanent Bancorp
and its subsidiaries against all losses arising out of any claim that relates to
any act or omission occurring at or prior to the effective time of the company
merger in the person's capacity as a director, officer or employee, to the
fullest extent Permanent Bancorp is now entitled to indemnify and advance
expenses to such persons under its certificate of incorporation and bylaws. The
merger agreement also provides that Old National will maintain in effect for at
least two years from the effective time of the company merger the directors' and
officers' liability insurance policies carried by Permanent Bancorp or
substitute policies providing similar coverage.
31
<PAGE> 40
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
to holders of Permanent Bancorp 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 Permanent Bancorp 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 Permanent Bancorp 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 and Permanent Bancorp have each requested the law firm of
Krieg DeVault Alexander & Capehart, LLP to render an opinion that the mergers 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
Permanent Bancorp, except with respect to cash received by Permanent Bancorp's
shareholders for fractional share interests of Old National common stock.
In rendering its opinion, Krieg DeVault Alexander & Capehart, LLP may
require and rely upon representations contained in letters received from Old
National and Permanent Bancorp, and may rely on customary assumptions of certain
facts. Under the merger agreement, the obligations of each of Old National and
Permanent Bancorp to consummate the merger is conditioned upon the receipt of an
opinion of Old National's counsel substantially to the effect as set forth
above. However, this legal opinion will not bind the Internal Revenue Service,
which could take a different view.
TAX CONSEQUENCES TO OLD NATIONAL AND PERMANENT BANCORP
Assuming the merger of Permanent Bank into Old National Bank and the merger
of Permanent Bancorp into Merger Corporation I are consummated as described in
the merger agreement and constitute statutory mergers under Indiana law, then
for United States federal income tax purposes, the mergers will constitute
tax-free reorganizations. As a result, no party to the merger agreement will
recognize gain or loss as a result of the mergers for federal income tax
purposes.
TAX CONSEQUENCES TO PERMANENT BANCORP SHAREHOLDERS
- PERMANENT BANCORP SHAREHOLDERS RECEIVING SOLELY OLD NATIONAL COMMON STOCK
A Permanent Bancorp shareholder who receives solely Old National common
stock in exchange for shares of Permanent Bancorp 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 Permanent Bancorp 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
A Permanent Bancorp 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
32
<PAGE> 41
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 Permanent Bancorp shareholder. If treated
as a sale and not a dividend, the Permanent Bancorp 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 Permanent Bancorp 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 Permanent Bancorp common stock is greater than one year.
- BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of cash to a person surrendering shares of Permanent Bancorp
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 PERMANENT BANCORP URGE SHAREHOLDERS TO
CONSULT WITH THEIR PERSONAL TAX ADVISORS WITH RESPECT TO ALL TAX CONSEQUENCES OF
THE MERGERS TO THEM, INCLUDING THE EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS
AND ANY OTHER TAX CONSEQUENCES INCLUDING THE EFFECTS OF FOREIGN TAX LAWS.
COMPARATIVE PER SHARE DATA
NATURE OF TRADING MARKET
- OLD NATIONAL BANCORP
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 December 17, 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 $31.548 per share. On
, 2000, the closing price of Old National common stock reported by
the Nasdaq National Market System was $31.548 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.
<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
</TABLE>
33
<PAGE> 42
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
---------------
HIGH LOW
------ ------
<S> <C> <C>
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
2000
First Quarter............................................... $33.06 $23.56
Second Quarter (through , 2000).................
</TABLE>
- PERMANENT BANCORP
Shares of Permanent Bancorp 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 "PERM." On December 17, 1999, the closing price
of Permanent Bancorp common stock reported by the Nasdaq National Market System
was $15.375. On April 19, 2000, the closing price of Permanent Bancorp common
stock was $18.50, 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 Permanent Bancorp 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............................................... $ 11.38 $ 10.13
Second Quarter.............................................. 13.00 10.38
Third Quarter............................................... 13.25 11.38
Fourth Quarter.............................................. 15.56 12.03
1998
First Quarter............................................... $ 18.75 $ 13.38
Second Quarter.............................................. 18.50 15.50
Third Quarter............................................... 16.25 11.63
Fourth Quarter.............................................. 14.38 10.56
1999
First Quarter............................................... $ 13.75 $ 10.75
Second Quarter.............................................. 11.25 8.875
Third Quarter............................................... 15.00 8.875
Fourth Quarter.............................................. 19.938 9.563
2000
First Quarter............................................... $19.375 $14.875
Second Quarter (through , 2000).................
</TABLE>
34
<PAGE> 43
DIVIDENDS
The following table sets forth, on a calendar year basis, the per share
cash dividends paid on shares of Old National common stock and Permanent Bancorp
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>
PERMANENT
OLD NATIONAL BANCORP
COMMON COMMON
STOCK(1) STOCK(2)
------------ ---------
<S> <C> <C>
1997
First Quarter............................................... $0.13 $0.0375
Second Quarter.............................................. 0.13 0.0375
Third Quarter............................................... 0.13 0.05
Fourth Quarter.............................................. 0.14 0.055
1998
First Quarter............................................... $0.13 $ 0.055
Second Quarter.............................................. 0.14 0.055
Third Quarter............................................... 0.14 0.06
Fourth Quarter.............................................. 0.14 0.06
1999
First Quarter............................................... $0.15 $ 0.06
Second Quarter.............................................. 0.16 0.07
Third Quarter............................................... 0.16 0.07
Fourth Quarter.............................................. 0.16 0.07
2000
First Quarter............................................... $0.17 $ 0.07
Second Quarter (through , 2000)................. 0.07
</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 Permanent Bancorp may continue to pay its
customary quarterly dividends of up to $0.07 per share, except that
Permanent Bancorp may not pay a dividend during the quarterly period in
which the mergers will be completed if Permanent Bancorp shareholders will,
during that period, be entitled to receive dividends on their shares of Old
National common stock received pursuant to the merger agreement. Certain
subsidiaries may pay cash dividends to Permanent Bancorp in the ordinary
course of business for payment of reasonable and necessary business and
operating expenses of Permanent Bancorp and to provide funds for Permanent
Bancorp'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 paid by
Old National on January 28, 1999, the 5% stock dividend paid by Old National on
January 28, 2000 and a three-for-two stock split paid on May 24, 1999.
Equivalent per share data is calculated by
35
<PAGE> 44
multiplying the pro forma Old National information by the exchange ratio
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>
Year Ended December 31, 1999............................. $1.63 $0.63 $10.35
</TABLE>
<TABLE>
<CAPTION>
AS REPORTED
-----------------------------------------
CASH BOOK VALUE
PERMANENT BANCORP NET INCOME(1) DIVIDENDS AT PERIOD END
- ----------------- ------------- --------- -------------
<S> <C> <C> <C>
Year Ended December 31, 1999............................. $0.72 $0.235 $10.27
</TABLE>
<TABLE>
<CAPTION>
NET INCOME(1)
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA EQUIVALENT
------------ -----------------
<S> <C> <C>
Year Ended December 31, 1999................................ $1.53 $1.19
</TABLE>
<TABLE>
<CAPTION>
CASH DIVIDENDS
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA EQUIVALENT
------------ -----------------
<S> <C> <C>
Year Ended December 31, 1999................................ $0.63 $0.49
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA(1) EQUIVALENT(1)
------------ -----------------
<S> <C> <C>
As of December 31, 1999..................................... $11.32 $8.83
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE OF COMMON STOCK
--------------------------------
PERMANENT BANCORP
OLD NATIONAL EQUIVALENT
------------ -----------------
<S> <C> <C>
As of December 17, 1999(2).................................. $31.54 $15.37
</TABLE>
- ---------------
(1) Considers the pending merger of Permanent Bancorp. See PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION.
(2) Represents the last business day prior to the public announcement of the
execution of the merger agreement.
36
<PAGE> 45
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The accompanying financial statements present an Unaudited Pro Forma
Condensed Combined Balance Sheet of Old National as of December 31, 1999 and Pro
Forma Condensed Combined Statement of Income for the year ended December 31,
1999.
The Unaudited Pro Forma Condensed Combined Statement of Income for the year
ended December 31, 1999 is presented giving effect to the pending merger as of
January 1 of the year presented.
The pro forma information is based upon historical financial statements.
The assumptions give effect to the proposed merger under the purchase 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.
37
<PAGE> 46
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED -- DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERMANENT
ONB BANCORP ADJUSTMENTS PRO FORMA
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..................... $ 211,337 $ 11,388 $ 222,725
Money market investments.................... 39,478 4,077 43,555
Investment securities....................... 1,821,439 120,334 $ (822)(b) 1,940,951
Loans....................................... 5,714,543 331,082 (b) 6,045,625
Reserve for loan losses..................... (65,685) (2,323) (68,008)
Excess cost over assets acquired............ 31,043 8,844 52,331(a) 92,218
Other intangibles........................... 2,855 2,855
Premises and equipment...................... 117,500 9,713 127,213
Other assets................................ 236,775 14,043 250,818
---------- -------- -------- ----------
$8,109,285 $497,158 $ 51,509 $8,657,952
========== ======== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits.................................... $5,962,499 $343,939 $ (b) $6,306,438
Medium term notes........................... 96,300 96,300
Subordinated debentures..................... 12,782 12,782
Other borrowings............................ 1,361,332 108,798 (b) 1,470,130
Other liabilities........................... 91,377 3,930 95,307
---------- -------- -------- ----------
Total liabilities................. 7,524,290 456,667 0 7,980,957
---------- -------- -------- ----------
Common stock................................ 56,518 49 3,237(a) 59,804
Capital surplus............................. 395,414 17,298 74,829(a) 487,541
Retained earnings........................... 162,384 26,557 (26,557)(a) 162,384
Accumulated other comprehensive income...... (29,321) (3,413) (32,734)
---------- -------- -------- ----------
Total shareholders' equity........ 584,995 40,491 51,509 676,995
---------- -------- -------- ----------
$8,109,285 $497,158 $ 51,509 $8,657,952
========== ======== ======== ==========
Outstanding common shares................... 56,518 59,804
========== ==========
Shareholders' equity per share.............. 10.35 11.32
========== ==========
</TABLE>
- ---------------
Notes:
(a) Exchange of 100% of Permanent Bancorp common stock for shares of ONB Common
Stock.
(b) Permanent's balances will be marked to market at acquisition date.
Adjustments, except for investments, are currently being determined.
38
<PAGE> 47
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED -- DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
AS REPORTED
--------------------
PERMANENT
ONB BANCORP ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income................................. $565,867 $33,670 $ 137(a) $599,674
Interest expense................................ 284,763 20,202 304,965
-------- ------- ------- --------
Net interest income............................. 281,104 13,468 137 294,709
Provision for loan losses....................... 14,798 292 15,090
-------- --------
Net interest income after provision for loan
losses........................................ 266,306 13,176 137 279,619
Noninterest income.............................. 82,974 3,325 86,299
Noninterest expense............................. 223,583 13,090 2,617(b) 239,290
-------- ------- ------- --------
Income before income taxes...................... 125,697 3,411 (2,480) 126,628
Provision for income taxes...................... 32,440 1,288 33,728
-------- ------- ------- --------
Net income from continuing operations........... 93,257 2,123 (2,480) 92,900
Discontinued operations......................... 4,101 0 0 4,101
-------- ------- ------- --------
Net income...................................... $ 97,358 $ 2,123 $(2,480) $ 97,001
======== ======= ======= ========
Net income from continuing operations per common
share:(b)
Assuming no dilution.......................... $ 1.63 $ 1.53
======== ========
Assuming full dilution........................ $ 1.59 $ 1.49
======== ========
Weighted average common shares outstanding:(b)
Assuming no dilution.......................... 57,261 60,547
======== ========
Assuming full dilution........................ 59,215 62,501
======== ========
</TABLE>
- ---------------
Notes:
(a) Reflects accretion of discount on Investment Securities of $822 over the
average remaining life (6 years) of the portfolio using the level-yield
method.
(b) Reflects amortization of goodwill arising from the Merger on a
straight-line basis over a 20-year period.
39
<PAGE> 48
DESCRIPTION OF OLD NATIONAL
OVERVIEW
Old National is a bank holding company that operates 149 banking offices
and 259 ATM locations in Indiana, Illinois, Kentucky, Ohio and Tennessee 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 41 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.
As of December 31, 1999, Old National had consolidated assets of
approximately $7 billion, consolidated deposits of approximately $5 billion and
stockholders' equity of approximately $493 million.
Old National's principal office is located at 420 Main Street, Evansville,
Indiana 47708. Its telephone number is (812) 464-1434.
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, 1999, which is incorporated by referenced into
this document. See "Where You Can Find More Information."
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.
40
<PAGE> 49
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 is now able to underwrite and sell
securities and insurance. It is also 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 March 14, 2000, Old National completed an offering of 2,000,000 of 9.50%
trust preferred securities due March 15, 2030, at a price and with a liquidation
value of $25 per security. The securities were sold through ONB Capital Trust I,
a business trust formed by Old National for the purpose of offering the
securities. Net of underwriting commissions, the proceeds to Old National from
the offering were approximately $48.4 million.
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 and to Old National's per share information
contained in this document have been adjusted to give effect to the stock
dividend.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning Old National does not purport to be
complete. Certain information relating to the business, management, executive
and director compensation, 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, 1999 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 PERMANENT BANCORP
BUSINESS
Permanent Bancorp is a unitary savings and loan holding company located in
Evansville, Indiana. Permanent Bancorp provides its banking through its
affiliate bank, Permanent Bank, and Permanent Bank's 11 affiliated offices
throughout southwestern Indiana. As of December 31, 1999, Permanent Bancorp had
consolidated assets of approximately $497 million, consolidated deposits of
approximately $344 million and stockholders' equity of approximately $40
million. Permanent Bancorp also conducts its business through its subsidiaries,
Perma Service Corp., Permanent Insurance Agency, Inc. and Permvest, Inc. These
subsidiaries provide a broad range of financial services to their customers.
Permanent Bancorp's principal office is located at 101 S.E. Third Street,
Evansville, Indiana 47708. Its telephone number is (812) 437-2265.
ADDITIONAL INFORMATION AND INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning Permanent Bancorp does not purport to
be complete. Certain information relating to the business, management, executive
and director compensation, voting securities, including the principal holders of
those securities, certain relationships and related transactions and other
matters as to Permanent Bancorp is incorporated by reference from or set forth
in Permanent Bancorp's
41
<PAGE> 50
Annual Report on Form 10-K/A for the fiscal year ended March 31, 1999 and other
documents filed by Permanent Bancorp 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
Permanent Bancorp at its address or telephone number indicated under "Where You
Can Find More Information."
You can also find more information about Permanent Bancorp in the enclosed
Permanent Bancorp 1999 Annual Report on Form 10-K/A and Quarterly Report on Form
10-Q for the quarter ended December 31, 1999.
COMPARISON OF COMMON STOCK
Following the mergers, the rights of former Permanent Bancorp 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 Permanent Bancorp are presently governed by the laws of the State of
Delaware, the state in which Permanent Bancorp is incorporated, and by Permanent
Bancorp's Certificate of Incorporation and By-Laws, as amended. The rights of
the shareholders of Permanent Bancorp 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
Permanent Bancorp 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 Articles of
Incorporation and By-Laws and Permanent Bancorp's Certificate of Incorporation
and By-Laws.
AUTHORIZED BUT UNISSUED SHARES
- OLD NATIONAL
Old National's Articles of Incorporation authorize the issuance of
150,000,000 shares of Old National Common Stock, of which approximately
46,851,000 million shares were outstanding as of January 31, 2000. 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
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 Series A Preferred
Stock and Shareholder Rights Plan" below.
As of March 31, 2000, 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, 430,000 shares of Old National common
stock reserved for issuance upon exercise of stock options outstanding as of
March 31, 2000 and 1.0 million shares of its common stock reserved for issuance
upon conversion of its outstanding 8% convertible subordinated debentures due
September 15, 2012. 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.
42
<PAGE> 51
The issuance of additional shares of Old National common stock or,
depending on its terms (such as convertability to common stock), the issuance of
Old National preferred stock may adversely affect holders of Old National common
stock by diluting their voting and ownership interests.
- PERMANENT BANCORP
Permanent Bancorp's Certificate of Incorporation authorizes the issuance of
up to 9,000,000 shares of Permanent common stock, of which were issued
and outstanding as of , 2000. Permanent has 1,000,000 shares of
preferred stock authorized, none of which are presently outstanding. The
preferred 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 Permanent. Permanent is generally authorized
to issue additional shares of common stock and shares of preferred stock up to
the amounts authorized under its Certificate of Incorporation without
shareholder approval. Following the company merger, each outstanding share of
Permanent common stock will convert into the right to receive shares of Old
National common stock as described in "Proposed Mergers -- Conversion of
Permanent 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 to permit such rights. As permitted by Delaware law, Permanent's
Certificate of Incorporation does not provide for preemptive rights to subscribe
for any new or additional shares of Permanent common stock or other securities.
DIVIDEND RIGHTS
The holders of common stock of Old National 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 may not pay a
dividend if, after giving effect to the dividend, (1) Old National would not be
able to pay its debts as they become due in the usual course of business, or (2)
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 receiving the
dividend if Old National were to be dissolved at the time of the dividend. Under
Delaware law, Permanent Bancorp may pay dividends either (1) out of its surplus
(i.e., capital in excess of par value) or (2) if there is no surplus, out of the
corporation's net profit for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
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
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
43
<PAGE> 52
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
Old National by its Ohio-chartered affiliate banks, are limited by Ohio law to
the undivided profits of the banks. However, prior to the declaration of any
dividend, the banks 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 the banks
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 Tennessee-chartered affiliate banks are
limited by Tennessee law to the undivided profits of such affiliate banks.
However, prior to the declaration of any dividend, such affiliate banks must
have made all required allocations to reserves for losses or contingencies. In
addition, the approval of the Tennessee Department of Financial Institutions is
required if the total dividends declared by such affiliate banks in any year
exceeds the total of its net income for that year combined with its retained net
income of the preceding two years. 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.
Cash dividends paid to Permanent by Permanent Bank, a federally-chartered
savings bank, are subject to the regulations of the Office of Thrift
Supervision. The approval of the Office of Thrift Supervision is required prior
to Permanent Bank's payment of a dividend if the total amount of dividends
declared by Permanent Bank in the then-current calendar year exceeds the total
of its net income for that calendar year to date combined with its retained net
income for the preceding two years.
VOTING RIGHTS
The holders of the outstanding shares of Old National common stock and
Permanent Bancorp common stock are entitled to one vote per share on all matters
presented for shareholder vote. Shareholders of Old National and Permanent
Bancorp 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.
Old National's By-Laws provide that the holders of a majority of the
outstanding shares entitled to vote shall constitute a quorum at a meeting of
shareholders. Old National's By-Laws further provide that unless a greater vote
is required under Indiana law, Old National's Articles of Incorporation or
By-Laws, the affirmative vote of the holders of a majority of the voting power
present will decide any matter before the shareholders (except the election of
directors, which is determined by a plurality of the votes cast). Permanent's
By-Laws provide that the holders of at least one-third of the shares entitled to
vote at a meeting shall constitute a quorum. Permanent's By-Laws further provide
that except as otherwise required by law or Permanent's Certificate of
Incorporation or By-Laws, all matters other than the election of directors (also
determined by a plurality of the votes cast) are determined by a majority of the
votes cast at the meeting.
Indiana law and Delaware law generally require that mergers, consolidations
and 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 or
certificate of incorporation requiring a higher percentage vote for certain
transactions. Old National's Articles of Incorporation and Permanent's
Certificate of Incorporation provide that certain business combinations may,
under certain
44
<PAGE> 53
circumstances, require approval of more than a simple majority of the issued and
outstanding shares of common stock. See "Comparison of Common
Stock -- Anti-Takeover Provisions."
CHARTER AND BYLAW AMENDMENTS
Indiana law generally 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 amendments to a
corporation's articles of incorporation. Delaware law generally requires
approval by the holders of a majority of the shares outstanding for amendments
to a corporation's certificate of incorporation. Both Indiana law and Delaware
law permit a corporation in its articles or certificate of incorporation to
prescribe a higher shareholder vote for certain amendments. Old National's
Articles of Incorporation and Permanent's Certificate of Incorporation each
require a super-majority shareholder vote of 80% of their outstanding shares of
common stock for the amendment of certain significant provisions.
Old National's Articles of Incorporation and By-Laws provide that the Old
National By-Laws may be amended only by the Board of Directors. Permanent's
Certificate of Incorporation provides that Permanent's By-Laws may be amended by
the Board of Directors or by the shareholders upon the approval of the holders
of at least 80% of the voting power outstanding.
SPECIAL MEETINGS OF SHAREHOLDERS
Old National's Articles of Incorporation provide that a special meeting of
shareholders may be called by the Board of Directors, the President or the
holders of at least one-fourth of the shares outstanding. Permanent's By-Laws
provide that special meetings of shareholders may be called only by the Board of
Directors.
