EXHIBIT 8
, 2000
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Board of Directors
Orange County Bank
224 West Court Street
Paoli, Indiana 47454
Board of Directors
Wolford Cannon Hoecker Insurance Agency, Inc.
923 North Vermilion
P. O. Box 10
Danville, Illinois 61834
Re: Orange County Bank Exchange of Wolford Cannon Hoecker
Insurance Agency, Inc. Common Stock for Old National
Bancorp Common Stock
Ladies and Gentlemen:
The respective Boards of Directors of Orange County Bank ("Bank") and
Wolford Cannon Hoecker Insurance Agency, Inc. ("WCH") have requested our opinion
as to certain federal income tax consequences of a reorganization involving
Bank, WCH, the shareholders of Wolford Cannon Hoecker Insurance Agency, Inc.
("Shareholders") and Old National Bancorp ("ONB") ("Share Exchange").
In summary, the proposed Share Exchange transaction involves Bank, a
subsidiary of ONB, acquiring from the Shareholders of WCH all of the issued and
outstanding shares of WCH common stock solely in exchange for common stock of
ONB. Upon consummation of the Share Exchange, WCH will become a wholly owned
subsidiary of Bank.
FACTS
In connection with the Share Exchange, the following facts have been
provided to us, and we have relied upon them for purposes of this opinion:
A. Old National Bancorp
ONB has its principal office at 420 Main Street, Evansville,
Vanderburgh County, Indiana 47708. ONB is a corporation duly incorporated and
existing under the laws of the State of Indiana and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended. As of June 30,
2000, ONB had 150,000,000 shares of voting, no par value common stock
authorized, of which approximately 55,400,000 shares 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.
ONB has 2,000,000 shares of no par value preferred stock authorized.
These shares are available to be issued, without the prior approval of ONB
shareholders, in classes with relative rights, privileges and preferences
determined for each class by ONB's Board of Directors. No shares of ONB
preferred stock have been issued, and ONB presently has no intent and no
commitments to issue any of such shares.
Of ONB's 2,000,000 authorized preferred shares, 200,000 shares have
been designated as Series A preferred stock which may not be issued except upon
exercise of certain rights pursuant to ONB's shareholder rights plan. No shares
of Series A preferred stock have been issued.
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 as of the date hereof of four (4)
operating banks, four (4) Delaware business trusts, one (1) consumer finance
company, one (1) realty company, 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 Share Exchange.
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B. Orange County Bank
Bank has its principal office at 224 West Court Street, Paoli, Indiana
47454. Bank is an Indiana state-chartered bank and a wholly-owned subsidiary of
ONB.
C. Wolford Cannon Hoecker Insurance Agency, Inc.
WCH has its principal office located at 923 North Vermilion, Danville,
Illinois 61834. WCH, an Illinois corporation and a licensed Illinois agency,
sells all lines of insurance, including, by way of example, property and
casualty insurance and health and disability insurance. Shareholders of WCH are
all residents of the State of Illinois and are the owners of all of the issued
and outstanding shares of common stock of WCH. WCH common stock is not publicly
traded. The rights of the Shareholders of WCH are governed by the laws of the
State of Illinois and by WCH's Articles of Incorporation and By-Laws, as
amended.
WCH's Articles of Incorporation authorize the issuance of 21,000 shares
of common stock. WCH has 21,000 shares of common stock issued and outstanding.
BUSINESS PURPOSES
Bank and the Shareholders of WCH desire to reorganize their stock
interests to accomplish the following business objectives, among others:
1. To obtain greater financial and managerial strength for future
growth and to achieve economies of scale and other operational
benefits.
2. To provide the Shareholders an interest in a more widely-held
enterprise with potentially more marketable stock.
3. To allow Bank and WCH to compete more effectively with other
insurance agencies and to enable WCH to provide new and broader
services to its customers.
PROPOSED TRANSACTION
As used herein, "Code" refers to the Internal Revenue Code of 1986, as
amended, and "Regulations" refer to regulations promulgated thereunder by the
Secretary of the Treasury, all as in effect as of the date of this opinion.