NUMBER OF DIRECTORS AND TERM OF OFFICE
Old National's By-Laws provide that the number of directors shall be set by
the Board of Directors and shall be at least 12 and no more than 24. Currently
there are 16 directors of Old National. Old National's Board of Directors is not
divided into classes; the entire Board of Directors is elected annually.
Permanent's Certificate of Incorporation provides that the number of
directors shall be determined from time to time by the Board of Directors.
Currently there are nine directors of Permanent. Permanent's Board of Directors
is divided into three classes with three directors in each class and with
directors elected for three-year staggered terms. Thus, unlike Old National,
whose entire Board of Directors is up for election at each annual shareholders
meeting, only one-third of Permanent's Board of Directors is elected at each
annual meeting of Permanent's shareholders. The absence of a classified board
means that a majority of Old National's directors could be replaced at a single
annual shareholders' meeting. Because Permanent's Board of Directors is
classified, a majority of Permanent's directors can be replaced only after two
annual meetings of shareholders.
REMOVAL OF DIRECTORS
Old National's By-Laws provide that any director or all directors of Old
National may be removed, with or without cause, at a meeting of shareholders
upon the vote of the holders of at least a majority of the outstanding shares
entitled to vote in the election of directors. Permanent's Certificate of
Incorporation provides that any director or all directors of Permanent may be
removed, but only for cause, by the vote of at least 80% of the voting power of
the outstanding shares entitled to vote in the election of directors.
DISSENTERS' RIGHTS
Shareholders of Indiana 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 on the plan,
45
<PAGE> 54
(2) consummation of a plan of share exchange by which the shareholder's shares
will be acquired, if the shareholder is entitled to vote on the plan, (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 on the sale or exchange, (4) approval of a "control share
acquisition" under Indiana law (discussed below under "Anti-takeover
Provisions"), 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 any transaction
described above 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 As of the date of this Proxy Statement-Prospectus,
shares of Old National common stock are traded on the Nasdaq National Market
System and, therefore, Old National shareholders presently are not entitled to
assert dissenters' rights under Indiana law with respect to any of the
transactions discussed above.
Under the Delaware General Corporation Law, shareholders of a corporation
who are voting on a merger or consolidation generally are entitled to dissent
from the transaction and obtain payment of the fair value of their shares. This
right does not apply if, however, (1) the shares are listed on a national
securities exchange or the Nasdaq National Market System or are held by 2,000 or
more holders of record and (2) except for cash in lieu of fractional share
interests, are being exchanged for the shares of the surviving corporation of
the merger or shares of any other corporation, which shares of such other
corporation are listed on a national securities exchange or the Nasdaq National
Market System or held of record by more than 2,000 holders. Because Permanent
common stock is listed on the Nasdaq National Market System and holders of
Permanent common stock will receive shares of Old National common stock in the
company merger, which also is listed on the Nasdaq National Market System,
holders of Permanent common stock will not be entitled to dissent from the
company merger.
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
rights of creditors and holders of shares of Old National preferred stock then
outstanding. Shareholders of Permanent have similar liquidation rights.
REDEMPTION AND ASSESSMENT
Under Indiana law, shares of Old National 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. 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.
Under Delaware law, shares of Permanent common stock are not liable to
further assessment. Permanent may acquire shares of Permanent common stock with
funds legally available for that purpose.
In addition, as a bank holding company, Old National must give prior notice
to the Federal Reserve if the consideration to be paid by Old National for any
redemption or acquisition of its shares, when aggregated with the consideration
paid for all redemptions or acquisitions for the preceding 12 months, equals or
exceeds 10% of its consolidated net worth.
46
<PAGE> 55
ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to Old National and Permanent
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 or
Permanent. These measures may have the effect of discouraging certain tender
offers for shares of Old National or Permanent 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.
Old National-Indiana Business Corporation Law. Under the business
combinations provision of the Indiana Business Corporation Law, any 10%
shareholder of an Indiana corporation with a class of voting shares registered
under Section 12 of the Exchange Act, such as Old National, or which has
specifically adopted this provision in the corporation's articles of
incorporation, is prohibited for a period of five years from completing a
business combination (generally a merger, significant asset sale or disposition
or significant issuance of additional shares) with the corporation unless, prior
to the acquisition of such 10% interest, the board of directors of the
corporation approved either the acquisition of such interest or the proposed
business combination. If such board approval is not obtained, then five years
after a 10% shareholder has become such, a business combination with the 10%
shareholder is permitted if all provisions of the articles of incorporation of
the corporation are complied with and either a majority of disinterested
shareholders approve the transaction or all shareholders receive a price per
share determined in accordance with the fair price criteria of the business
combinations provision of the Indiana Business Corporation Law.
An Indiana corporation may elect to remove itself from the protection
provided by the Indiana business combinations provision through an amendment to
its articles of incorporation approved by a majority of the outstanding shares
not held by the 10% shareholder; however, such an election remains ineffective
for 18 months after the amendment 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 is subject to the business combinations provision of
Indiana law, but such provision does not apply to the merger between Old
National and Permanent. The constitutional validity of the business combinations
provision of the Indiana Business Corporation Law has in the past been
challenged and has been upheld by the United States Supreme Court.
In addition to the business combinations provision, the Indiana Business
Corporation 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. Under the control share
acquisition provision, unless otherwise provided in the corporation's articles
of incorporation or by-laws, if a shareholder acquires shares of the
corporation's voting stock (referred to as control shares) within one of several
specified ranges (one-fifth or more but less than one-third, one-third or more
but less than a majority, or a majority or more), approval by shareholders of
the control share acquisition must be obtained before the acquiring shareholder
may vote the control shares. If such approval is not obtained, the shares held
by the acquiror will be redeemed by the corporation at the fair value of the
shares as determined by the control share acquisition provision.
The control share acquisition provision does not apply to a plan of
affiliation and merger or share exchange, if the corporation complies with the
applicable merger provisions and is a party to the plan of merger or plan of
share exchange. Old National is subject to the control share acquisition
provision, but such provision does not apply to Old National's acquisition of
Permanent Bancorp pursuant to the merger agreement.
Permanent-Delaware General Corporation Law. The Delaware General
Corporation Law contains a business combination provision which provides that a
corporation may not engage in any business combination with an interested
shareholder (one who owns 15% or more of the outstanding voting stock of the
corporation) for a period of three years after the person became an interested
shareholder unless (1) prior to the time the person became an interested
shareholder, the board of directors approved either
47
<PAGE> 56
the business combination or the transaction pursuant to which the person became
an interested shareholder, (2) upon consummation of the transaction which
resulted in the person becoming an interested shareholder, the interested
shareholder owned at least 85% of the voting shares outstanding at the time the
transaction commenced (excluding shares owned by management and employee benefit
plans) or (3) the business combination is approved at or after the time the
person became an interested shareholder by the board of directors and by 66 2/3%
of the outstanding voting stock not owned by the interested shareholder. A
corporation may opt-out of the statute through a provision in its original
certificate of incorporation or an amendment to its certificate of
incorporation. Permanent has not opted-out of the Delaware business combination
statute; however, because Permanent's Board of Directors has approved the
company merger, the statute will not apply to the company merger.
Unlike the Indiana Business Corporation Law, the Delaware General
Corporation Law does not contain a control share acquisition statute.
Old National's Articles of Incorporation. In addition to the protections
provided by the Indiana Business Corporation Law, Old National's Articles of
Incorporation require the affirmative vote of the holders of at least 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 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 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, such as the social and
economic effects on employees, customers, creditors and the communities in which
Old National operates, and (2) any person acquiring 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 80%
affirmative vote of the issued and outstanding shares of Old National common
stock entitled to vote thereon in order to be amended or repealed.
Old National Series A Preferred Stock and Shareholder Rights Plan. The
shares of Old National Series A preferred stock are non-redeemable 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. The terms of the Series A preferred stock are intended to make the
value of one one-hundredth of a share of Series A preferred stock equivalent to
one share of Old National common stock. 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 anti-dilution
provisions. No shares of the Old National Series A preferred stock will be
issued unless and until the rights to purchase such shares under Old National's
shareholder rights plan become exercisable.
48
<PAGE> 57
On January 25, 1990, the Board of Directors of Old National adopted the Old
National shareholder rights plan and declared a dividend of one right for each
issued and outstanding share of Old National common stock as of March 1, 1990
and each share of Old National common stock issued after that date (including
Old National shares issued to holders of Permanent common stock pursuant to the
merger agreement). See "-- Authorized But Unissued Shares-Old National." Each
right entitles its holder to purchase from Old National one one-hundredth of a
share of Old National Series A preferred stock at an initial purchase price of
$60.00, subject to adjustment. The rights become exercisable on the tenth day
following a public announcement that a person has acquired or intends to acquire
beneficial ownership of 20% or more of Old National's common stock. If an
acquiring person becomes the beneficial owner of 20% or more of Old National's
outstanding common shares, the rights will "flip-in," entitling their holders
(other than the acquiring person) to purchase two shares of Old National common
stock for the price of one share at the then market price (i.e., at a 50%
discount to market value). If Old National is acquired and is not the surviving
corporation, or survives a merger but has all or part of its common stock
exchanged, the rights will "flip-over," entitling their holders to acquire
shares of the acquiring company with a value of two times the then exercise
price of the rights for each right held.
Old National's Board of Directors recently approved an amendment to the
shareholder rights plan extending the expiration date of the rights from March
1, 2000 to March 1, 2010. The shareholder rights plan may have the effect of
discouraging an unsolicited offer to acquire control of Old National, because of
the substantial dilution to the offeror's Old National's shares that would
likely occur if the rights flipped-in.
The terms and conditions of the rights are contained in a Rights Agreement,
dated March 1, 1990 and amended as of March 1, 2000, between Old National and
Old National Bank in Evansville, as Rights Agent. The above description of Old
National's shareholder rights plan does not purport to be complete. For
additional information, see the Rights Agreement, which is specifically
incorporated herein by reference. See "Where You Can Find More Information."
Holders of Permanent common stock will receive one Old National right for each
share of Old National common stock that they receive pursuant to the merger
agreement. Permanent does not have a shareholder rights plan.
Permanent's Certificate of Incorporation. In addition to the protections
provided by the Delaware General Corporation Law, Permanent's Certificate of
Incorporation provides that certain business combinations involving any 10%
shareholder must be approved by the holders of at least 80% of the voting power
of the then-outstanding shares of Permanent stock entitled to vote in the
election of directors, unless (1) the business combination has been approved in
advance by a majority of the disinterested directors, or (2) certain fair price
conditions are met. If the requisite approval of the disinterested directors is
given, or the fair price conditions are met, the normal voting requirements of
Delaware law and Permanent's Certificate of Incorporation would apply to the
transaction (i.e., a majority of the outstanding shares of Permanent common
stock).
Permanent's Certificate of Incorporation provides that any person who
beneficially owns in excess of 10% of the outstanding shares of Permanent common
stock may not vote the shares in excess of 10%. Old National's Articles of
Incorporation contain no such limitation; however, under Indiana law, certain
shareholders of Old National may have their voting rights limited upon crossing
the ownership thresholds specified in the Indiana control share acquisition
statute. See "-- Old National's Articles of Incorporation."
Permanent's Certificate of Incorporation contains an "anti-greenmail"
provision, which generally prohibits Permanent from purchasing any of its shares
from any person who owns 5% or more of Permanent's voting stock without approval
by 80% of the shareholders (excluding the seller). No shareholder vote is
required if the purchase is (1) part of a tender or exchange offer made to all
shareholders, (2) pursuant to an open market repurchase program approved by a
majority of the disinterested directors or (3) made at no more than market
price. Neither the Indiana Business Corporation Law nor Old National's Articles
of Incorporation contain an "anti-greenmail" provision.
49
<PAGE> 58
DIRECTOR LIABILITY
Under Indiana law, a director of Old National 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.
Pursuant to Permanent's Certificate of Incorporation, a director of
Permanent cannot be personally liable to Permanent or its shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (1) for any breach of the director's duty of loyalty to Permanent or
its shareholders; (2) for any acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law; (3) for
unlawful dividends or other distributions; or (4) for any transaction from which
the director derived an improper personal benefit.
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 By-Laws, the Nominating
Committee of the Board of Directors of Old National is required to submit to the
entire Board of Directors its recommendation of nominees for election as
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.
Permanent's By-Laws provide that nominations for election as directors may
be made only (1) by the Board of Directors or (2) by any shareholder entitled to
vote at the meeting who complies with the notice requirements specified in
Permanent's By-Laws. A shareholder's nomination notice must be received by
Permanent at least 90 days before the date of the meeting. If, however, less
than 100 days' notice or prior public disclosure of the date of the meeting is
given or made to shareholders, the nomination notice must be received by
Permanent not later than the close of business on the tenth day following the
day on which notice of the date of the meeting was mailed or such prior public
disclosure of the date of the meeting was made.
LEGAL OPINIONS
The validity of the shares of Old National common stock to be issued in the
company merger will be passed upon by Krieg DeVault Alexander & Capehart, LLP,
One Indiana Square, Suite 2800, Indianapolis, Indiana 46204. Certain tax
consequences of the mergers will be passed upon for Old National by Krieg
DeVault Alexander & Capehart, LLP. Certain other legal matters in connection
with the mergers will be passed upon for Old National by Krieg DeVault Alexander
& Capehart, LLP and for Permanent Bancorp by Silver, Freedman & Taff, L.L.P,
1100 New York Avenue, N.W., Washington, D.C. 20005.
50
<PAGE> 59
EXPERTS
The consolidated financial statements of Old National and affiliates
incorporated into this document have been audited by PricewaterhouseCoopers,
LLP, independent public accountants, as of and for the year ended December 31,
1999 and Arthur Andersen, LLP, independent public accountants, as of and for the
years in the period ended December 31, 1998 and to the extent and for the years
indicated in their reports thereon, and have been so incorporated into this
document in reliance upon the reports of PricewaterhouseCoopers and Arthur
Andersen and upon the authority of such firms as experts in auditing and
accounting.
The consolidated financial statements of Permanent Bancorp incorporated
into this document have been audited by Deloitte & Touche, LLP, independent
auditors, to the extent and for the years indicated in their report thereon.
Such consolidated financial statements have been so incorporated into this
document in reliance upon the report of Deloitte & Touche and upon the authority
of such firm as experts in auditing and accounting.
The consolidated financial statements of Old National and affiliates
incorporated into this document contain financial statements of ANB Corporation
and Heritage Financial Services, Inc. which have been audited by Olive, LLP,
independent auditors, and Heathcott & Mullaly, P.C., independent auditors,
respectively, to the extent and for the years indicated in their report thereon.
Representatives of PricewaterhouseCoopers, Deloitte & Touche and Arthur
Andersen 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 Permanent Bancorp
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 Permanent
Bancorp 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.
SHAREHOLDER PROPOSALS
Permanent Bancorp does not plan to hold a 2000 annual meeting of
shareholders because Permanent Bancorp will cease to exist upon completion of
the company merger. If Permanent Bancorp does hold a 2000 annual meeting of
shareholders, no shareholder proposals will be accepted for inclusion in
Permanent Bancorp's proxy materials for that meeting because the deadline for
inclusion has passed.
To be considered for presentation at Permanent Bancorp's 2000 annual
meeting (if held), but not for inclusion in Permanent Bancorp's proxy materials
for that meeting, shareholder proposals must be received by Permanent Bancorp at
least 90 days prior to the date of that meeting. If, however, Permanent Bancorp
gives less than 100 days' notice or prior public disclosure of the meeting date,
the deadline will be close of business on the tenth day after the day on which
notice of the date of the meeting is mailed or public disclosure of the date of
the meeting is first made. If a shareholder proposal that is received by
Permanent Bancorp after the applicable deadline for presentation at its 2000
annual meeting is raised at that meeting, the holders of the proxies for that
meeting will have the discretion to vote on the proposal in accordance with
their best judgment and discretion, without any discussion of the proposal in
Permanent Bancorp's proxy statement for the meeting.
51
<PAGE> 60
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 Permanent Bancorp, as well
as certain information relating to the mergers, 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 mergers and Old National's other recent acquisitions may not be
fully realized or realized within the expected time frame; (b) revenues
following the mergers and Old National's other recent acquisitions may be lower
than expected, or deposit attrition, operating costs or customer loss and
business disruption following the mergers and Old National's other recent
acquisitions 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 or Permanent 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 businesses in which Old National and Permanent are engaged; (g)
technological changes may be more difficult or expensive than anticipated; and
(h) changes may occur in the securities markets.
WHERE YOU CAN FIND MORE INFORMATION
Old National and Permanent Bancorp 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:
<TABLE>
<S> <C>
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
</TABLE>
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 Permanent Bancorp, 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 Permanent Bancorp common stock is quoted on the Nasdaq National
Market System and reports, proxy statements and other information concerning Old
National and Permanent Bancorp 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 Permanent Bancorp. 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 or retrieved from the SEC's website at the address set forth above.
The SEC allows Old National and Permanent Bancorp 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
52
<PAGE> 61
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 below that Old National
and Permanent Bancorp 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and the portions of Old National's proxy statement
relating to its annual meeting of shareholders to be held on April 20,
2000 that have been incorporated by reference into the Form 10-K.
- The description of Old National's common stock contained in Old
National's Current Reports on Form 8-K, dated January 6, 1983 and March
1, 2000, and the description of Old National's Preferred Stock Purchase
Rights contained in Old National's Form 8-A, dated March 1, 1990, as
amended on March 1, 2000, 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 April 19, 2000.
The following documents previously filed by Permanent Bancorp (SEC File No.
0-23370) with the SEC pursuant to the Exchange Act are incorporated herein by
reference:
- Permanent Bancorp's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1999, September 30, 1999 and December 31, 1999.
- Permanent Bancorp's Annual Report on Form 10-K, as amended, for the
fiscal year ended March 31, 1999, and the portions of Permanent Bancorp's
proxy statement relating to its annual meeting of shareholders held on
July 27, 1999 that have been incorporated by reference into the Form
10-K, as amended.
- The Current Report on Form 8-K filed on July 23, 1999.
- The Current Report on Form 8-K filed on December 20, 1999.
- The Current Report on Form 8-K filed on December 28, 1999.
- The Current Report on Form 8-K filed on February 2, 2000.
Old National and Permanent Bancorp incorporate by reference additional
documents that either company may file with the SEC between the date of this
document and the dates of the Permanent Bancorp 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.
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 Permanent Bancorp
has supplied all relevant information relating to Permanent Bancorp.
You can obtain any of the documents incorporated by reference in this
document through Old National or Permanent Bancorp, 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
53
<PAGE> 62
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:
<TABLE>
<S> <C>
Old National Bancorp Permanent Bancorp, Inc.
420 Main Street 101 SE Third Street
P. O. Box 718 Evansville, Indiana 47708
Evansville, Indiana 47705 Attn: Chief Financial Officer
Attn: Jeffrey L. Knight, Corporate (812) 437-2265
Secretary and General Counsel
(812) 464-1363
</TABLE>
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 Permanent Bancorp have not authorized anyone to give any
information or make any representation about the mergers 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 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.
54
<PAGE> 63
LIST OF APPENDICES
<TABLE>
<S> <C>
Agreement of Affiliation and Merger, dated December 20,
1999, by and among Old National Bancorp, Permanent
Bancorp, Inc., Merger Corporation I, Old National Bank and
Permanent Bank............................................ Appendix A
Fairness Opinion of Capital Resources Group, Inc............ Appendix B
</TABLE>
<PAGE> 64
APPENDIX A
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement") is made and entered
into effective as of the 20th day of December, 1999, by and among OLD NATIONAL
BANCORP ("ONB"), PERMANENT BANCORP, INC. ("Permanent"), MERGER CORPORATION I
("Merger Corporation"), OLD NATIONAL BANK, and PERMANENT BANK (the "Bank").
WITNESSETH:
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, Old National Bank, a wholly-owned subsidiary of ONB, is a national
banking association with its principal office in Lawrenceville, Illinois; and
WHEREAS, Permanent is a Delaware corporation registered as an unitary
savings and loan holding company under the Savings and Loan Holding Company Act,
as amended, with its principal office located in Evansville, Vanderburgh County,
Indiana; and
WHEREAS, Permanent is the sole owner, directly or indirectly, of all of the
outstanding capital stock of (i) the Bank, a federal savings bank, located in
Evansville, Vanderburgh County, Indiana, (ii) Perma Service Corp. ("Perma
Service"), a service corporation, (iii) Permanent Insurance Agency, Inc.
("Permanent Insurance"), an insurance agency and (iv) Permavest, Inc.
("Permavest") (collectively, the "Subsidiaries"); and
WHEREAS, ONB and Permanent seek to affiliate through a corporate
reorganization whereby the Bank will first merge into Old National Bank, and
Permanent will merge immediately thereafter into Merger Corporation, an Indiana
corporation and wholly-owned subsidiary of ONB, and the Bank will thereby become
a wholly-owned subsidiary of ONB; and
WHEREAS, ONB, Permanent, Merger Corporation, Old National Bank and the Bank
intend for the mergers to qualify as reorganizations within the meaning of
Section 368(a)(2)(D) and related sections of the Internal Revenue Code of 1986,
as amended ("Code"), and agree to cooperate and to take such actions as may be
reasonably necessary to assure such result; and
WHEREAS, the Board of Directors of each of the parties hereto has
determined that it is in the best interests of its respective corporations or
entities 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 mergers.
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, Permanent, Merger Corporation, Old National Bank and the Bank
hereby make this Agreement and prescribe the terms and conditions of the
affiliation of ONB and
A-1
<PAGE> 65
Permanent and Old National Bank and the Bank and the mode of carrying such
mergers into effect as follows:
SECTION 1
THE MERGERS
1.01. The Bank Merger.
(a) General Description. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 10 hereof),
immediately prior to the Company Merger (as hereinafter defined), the Bank shall
be merged with and under the Articles of Association of Old National Bank ("Bank
Merger"). The Bank Merger is subject to the Company Merger occurring immediately
after the Bank Merger, and if the Company Merger will not close immediately
thereafter, the Bank Merger shall not occur. Old National Bank shall survive the
Bank Merger ("Surviving Bank") and shall continue its corporate existence under
the federal banking laws pursuant to the provisions of and with the effect
provided in the National Bank Act, as amended.
(b) Name, Offices and Management. The name of the Surviving Bank shall be
"Old National Bank." Its principal office shall be located at 420 Main Street,
Evansville, Indiana 47708. The Board of Directors of the Surviving Bank, until
such time as their successors have been elected and have qualified, shall
consist of the Board of Directors of Old National Bank serving at the Effective
Time (as hereinafter defined). At the Effective Time, Donald P. Weinzapfel and
Jack H. Kinkel shall become directors of the Old National Bank Evansville
Community Bank Board, until such time as their successors shall have been duly
elected and have qualified or until their earlier resignation, death or removal
from office. The officers of Old National Bank serving at the Effective Time
shall continue to serve as the officers of the Surviving Bank, until such time
as their successors shall have been duly elected and have qualified or until
their earlier resignation, death or removal from office. As of and following the
Effective Time, the main bank office and all branch offices of the Bank shall
become branch offices of Old National Bank.
(c) Capital Structure. At the Effective Time, the capital of the Surviving
Bank shall be not less than the capital of Old National Bank immediately prior
to the Effective Time. At the Effective Time, all outstanding shares of common
stock of the Bank shall be canceled.
(d) Articles of Association and By-Laws. The Articles of Association and
By-Laws of Old National Bank in existence at the Effective Time shall remain the
Articles of Association and By-Laws of the Surviving Bank, until such Articles
of Association and By-Laws shall be further amended as provided by applicable
law.
(e) Effect of Bank Merger. The effect of the Bank Merger upon consummation
thereof shall be as set forth under the National Bank Act, as amended.
1.02. The Company Merger.
(a) General Description. Upon the terms and subject to the conditions of
this Agreement, immediately following the Bank Merger, Permanent shall be merged
with and under the Articles of Incorporation of Merger Corporation ("Company
Merger") (the Bank Merger and the Company Merger are hereinafter collectively
referred to as the "Mergers"). Merger Corporation shall survive the Company
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.
(b) Name, Offices and Management. The name of the Surviving Corporation
shall be "Merger Corporation I". Its principal office shall be located at 420
Main Street, Evansville, Indiana 47708. The Board of Directors of the Surviving
Corporation, until such time as their successors have been elected and have
qualified or until their earlier resignation, death or removal from office,
shall consist of the Board of Directors of Merger Corporation serving at the
Effective Time. The officers of Merger Corporation serving
A-2
<PAGE> 66
at the Effective Time shall be 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.
(c) Capital Structure. At the Effective Time, the capital of the Surviving
Corporation shall be not less than the capital of Merger Corporation immediately
prior to the Effective Time.
(d) Articles of Incorporation and By-Laws. The Articles of Incorporation
and By-Laws of Merger Corporation 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.
(e) Effect of Company Merger. The effect of the Company Merger upon
consummation thereof shall be as set forth in Indiana Code Section 23-1-40-6, as
amended.
1.03. Tax Free Reorganization. ONB, Permanent, Merger Corporation, Old
National Bank and the Bank intend for the Mergers to qualify as a reorganization
within the meaning of Section 368(a) and related sections of the Code, and agree
to cooperate and to take such actions as may be reasonably necessary to assure
such result.
SECTION 2
MANNER AND BASIS OF EXCHANGE OF STOCK
2.01. Exchange Ratio. (a) Upon and by virtue of the Company Merger becoming
effective at the Effective Time, each issued and outstanding share of Permanent
Common Stock (as defined in Section 4.03 hereof) shall be converted into the
right to receive such number of shares of ONB common stock as provided by
Section 2.01(b), 2.01(c) or 2.01(d) hereof (the "Exchange Ratio"), subject to
Section 9.01(c)(v) hereof.
(b) Subject to Section 2.01(c), the Exchange Ratio shall equal (calculated
to the nearest one-ten thousandth): (i) the quotient arrived at by dividing (A)
the quotient arrived at by dividing (X) the sum of $92,000,000 plus the
aggregate exercise price for Permanent Common Stock otherwise purchasable
pursuant to all Stock Options of holders exercising their right to exchange
their Stock Options for cash or shares of ONB common stock pursuant to Section
7.04(a) hereof (such aggregate exercise price hereinafter referred to as
"Aggregate Strike Price") by (Y) the Total Outstanding Shares (as defined in
Section 4.03(a) by (B) the Average Price Per Share of ONB common stock, if the
Average Price Per Share of ONB common stock is greater than or equal to $28.00
but less than or equal to $36.00; (ii) the quotient arrived at by dividing (A)
the quotient arrived at by dividing (X) the sum of $92,000,000 plus the
Aggregate Strike Price by (Y) $28.00 by (B) the Total Outstanding Shares, if the
Average Price Per Share of ONB common stock is less than $28.00; or (iii) the
quotient arrived at by dividing (A) the quotient arrived at by dividing (X) the
sum of $92,000,000 plus the Aggregate Strike Price by (Y) $36.00 by (B) the
Total Outstanding Shares, if the Average Price Per Share of ONB common stock is
greater than $36.00.
(c) Subject to Section 2.01(d), if the Average Price Per Share of ONB
common stock is greater than $38.00, then ONB may request in writing to
Permanent a renegotiation of the Exchange Ratio. ONB and Permanent shall then
attempt in good faith to renegotiate the Exchange Ratio to their mutual
satisfaction. In the event ONB and Permanent are unable to renegotiate the
Exchange Ratio by the earlier of (A) ten (10) days of the date of such written
notice or (B) September 30, 2000, either ONB or Permanent may terminate this
Agreement in accordance with Section 10 hereof.
(d) Notwithstanding anything herein to the contrary, if between the date of
this Agreement and the Effective Time, ONB enters into an agreement with another
corporation, partnership, person or other entity pursuant to which current
shareholders of ONB common stock will exchange their ONB common stock for stock
of another entity, and the Average Price Per Share of ONB common stock is
greater than $38.00, the Exchange Ratio (calculated to the nearest one
ten-thousandth) shall equal the quotient arrived
A-3
<PAGE> 67
at by dividing (A) the quotient arrived at by dividing (X) the sum of
$92,000,000 plus the Aggregate Strike Price by (Y) $36.00 by (B) the Total
Outstanding Shares.
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 stockholder of Permanent 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 ten (10) business
days on which shares of ONB common stock were traded immediately preceding the
Effective Time ("Average Price Per Share").
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
outstanding shares of common stock (a "Recapitalization"), such that the number
of issued and outstanding shares of ONB common stock is increased or decreased,
then all references to the Average Price Per Share of ONB common stock in
Sections 2.01 and 9.01(c)(v) hereof shall also be adjusted to give effect to the
Recapitalization. All references to the Average Price Per Share of ONB common
stock shall be adjusted by multiplying each Average Price Per Share of ONB
common stock by a fraction, the numerator of which shall be equal to the number
of shares of ONB common stock outstanding immediately prior to the
Recapitalization and the denominator of which shall be equal to the number of
shares of ONB common stock outstanding immediately after the Recapitalization.
2.04. Distribution of ONB Common Stock and Cash. (a) Immediately following
the Effective Time, ONB shall mail to each Permanent stockholder a letter of
transmittal providing instructions as to the transmittal to ONB of certificates
representing shares of Permanent 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 stockholder
of Permanent as soon as practical following delivery to ONB of the stockholder's
certificate(s) representing its shares of Permanent 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
Permanent 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
Permanent stockholder entitled to receive the same until such stockholder has
surrendered to ONB his or her certificate or certificates representing Permanent
Common Stock in exchange for a certificate or certificates representing ONB
common stock. Upon surrender of the certificates representing shares of
Permanent 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
Permanent 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 Permanent Common Stock.
(e) With respect to any certificate for shares of Permanent 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 destroyed stock certificate, both in form and substance reasonably
satisfactory to ONB, and upon compliance by the
A-4
<PAGE> 68
Permanent stockholder with all other reasonable requirements of ONB in
connection with lost, stolen or destroyed stock certificates.
SECTION 3
DISSENTING STOCKHOLDERS
Stockholders of Permanent are not entitled to any dissenters' rights under
Section 262 of the Delaware General Corporation Law, as amended, since Permanent
Common Stock is quoted and traded on Nasdaq. Permanent shall take no action
which would result in the loss of such listing prior to the Effective Time.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PERMANENT
On or prior to the date hereof, Permanent 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 Permanent 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 Permanent 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
Permanent and the Subsidiaries taken as a whole, or (ii) would materially impair
the ability of Permanent to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
Mergers 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 Mergers or
restructuring charges taken in connection with the Mergers, 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.
No representation or warranty of Permanent contained in this Section 4,
except Section 4.03, shall be deemed untrue, incomplete or incorrect, and
Permanent 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, circumstance 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 Permanent.
Permanent and the Bank accordingly hereby represent and warrant to ONB as
follows:
4.01. Organization and Authority. (a) Permanent is a corporation duly
organized and validly existing under the laws of the State of Delaware.
Permanent 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. Permanent 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, Permanent's only
direct subsidiary is the Bank and Permanent has no other direct subsidiaries and
owns no voting stock or equity securities of any corporation, partnership,
association or other entity.
A-5
<PAGE> 69
(b) The Bank is a federal savings bank duly organized and validly existing
under the federal banking laws of the United States of America. The Bank has no
direct subsidiaries, except for Perma Service and Permavest. The Bank is subject
to primary regulatory supervision and examination by the Office of Thrift
Supervision (the "OTS") and the Federal Deposit Insurance Corporation (the
"FDIC"). The 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) Perma Service is a service corporation duly organized and validly
existing under the laws of the State of Indiana. Perma Service owns
approximately 14.28% of Family Financial Life Insurance Company, which
underwrites various types of life and disability insurance and annuity programs.
Perma Service has one wholly-owned subsidiary, Permanent Insurance which offers,
on an agency basis, casualty, life, accident, health, mortgage, disability and
consumer credit insurance. Except for Family Financial Life Insurance Company
and Permanent Insurance, Perma Service has no other subsidiaries. Perma Service
is subject to primary regulatory supervision and examination by the Office of
Thrift Supervision. Perma Service 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) Permanent Insurance is an insurance agency duly organized and validly
existing under the laws of the State of Indiana. Permanent Insurance has no
subsidiaries. Permanent Insurance 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.
(e) Permavest is a corporation duly organized and validly existing under
the laws of the State of Delaware. Permavest owns 99.5% of Permavest, a Nevada
partnership. The remaining .5% of Permavest is owned by Permanent. Except for
Permavest, a Nevada partnership, Permavest owns no subsidiaries. Permavest is
subject to primary regulatory supervision and examination by the OTS. Permavest,
Inc. 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) Each of Permanent and the Bank 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), (f) and (g) hereof. As of the date hereof, neither
Permanent nor the Bank 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 Permanent and
the Bank have been duly authorized and approved by the Board of Directors of
Permanent and the Bank, respectively, and, assuming due execution and delivery
by ONB and Old National Bank, constitutes a valid and binding obligation of
Permanent and the Bank, 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 Mergers contemplated hereby: (i)
conflicts with or violates Permanent's Certificate of Incorporation or By-Laws
or the Bank's Charter or By-Laws; (ii) conflicts with or violates any local,
state, federal or foreign law, statute, ordinance, rule or regulation (provided
that the approvals of or filings with applicable government regulatory agencies
or authorities required for consummation of the Mergers are obtained) or any
court or administrative judgment, order, injunction, writ or decree; (iii)
conflicts with, results in a breach of or constitutes a default under any note,
bond, indenture, mortgage, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which Permanent or any Subsidiary
is a party or by which Permanent 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
A-6
<PAGE> 70
(other than ONB or Old National Bank) or any other adverse interest, upon any
right, property or asset of Permanent 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 Permanent or any Subsidiary is bound or with respect
to which Permanent 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 Mergers by
Permanent or the Bank.
4.03. Capitalization. (a) The authorized capital stock of Permanent as of
the date hereof consists, and at the Effective Time will consist, of 1,000,000
shares of preferred stock, $0.01 par value, none of which shares are issued or
outstanding and 9,000,000 shares of common stock, $0.01 par value per share, of
which 4,103,095 shares are issued and outstanding as of the date hereof, which
number of shares of Permanent common stock is subject to increase to a total of
4,467,239 shares (such number referred to herein as the "Total Outstanding
Shares") pursuant to the exercise of options (collectively, the "Stock Options")
granted under the 1999 Omnibus Incentive Plan and the 1993 Stock Option and
Incentive Plan (collectively, the "Stock Option Plans") to purchase an aggregate
of 364,144 shares of common stock of Permanent (all of such shares of common
stock are referred to herein as "Permanent Common Stock"). Such issued and
outstanding shares of Permanent Common Stock have been duly and validly
authorized by all necessary corporate action of Permanent, are validly issued,
fully paid and nonassessable and have not been issued in violation of any
pre-emptive rights of any present or former Permanent stockholder. Permanent 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 Permanent Common Stock.
(b) The authorized capital stock of the Bank as of the date hereof
consists, and at the Effective Time will consist, of 1,000,000 shares of
preferred stock, none of which shares are issued or outstanding and of 9,000,000
shares of common stock, $0.01 par value per share, 2,380,500 of which shares are
issued and outstanding (such issued and outstanding shares are referred to
herein as "Bank Common Stock"). Such issued and outstanding shares of Bank
Common Stock have been duly and validly authorized by all necessary corporate
action of the 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
Bank shareholder. The Bank Common Stock is, and at the Effective Time will be,
the only class of capital stock of the Bank outstanding. Except as set forth in
the Disclosure Schedule, all of the issued and outstanding shares of the Bank
Common Stock are owned by Permanent 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. The 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 Bank Common Stock.
(c) All of the issued and outstanding shares of Perma Service's common
stock ("Perma Service Common Stock") have been duly and validly authorized by
all necessary corporate action of Perma Service, are validly issued, fully paid
and nonassessable, and have not been issued in violation of any pre-emptive
rights of any present or former Perma Service shareholder. The Perma Service
Common Stock is and at the Effective Time will be the only class of capital
stock of Perma Service outstanding. All of the issued and outstanding shares of
Perma Service Common Stock are owned by the 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. Perma Service 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 Perma Service Common Stock.
A-7
<PAGE> 71
(d) All of the issued and outstanding shares of Permanent Insurance's
common stock ("Permanent Insurance Common Stock") have been duly and validly
authorized by all necessary corporate action of Permanent Insurance, are validly
issued, fully paid and nonassessable, and have not been issued in violation of
any pre-emptive rights of any present or former Permanent Insurance shareholder.
The Permanent Insurance Common Stock is, and at the Effective Time will be, the
only class of capital stock of Permanent Insurance outstanding. All of the
issued and outstanding shares of Permanent Insurance Common Stock are owned by
Perma Service 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. Permanent Insurance 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 Permanent Insurance Common Stock.
(e) All of the issued and outstanding shares of Permavest's common stock
("Permavest Common Stock") have been duly and validly authorized by all
necessary corporate action of Permavest, are validly issued, fully paid and
nonassessable, and have not been issued in violation of any pre-emptive rights
of any present or former Permavest shareholder. The Permavest Common Stock is,
and at the Effective Time will be, the only class of capital stock of Permavest
outstanding. All of the issued and outstanding shares of Permavest Common Stock
are owned by the 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. Permavest 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 Permavest Common Stock.
(f) Except as set forth in the Disclosure Schedule and except for options
granted under the Stock Option Plans, there are no options, warrants,
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any shares of Permanent Common Stock, or any
securities convertible into or representing the right to purchase or otherwise
acquire any common stock or debt securities of Permanent, by which Permanent is
or may become bound. Permanent does not have any outstanding contractual or
other obligation to repurchase, redeem or otherwise acquire any of the issued
and outstanding shares of Permanent Common Stock.
(g) 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.
(h) Except as set forth in the Disclosure Schedule, Permanent has no
knowledge of any person or entity which beneficially owns 5% or more of its
outstanding shares of Permanent Common Stock.
(i) Set forth in the Disclosure Schedule is a listing of each affiliate of
Permanent as described in Section 6.05 hereof setting forth the number of shares
of Permanent Common Stock beneficially owned (as defined in Rule 13d-3 under the
1934 Act) by each affiliate and the manner in which such shares are owned.
4.04. Organizational Documents. The respective Certificate of Incorporation
and By-Laws of Permanent and the Charter and By-Laws of the Bank, 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 Permanent 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. Permanent
A-8
<PAGE> 72
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 or Old National Bank 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 Permanent nor
any Subsidiary or their property 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 OTS,
the Federal Reserve Board and the FDIC) or the supervision or regulation of
Permanent or any Subsidiary. There are no uncured violations, or violations with
respect to which refunds or restitutions may be required, cited in any
examination report of Permanent 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 Permanent or any Subsidiary.
4.06. Accuracy of Statements Made and Materials Provided to ONB. No
representation, warranty in this Section 4 or other statement made, or any
information provided, by Permanent 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 Permanent or any Subsidiary to ONB through and including the Effective Time
in connection with this Agreement or the Mergers contemplated hereby (including,
without limitation, any written information which has been or shall be supplied
by Permanent 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 Mergers), contains or shall contain (in the case of information relating
to the proxy statement-prospectus at the time it is mailed to Permanent's
stockholders) 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 Permanent after due inquiry,
threatened in any court or before any government agency or authority,
arbitration panel or otherwise (nor does Permanent have any knowledge of a basis
for any claim, action, suit, proceeding, litigation, arbitration or
investigation) against, by or affecting Permanent 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 Permanent 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 Permanent
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 Permanent 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. Permanent has delivered to ONB
copies of the following financial statements and reports of Permanent and the
Subsidiaries, including the notes thereto (collectively, the "Permanent
Financial Statements"):
(a) Consolidated Balance Sheets and the related Consolidated Statements of
Income and Consolidated Statements of Changes in Stockholders' Equity of
Permanent as of and for the years ended March 31, 1997, 1998 and 1999, and as of
and for the fiscal quarter ended September 30, 1999;
A-9
<PAGE> 73
(b) Consolidated Statements of Cash Flows of Permanent for the years ended
March 31, 1997, 1998 and 1999, and for the fiscal quarter ended September 30,
1999;
(c) Consolidated Statements of Changes in Financial Position of Permanent
for the years ended March 31, 1998 and 1999, and for the fiscal quarter ended
September 30, 1999.
(d) Thrift Financial Reports for the Bank as of close of business on
December 31, 1996, 1997 and 1998 and September 30, 1999; and
(e) Financial Statements of Permanent on Form H-(b)(11) filed with the
Office of Thrift Supervision at the close of business on March 31, 1998 and
1999.
The Permanent Financial Statements present fairly the consolidated
financial position of Permanent as of and at the dates shown and the
consolidated results of operations for the periods covered thereby. The
Permanent 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 Permanent 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 Permanent
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 (other
than properties acquired through foreclosures) owned by Permanent and the
Subsidiaries and the principal buildings and structures located thereon and
each lease of real property to which Permanent 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;
(ii) a list of all agreements, contracts, leases, licenses, lines of
credit, understandings, commitments or obligations of Permanent or any
Subsidiary which individually:
(A) will involve payment or receipt by Permanent or any Subsidiary
(other than as disbursements of loan proceeds to customers, loan
payments by customers or customer deposits) of more than $50,000;
(B) will involve payments based on profits of Permanent or any
Subsidiary;
(C) will relate to the purchase of goods, products, supplies or
services in excess of $50,000;
(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 Permanent 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 Permanent 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 Permanent and
the Subsidiaries are, and, to the best knowledge of Permanent after due inquiry,
all other parties thereto are, in compliance with the provisions thereof, and
A-10
<PAGE> 74
Permanent and the Subsidiaries are not in default in the performance, observance
or fulfillment of any obligation, covenant or provision contained therein.