To accomplish the objectives specified above, Bank and WCH and the
Shareholders entered into a Share Exchange Agreement dated October ___, 2000
("Share Exchange Agreement"). Under the terms of the Share Exchange Agreement,
Bank will acquire from the Shareholders all of the WCH common stock in exchange
for shares of ONB common stock. Upon consummation of the Share Exchange, WCH
will become a wholly-owned subsidiary of Bank. At the effective time of the
Share Exchange, each issued and outstanding share of WCH common stock will be
converted into the right to receive 5.2838 shares of ONB common stock, subject
to adjustment, if any, as provided for in the Share Exchange 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 entitled to a fractional share interest of ONB common
stock will receive cash in lieu thereof in an amount equal to the fraction of a
share of ONB common stock multiplied by the average of the per share closing
price of ONB common stock reported on the NASDAQ National Market System for the
final five (5) business days on which shares of ONB common stock were traded
immediately preceding the effective time of the Share Exchange. The payment of
cash in lieu of fractional share interests of ONB common stock is solely for the
purpose of avoiding the expense and inconvenience to ONB of issuing fractional
shares of its common stock and does not represent separately bargained-for
consideration.
We have acted as legal counsel to Bank in connection with the Share
Exchange Agreement. As such, and for the purpose of rendering this opinion, we
have examined and are relying upon (without any independent investigation or
review thereof) the truth and accuracy, at all relevant times, of the
statements, covenants, representations and warranties contained in the following
documents:
1. The Share Exchange Agreement (including the exhibits thereto),
and
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2. Such other instruments and documents related to the formation,
organization and operation of Bank and WCH or to the consummation
of the Share Exchange and the transactions contemplated thereby
as we have deemed necessary or appropriate.
ASSUMPTIONS
In connection with rendering this opinion, we have relied upon the
following assumptions:
(a) The fair market value of the ONB common stock to be received by
each Shareholder will be approximately equal to the fair market
value of the WCH common stock surrendered in exchange therefor.
(b) There is no plan or intention on the part of the Shareholders who
own one percent (1%) or more of WCH stock, and to the best of the
knowledge of the management of WCH, there is no plan or intention
on the part of the remaining Shareholders to sell, exchange or
otherwise dispose of in any manner a number of shares of ONB
common stock received in the Share Exchange that would reduce the
Shareholders' ownership of ONB common stock to a number of shares
having, in the aggregate, a value, as of the date of the Share
Exchange, of less than 50 percent of the fair market value of the
WCH common stock outstanding as of the same date. For purposes of
the preceding sentence, all shares of WCH common stock exchanged
for cash (including shares exchanged for cash in lieu of
fractional shares of ONB common stock) will be considered
outstanding WCH common stock as of the date of the Share
Exchange. Moreover, shares of WCH common stock and shares of ONB
common stock held by Shareholders and otherwise sold, redeemed,
or disposed of prior or subsequent to the Share Exchange are
taken into account for purpose of the first sentence of this
paragraph.
(c) Bank has no plan or intention to sell or otherwise dispose of any
of the WCH common stock to be acquired by it in the Share
Exchange, to merge WCH into another corporation, to liquidate
WCH, or to cause the sale or other disposition of any of the
assets of WCH except for dispositions made in the ordinary course
of business. Neither WCH nor Bank has any plan or intention to
cause WCH to issue additional shares of WCH stock to persons
other than Bank in any amounts that would result in Bank no
longer being in control of WCH within the meaning of Section
368(c) of the Code.
(d) Following the Share Exchange, WCH will continue its historical
business in substantially the same manner as it was conducted by
WCH prior to the transaction.
(e) Bank will acquire WCH common stock solely in exchange for ONB
voting stock. Further, no liabilities of WCH or any Shareholder
will be assumed by or transferred to Bank, nor will any of the
WCH common stock be subject to any liabilities.
(f) Except as set forth in the Share Exchange Agreement, Bank, WCH
and the Shareholders will each pay their own expenses, if any,
incurred in connection with the Share Exchange.