Except as set forth in the Disclosure Schedule, none of the foregoing requires
the consent of any party to its assignment in connection with the Mergers
contemplated by this Agreement. Other than as disclosed pursuant to this Section
4.09, to the best knowledge of Permanent 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 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 Permanent nor any Subsidiary is, to the best knowledge of
Permanent, 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
Permanent Financial Statements, Subsequent Permanent Financial Statements and in
the Disclosure Schedule, except for unfunded loan commitments and obligations on
letters of credit to customers of the Bank and trade payables incurred in the
ordinary course of the Bank's business, and except for the transaction
contemplated by this Agreement, neither Permanent 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)
Permanent or any Subsidiary, 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 as owned in the Permanent Financial Statements as of September 30,
1999; good title to all personal property reflected as owned in the Permanent
Financial Statements as of September 30, 1999, other than personal property
disposed of in the ordinary course of business since September 30, 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
Permanent and the Subsidiaries purport to own or which Permanent 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 September 30, 1999. All of such properties and
assets are owned by Permanent 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 Permanent Financial Statements; (iii) statutory liens for taxes not
yet delinquent or being contested in good faith by appropriate proceedings; (iv)
pledges or liens required to be granted in connection with the acceptance of
government deposits or granted in connection with repurchase or reverse
repurchase agreements; and (v) easements, encumbrances and liens of record,
imperfections of title and other limitations which are not material in amounts
to Permanent 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 Permanent or
any Subsidiary is in compliance with all applicable zoning and land use laws.
Normal wear and tear excepted, all real property, machinery, equipment,
furniture and fixtures owned or leased by Permanent or any Subsidiary is
structurally sound, in good operating condition and has been and is being
maintained and repaired in the ordinary condition of business.
A-11
<PAGE> 75
(b) Permanent and the Subsidiaries have conducted their respective
businesses 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,
air, water, soil 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 the rules 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 in effect (collectively,
"Environmental Laws"). Except as set forth in the Disclosure Schedule, there are
no pending or, to the best knowledge of Permanent after due inquiry, threatened,
claims, actions or proceedings by any local municipality, sewage district or
other governmental entity against Permanent 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 Permanent or any
Subsidiary, as presently conducted. Neither Permanent 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,
treatment, abatement, response costs or any other remedial action under any
Environmental Law, and there is no reasonable basis or grounds for any such
claim, action or proceeding. Permanent and the Subsidiaries own, operate, lease,
use and control, and have owned, operated, leased, used and controlled, all real
property in compliance with the Environmental Laws. Neither Permanent nor any
Subsidiary has any liability for any clean-up or remediation under any of the
Environmental Laws with respect to any real property.
4.12. Loans. (a) Except as set forth in the Disclosure Schedule, there is
no loan by the Bank in excess of $50,000 that has been classified by bank
regulators or management as "Other Loans Specially Mentioned," "Substandard,"
"Doubtful" or "Loss" or in excess of $50,000 or 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 the Bank and a list of all
loans in excess of $50,000 which the 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 Permanent Financial Statements as of
September 30, 1999 and which have been made, extended, renewed, restructured,
approved, amended or acquired since September 30, 1999: (i) to the best
knowledge of Permanent, 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 Permanent or any Subsidiary has a
security interest in collateral or a mortgage securing such loans, by perfected
security interests or recorded mortgages naming Permanent or any 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 Permanent Financial
Statements are to the best of Permanent's knowledge, adequate in all respects
under the requirements of generally accepted accounting principles
A-12
<PAGE> 76
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. Stockholder Rights Plan. Except as otherwise provided in this
Agreement, the Disclosure Schedule and Permanent's Certificate of Incorporation
and By-Laws, Permanent has no stockholder rights plan or any other plan, program
or agreement involving, restricting, prohibiting or discouraging a change in
control or merger of Permanent 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 Permanent or
any Subsidiary, whether written or oral, in which Permanent or any Subsidiary
participates as a participating employer; to which Permanent or any Subsidiary
contributes and including any such plans which within the preceding six years
have been terminated, merged into another plan of Permanent or the Bank, frozen
or discontinued (collectively, "Permanent Plans") except as set forth on the
Disclosure Schedule: (i) all such Permanent 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 Permanent 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 Permanent is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter; (iii) except for the Permanent Common Stock held by its trustee as an
asset of the Permanent ESOP, no Permanent Plan (or its related trust) holds any
stock or other securities of Permanent or any related or affiliated person or
entity; (iv) Permanent has not engaged in any transaction that may subject
Permanent, or any Permanent 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
Permanent Plan; (vi) there are no actions, suits, proceedings or claims pending
(other than routine claims for benefits) or, to the best knowledge of Permanent
after due inquiry, threatened, against Permanent, any Subsidiary, any Permanent
Plan, any fiduciary of any Permanent Plan or the assets of any Permanent Plan as
to which Permanent or any Subsidiary would have liability.
(b) Permanent 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, fringe or benefit plans, or agreements, maintained
or sponsored, participated in, or contributed to by Permanent 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 Permanent 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 Permanent, except that such individuals may
be entitled to continue their group health care coverage pursuant to the retiree
health coverage provisions of Permanent's 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 that 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 Permanent or any Subsidiary, in which
Permanent or any Subsidiary participates as a participating employer or to which
Permanent or any Subsidiary contributes, no director, officer, employee or agent
of Permanent or any Subsidiary has engaged in any action or failed to act in
such a manner that,
A-13
<PAGE> 77
as a result of such action or failure to act, would cause a tax to be imposed on
Permanent 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 Permanent 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 Permanent Plan have been timely made or have been reflected on
the Permanent Financial Statements. Neither any Permanent 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 Permanent 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
Permanent nor any Subsidiary have 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, Permanent 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 Permanent 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). Permanent has
established, and shall establish in the Subsequent Permanent Financial
Statements, in accordance with generally accepted accounting principles, a
reserve for taxes in the Permanent Financial Statements adequate to cover all of
Permanent's and the Subsidiaries' tax liabilities (including, without
limitation, income taxes, payroll taxes and withholding, and franchise fees) for
the periods then ending. Neither Permanent nor any Subsidiary has, nor will
have, any liability for taxes of any nature for or with respect to the operation
of their respective businesses, including the business of any subsidiary, or
ownership of their assets, including the assets of any subsidiary, from the date
hereof up to and including the Effective Time, except to the extent set forth in
the Subsequent Permanent Financial Statements (as hereinafter defined) or as
accrued or reserved for on the books and records of Permanent. Neither Permanent
nor any Subsidiary is currently under audit by any state or federal taxing
authority. No federal, state or local tax returns of Permanent have been audited
by any taxing authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of the Bank are insured by the FDIC
in accordance with the Federal Deposit Insurance Act, as amended, and Permanent
and the 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 Permanent or any Subsidiary
on the date hereof or with respect to which Permanent 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 Permanent and the
Subsidiaries have been fully, properly and accurately maintained.
A-14
<PAGE> 78
4.20. Broker's, Finder's or Other Fees. Except for reasonable fees of
Permanent's attorneys, accountants, proxy solicitors and investment bankers, all
of which shall be paid by Permanent prior to the Effective Time, no agent,
broker or other person acting on behalf of Permanent or any Subsidiary or under
any authority of Permanent 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
Mergers contemplated hereby.
4.21. Interim Events. (a) Except as set forth in the Disclosure Schedule,
between the period from September 30, 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
September 30, 1999 to the date of this Agreement, Permanent and the Subsidiaries
have carried on their businesses in the ordinary and usual course consistent
with their past practices (excluding the incurrence of fees and 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 Permanent
Common Stock, except as provided by Section 6.03(a)(iii); or
(ii) any split, combination or reclassification of any capital stock
of Permanent 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 Permanent Common Stock, except for issuances of
Permanent Common Stock upon the exercise of the Stock Options awarded prior
to the date hereof in accordance with the terms of the Stock Option Plans.
4.22. Regulatory Filings. Permanent 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
appropriate federal and state regulatory agencies and authorities as required by
applicable law. All such filings with the SEC and with all other appropriate
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 Permanent 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, stockholder or agent against liability or hold the
same harmless from liability other than as expressly provided in the Certificate
of Incorporation or By-Laws of Permanent or the Articles or By-Laws of any
Subsidiary.
(b) No claims have been made against or filed with Permanent or any
Subsidiary nor have, to the best knowledge of Permanent after due inquiry, any
claims been threatened against Permanent or any Subsidiary, for indemnification
against liability or for reimbursement of any costs or expenses incurred in
connection with any legal or regulatory proceeding by any present or former
director, officer, stockholder, employee or agent of Permanent 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 Permanent and the Subsidiaries to
carry on their 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
A-15
<PAGE> 79
calculated to result in no disruption of any of Permanent's or the Subsidiaries'
business operations. Neither Permanent nor any 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) Permanent 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 Permanent or any Subsidiary 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. Stockholder Approval. The affirmative vote of the holders of a
majority of the Permanent Common Stock (which are issued and outstanding on the
record date relating to the meeting of stockholders) is required for stockholder
approval of this Agreement and the Company Merger.
4.26. Nonsurvival of Representations and Warranties. The representations
and warranties of Permanent and the Bank contained in this Agreement shall
expire at the earlier of the termination of this Agreement or the Effective
Time, and thereafter Permanent and all directors, officers and employees of
Permanent 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 5
REPRESENTATIONS AND WARRANTIES OF ONB
On or prior to the date hereof, ONB has delivered to Permanent 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 on ONB (as defined
below). The items set forth in the ONB Disclosure Schedule establish only those
items that constitute an exception to a representation or warranty which
constitutes, or is reasonably likely to result in, a Material Adverse Effect on
ONB.
For the purpose of this Agreement, and in relation to ONB and its
subsidiaries, a Material Adverse Effect on ONB 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
Mergers and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect on ONB 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 Mergers or
restructuring charges taken in connection with the Mergers, 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.
A-16
<PAGE> 80
No representation or warranty of ONB contained in this Section 5, shall be
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, circumstance 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 Permanent as follows:
5.01. Organization and Authority. Each of ONB and Merger Corporation is a
corporation duly organized and validly existing under the laws of the State of
Indiana. Old National Bank is a national banking association duly organized and
validly existing under the laws of the United States of America. ONB is a
registered bank holding company under the BHC Act, and has full power and
authority (corporate and otherwise) to own and lease its properties as presently
owned and leased and to conduct its business in the manner and by the means
utilized as of the date hereof. The execution, delivery and performance of this
Agreement by each of ONB, Old National Bank and Merger Corporation has been duly
authorized by all necessary corporate action. 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) Each of ONB, Old National Bank and Merger
Corporation 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 Permanent and the Bank, this Agreement constitutes a valid and binding
obligation of ONB, Old National Bank and Merger Corporation, 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 Mergers
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 Mergers are obtained)
or any court or administrative judgment, order, injunction, writ or decree;
(iii) conflicts with, results in a breach of or constitutes a default under any
note, bond, indenture, mortgage, deed of trust, license, contract, lease,
agreement, arrangement, commitment or other instrument to which ONB 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 Permanent or the Bank) 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, no notice
A-17
<PAGE> 81
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
Mergers 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 45,600,000 shares were issued and outstanding as
of September 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.
(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. 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.
5.05. Shares to be Issued in Merger. The shares of ONB common stock which
Permanent stockholders will be entitled to receive upon consummation of the
Mergers 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.
5.06. Organizational Documents. The Articles of Incorporation and By-Laws
of ONB in force as of the date of this Agreement have been delivered to
Permanent and represent true, accurate and complete copies of such corporate
documents of ONB in effect as of the date of this Agreement.
5.07. 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.
5.08. 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
A-18
<PAGE> 82
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.
5.09. Accuracy of Statements Made to Permanent. 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 Permanent
through and including the Effective Time in connection with this Agreement or
the Mergers 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 Mergers), contains or shall contain (in
the case of information relating to the proxy statement-prospectus at the time
it is mailed to Permanent's stockholders) 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.
5.10. 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 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 Permanent 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 ONB,
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
A-19
<PAGE> 83
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.
5.11. Taxes, Returns and Reports. 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 financial statements of ONB
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.
5.12. Books and Records. The books and records of ONB have been fully,
properly and accurately maintained.
5.13. 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 5.13, "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.
A-20
<PAGE> 84
5.14. Financial Statements and Reports. (a) ONB or its agents have
delivered to Permanent 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 September 30, 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 September
30, 1999.
(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.
5.15. Interim Events. Except as set forth in the ONB Disclosure Schedule,
between the period from September 30, 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 on ONB.
5.16. Shareholder Approval. Approval by ONB's shareholders of the Merger of
Permanent with Merger Corporation or for any other actions contemplated by this
Agreement is not required.
5.17. 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 Mergers contemplated hereby.
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 or 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 PERMANENT
Permanent and the Bank covenant and agree with ONB, Old National Bank and
Merger Corporation and covenant and agree to cause the Subsidiaries, to act as
follows:
6.01. Stockholder Approval. (a) Subject to Section 6.06 hereof, Permanent
shall submit this Agreement to its stockholders for approval and adoption at a
meeting to be called and held in accordance with applicable law and the
Certificate of Incorporation and By-Laws of Permanent at the earliest possible
reasonable date. Subject to Section 6.06 hereof, the Board of Directors of
Permanent shall recommend to Permanent's stockholders that such stockholders
approve and adopt this Agreement and the Company Merger and shall solicit
proxies voting in favor of this Agreement from Permanent's stockholders, unless
otherwise necessary under applicable fiduciary duties of Permanent's Board of
Directors as determined by the Board of Directors of Permanent in good faith
after consultation with independent legal counsel.
A-21
<PAGE> 85
(b) Subject to Section 6.06(b) hereof, the Bank shall submit this Agreement
to Permanent, as its sole shareholder, for approval by unanimous written consent
without a meeting in accordance with applicable law and the Charter and By-Laws
of the Bank at a date reasonably in advance of the Effective Time. The Board of
Directors of the Bank shall recommend approval of this Agreement and the Bank
Merger to Permanent, as the sole shareholder of the Bank, and Permanent, as the
sole shareholder of the Bank, shall approve this Agreement and the Bank Merger.
6.02. Other Approvals. (a) Permanent 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 Mergers on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
(b) Any materials or information provided by Permanent 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 Permanent 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 issuance of up to 364,144 shares of
Permanent 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 stockholders except that (A) the Bank
may pay cash dividends to Permanent in the ordinary course of business for
payment of reasonable and necessary business and operating expenses of
Permanent and for purposes of retiring the debt referenced in Section
8.01(i) hereof and to provide funds for Permanent's dividends to its
stockholders in accordance with this Agreement, (B) Permanent may pay to
its stockholders its usual and customary quarterly cash dividend of no
greater than Seven Cents ($0.07) per share for each such dividend until the
Effective Time; provided, however, that no dividend may be paid to
Permanent stockholders during the quarterly period in which the Mergers are
consummated if, during such period, Permanent stockholders 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, except as provided by Section 6.06(b) hereof;
(vi) purchase or acquire 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;
(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 transactions or proposed transactions described
in the Disclosure Schedule and 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
Bank) or fixed asset constituting a capital investment in excess of $50,000
individually or $100,000 in the aggregate;
A-22
<PAGE> 86
(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 Permanent or the
Bank 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;
(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 Permanent 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 Permanent and the Subsidiaries and other
than pursuant to an employee retention program, which has been disclosed to
ONB);
(xi) except for matters described in the Disclosure Schedule, execute,
create, institute, modify, amend or terminate (except with respect to any
amendments to the Permanent 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 Permanent 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) except for matters described in the Disclosure Schedule, 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 Permanent or any Subsidiary;
(xiii) hire or employ any new or additional employees of Permanent 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
Permanent or any Subsidiary who are not presently serving in such
capacities;
(xv) amend, modify or restate Permanent's Certificate of Incorporation
or By-Laws or the Articles, Charter or By-Laws of any Subsidiary from those
in effect on the date of this Agreement and as delivered to ONB hereunder;
(xvi) give, dispose of, sell, convey or transfer; assign, hypothecate,
pledge or encumber; or grant a security interest in or option to or right
to acquire any shares of common stock or substantially all of the assets of
Permanent or any Subsidiary, or enter into any agreement or commitment
relative to the foregoing, except as provided by Section 6.06(b) hereof;
(xvii) fail to continue to make additions to in accordance with the
Bank's past practices and to otherwise maintain in all respects the Bank's
reserve for loan and lease losses, or any other reserve account, in
accordance with safe, sound, and prudent banking practices and in
accordance with generally accepted accounting principles applied on a
consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but not limited to, trade
payables, incurred in the regular and ordinary course of business as such
debts, liabilities, obligations and expenses become due;
(xix) except for obligations disclosed within this Agreement or the
Disclosure Schedule, 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
A-23
<PAGE> 87
Permanent Financial Statements or the Subsequent Permanent Financial
Statements, (A) borrow any money (except for capital purposes related to
the Bank), (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 Mergers);
(xx) open, close, move or, in any material respect, expand, diminish,
renovate, alter or change any of its offices or branches;
(xxi) incur any additional indebtedness with respect to the debt
referenced in Section 8.01(i) hereof, except for accrued interest; or
(xxii) pay or commit to pay any management or consulting or other
similar type of fees other than in the ordinary course of business.
(b) Permanent and the Subsidiaries shall use their best efforts to
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 liabilities and hazards as are currently insured
by Permanent 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, Permanent 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. Permanent 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 Permanent 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
Permanent following the date of this Agreement, Permanent shall use its best
efforts to obtain from each director, executive officer and other person who may
be deemed to be such an affiliate of Permanent 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 Permanent following the date of this
Agreement, a written agreement, substantially in the form as attached hereto as
Exhibit A. On or prior to the Effective Time, Permanent shall use its best
efforts to obtain from each director, executive officer and other person who may
be deemed to be an affiliate of Permanent 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 Permanent nor
any Subsidiary shall permit nor authorize their respective directors, officers,
employees, agents or representatives to, directly or indirectly, initiate,
solicit or encourage, any corporation,
A-24
<PAGE> 88
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 Permanent or any Subsidiary or to which Permanent or any Subsidiary may
become a party (all such transactions are hereinafter referred to as
"Acquisition Transactions").
(b) Permanent 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. Permanent or any Subsidiary may, in response to an
unsolicited written proposal with respect to an Acquisition Transaction from a
third party (where Permanent or any Subsidiary is the selling or nonsurviving
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 Permanent'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 Permanent's Board of
Directors in connection with another Acquisition Transaction (where Permanent or
any Subsidiary is the selling or nonsurviving party).
6.07. Press Releases. Except as required by law, neither Permanent nor any
Subsidiary shall issue any news or press releases or make any other public
announcements or disclosures relating to the Mergers without the prior consent
of ONB, which consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. Permanent 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 Permanent contained herein
incorrect, untrue or misleading. No such supplement, amendment or update shall
become part of the Disclosure Schedule unless ONB shall have first consented in
writing with respect thereto.
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 Permanent 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 Permanent 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 Permanent and the Subsidiaries.
Upon request, Permanent 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 Permanent or any
Subsidiary, their auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by Permanent 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
Permanent 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 Permanent herein. ONB
shall not use any such information obtained pursuant to this Agreement for any
purpose unrelated to the Mergers. 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
A-25
<PAGE> 89
ONB or, at Permanent's request, returned to Permanent 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 Permanent Financial Statements. As soon as reasonably
available after the date of this Agreement, Permanent shall deliver to ONB the
monthly unaudited consolidated balance sheets and profit and loss statements of
Permanent prepared for its internal use, Thrift Financial Reports of the Bank
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 Permanent
Financial Statements"). The Subsequent Permanent 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 absence of footnotes for interim statements. The
Subsequent Permanent 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. Transition of Defined Benefit Plan. Permanent shall continue to make
contributions to the Financial Institution Retirement Fund (the "Fund"), if any,
as may be required by the Fund prior to the Effective Time in order to prevent a
minimum funding deficiency, as defined by Section 412 of the Code, or to defray
reasonable administrative expenses of the Fund owed by or assessed against
Permanent prior to the Effective Time. To the extent that prior to the Effective
Time there exists under the Fund an excess of Fund assets attributable to
contributions made to the Fund by Permanent over the benefit liabilities owed by
the Fund to Permanent employees or participants, as determined by the Fund
administrator, Permanent may amend the defined benefit plan prior to the
Effective Time to increase such benefit liabilities for the purpose of absorbing
such excess Fund assets; provided, however, that such amendment (i) does not
result in any minimum funding deficiency under Section 412 of the Code; (ii)
does not contravene any Fund provision; or (iii) does not result in the loss of
the defined benefit plan's qualification under Section 401(a) of the Code.
Subject to the satisfaction of any notice requirements of the Fund, Permanent
shall withdraw as a participating employer under the Fund as of the Effective
Time. The non-forfeitable benefits accrued by Permanent employees under the Fund
as of the date of such withdrawal, as determined by the Fund administrator,
shall be paid or otherwise transferred in accordance with the applicable
provisions of Article XII of the Fund (Withdrawal of Participating Employer).
6.12. Transition of 401(k) Plan. Permanent shall continue to make all
non-discretionary contributions which it is required to make to the Financial
Institutions Thrift Plan (the "Plan") prior to the Effective Time. Subject to
the satisfaction of any notice requirements of the Plan, Permanent shall
terminate as a participating employer under the Plan as of the day before the
Effective Time. The non-forfeitable account balances of Permanent employees
under the Plan as of the date of such termination, including any accrued but
unpaid contributions for the partial plan year ending on such date, as
determined by the Plan administrator, shall be paid or otherwise transferred in
accordance with the applicable provisions of Article XI of the Plan (Termination
of Employer Participation).
6.13. Transition of ESOP. Permanent shall continue to make employer
contributions to the Permanent Bancorp, Inc. Employee Stock Ownership Plan (the
"ESOP") for each plan year quarter ending on or before the Effective Time,
provided such contributions are comparable in amount, on a prorated basis, to
past employer contributions to the ESOP. In the event the amount of such
contributions is insufficient to enable the ESOP trustee to pay principal and
interest on any Exempt Loan (as defined in the ESOP) as they are due, Permanent
shall direct the ESOP trustee to sell a sufficient number of unallocated shares
of Employer Securities held by the trustee and to apply the proceeds of such
sale in satisfaction of such principal and interest then due.
A-26
<PAGE> 90
In addition, Permanent shall take, or cause to be taken, all actions
necessary to cause the fiduciaries of the ESOP to take all of the following
actions:
(i) Implement a written confidential pass through voting procedure
pursuant to which the participants under the Permanent ESOP and their
beneficiaries shall direct the trustee under the Permanent ESOP to vote the
shares of Permanent Common Stock allocated to their Permanent ESOP accounts
with respect to the Merger;
(ii) Provide the Permanent ESOP participants and their beneficiaries
with a written notice regarding the existence of and provisions for such
confidential pass through voting procedures, as well as the same written
materials to be provided to the shareholders of Permanent in connection
with the Merger;
(iii) Obtain a written opinion from a qualified, independent financial
advisor to the trustee of the Permanent ESOP to the effect that the shares
of ONB common stock to be received by the Permanent ESOP in the Merger in
exchange for the shares of Permanent Common Stock will constitute "adequate
consideration" as defined in Section 3(18) of ERISA, and that the Merger,
including the disposition of the Permanent ESOP in connection therewith, is
fair to the Permanent ESOP and its participants from a financial point of
view. The written opinion referred to in the preceding sentence may be
jointly issued by such financial advisor to the trustee, the Permanent ESOP
and to all other stockholders of Permanent Common Stock; and
(iv) Take any and all additional actions necessary to satisfy the
requirements of ERISA applicable to the Permanent ESOP fiduciaries in
connection with the Merger.
Permanent shall also take, or cause to be taken, all actions necessary to
obtain, prior to the Effective Time, a favorable determination letter from
Internal Revenue Service to the effect that the termination of the ESOP as of
the Effective Time does not adversely affect the qualification of the ESOP or
its related employee benefit trust for favorable income tax treatment under
Section 401(a) and 501(a) of the Code, respectively.
Permanent shall terminate the ESOP as of the Effective Time. All account
balances of the ESOP participants shall be fully vested and non-forfeitable as
of such termination date. As soon as administratively feasible following the
later of (1) the date of termination of the ESOP, or (2) the receipt by
Permanent of the favorable determination letter described in the preceding
paragraph, all vested and non-forfeitable benefits under the ESOP shall be
distributed to its participants pursuant to the provisions of Section 13.5 of
the ESOP (Voluntary Termination).
6.14. Termination of Welfare Benefit Plans. Effective as of the last day of
the calendar month in which occurs the Effective Time, the group health, dental,
life and long term disability plans, and any other employee welfare benefit
plan, sponsored by Permanent on behalf of its eligible employees shall be
terminated. From the date of this Agreement through the date as of which each
such plan terminates Permanent shall continue to pay the insurance premiums
necessary to continue the benefits currently provided under such plans. As of
the Effective Time, each individual who has qualified for retiree health
coverage under the Permanent group health plan, either as a retiree or a spouse
or dependent of a retiree or as a director to whom Permanent has made, prior to
the date of this Agreement, a commitment to provide retiree health coverage
under such plan upon the retirement of such director or the termination of his
or her directorship, shall become covered as of the Effective Time under the
retiree health coverage provided under the ONB group health plan. It is
understood that such individual's coverage under the ONB group health plan shall
become secondary to such individual's Medicare coverage upon such individual's
eligibility for such Medicare coverage.
6.15. Termination of Educational Assistance Program. As of the last day of
the calendar month in which occurs the Effective Time, the tuition assistance
program currently sponsored by Permanent on behalf of its eligible employees
shall terminate. From the date of this Agreement through the date as of
A-27
<PAGE> 91
which such program terminates Permanent shall continue to pay eligible benefits
for which a Permanent employee qualifies pursuant to the current provisions of
such program.
6.16. Termination of Cash Bonus Program. As of the Effective Time, the cash
bonus program currently sponsored by Permanent on behalf of its eligible
employees shall terminate. From the date of this Agreement through the Effective
Time, Permanent may continue to pay cash bonuses under the program provided the
amounts of such bonuses, individually or in the aggregate, are comparable to the
amounts of any past bonuses under the program and provided further that
Permanent has obtained the written consent of the ONB Chief Financial Officer to
pay any such bonus.
6.17 Transition of Director Deferred Compensation Plans. As of the
Effective Time, all contributions to or under either the Director Deferred
Compensation Master Agreement or the Second Director Deferred Compensation Plan
(collectively, the "Plans") shall cease. From the date of this Agreement through
the Effective Time, Permanent 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 applicable Plan. Following the Effective Time ONB shall
continue the Plans, and the grantor (rabbi) trust established on April 1, 1997
by Permanent in connection with such Plans, until all benefit liabilities
accrued under the Plans as of the Effective Time are distributed to the
participants entitled to such benefits. Upon the distribution of such accrued
benefits the Plans, and the trust, shall terminate and any residual assets of
such trust shall be returned to ONB.
6.18. Disposition of Restricted Stock. As of the date of this Agreement the
Board of Directors of Permanent shall take all actions necessary to ensure that
no further awards of Restricted Stock are granted to any participant under the
Recognition and Retention Plan (the "RRP"); the 1993 Stock Option and Incentive
Plan (the "1993 Plan"); or the 1999 Omnibus Incentive Plan (the "1999 Plan"). As
of the Effective Time, Permanent shall take all actions necessary to terminate
the RRP, the 1993 Plan and the 1999 Plan. As of the date each such plan
terminates, any Restricted Period with respect to Restricted Stock theretofore
awarded to any participant under each such plan shall lapse. To the extent not
already fully vested, all shares of Permanent Common Stock awarded under each
such plan as Restricted Stock shall become fully vested in the participant to
whom such shares were awarded, and shall be exchanged for unrestricted common
stock of ONB pursuant to the provisions of Section 2.01 hereof.
6.19. Disposition of Stock Options and Stock Rights. As of the date of this
Agreement the Board of Directors of Permanent shall take all actions necessary
to ensure that no further automatic or discretionary grants of an Incentive
Stock Option, a Non-Qualified Stock Option, a Stock Appreciation Right, a
Limited Stock Appreciation Right, or any combination thereof, as defined
therein, shall be awarded to any participant under the 1993 Plan or the 1999
Plan. As of the Effective Time, the Board of Directors of Permanent shall
terminate both the 1993 Plan and the 1999 Plan. To the extent not already fully
vested, all outstanding options and rights theretofore awarded under either such
plan shall be fully vested in the participants to whom such awards were granted.
6.20. Year 2000. Permanent shall:
(a) Additional Information. Furnish such additional information, statements
and other reports with respect to Permanent'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.
(b) Notice of Changes. In the event of any change in circumstances that
causes or will likely cause any of the 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 Permanent 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
the representations and warranties set forth in Section 4.24 hereof to no longer
be true. Permanent shall, within ten (10) days of a request, also provide ONB
with any additional
A-28
<PAGE> 92
information ONB reasonably requests of Permanent in connection with the Notice
and/or a Change in Circumstances.
(c) Audits. Give any representative of ONB reasonable access to inspect any
of the Systems of Permanent 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.
6.21. Reports. Promptly upon its becoming available, furnish to ONB one (1)
copy of each financial statement, report, notice, or proxy statement sent by
Permanent to its stockholders generally and of each regular or periodic report,
registration statement or prospectus filed by Permanent with the SEC or any
successor agency, and of any order issued by any Governmental Authority in any
proceeding to which Permanent is a party, except for foreclosure proceedings in
the ordinary course of business. 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 Permanent or any of its business, operations or
properties.
6.22. Adverse Actions. Permanent shall not (a) take any action while
knowing that such action would, or is reasonably likely to, prevent or impede
the Mergers from qualifying 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 Mergers 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 Mergers except, in
each case, as may be required by applicable law or regulation.
6.23. Termination Fee. (a) Permanent hereby understands, acknowledges and
agrees that ONB and Old National Bank have committed and will commit substantial
time, effort, resources and expenses in pursuing the Mergers and that neither
ONB nor Old National Bank would enter into this Agreement without Permanent and
the Bank agreeing to the Termination Fee (as hereinafter defined). Permanent and
the Bank hereby further agree that they shall immediately pay to ONB a
termination fee in the amount of Four Million Six Hundred Thousand Dollars
($4,600,000) in immediately available funds ("Termination Fee"), in the event
that any of the following events occurs or has occurred without the prior
written consent of ONB:
(i) the acquisition, following the date of this Agreement, by any
entity, person or group, other than ONB, of beneficial ownership, or the
right to acquire beneficial ownership, of fifteen percent (15%) or more (in
the aggregate) of any shares of voting capital stock of Permanent
(including, without limitation, shares of Permanent Common Stock) or any
shares of capital stock of any of the Subsidiaries (for purposes of this
Section, the terms "group" and "beneficial ownership" shall have the same
meanings assigned thereto in Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder),
but only if (A) such entity, person or group has publicly announced its
opposition to this Agreement or the Mergers or its intention not to vote
the capital stock of Permanent or any of the Subsidiaries beneficially
owned by the entity, person or group in favor of this Agreement or the
Mergers; or (B) such entity, person or group has proposed, indicated an
intention to propose or entered into a letter of intent, agreement in
principle or other agreement (whether binding or non-binding) relating to a
merger, consolidation, share exchange or other combination with, or an
acquisition of, Permanent or any of the Subsidiaries; or (C) such entity,
person or group has commenced or indicated its intention to commence a
tender, exchange or other offer for any shares of capital stock of
Permanent (including, without limitation, shares of Permanent Common Stock)
or any shares of capital stock of any of the Subsidiaries; or
(ii) the Board of Directors of Permanent, in connection with its
consideration, acceptance or approval of any merger, consolidation, share
exchange or combination involving Permanent or any of the Subsidiaries or
any purchase of all or substantially all of Permanent's or any of the
Subsidiaries' assets or capital stock or any other similar acquisition or
transaction, or in connection with any tender, exchange or other offer for
any shares of capital stock of Permanent (including, without limitation,
A-29
<PAGE> 93
shares of Permanent Common Stock) or any shares of capital stock of any of
the Subsidiaries, has (A) failed to unanimously recommend to Permanent
stockholders approval and adoption of this Agreement and the Company
Merger; or (B) withdrawn or conditioned its unanimous recommendation to
Permanent stockholders of approval and adoption of this Agreement and the
Company Merger; or (C) modified or changed its unanimous recommendation to
Permanent stockholders of approval and adoption of this Agreement and the
Company Merger in a manner adverse in any respect to the interests of ONB;
or (D) failed to solicit proxies in favor of this Agreement and the Company
Merger from the stockholders of Permanent; or
(iii) the acceptance or approval by Permanent or any of the
Subsidiaries of any proposal (however conditional or future) of, or the
execution by Permanent or any of the Subsidiaries 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, (A) to acquire Permanent
by merger, consolidation, share exchange, combination, purchase of all or
substantially all of Permanent's or any of the Subsidiaries' assets or
capital stock or any other similar acquisition or transaction, or (B) in
connection with any tender, exchange or other offer for any shares of
capital stock of Permanent (including, without limitation, shares of
Permanent Common Stock) or any shares of capital stock of any of the
Subsidiaries; or
(iv) the Board of Directors of Permanent shall have accepted or
approved, and any entity, person or group shall have filed an application,
notice, registration statement, proxy statement or other materials or
documents with the Board of Governors of the Federal Reserve System, the
Office of Thrift Supervision, the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency, the SEC or any other federal
or state government agency, authority or body with respect to, (A) any
merger, consolidation, share exchange or other combination involving, or
any purchase of all or substantially all of the assets or capital stock of,
Permanent or any of the Subsidiaries, or any similar acquisition or
transaction, or (B) any tender, exchange or other offer for any shares of
capital stock of Permanent (including, without limitation, shares of
Permanent Capital Stock) or any shares of the capital stock of any of the
Subsidiaries; or
(v) notwithstanding any fiduciary duties of Permanent's Board of
Directors, the meeting at which Permanent's stockholders will vote with
respect to this Agreement and the Company Merger shall not have occurred on
or before September 27, 2000, unless such vote shall not have occurred
because the SEC has not authorized for mailing to Permanent's stockholders
Permanent's proxy statement relating to this Agreement and the Company
Merger on a timely basis in order to permit such meeting to occur on or
before September 27, 2000.
The provisions of this Section 6.23(a) shall terminate upon any termination
of this Agreement, except (i) if one of the events described in this Section
6.23(a) occurs or shall have occurred prior to the termination of this
Agreement, or (ii) if ONB terminates this Agreement based upon a willful breach
by Permanent or the Bank of any representation, warranty, covenant or agreement
contained in this Agreement; then, in the case of clause (i) of this paragraph,
the obligation of Permanent and the Bank to pay ONB the Termination Fee and all
costs of collection and interest related thereto shall survive any termination
of this Agreement and continue in full force and effect until the Termination
Fee and all costs of collection and interest have been paid in full to ONB; and
in the case of clause (ii) of this paragraph, the obligation of Permanent and
the Bank to pay the Termination Fee and all costs of collection and interest
related thereto shall survive such termination and continue in full force and
effect until the Termination Fee and all costs of collection and interest have
been paid in full to ONB, but only if any of the events described in this
Section 6.23(a)(i), (iii) and (iv) occurs or shall have occurred during the
twelve (12) month period immediately following such termination by ONB. In
addition, neither Permanent nor the Bank shall be obligated to pay the
Termination Fee and the costs of collection related thereto in the event that
Permanent terminates this Agreement based upon a willful and material breach of
any representation, warranty or covenant contained in this Agreement by ONB.
A-30
<PAGE> 94
(b) The Termination Fee shall be immediately paid to ONB upon the
occurrence of any of the events set forth in Section 6.23(a) hereof. If the
Termination Fee is not immediately paid as provided, then ONB shall be entitled
to recover interest at the highest prime rate set forth in The Wall Street
Journal (Midwest Edition) under the section entitled "Money Rates" on the unpaid
amount of the Termination Fee from the time that the Termination Fee is due
until paid-in-full, together with all costs of collection thereof, including
reasonable attorneys' fees and expenses.
(c) The parties hereby understand, acknowledge and agree that the
Termination Fee shall reasonably compensate ONB and Old National Bank for, among
other things, (i) certain expenses incurred for attorneys, accountants,
financial advisors and consultants of ONB and Old National Bank in developing
the Mergers and drafting this Agreement, (ii) ONB's and Old National Bank's
management time and expense in investigating, analyzing, developing and pursuing
the Mergers, (iii) expenses relating to ONB's and Old National Bank's due
diligence efforts relating to Permanent and the Bank, (iv) ONB's and Old
National Bank's substantial time, effort, resources and expenses committed and
to be committed in pursuing the Mergers, and (v) the fact that neither ONB nor
Old National Bank would enter into this Agreement without Permanent and the Bank
agreeing to the payment of the Termination Fee as provided herein. Permanent and
the Bank further understand, acknowledge and agree that the amount of the
Termination Fee is fair, reasonable and not a penalty.
(d) For purposes of this Section 6.23, the terms "person" and "entity"
shall include an individual, partnership, limited liability company,
corporation, trust, firm, association, unincorporated organization and any other
entity.
6.24. Confirmation of Total Outstanding Shares. Permanent shall confirm in
writing to ONB five (5) business days prior to the Effective Time the Total
Outstanding Shares. In the event the Total Outstanding Shares differs from
4,467,239, then for purposes of this Agreement, the Total Outstanding Shares
shall be deemed to be the corrected number confirmed to ONB pursuant to this
Section 6.24 and such event shall not be deemed a breach of this Agreement by
Permanent; provided, however, that such difference is not greater than 25,000
shares and ONB then shall have the right to terminate this Agreement pursuant to
Section 9.01(b)(i)(A) regardless of materiality.
SECTION 7
COVENANTS OF ONB
ONB, Old National Bank and Merger Corporation covenant and agree with
Permanent and the Bank as follows:
7.01. Approvals. (a) 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 Mergers. 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 Permanent's legal counsel
a reasonable opportunity to review such applications prior to their filing and
shall provide to Permanent'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 Mergers on the terms and conditions provided
in this Agreement at the earliest possible reasonable date.
(b) So long as this Agreement is submitted to Permanent's stockholders for
a vote thereon, Old National Bank and Merger Corporation shall submit this
Agreement to ONB, as their sole shareholder, for approval by unanimous written
consent without a meeting in accordance with applicable law and the respective
Articles and By-Laws of Old National Bank and Merger Corporation, and the Boards
of Directors of Old National Bank and Merger Corporation shall each recommend to
its sole shareholder that such shareholder approve this Agreement and the
Mergers.
A-31
<PAGE> 95
(c) So long as the actions contemplated by Section 7.01(b) hereof with
respect to Permanent have occurred, ONB shall vote all of its shares of capital
stock of Old National Bank and Merger Corporation in favor of approval of this
Agreement and the Mergers.
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 Permanent, prepared for
use in connection with the meeting of stockholders of Permanent 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 Permanent and its counsel with a copy of the
Registration Statement and each such other filing and provide a reasonable
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.
(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 Mergers.
7.03. Employee Benefit Plans. (a) As of the Effective Time, ONB will make
available to the employees of Permanent and the Subsidiaries who continue as
employees of ONB or any subsidiary of ONB after the Effective Time, subject to
Section 7.03(b) and (c) 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 Permanent and the
Subsidiaries become covered by the ONB welfare benefit plans, the employees of
Permanent and the Subsidiaries shall remain covered by the Permanent Plans which
cover such employees, subject to the terms of such plans. Except as otherwise
provided in Sections 6.11 through 6.19, ONB will honor in accordance with their
terms (i) all employee benefit obligations to current and former officers,
directors and employees of Permanent 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 Permanent
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
A-32
<PAGE> 96
Employee Stock Ownership Plan ("ESOP"). Those officers and employees of
Permanent 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
Permanent or any Subsidiary, shall become participants thereunder at the
Effective Time. Those officers and employees of Permanent or any Subsidiary who
otherwise meet the eligibility requirements of the ONB Pension Plan, based upon
their age and years of Permanent or any Subsidiary service, shall become
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) In accordance with the provisions of the Health Insurance Portability
and Accountability Act ("HIPAA") and the terms of the ONB group health plan,
officers and employees of Permanent or any Subsidiary who become participants in
the ONB group health plan will be given "creditable coverage" credit for their
coverage under the Permanent Group Health Plan under the ONB group health plan's
pre-existing condition limitation provisions. In addition, if a condition was
not a "pre-existing condition" for a participant in the Permanent Group Health
Plan, it shall not be considered to be a pre-existing condition under the ONB
group health plan.
(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 Permanent 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 Permanent 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) 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 a government regulatory agency.
(f) ONB shall take any and all actions reasonably necessary to effectuate
the disposition of the Permanent Plans provided by Sections 6.11 through 6.19,
and ONB's obligations to take these actions shall survive the Effective Time.
7.04. Stock Options. (a) Prior to five (5) business days before the
Effective Time, a holder of a Stock Option may by written notice to ONB elect to
exchange such Stock Option for either (i) cash in an amount equal to the
remainder of (A) the product of the number of shares of Permanent Common Stock
subject to such Stock Option multiplied by the Exchange Ratio multiplied by the
Average Price Per Share of ONB common stock minus (B) the aggregate exercise
price for Permanent Common Stock otherwise purchasable pursuant to such Stock
Option (such number calculated pursuant to this Section 7.04(a)(i) hereinafter
referred to as the "Option Value") or (ii) such number of shares of ONB common
stock equal to the quotient arrived at by dividing (A) the Option Value by (B)
the Average Price Per Share of ONB common stock.
(b) Following the Effective Time, distribution of stock certificates
representing shares of ONB common stock and any cash payment, without interest,
pursuant to Section 7.04(a) hereof shall be made by ONB to each former holder of
a Stock Option exercising an election pursuant to Section 7.04(a) hereof as soon
as practical following delivery to ONB of a properly completed and executed
cancellation of Stock Option, all in form and substance reasonably satisfactory
to ONB.