(g) Bank has no plan or intention to redeem or otherwise reacquire
any of the shares of ONB common stock to be issued in the Share
Exchange. Although the Board of Directors of ONB has authorized
ONB to make periodic repurchases of its stock in the open market
for various corporate purposes, ONB and Bank have no specific
plan or intention to reacquire its stock from the former
Shareholders nor, in the event that stock acquired by the former
Shareholders in the Share Exchange should enter the open market,
to acquire such shares from such Shareholders.
(h) WCH has no outstanding warrants, options, convertible securities,
or any other type of right pursuant to which any person could
acquire any stock in WCH.
(i) Bank does not presently own, directly or indirectly, nor has it
owned, directly or indirectly, in the past five years any stock
of WCH.
(j) At the time of the Share Exchange, the fair market value of all
the assets of Bank will exceed the sum of all of the liabilities
of Bank.
(k) The payment of cash to Shareholders in lieu of fractional shares
of ONB common stock is solely for the purpose of avoiding the
expense and inconvenience to Bank of issuing fractional shares
and does not represent separately bargained for consideration.
The total cash consideration paid in the Share Exchange to
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Shareholders in lieu of issuing fractional shares of ONB common
stock will not exceed one percent of the total consideration
received by Shareholders in the Share Exchange. The fractional
share interests of each Shareholder will be aggregated, and no
Shareholder will receive cash in lieu of fractional shares in an
amount equal to or greater than the value of one full share of
ONB stock.
(l) No compensation to be paid by Bank to any Shareholder-employee of
WCH will be separate consideration for or allocable to such
Shareholder's shares of WCH common stock; none of the shares of
ONB common stock to be received by any Shareholder-employee is
separate consideration allocable to any employment agreement; and
the compensation paid to any Shareholder-employee will be for
service actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar
services.
(m) At the time of the Share Exchange, the fair market value of the
assets of WCH will exceed the sum of all of the liabilities of
WCH plus the liabilities, if any, to which the assets are
subject.
(n) No parties to the Share Exchange are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Internal
Revenue Code.
(o) There will be no dissenters to the Share Exchange.
OPINION
Based on the facts and assumptions set forth above, and subject to the
condition noted below, we are of the opinion that:
(1) The acquisition by Bank of WCH common stock in exchange for ONB
common stock will qualify as a tax-free reorganization within the
meaning of Section 368(a)(1)(B) of the Code. ONB, Bank and WCH
will each be a "party to a reorganization" within the meaning of
Section 368(b).
(2) To the extent that a Shareholder receives ONB common stock in
exchange for his WCH common stock (including fractional shares of
ONB common stock deemed issued as described below), he will not
recognize any gain or loss upon the exchange.
(3) A Shareholder who receives cash in lieu of a fractional share of
ONB common stock will be treated as if he received a fractional
share of ONB common stock pursuant to the Share Exchange and ONB
then redeemed such fractional share for the cash. Such
Shareholder will recognize capital gain or loss on the
constructive redemption of the fractional share in an amount
equal to the difference between the cash received and the
adjusted basis of the fractional share provided that he holds his
WCH common stock as a capital asset.
The opinion expressed herein represents our conclusions as to the
application of existing federal income tax law to the facts as presented to us
relating to the Share Exchange, and we give no assurance that changes in such
law or any interpretation thereof will not affect the opinion expressed by us.
Moreover, there can be no assurance that this opinion will not be challenged by
the Internal Revenue Service or that a court considering the issues will not
hold contrary to such opinion. We express no opinion on the treatment of the
Share Exchange under the income tax laws of any state or other taxing
jurisdiction. We assume no obligation to advise you of any changes concerning
the above, whether or not deemed material, which may hereafter come or be
brought to our attention. The opinions expressed herein are a matter of
professional judgment and are not a guarantee of result.
This opinion is addressed to you and is solely for your use in
connection with the Share Exchange and your role as members of your respective
Boards of Directors. We assume no professional responsibility to any other
person or entity whatsoever, including, without limitation, any shareholder of
ONB or Shareholder of WCH. 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,
/s/ KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
KRIEG DeVAULT ALEXANDER & CAPEHART, LLP