(c) At the Effective Time, the obligations of Permanent with respect to
each outstanding Stock Option which was properly granted pursuant to a stock
option agreement executed in accordance with the Stock Option Plans 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
A-33
<PAGE> 97
stock, rounded to the nearest whole share, as the holder of such Stock Option
would have been entitled to receive pursuant to the Mergers 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 Permanent
Common Stock otherwise purchasable pursuant to such Stock Option divided by (B)
the number of shares of ONB common stock, rounded to the nearest whole share,
deemed purchasable pursuant to such Stock Option; 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 4.24(a) of the Code. In no event shall ONB be
required to issue fractional shares of ONB common stock pursuant to the Stock
Options.
(d) 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 7.04
after giving effect to the Mergers and the assumption by ONB as set forth
above); provided, however, to the extent necessary to effectuate the provisions
of this Section 7.04, 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 7.04 and as a result of the grant and exercise of such Stock Options.
(e) At 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.
7.05. Press Releases. Except as required by law, ONB shall not issue any
news or press releases or make any other public announcements or disclosures
relating primarily to Permanent with respect to the Mergers without the prior
consent of Permanent, which consent shall not be unreasonably withheld.
7.06. Indemnification. (a) Following the Effective Time and for a period of
six (6) years thereafter, ONB shall indemnify, defend and hold harmless the
present directors, officers and employees of Permanent and its Subsidiaries
(each, an "Indemnitee") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including without limitation, the transactions contemplated by
this Agreement) to the fullest extent that Permanent is permitted to indemnify
(and advance expenses to) its directors, officers, and employees under
Permanent's Certificate of Incorporation and Permanent's By-Laws as in effect on
the date hereof.
(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 7.06.
(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 Permanent; 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
A-34
<PAGE> 98
may be incurred by any Indemnitee in enforcing the indemnity and other
obligations provided for in this Section 7.06.
(d) The provisions of this Section 7.06 are intended to be for the benefit
of, and shall be enforceable by, each Indemnitee and their respective heirs and
representatives.
7.07. Adverse Actions. ONB shall not (a) take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Mergers
from qualifying 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 Mergers 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 Mergers except, in each
case, as may be required by applicable law or regulation.
7.08. Notice of Changes Relating to Year 2000 Compliance. In the event of
any change in circumstances that causes or will likely cause any of the
representations and warranties set forth in Section 5.13 hereof to no longer be
true and would result in a Material Adverse Effect on ONB (hereinafter referred
to as a "Change in Circumstances"), then ONB shall promptly, and in any event
within ten (10) days of receipt of information regarding a Change in
Circumstances, provide Permanent with written notice ("Notice") that describes
in reasonable detail the Change in Circumstances and how such Change in
Circumstances caused or will likely cause the representations and warranties set
forth in Section 5.13 hereof to no longer be true. ONB shall, within ten (10)
days of a request, also provide Permanent with any additional information
Permanent reasonably requests of ONB in connection with the Notice and/or a
Change in Circumstances.
7.09. Disclosure Schedule Update. ONB shall promptly supplement, amend and
update, upon the occurrence of any change prior to the Effective Time, and as of
the Effective Time, the ONB 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 ONB 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 ONB contained herein incorrect, untrue
or misleading. No such supplement, amendment or update shall become part of the
ONB Disclosure Schedule unless Permanent shall have first consented in writing
with respect thereto.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGERS
8.01. ONB. The obligation of ONB to consummate the Mergers is subject to
the satisfaction and fulfillment of each of the following conditions on or prior
to the Effective Time, unless waived in writing by ONB:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Permanent and the Bank contained in this
Agreement shall, subject to the standard set out in the second paragraph to
Section 4, be true, accurate 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 Permanent 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 Permanent 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 stockholders of Permanent in accordance with
this Agreement with the SEC pursuant to the
A-35
<PAGE> 99
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 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 which reduction in benefits shall not include any divestiture of
branches of the Bank necessary to make the Mergers not anti-competitive.
(f) Permanent Stockholder Approval. The stockholders of Permanent shall
have approved and adopted this Agreement as required by applicable law and its
Certificate of Incorporation. Permanent, as the sole shareholder of the Bank,
shall have approved and adopted this Agreement as required by applicable law and
the Bank's Charter.
(g) Officers' Certificate. Permanent 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),
the representations and warranties of Permanent and the Bank contained in this
Agreement shall be true, accurate and correct at and as of the Effective Time;
(ii) that all the covenants of Permanent have been complied with from the date
of this Agreement through and as of the Effective Time; and (iii) that Permanent
has satisfied and fully complied with all conditions necessary to make this
Agreement effective as to Permanent.
(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 Mergers to be effected pursuant to this Agreement will
constitute a tax-free reorganization under the Code (as described in Section
1.03 hereof) to each party hereto and to the stockholders of Permanent, except
with respect to cash received by Permanent's stockholders for fractional shares
resulting from application of the Exchange Ratio and pursuant to Section
7.04(a)(i) hereof. In rendering such opinion, counsel may require and rely upon
customary representation letters of the parties hereto and rely upon customary
assumptions.
(i) Satisfaction of Debt. The existing debt of Permanent owed to an
unaffiliated financial institution ("Lender") in the principal amount of
approximately $3 million shall be paid by Permanent at or prior to the Effective
Time and the security interest of the Lender in the Bank Common Stock shall be
released. At the Effective Time, all of the issued and outstanding shares of the
Bank Common Stock shall be owned by Permanent 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.
(j) Fairness Opinion. Permanent's investment banker shall have issued (as
of the date not later than the mailing date of the proxy statement-prospectus
relating to the Mergers to be mailed to the stockholders of Permanent) its
fairness opinion stating that the Exchange Ratio relating to the Mergers is fair
to the stockholders of Permanent from a financial point of view.
8.02. Permanent. The obligation of Permanent and the Bank to consummate the
Mergers is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by
Permanent:
(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, accurate
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.
A-36
<PAGE> 100
(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. Permanent shall have received from ONB at the
Closing the items and documents, in form and content reasonably satisfactory to
Permanent, listed in Section 11.02(a) hereof.
(d) Registration Statement Effective. ONB shall have registered its shares
of common stock to be issued to stockholders of Permanent 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 Permanent
reasonably determines in good faith would (i) following the Effective Time, have
a Material Adverse Effect on Permanent or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Permanent would not have
entered into this Agreement had such conditions, restrictions or requirements
been known at the date hereof.
(f) ONB Shareholder Approval. ONB, as the sole shareholder of Old National
Bank and Merger Corporation, shall have approved and adopted this Agreement as
required by applicable law and Old National Bank's Articles of Association and
Merger Corporation's Articles of Incorporation.
(g) Permanent Stockholder Approval. The stockholders of Permanent shall
have approved and adopted this Agreement as required by applicable law and its
Certificate of Incorporation. Permanent, as the sole shareholder of the Bank,
shall have approved and adopted this Agreement as required by applicable law and
the Bank's Charter.
(h) Officers' Certificate. ONB shall have delivered to Permanent 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), the representations and warranties of ONB contained in this Agreement
shall be true, accurate and correct on and as of the Effective Time; (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.
(i) Tax Opinion. The Board of Directors of Permanent 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 Permanent,
to the effect that the Mergers to be effected pursuant to this Agreement will
constitute a tax-free reorganization under the Code (as described in Section
1.03 hereof) to each party hereto and to the stockholders of Permanent, except
with respect to cash received by Permanent's stockholders for fractional shares
resulting from application of the Exchange Ratio and pursuant to Section
7.04(a)(i). In rendering such opinion, counsel may require and rely upon
customary representation letters of the parties hereto and rely upon customary
assumptions.
(j) Fairness Opinion. Permanent's investment banker shall have issued (as
of a date not later than the mailing date of the proxy statement-prospectus
relating to the Mergers to be mailed to the stockholders of Permanent) its
fairness opinion stating that the Exchange Ratio relating to the Mergers is fair
to the stockholders of Permanent from a financial point of view.
A-37
<PAGE> 101
SECTION 9
TERMINATION OF MERGERS
9.01. Manner of Termination. This Agreement and the Mergers may be
terminated at any time prior to the Effective Time by written notice delivered
by ONB to Permanent, or by Permanent to ONB as follows:
(a) By ONB or Permanent, if:
(i) the Mergers contemplated by this Agreement have not been
consummated by September 30, 2000; provided, however, that a party hereto
in willful breach of or willful default hereunder shall have no right to
terminate this Agreement pursuant to this Section 9.01(a)(i); or
(ii) the respective Boards of Directors of ONB and Permanent mutually
agree to terminate this Agreement; or
(iii) in the event a request is made to renegotiate the Exchange Ratio
and ONB and Permanent are unable to do so to their mutual satisfaction
within the time allotted by and as contemplated by Section 2.01(c) hereof.
(b) By ONB, if:
(i) at any time prior to the Effective Time, ONB's Board of Directors
reasonably determines, in the event of either
(A) a breach by Permanent or the Bank 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 Permanent
of such breach; provided, however, that any such cure may not result in
a Material Adverse Effect or an intentional breach of this Agreement; or
(B) a breach by Permanent or the Bank 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
Permanent 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; provided, however,
that any such cure may not result in a Material Adverse Effect; or
(ii) it shall reasonably determine that the Mergers contemplated by
this Agreement have become impracticable by reason of commencement or
threat of any claim, litigation or proceeding against ONB, Permanent, any
Subsidiary, or any subsidiary of ONB, or any director or officer of any of
such entities relating to this Agreement or the Mergers; or
(iii) there has been a material adverse change in the business,
assets, capitalization, financial condition or results of operations of
Permanent or any Subsidiary taken as a whole 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 laws or
regulations (or interpretations thereof), changes in banking 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 Mergers or restructuring charges taken in
connection with the Mergers, 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
(iv) Permanent fulfills the requirements of Section 6.01 hereof but
the stockholders of Permanent do not approve and adopt this Agreement and
the Company Merger.
A-38
<PAGE> 102
(c) By Permanent, if:
(i) at any time prior to the Effective Time, Permanent's Board of
Directors reasonably 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, Old National Bank or Merger Corporation 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, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect on ONB; or
(ii) there has been a material adverse change in the financial
condition, results of operations, business, assets or capitalization of ONB
on a consolidated basis as of the Effective Time as compared to that in
existence on September 30, 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 Mergers or restructuring charges taken in connection with the
Mergers, in each case in accordance with generally accepted accounting
principles, effects of any action taken with the prior written consent of
Permanent 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 Mergers contemplated by
this Agreement have become impracticable by reason of commencement or
threat of any material claim, litigation or proceeding against ONB, Old
National Bank or Merger Corporation relating to this Agreement or the
Mergers and which is likely to have a Material Adverse Effect on ONB; or
(iv) Permanent fulfills the requirements of Section 6.01 hereof but
the stockholders of Permanent do not approve and adopt this Agreement and
the Company Merger; or
(v) if the Average Price Per Share of ONB common stock is less than
$26.00, subject, however, to the following three sentences. If Permanent
elects to exercise its termination right pursuant to this Section
9.01(c)(v), it shall give written notice to ONB (provided that such notice
of election to terminate may be withdrawn at any time within the following
five-day period). During the five-day period commencing with its receipt of
such notice, ONB shall have the option, at its discretion, to increase the
consideration to be received by the holders of Permanent Common Stock
hereunder, by adjusting the Exchange Ratio (calculated to the nearest one
ten-thousandth) to equal (a) the quotient arrived at by dividing (x) the
sum of $85,427,011 plus the Aggregate Strike Price (y) by the Total
Outstanding Shares by (b) the Average Price Per Share of ONB common stock.
If ONB so elects within such five-day period, it shall give prompt written
notice to Permanent of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Section
9.01(c)(v) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified).
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 Permanent
and their respective directors, officers, employees, agents and shareholders or
stockholders, except as provided in compliance with: (i) the confidentiality
provisions of this Agreement set forth in Section 6.09 hereof and the
Confidentiality Agreement by and between ONB and Permanent (the "Confidentiality
Agreement"); (ii) the payment of expenses set forth in Section 12.09 hereof and
(iii) the payment of the Termination Fee as provided by Section 6.23 hereof;
provided, however, that
A-39
<PAGE> 103
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 MERGERS
Upon the terms and subject to the conditions specified in this Agreement,
the Company Merger shall become effective at the close of business on the day
and at the time specified in the Articles of Merger of Permanent with and into
ONB as filed with the Indiana Secretary of State and the Delaware Secretary of
State ("Effective Time") and the Bank Merger shall become effective on the date
and at the time specified in the Articles of Combination of the Bank with and
into Old National Bank as filed with the OTS and the Comptroller of the
Currency. Unless otherwise mutually agreed to by the parties hereto, the
Effective Time shall occur on the later of (i) July 31, 2000 or (ii) the last
business day of the month following (a) the fulfillment of all conditions
precedent to the Mergers 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 Mergers.
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
Mergers ("Closing") shall take place on the Effective 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 Permanent 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 Mergers;
(iii) copies of (A) the resolutions of the Board of Directors of ONB,
certified by the Secretary of ONB, relative to the approval of this
Agreement and (B) the resolutions of the Boards of Directors and sole
shareholder of Old National Bank and Merger Corporation, certified by their
respective Secretaries, relative to the approval of this Agreement;
(iv) an opinion of its counsel dated as of the Effective Time and
substantially in form set forth in Exhibit B attached hereto; and
(v) such other documents as Permanent or its legal counsel may
reasonably request.
(b) At the Closing, Permanent shall deliver to ONB the following:
(i) the officers' certificate contemplated by Section 8.01(g) hereof;
(ii) a list of Permanent's stockholders as of the Effective Time
certified by the President and Secretary of Permanent;
(iii) copies of (A) the resolutions adopted by the Board of Directors
of Permanent certified by the Secretary of Permanent, relative to the
approval of this Agreement and (B) the resolutions of the Board of
Directors and sole shareholder of the Bank, certified by its President and
Secretary, relative to the approval of this Agreement;
(iv) an opinion of its counsel dated as of the Effective Time and
substantially in form set forth in Exhibit C attached hereto; and
(v) such other documents as ONB or its legal counsel may reasonably
request.
A-40
<PAGE> 104
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 stockholders of Permanent shall affect
the rights of such stockholders in any manner which is materially adverse to
such stockholders or which would violate the federal securities laws. 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, and 7.06
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 Permanent
stockholders shall not be decreased by such an amendment following the adoption
and approval of the Mergers and this Agreement by the Permanent stockholders;
(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 Mergers. The waiver by any party hereto of a breach of or
noncompliance with any provision of this Agreement shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder.
(b) Subject to Section 12.01 hereof, 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:
<TABLE>
<S> <C>
If to ONB, Old National Bank or with a copy to (which shall not
Merger Corporation constitute notice):
Old National Bancorp Krieg DeVault Alexander &
420 Main Street Capehart, LLP
P.O. Box 718 One Indiana Square, Suite 2800
Evansville, Indiana 47705 Indianapolis, Indiana 46204-2017
ATTN: Jeffrey L. Knight, ATTN: Nicholas J. Chulos, Esq.
Secretary Telephone: (317) 238-6224
and General Counsel Telecopier: (317) 636-1507
Telephone: (812) 464-1363
Telecopier: (812) 464-1567
</TABLE>
A-41
<PAGE> 105
<TABLE>
<S> <C>
If to Permanent or the Bank: with a copy to (which shall not
constitute notice):
Permanent Bancorp, Inc.
101 SE Third Street Silver, Freedman & Taff, P.C.
Evansville, Indiana 47708 1100 New York Avenue, NW,
ATTN: Donald P. Weinzapfel, Seventh Floor
Chairman and Chief Washington, DC 20005
Executive Officer ATTN: Jeffrey M. Werthan, Esq.
Telephone: (812) 428-6800 Telephone: (202) 414-6100
Telecopier: (812) 428-6812 Telecopier: (202) 682-0354
</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.
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 reference to any choice of law provisions, principles or rules thereof
(whether of the State of Indiana or any other jurisdiction) that would cause the
application of any laws of any jurisdiction other than the State of Indiana.
12.08. Entire Agreement. This Agreement supersedes, terminates and renders
of no further force or effect all other prior or contemporaneous understandings,
commitments, representations, negotiations or agreements, whether oral or
written, among the parties hereto relating to the Mergers or matters
contemplated herein and constitutes the entire agreement between the parties
hereto, except for the Confidentiality Agreement, which shall continue in full
force and effect following the date hereof. 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, Old National Bank and Merger Corporation shall pay
its expenses incidental to the Mergers contemplated hereby, including all
expenses related to banking applications and filing fees with the SEC. Permanent
and the Bank shall pay its expenses incidental to the Mergers 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 is open for the transaction of business.
A-42
<PAGE> 106
IN WITNESS WHEREOF, ONB and Permanent 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
OLD NATIONAL BANK
By: /s/ MICHAEL R. HINTON
----------------------------------
Michael R. Hinton, President
ATTEST:
By: /s/ GAIL A. LEHR
--------------------------------
Gail A. Lehr, Secretary
MERGER CORPORATION I
By: /s/ THOMAS F. CLAYTON
----------------------------------
Thomas F. Clayton, President
ATTEST:
By: /s/ JEFFREY L. KNIGHT
--------------------------------
Jeffrey L. Knight, Secretary
A-43
<PAGE> 107
PERMANENT BANCORP, INC.
By: /s/ DONALD P. WEINZAPFEL
--------------------------------
Donald P. Weinzapfel, Chairman
and Chief Executive Officer
ATTEST:
By: /s/ ROBERT A. CERN
--------------------------------
Robert A. Cern, Secretary
PERMANENT BANK
By: /s/ MURRAY J. BROWN
----------------------------------
Murray J. Brown, Chairman,
President
and Chief Executive Officer
ATTEST:
By: /s/ ROBERT A. CERN
--------------------------------
Robert A. Cern, Secretary
A-44
<PAGE> 108
APPENDIX B
December 20, 1999
Board of Directors
Permanent Bancorp, Inc.
101 Southeast Third Street
Evansville, Indiana 47708
Dear Board Members:
You have requested our opinion as to the fairness from a financial point of
view to the holders of shares of common stock of Permanent Bancorp, Inc. (the
"Company") of the proposed consideration to be paid to the shareholders of the
Company by Old National Bancorp ("ONB").
Capital Resources Group, Inc. ("Capital Resources") is a financial
consulting and an investment banking firm that, as part of our specialization in
financial institutions, is regularly engaged in the financial valuations and
analyses of business enterprises and securities in connection with mergers and
acquisitions, valuations for initial and secondary stock offerings, divestiture
and other corporate purposes. Senior members of Capital Resources have extensive
experience in such matters. We believe that, except for the fee we will receive
for our opinion and other financial advisory fees to be received in connection
with the transaction discussed below, we are independent of the Company. In the
ordinary course of its business, Capital Resources may trade the equity
securities of the Company and ONB for its own accounts, its principals,
proprietary accounts it manages, and for the accounts of customers and, may at
any time hold long or short positions in such securities.
FINANCIAL TERMS OF THE OFFER
We understand that, pursuant to an Agreement of Affiliation and Merger
("Agreement") between the Company and ONB, all issued and outstanding shares of
Company common stock and options to purchase shares of Company common stock will
be exchanged for ONB common stock (or cash or ONB stock options in the case of
Company stock options) having a total aggregate market value dependent upon the
average price of ONB stock at the time of closing, as follows: (1) no less than
$85.4 million if ONB's average price is below $28 per share; (2) equal to $92
million if ONB's average price is $28 to $36 per share; and, (3) up to $97.3
million if ONB's price is greater than $36 up to $38 per share.
Based on a trading price for ONB's stock of between $28 and $36 per share
(ONB's recent stock price is $33 per share) and 4,103,095 Company common shares
and 364,144 Company stock options currently outstanding, each share of Company
common stock will be exchanged for and converted into a number of shares of ONB
common stock having a market value, or consideration, between $20.59 and $21.28,
depending upon the exchange option chosen by Permanent option holders (see
below). If the trading price of ONB common stock at the time of closing is less
than $28 or greater than $36 then the market value of ONB shares received could
be less than $20.59 or greater than $21.28. However, if ONB's trading price at
closing is less than $26 or more than $38 then the Exchange Ratio will be
subject to renegotiation except in the case of ONB being subject to an
acquisition offer by another Company.
Prior to closing, an option holder of the Company may elect to exchange
Company options for ONB options, based on the Exchange Ratio, or receive cash or
ONB common stock in exchange for Company options.
In the event of any change in the outstanding ONB common stock by reason of
a stock split, stock dividend, reverse stock split, recapitalization and similar
items, the Exchange Ratio and all stock prices will be appropriately adjusted.
As a result of the merger transaction, the Company will be merged with and
into ONB and the separate existence of the Company will cease.
B-1
<PAGE> 109
MATERIALS REVIEWED
In the course of rendering our opinion we have, among other things:
(1) Reviewed the terms of the Agreement and discussed the Agreement with
management and the Board of Directors of the Company, and the Company's legal
counsel, Silver, Freedman & Taff, P.C.;
(2) Reviewed the following financial data of the Company:
- the audited financial statements of the Company for the fiscal years
ended March 31, 1995 through March 31, 1999 as presented in the
Company's reports on Form 10-K, and the unaudited financial statements
for the six months ended September 30, 1999 as reported in the
Company's quarterly reports on Form 10-Q and internal financial
reports,
- Permanent Bank's (the "Bank") Thrift Financial Reports covering the
period through September 30, 1999, the latest available period,
- the Company's latest available asset/liability reports,
- other miscellaneous internally-generated management information
reports for recent periods, as well as other publicly available
information,
- the Company's most recent business plan and budget report;
(3) Reviewed the Company's Annual Report to shareholders for fiscal 1999
which provides a discussion of the Company's business and operations and reviews
various financial data and trends;
(4) Discussed with executive management of the Company, the business,
operations, recent financial condition and operating results and future
prospects of the Company;
(5) Compared the Company's financial condition and operating results to
those of similarly-sized thrifts operating in Indiana and the U.S.;
(6) Compared the Company's financial condition and operating performance to
the published financial statements and market price data of publicly-traded
thrifts in general, and publicly-traded thrifts in the Company's region of the
U.S. specifically;
(7) Reviewed the relevant market information regarding the shares of common
stock of the Company including trading activity and volume and information on
options to purchase shares of common stock;
(8) Performed such other financial and pricing analyses and investigations
as we deemed necessary, including a comparative financial analysis and review of
the financial terms of other pending and completed acquisitions of companies we
consider to be generally similar to the Company;
(9) Examined the Company's economic operating environment and the
competitive environment of the Company's market area;
(10) Reviewed available financial reports and financial data for ONB,
including Annual Reports to shareholders and Form 10-K reports covering the
fiscal years ended through December 31, 1998, quarterly reports, Form 10-Q
reports through September 30, 1999, other published financial data and other
regulatory and internal financial reports provided by management of ONB,
including pro forma financial statements reflecting the impact of pending
acquisitions; reviewed ONB's banking office network; and reviewed the pricing
trends of ONB's common stock and dividend payment history;
(11) Visited ONB's administrative and executive offices and conducted
interviews with management, which included discussions regarding ONB's lending
programs and business strategies.
In arriving at our opinion, we have relied upon the accuracy and
completeness of the information provided to us by the various parties mentioned
above, upon public information and upon representations and warranties in the
Agreement, and have not conducted any independent investigations to verify any
such information or performed any independent appraisal of the Company's or
ONB's assets.
B-2
<PAGE> 110
This fairness opinion is supported by the detailed information and analysis
contained in the Evaluation and Analysis Report dated December 20, 1999
("Report"), which has been produced by Capital Resources and will be delivered
to the Company. We have relied on the Report for purposes of rendering this
current fairness opinion.
The Report contains a business description and financial analysis of the
Company, an analysis of current economic conditions in the Company's primary
market area, and a financial and market pricing comparison with a selected group
of thrifts institutions which completed merger and acquisition transactions or
are currently subject to pending transactions. In addition, the Report contains
a discounted dividend stream and terminal value analysis. This analysis compares
the value of the consideration proposed by ONB with the potential present value
returns to the Company's shareholders if the Company remains independent for at
least three to five years.
OPINION
Based on the foregoing and on our general knowledge of and experience in
the valuation of businesses and securities, we are of the opinion that, as of
December 20, 1999, the consideration proposed by ONB for shares of common stock
of the Company is fair to the shareholders of the Company from a financial point
of view.
Respectfully submitted,
CAPITAL RESOURCES GROUP, INC.
B-3
<PAGE> 111
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:
<TABLE>
<C> <S>
2 -- Agreement of Affiliation and Merger (included as Appendix
A to Proxy Statement-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. 0-10888, 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 and March 1, 2000 (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, as amended on
March 1, 2000, between the Registrant and Old National
Bank in Evansville, as Trustee (incorporated by reference
thereto)
5.01 -- 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
10.01 -- Consulting Agreement, dated December 20, 1999, by and
between Donald P. Weinzapfel and Old National Bancorp
10.02 -- Material Contracts (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999
21 -- Subsidiaries of the Registrant
23.01 -- Consents of Krieg DeVault Alexander & Capehart, LLP
(included in Opinions of Krieg DeVault Alexander &
Capehart, LLP re: legality at Exhibit 5 and re: certain
federal income tax matters at Exhibit 8)
23.02 -- Consent of PricewaterhouseCoopers LLP
23.03 -- Consent of Deloitte & Touche, LLP
23.04 -- Consent of Arthur Andersen, LLP
</TABLE>
II-1
<PAGE> 112
<TABLE>
<C> <S>
23.05 -- Consent of Olive LLP
23.06 -- Consent of Heathcott & Mullaly, P.C.
24 -- Powers of Attorney
99.01 -- Form of Proxy
99.02 -- Consent of Capital Resources Group, Inc.
</TABLE>
(b) Financial Statement Schedules
Not Applicable
(c) Fairness Opinion
Included in Part I as Appendix B 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, 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
II-2
<PAGE> 113
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.
II-3
<PAGE> 114
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Evansville,
State of Indiana, on May 3, 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 May 3, 2000.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ JAMES A. RISINGER Chairman of the Board, Director, President and
- ----------------------------------------------------- Chief Executive Officer (Chief Executive
James A. Risinger 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*
DAVID E. ECKERLE* Director
- -----------------------------------------------------
David E. Eckerle*
ANDREW E. GOEBEL* Director
- -----------------------------------------------------
Andrew E. Goebel*
PHELPS L. LAMBERT* Director
- -----------------------------------------------------
Phelps L. Lambert*
</TABLE>
II-4
<PAGE> 115
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
RONALD B. LANKFORD* Director
- -----------------------------------------------------
Ronald B. Lankford*
LUCIEN H. MEIS* Director
- -----------------------------------------------------
Lucien H. Meis*
LOUIS L. MERVIS* Director
- -----------------------------------------------------
Louis L. Mervis*
JOHN N. ROYSE* Director
- -----------------------------------------------------
John N. Royse*
MARJORIE Z. SOYUGENC* Director
- -----------------------------------------------------
Marjorie Z. Soyugenc*
KELLY N. STANLEY* Director
- -----------------------------------------------------
Kelly N. Stanley*
CHARLES D. STORMS* Director
- -----------------------------------------------------
Charles D. Storms*
*By: /s/ JEFFREY L. KNIGHT
-----------------------------------------------
Attorney-in-Fact
</TABLE>
Print Name: Jeffrey L. Knight
------------------------------------------------
II-5
<PAGE> 116
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2 -- Agreement of Affiliation and Merger (included as Appendix
A to Proxy Statement-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. 0-10888, 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 and March 1, 2000 (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, as amended on
March 1, 2000, between the Registrant and Old National
Bank in Evansville, as Trustee (incorporated by reference
thereto)
5.01 -- 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
10.01 -- Consulting Agreement, dated December 20, 1999, by and
between Donald P. Weinzapfel and Old National Bancorp
10.02 -- Material Contracts (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999
21 -- Subsidiaries of the Registrant
23.01 -- Consents of Krieg DeVault Alexander & Capehart, LLP
(included in Opinions of Krieg DeVault Alexander &
Capehart, LLP re: legality at Exhibit 5 and re: certain
federal income tax matters at Exhibit 8)
23.02 -- Consent of PricewaterhouseCoopers LLP
23.03 -- Consent of Deloitte & Touche, LLP
23.04 -- Consent of Arthur Andersen, LLP
23.05 -- Consent of Olive LLP
23.06 -- Consent of Heathcott & Mullaly, P.C.
24 -- Powers of Attorney
99.01 -- Form of Proxy
99.02 -- Consent of Capital Resources Group, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 5.01
, 2000
- -----------------
Board of Directors
Permanent Bancorp, Inc.
101 SE Third Street
Evansville, Indiana 47708
RE: Issuance of Shares of Common Stock of Old National Bancorp in
connection with the Acquisition of Permanent Bancorp and
Permanent Bancorp
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 Permanent
Bancorp ("Permanent"), in connection with the proposed affiliation of Permanent
and Old National, as specified in the Agreement of Affiliation and Merger, dated
December 20, 1999 ("Agreement"), by and among Old National, Permanent, Merger
Corporation I, Old National Bank (the "Bank") and Permanent Bank, through which
Permanent Bank will first merge with the Bank and, immediately thereafter,
Permanent will merge into Merger Corporation I, a wholly-owned subsidiary of Old
National (the "Mergers"). The Mergers 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 Permanent 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
<PAGE> 2
Board of Directors
,2000
- ------------
Page 2
whole or in part, any other person, corporation, entity or governmental
authority without, in each instance, the prior written consent of this firm.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference made to us in the Registration
Statement and the Prospectus forming a part thereof under the caption "Legal
Opinions". In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and 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
_______________, 2000
Board of Directors Board of Directors
Old National Bancorp Permanent Bancorp, Inc.
420 Main Street 101 SE Third Street
Evansville, Indiana 47708 Evansville, Indiana 47708
Ladies and Gentlemen:
The Boards of Directors of Old National Bancorp ("ONB") and Permanent
Bancorp, Inc. ("Permanent"), have requested our opinion as special tax counsel
as to certain federal income tax consequences of a reorganization involving ONB,
Permanent, Merger Corporation I ("Merger Corporation"), Old National Bank and
Permanent Bank ("Bank").
In summary, the proposed transaction consists of the merger of Bank
with and into Old National Bank ("Bank Merger") and, immediately thereafter, the
merger of Permanent with and into Merger Corporation ("Company Merger"). The
Bank Merger and the Company Merger are hereinafter collectively referred to as
the "Mergers". In consideration of the Mergers, Permanent shareholders will
receive shares of ONB common stock in exchange for their shares of Permanent
common stock.
FACTS
In connection with the Mergers, the following facts have been provided
to us, and we have relied upon them for purposes of this opinion:
A. ONB
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 April 27,
2000, ONB had 150,000,000 shares of voting, no par value, common stock
authorized, of which approximately 46,851,000 were issued and outstanding. ONB
common stock is traded in the over-the-counter market and stock prices are
reported on the NASDAQ National Market System.
<PAGE> 2
_______________, 2000
Page 2
ONB also has 2,000,000 shares of preferred stock authorized. The
preferred stock has no stated dividend rate. No shares of Series A, no par
value, 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, 2010. 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 four (4) operating banks, one
(1) securities brokerage company, one (1) insurance company, one (1) 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.
Merger Corporation is an Indiana corporation and a wholly-owned
subsidiary of ONB.
Old National Bank is an Indiana state chartered bank and a wholly-owned
subsidiary of ONB.
B. Permanent
Permanent has its principal office at 101 SE Third Street, Evansville,
Indiana 47708. Permanent is a corporation duly incorporated and existing under
the laws of the State of Delaware and is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. As of December 20, 1999,
Permanent had 9,000,000 shares of voting, $0.01 par value, common stock
authorized, of which 4,103,095 shares were issued and outstanding, which number
of shares of Permanent common stock is subject to increase to a total of
4,467,239 shares pursuant to the exercise of options granted under the 1999
Omnibus Incentive Plan and the 1993 Stock Option and Incentive Plan to purchase
an aggregate of 364,144 shares of common stock of Permanent. The common stock of
Permanent is traded in the over-the-counter market and stock prices are reported
on the NASDAQ National Market System.
<PAGE> 3
_______________, 2000
Page 3
As of the date hereof, the following persons or entities who
beneficially own five percent (5%) or more of Permanent's outstanding common
stock:
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME PERMANENT SHARES SHARES
---- ---------------- --------------
The Permanent Bancorp, Inc.
Employee Stock Ownership
Plan 333,270 8.12%
Rahmi Soyugenc 259,646 6.33%
Donald P. Weinzapfel 242,036 5.9%
Permanent also has 1,000,000 shares of preferred stock, $0.01 par value
authorized. No shares of Permanent preferred stock have been issued, and
Permanent presently has no interest and no commitments to issue any of such
shares.
Permanent maintains its accounting on a calendar year basis, and
computes its income under the accrual method of accounting. Permanent is the
parent corporation for Bank, its only direct subsidiary. Bank's only direct
subsidiaries are Perma Service Corp. ("Perma Service") and Permavest, Inc.
("Permavest").
BUSINESS PURPOSES
The shareholders of ONB and the shareholders of Permanent desire to
reorganize their capital 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 Permanent an interest in a more
widely-held enterprise with potentially more marketable stock.
3. To allow Old National Bank to compete more effectively with other
banking organizations and to enable Old National Bank to provide new and broader
services to Bank's former customers.
<PAGE> 4
_______________, 2000
Page 4
PROPOSED TRANSACTIONS
As used herein, "Code" means the Internal Revenue Code of 1986, as
amended, and "Regulations" means the 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, the Mergers, as
contemplated by an Agreement of Affiliation and Merger, dated December 20, 1999
("Agreement"), by and among ONB, Permanent, Merger Corporation, Old National
Bank and Bank, will consist of the following:
(i) Bank will merge with and into Old National Bank pursuant to the
National Bank Act. Old National Bank will acquire all of the
assets and assume all the liabilities of Bank, and Bank will
cease to exist. Each share of Bank capital stock will be
cancelled, and ONB will be allocated all of the capital stock of
Old National Bank. No new shares of ONB common stock or cash
will actually be issued to shareholders of Permanent in this
step. Permanent's shareholders will receive the consideration
described in subparagraph (ii) hereof, which consideration will
consist of ONB common stock, including the Rights described
herein. There will be no dissenters to the Bank Merger described
herein.
(ii) Immediately following and on the same day as the Bank Merger,
Permanent will merge with and into Merger Corporation pursuant
to the provisions of Indiana law. At the effective time of the
Company Merger, each issued and outstanding share of Permanent
common stock will be converted into the right to receive a
certain number of shares of ONB common stock calculated in
accordance with an exchange ratio set out in the Agreement,
subject to adjustment 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 Permanent
entitled to a fractional share interest of ONB common stock as a
result of the exchange ratio will receive cash in lieu thereof
in an amount equal to the fraction of the share times the
average of the per share closing prices of ONB common stock as
reported on NASDAQ National Market System for the ten (10)
business days on which shares of ONB common stock were traded
immediately preceding the effective time of the Mergers.
<PAGE> 5
_______________, 2000
Page 5
ASSUMPTIONS
In connection with the Bank Merger, we have relied upon the following
assumptions for the purpose of issuing this opinion:
(a) The fair market value of the shares of ONB common stock deemed
received in the exchange by Bank shareholders will be
approximately equal to the fair market value of the Bank capital
stock deemed surrendered in the exchange.
(b) There is no plan or intention by shareholders of Bank to sell,
exchange or otherwise dispose of a number of shares of ONB
common stock deemed received in the Bank Merger which would
reduce Bank's shareholder's ownership of ONB common stock to a
number of shares having a value, as of the effective date of the
Bank Merger, of less than fifty percent (50%) of the value of
all of the formerly outstanding shares of capital stock of Bank
as of the same date. For purposes of this assumption, shares of
Bank capital stock and shares of ONB common stock held by the
Bank's shareholder and otherwise sold, redeemed, or disposed of
prior or subsequent to the Bank Merger will be considered in
making this assumption.
(c) Old National Bank will acquire at least ninety percent (90%) of
the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held
by Bank immediately prior to the Bank Merger. For purposes of
this assumption, Bank's assets used to pay its reorganization
expenses, and all redemptions and distributions (except for
regular and normal dividends) made by Bank immediately preceding
the transfer, will be included as assets of Bank held
immediately prior to the Bank Merger.
(d) Prior to the Bank Merger, ONB will be in control of Old National
Bank within the meaning of Section 368(c) of the Code.
(e) Following the Bank Merger, Old National Bank will not issue
additional shares of its capital stock that would result in ONB
losing control of Old National Bank within the meaning of
Section 368(c) of the Code.
(f) ONB has no plan or intention to reacquire any of its capital
stock deemed issued in the Bank 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.
(g) ONB has no plan or intention to liquidate Old National Bank, to
merge Old
<PAGE> 6
_______________, 2000
Page 6
National Bank with and into another corporation, to sell or
otherwise dispose of the capital stock of Old National Bank, or
to cause Old National Bank to sell or otherwise dispose of any
of the assets of Bank acquired in the Bank Merger, except for
dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code.
(h) The liabilities of Bank assumed by Old National Bank and the
liabilities to which the transferred assets of Bank are subject
were incurred by Bank in the ordinary course of its business.
(i) Following the Bank Merger, Old National Bank will continue the
historic business of Bank or use a significant portion of Bank's
business assets in a business.
(j) ONB, Old National Bank, Bank and the sole shareholder of Bank
will pay their respective expenses, if any, incurred in
connection with the Bank Merger.
(k) No intercorporate indebtedness exists between ONB and Bank or
between Old National Bank and Bank that was issued, acquired, or
will be settled at a discount.
(l) No two parties to the Bank Merger are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(m) Bank 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.
(n) The fair market value of the assets of Bank transferred to Old
National Bank in the Bank Merger will equal or exceed the sum of
the liabilities assumed by Old National Bank in the Bank Merger,
plus the amount of liabilities, if any, to which the transferred
assets are subject.
(o) No capital stock of Old National Bank will be issued in the Bank
Merger.
(p) None of the compensation received by any shareholder-employee of
Bank in the Bank Merger (if any) will be separate consideration
for, or allocable to, any of its shares of Bank capital stock;
none of the shares of ONB common stock received by any
shareholder-employee of Bank will be separate consideration for,
or allocable to, any employment agreement; and the compensation
paid to any shareholder-employee of Bank (if any) will be for
services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar
services.
In connection with the Company Merger, we have relied upon the following
assumptions
<PAGE> 7
_______________, 2000
Page 7
for the purpose of issuing this opinion:
(a) The fair market value of the shares of ONB common stock received
in the exchange by Permanent shareholders will be approximately
equal to the fair market value of the Permanent capital stock
surrendered in the exchange.
(b) There is no plan or intention by shareholders of Permanent to
sell, exchange or otherwise dispose of a number of shares of ONB
common stock deemed received in the Company Merger which would
reduce the Permanent shareholders' ownership of ONB common stock
to a number of shares having a value, as of the effective date
of the Company Merger, of less than fifty percent (50%) of the
value of all of the formerly outstanding shares of capital stock
of Permanent as of the same date. For purposes of this
assumption, shares of Permanent capital stock and shares of ONB
common stock held by the Permanent shareholders and otherwise
sold, redeemed, or disposed of prior or subsequent to the
Company Merger will be considered in making this assumption.
(c) Merger Corporation will acquire at least ninety percent (90%) of
the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held
by Permanent immediately prior to the Company Merger. For
purposes of this assumption, Permanent's assets used to pay its
reorganization expenses, and all redemptions and distributions
(except for regular and normal dividends) made by Permanent
immediately preceding the transfer, will be included as assets
of Permanent held immediately prior to the Company Merger.
(d) Prior to the Company Merger, ONB will be in control of Merger
Corporation within the meaning of Section 368(c) of the Code.
(e) Following the Company Merger, Merger Corporation will not issue
additional shares of its capital stock that would result in ONB
losing control of Merger Corporation within the meaning of
Section 368(c) of the Code.
(f) ONB has no plan or intention to reacquire any of its capital
stock issued in the Company 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.
(g) ONB has no plan or intention to liquidate Merger Corporation, to
merge Merger Corporation with and into another corporation, to
sell or otherwise dispose of the capital stock of Merger
Corporation, or to cause Merger Corporation to sell or otherwise
dispose of any of the assets of Permanent acquired in the
Company Merger, except for dispositions made in the ordinary
course of business or
<PAGE> 8
_______________, 2000
Page 8
transfers described in Section 368(a)(2)(C) of the Code.
(h) The liabilities of Permanent assumed by Merger Corporation and
the liabilities to which the transferred assets of Permanent are
subject were incurred by Permanent in the ordinary course of its
business.
(i) Following the Company Merger, Merger Corporation will continue
the historic business of Permanent or use a significant portion
of Permanent's business assets in a business.
(j) ONB, Merger Corporation and Permanent will pay their respective
expenses, if any, incurred in connection with the Company
Merger.
(k) No intercorporate indebtedness exists between ONB and Permanent
or between Merger Corporation and Permanent that was issued,
acquired, or will be settled at a discount.
(l) No two parties to the Company Merger are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(m) Permanent 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.
(n) The fair market value of the assets of Permanent transferred to
Merger Corporation in the Company Merger will equal or exceed
the sum of the liabilities assumed by Merger Corporation in the
Company Merger, plus the amount of liabilities, if any, to which
the transferred assets are subject.
(o) No capital stock of Merger Corporation will be issued in the
Company Merger.
(p) None of the compensation received by any shareholder-employee of
Permanent in the Company Merger (if any) will be separate
consideration for, or allocable to, any of its shares of
Permanent capital stock; none of the shares of ONB common stock
received by any shareholder-employee of Permanent will be
separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any shareholder-employee
of Permanent (if any) will be for services actually rendered and
will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
OPINION
Based solely on the facts, assumptions and other information set forth
above, and so long
<PAGE> 9
_______________, 2000
Page 9
as such facts, assumptions and other information are true and correct on
the date of the consummation of the Bank Merger, it is our opinion with
respect to the Bank Merger that:
(1) Provided that the merger of Bank with and into Old National Bank
qualifies as a statutory merger under applicable law, and
following the Bank Merger, Old National Bank will hold
substantially all of its assets and the assets of Bank, and in
the Bank Merger, the shareholder of Bank will constructively
exchange an amount of stock constituting control of Bank (within
the meaning of Section 368(c) of the Code) solely for ONB voting
common stock, the proposed merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Code. The reorganization will not be
disqualified by reason of the fact that voting stock of ONB is
being used in the merger. For purposes of this opinion,
"substantially all" means at least ninety percent (90%) of the
fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets of Bank. ONB,
Old National Bank, and Bank will each be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code.
(2) No gain or loss will be recognized by Bank on the transfer of
substantially all of its assets to Old National Bank and the
assumption by Old National Bank of the liabilities of Bank
(Sections 361(a) and 357(a) of the Code).
(3) No gain or loss will be recognized by ONB or Old National Bank
on the receipt by Old National Bank of substantially all of the
assets of Bank in constructive exchange for ONB common stock and
the assumption by Old National Bank of Bank's liabilities (Rev.
Rul. 57-278, 1957-1 C.B. 124).
(4) No gain or loss will be recognized by the shareholder of Bank
upon the deemed exchange of Bank common stock solely for ONB
common stock (Section 354(a)(1) of the Code).
Based solely on 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 consummation of the Company Merger, it is our opinion
that:
(1) Provided that the merger of Permanent with and into Merger
Corporation qualifies as a statutory merger under applicable
law, and following the Company Merger, Merger Corporation will
hold substantially all of its assets and the assets of
Permanent, and in the Company Merger, the shareholders of
Permanent will exchange an amount of stock constituting control
of Permanent (within the meaning of Section 368(c) of the Code)
solely for ONB voting common stock, the proposed merger will
constitute a reorganization within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Code. The
reorganization will not
<PAGE> 10
_______________, 2000
Page 10
be disqualified by reason of the fact that voting stock of ONB
is being used in the merger. For purposes of this opinion,
"substantially all" means at least ninety percent (90%) of the
fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets of Permanent.
ONB, Merger Corporation, and Bank will each be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code.
(2) No gain or loss will be recognized by Permanent on the transfer
of substantially all of its assets to Merger Corporation and the
assumption by Merger Corporation of the liabilities of Permanent
(Sections 361(a) and 357(a) of the Code).
(3) No gain or loss will be recognized by ONB or Merger Corporation
on the receipt by Merger Corporation of substantially all of the
assets of Permanent in constructive exchange for ONB common
stock and the assumption by Merger Corporation of Permanent's
liabilities (Rev. Rul. 57-278, 1957-1 C.B. 124).
(4) No gain or loss will be recognized by the shareholders of
Permanent upon the exchange of Permanent common stock solely for
ONB common stock (Section 354(a)(1) of the Code).
The opinions expressed herein represent our conclusions as to the
application of existing federal income tax law to the facts as presented to us
relating to the Bank Merger and Company Merger, and we give no assurance that
changes in such law or any interpretation thereof will not affect the opinions
expressed by us. Moreover, there can be no assurance that 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 transactions 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.
This opinion is addressed to you and is solely for your use in
connection with the transactions described herein. We assume no professional
responsibility to any other person or entity whatsoever, including, without
limitation, any shareholder of either ONB or Permanent. 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.
Very truly yours,
KRIEG DEVAULT ALEXANDER &
CAPEHART, LLP
<PAGE> 1
EXHIBIT 10.01
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into as of this 20th day
of December, 1999, by and between OLD NATIONAL BANCORP (the "Company"), an
Indiana corporation, and DONALD P. WEINZAPFEL (the "Executive"), an Indiana
resident.
WITNESSETH:
WHEREAS, the Company, Old National Bank, Permanent Bancorp, Inc.
("Permanent"), Permanent Bank (the "Bank") and Merger Corporation I ("Merger
Corporation") have entered into that certain Agreement of Affiliation and Merger
dated December 20, 1999 (the "Merger Agreement"); and
WHEREAS, the Company wishes to engage the Executive as a consultant,
and the Executive desires to provide certain consulting services, in accordance
with this Agreement.
NOW THEREFORE, in consideration of the foregoing premises, the mutual
promises, obligations and undertakings contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Term; Consulting Services.
The Executive shall provide the consulting services described herein
for a term of eighteen (18) months immediately following the Effective Time (as
defined in the Merger Agreement), unless earlier terminated as provided herein
(the "Term"). During the Term, the Executive shall provide, upon the request of
the Company or Old National Bank, certain consulting services to Old National
Bank. Such consulting services shall (a) be reasonably determined by the Company
or Old National Bank, (b) be performed by the Executive during normal business
hours at any office of the Company or Old National Bank now or hereafter located
in Vanderburgh, Warrick or Posey Counties in Indiana, and (c) not exceed twenty
(20) hours per month. The Executive shall perform the consulting services
pursuant to this Agreement to the best of his ability and in a faithful and
diligent manner.
Section 2. Executive's Employment.
In accordance with Section 6(b) of the Employment Agreement, the
Executive hereby voluntarily terminates his employment by, and hereby
voluntarily resigns from all officer and other positions held by him at,
Permanent and the Bank, effective as of the Effective Time, and the parties
hereto hereby waive the ninety (90) day notice requirement of Section 6(b) of
the Employment Agreement and the requirement to obtain an assumption agreement
pursuant to Section 12 of the Employment Agreement. Accordingly, at and
following
<PAGE> 2
the Effective Time, no party to that certain Employment Agreement (the
"Employment Agreement") dated October 6, 1998 by and among Permanent, the Bank
and the Executive shall have any liability or obligation to any other party
thereto under the Employment Agreement, except that the Executive's covenants
and obligations pursuant to Section 10 of the Employment Agreement shall remain
in full force and effect and continue to be binding upon the Executive in
accordance with the provisions thereof and except with respect to any
compensation properly due and payable to the Executive under the Employment
Agreement at the Effective Time which remains unpaid at the Effective Time. The
Executive hereby understands, acknowledges and agrees that, from and following
the Effective Time, (a) he shall not be entitled to receive or participate in
any salary, bonus, compensation or other payments or any employee benefits
(including, without limitation, any retirement, pension, profit-sharing and
insurance) of or from the Company, Old National Bank, Permanent, the Bank or
Merger Corporation, whether pursuant to the Employment Agreement or otherwise,
except for (i) the Consulting Fee provided herein, (ii) all fully vested
retirement, pension and profit-sharing benefits properly payable to the
Executive, and (iii) any insurance coverage under applicable law or under the
retiree welfare benefits, if any, made available by the Company to its retirees
or former directors, it being understood and agreed that all premiums and costs
for such insurance coverage shall be the sole responsibility of the Executive;
and (b) he hereby waives and releases any and all rights and claims to the items
referenced in Section 2(a) hereof.
The Executive hereby expressly understands, acknowledges and agrees
that, on and after the Effective Time, he shall not be entitled to, and the
Executive hereby expressly waives and releases all rights and claims to, any
salary, compensation, payment and/or other amount from the Company, Old National
Bank, Permanent, the Bank and Merger Corporation under Sections 6, 7 and 8 of
the Employment Agreement (whether based upon any termination, change in control
or otherwise).
Section 3. Compensation.
During the Term, the Company shall pay to the Executive, and the
Executive shall accept from the Company, as full payment for his consulting
services provided hereunder, an amount equal to Fourteen Thousand Five Hundred
Dollars ($14,500) per month (the "Consulting Fee"), payable in equal monthly
installments on the first day of each month during the Term. The Executive shall
be responsible for and pay all taxes relating to the Consulting Fee paid to the
Executive.
Section 4. Termination.
During the Term, this Agreement may be terminated by the Company or the
Executive at any time with or without cause upon ten (10) days prior written
notice to the other. In addition, this Agreement shall automatically terminate
upon the death or disability of the Executive. Upon any termination of this
Agreement, the Company shall pay to the Executive (or, in the event of the
Executive's death, to the Executive's estate) the Consulting Fee from the date
of termination through the end of the Term. Any
<PAGE> 3
termination of this Agreement shall not affect the Executive's covenants and
obligations under Section 10 of the Employment Agreement, all of which shall
remain in full force and effect and continue to be binding upon the Executive in
accordance with the provisions thereof
Section 5. Relationship of the Parties.
The Executive shall be an independent contractor responsible for his
own actions, and nothing contained in this Agreement shall be construed to
constitute or make the Executive an employee, representative or agent of the
Company. Nothing in this Agreement creates a relationship of agency, employment,
partnership, co-venture or joint venture between the parties, and neither party
hereto shall have any authority to bind the other in any respect. This Agreement
does not and shall not be construed so as to entitle Executive to any of the
benefits, privileges or amenities of employment by the Company or any of its
subsidiaries, other than the insurance coverage described in Section 2 hereof.
Section 6. Certain Other Matters.
6.01. Country Club Membership. The Company shall, within thirty (30)
days following the Effective Time, cause Permanent or Old National Bank, as the
case may be, to transfer and assign to the Executive the membership at Rolling
Hills Country Club owned by Permanent for the benefit of the Executive.
Following such transfer and assignment, the Executive shall be responsible for
and pay all dues, assessments, fees, costs and other amounts relating to such
membership.
6.02. Other Agreements. The Executive hereby acknowledges and agrees
that the Employment Agreement (including the agreements, arrangements and
perquisites referred to therein) constitutes the only agreement, commitment and
understanding between or among Permanent, the Bank and the Executive relating to
Permanent's and the Bank's employment of the Executive. The Executive further
acknowledges and agrees that the Employment Agreement has never been amended,
modified or extended in any respect, except for the amendment thereto that
extended the term of the Employment Agreement through the Effective Time.
6.03. No Breaches or Claims. The Executive hereby acknowledges and
agrees that neither the Executive nor Permanent or the Bank has breached or
defaulted under, or is presently in breach of or default under, the Employment
Agreement. The Executive hereby further acknowledges and agrees that the
Executive has not waived compliance of any term, condition or provision of the
Employment Agreement. The Executive represents and agrees that, as of the date
hereof, he has no claims, demands, causes of action, suits or proceedings
pending or threatened against Permanent, the Bank or any of their stockholders,
directors, officers or employees, whether arising under the Employment Agreement
or otherwise.
6.04. Payments under the Employment Agreement. The Executive hereby
acknowledges and agrees that he has received in full all salary, compensation,
employee benefits, payments and other amounts to which
<PAGE> 4
he is entitled under the Employment Agreement or otherwise from Permanent and
the Bank through and including the date hereof (except for any fully vested
benefits under any employee benefit plan of Permanent or the Bank that are being
paid or will be paid in accordance with a written plan document or agreement).
6.05. Certain Representations, Warranties and Covenants. The Executive
represents, warrants, covenants and agrees that (a) he has the legal capacity to
enter into this Agreement and that by doing so, the Executive is not in breach
or contravention of any other agreements to which he is a party, (b) this
Agreement is binding upon and enforceable against the Executive, (c) all
information and materials which the Executive may submit to the Company or Old
National Bank in providing the consulting services hereunder will not infringe
upon or violate the rights of any third party, (d) Section 10 of the Employment
Agreement shall survive the Merger and shall continue in full force and effect
and be binding upon him following the Effective Time in accordance with the
provisions thereof, (e) neither this Agreement (including the Executive's
resignation contemplated hereby) nor any action on the part of the Company, Old
National Bank, Permanent or the Bank constitutes a "termination" (as defined in
the Employment Agreement) by Permanent or the Bank of the Executive's employment
(whether with or without "cause", as defined in the Employment Agreement) and
does not constitute Permanent or the Bank having "involuntarily terminated", as
defined in the Employment Agreement, the Executive's employment, and (f) neither
this Agreement (including the Executive's resignation contemplated hereby) nor
any action on the part of the Company, Old National Bank, Permanent or the Bank
will result in the Executive being entitled to any payment under the Employment
Agreement (whether in connection with a "change in control", as defined in the
Employment Agreement, or otherwise).
6.06. Confirmation. Immediately prior to the Effective Time, the
Executive shall confirm in writing that his representations, warranties,
agreements, waivers and releases contained in this Agreement continue are true,
accurate and complete and binding upon him as of the Effective Time.
Section 7. Effectiveness of this Agreement.
This Agreement shall be in full force and effect and binding upon the
parties hereto on and after the date hereof, notwithstanding that the Term shall
begin following the date hereof. In the event that the Merger Agreement is
terminated as provide therein, then this Agreement shall automatically terminate
(without the need for any further action, writing or notice by either party
hereto).
Section 8. Miscellaneous.
(a) Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, trustees, representatives, successors and assigns.
Neither party may assign this Agreement without the prior written consent of
each other party
<PAGE> 5
hereto; provided, however, that the Executive shall not unreasonably withhold
his consent to any such assignment by the Company.
(b) Waiver. The parties hereto may, by an instrument in writing signed
by the waiving party, waive the performance or breach by the other party of any
of the covenants or agreements to be performed by such other party under this
Agreement. 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.
(c) Amendment. Except as expressly provided otherwise herein, this
Agreement may be terminated, amended, modified or supplemented only by a written
agreement executed by all of the parties hereto.
(d) Severability. In case any one or more of the provisions (or any
portion thereof) 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 (or portion thereof) had never been contained herein.
(e) Entire Agreement. This Agreement supersedes all other prior
understandings, commitments, representations, negotiations, contracts and
agreements, whether oral or written, between the parties hereto relating to the
matters contemplated hereby and constitutes the entire agreement between the
parties hereto relating to the subject matter hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana, without reference to any
choice of law provisions, principles or rules thereof (whether of the State of
Indiana or any other jurisdiction) that would cause the application of any laws
of any jurisdiction other than the State of Indiana.
(g) Headings. The section headings contained in this Agreement have
been inserted solely for convenience and ease of reference and shall not be
considered in the interpretation, construction or enforcement of this Agreement.
(h) Capitalized Terms. All capitalized terms used but not otherwise
defined in this Agreement shall have the same meanings ascribed to them in the
Merger Agreement.
* * *
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have entered into, executed and
delivered this Agreement as of the day and year first above written.
OLD NATIONAL BANCORP
By: /s/ JAMES A. RISINGER
--------------------------------
James A. Risinger, Chairman and
Chief Executive Officer
EXECUTIVE
/s/ DONALD P. WEINZAPFEL
------------------------------------
Donald P. Weinzapfel
<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
(Carbondale, Illinois) and 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
American National Bank and Trust Company United States of America American National Bank and
(Muncie, Indiana) Trust Company of Muncie
Peoples Loan & Trust Bank Indiana Peoples Loan & Trust Bank
(Winchester, Indiana)
The Farmers State Bank of Union City, Ohio Ohio Farmers State Bank
(Union City, Ohio)
American National Trust and Investment Indiana American National Trust
Management Company and Investment Management
(Muncie, Indiana) Company
Service Management Corporation Indiana ANB Financial
(Muncie, Indiana)
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
JURISDICTION
OF INCORPORATION OR BUSINESS NAME OF
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARY
------------------ ------------------- ----------------
<S> <C> <C>
Heritage Bank Tennessee Heritage Bank
(Clarksville, Tennessee)
Central Life Insurance Company Tennessee Central Life Insurance
(Clarksville, Tennessee) Company
Heritage Investment Center, Inc. Tennessee Heritage Investment
(Clarksville, Tennessee) Center, Inc.
Advance Credit Company, Inc. Tennessee Advance Credit Company,
(Clarksville, Tennessee) Inc.
Heritage Investment Corporation Tennessee Heritage Investment
(Clarksville, Tennessee) Corporation
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 5.01 and Exhibit
8.01.
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Old National Bancorp of our report dated
January 26, 2000 relating to the financial statements appearing in Old National
Bancorp's Annual Report on Form 10-K for the year ended December 31, 1999 and of
our report dated March 10, 2000 relating to the supplemental consolidated
financial statements appearing in Old National Bancorp's current Report on Form
8-K filed April 19, 2000. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS, LLP
-------------------------------
PricewaterhouseCoopers, LLP
Chicago, Illinois,
May 1, 2000
<PAGE> 1
Exhibit 23.03
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Old National Bancorp on Form S-4 of our report dated May 21, 1999, appearing in
the Annual Report on Form 10-K of Permanent Bancorp, Inc. for the year ended
March 31, 1999 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
- -----------------------------------
May 2, 2000
Indianapolis, Indiana
<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 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 annual report on Form 10-K for the year ended December 31, 1999 and to
the incorporation by reference in this registration statement of our report
dated January 27, 1999 (except with respect to the Southern Bancshares LTD, ANB
Corporation and Heritage Financial Services, Inc. business combinations
discussed in Note 2 as to which the dates are January 29, 1999, March 10, 2000
and March 1, 2000, respectively ) included in Old National Bancorp's
supplemental financial statements on Form 8-K for the year ended December 31,
1999 and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
May 1, 2000
<PAGE> 1
EXHIBIT 23.05
CONSENT OF INDEPENDENT ACCOUNTANT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of our report dated January 28, 2000 relating to the
financial statements of ANB Corporation appearing in Old National Bancorp's
current Report on Form 8-K filed April 19, 2000. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
Olive LLP
Indianapolis, Indiana
April 28, 2000
<PAGE> 1
EXHIBIT 23.06
CONSENT OF INDEPENDENT ACCOUNTANT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of our report dated January 18, 2000 relating to the
financial statements of Heritage Financial Services, Inc. appearing in Old
National Bancorp's current Report on Form 8-K filed April 19, 2000. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
Heathcott & Mullaly, P.C.
Brentwood, Tennessee
April 28, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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/ ANDREW E. GOEBEL
- --------------------
DIRECTOR
Andrew E. Goebel
- --------------------
Printed Name
Dated: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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/ KELLY N. STANLEY
- --------------------
DIRECTOR
Kelly N. Stanley
- --------------------
Printed Name
Dated: May 2, 2000
<PAGE> 15
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 Permanent Bancorp, Inc., a Delaware
corporation with its principal office located in Evansville, 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: May 2, 2000
<PAGE> 1
Exhibit 99.01
PROXY
PERMANENT BANCORP, INC.
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 Permanent Bancorp, Inc. ("Permanent") which the undersigned
beneficially holds of record on ___________, 2000 and would be entitled to vote
at the Special Meeting of Shareholders of Permanent, to be held at
_____________________, located at _________________, Evansville, Indiana, 47708,
on ___________, 2000, at ___:____ __.m., local time, and at any adjournments or
postponements thereof, with all of the powers the undersigned would possess if
personally present, on the matters set forth below.
The Board of Directors of Permanent recommends a vote FOR approval of
Proposal 1.
Only holders of shares of Permanent 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. Adoption of the Agreement of Affiliation and Merger
("Agreement"), dated December 20, 1999, by and among
Permanent, Old National Bancorp, Merger Corporation I, Old
National Bank and Permanent Bank pursuant to which Permanent
Bank will merge into Old National Bank and Permanent will
merge into Merger Corporation I and each outstanding share of
Permanent common stock will be converted into the right to
receive such number of shares of Old National Bancorp common
stock as is provided for in the Agreement and as described in
the accompanying Proxy Statement-Prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, those named in this proxy may vote on
such other matters as may properly come before the Special
Meeting or any adjournment or postponement thereof.
Please sign on reverse side
<PAGE> 2
(continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTIONS ARE SPECIFIED, 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 BY (I) FILING WITH THE SECRETARY OF PERMANENT AT
OR BEFORE THE SPECIAL MEETING A WRITTEN NOTICE OF REVOCATION BEARING A LATER
DATE THAN THIS PROXY; (II) DULY EXECUTING A SUBSEQUENT PROXY RELATING TO THE
SAME SHARES AND DELIVERING IT TO THE SECRETARY OF PERMANENT AT OR BEFORE THE
SPECIAL MEETING; OR (III) ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON
(ALTHOUGH ATTENDANCE AT THE SPECIAL MEETING WILL NOT IN AND OF ITSELF CONSTITUTE
REVOCATION OF THIS PROXY). IF THIS PROXY IS PROPERLY REVOKED AS DESCRIBED ABOVE,
THEN THE POWER OF THE PROXIES NAMED HEREIN TO ACT HEREUNDER SHALL BE DEEMED
TERMINATED AND OF NO FURTHER FORCE AND EFFECT.
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 99.02
CONSENT OF CAPITAL RESOURCES GROUP, INC.
We hereby consent to the use of our opinion letter to the Board of
Directors of Permanent Bancorp, Inc. to the Prospectus/ Proxy Statement relating
to the proposed merger of Permanent Bancorp, Inc. with and into Old National
Bancorp and to the references to our Firm and such opinion in such Prospectus/
Proxy Statement. 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, or the rules and regulations of the Securities and
Exchange Commission thereunder, nor do we thereby 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 Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Capital Resources Group, Inc.
April 21, 2000
