1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 10,MAY 3, 2000
================================================================================REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OLD NATIONAL BANCORP
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(Exact name of registrant as specified in its charter)
INDIANA 6021 35-1539838
- --------------------------------------- -------------------------------------- -------------------------------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Identification No.)
incorporation or organization) Classification Code Number) Identification No.)
420 MAIN STREET, EVANSVILLE, INDIANA 47708, (812) 464-1434
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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 MICHAEL J. MESSAGLIA, ESQ.
OLD NATIONAL BANCORP 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)
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(Name, address, including zip code, and telephone number, including area code,
orof 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
====================================================================================================================================
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities- --------------------------------------------------------------------------------------------------------------------------
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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)
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up to be offering price aggregate offering registration
to be registered registered (1) per unit (2) price fee (3)3,532,100
Common Stock, no par value............. shares $N/A $97,100,000 $25,635
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COMMON STOCK, UP TO
NO PAR VALUE 7,669,301 SHARES $28.95 $ 222,044,526 $ 58,620
====================================================================================================================================--------------------------------------------------------------------------------------------------------------------------
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(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
numberpurchase price of shares of ANB common stock presently outstanding or
reserved for issuance under various plans or otherwise expected to be
issued upon the consummation of the proposed merger to which this
registration statement relates, multiplied by the exchange ratio of
1.3125 shares of Old National common stock per each share of ANB common
stock.$97.1 million.
(2) Calculated in accordance with Rule 457(f) and 457(c) under the
Securities Act of 1933, as amended, the proposed maximum offering price
per share is computed by dividing (i) the product of (A) the average of
the bid and asked prices of ANB common stock as reported on the Nasdaq
National Market System on January 5, 2000 ($38.00) and (B) 5,843,277,
representing the maximum number of shares of ANB common stock expected
to be exchanged for the Old
2
National common stock being registered by (ii) 7,669,301, representing
the maximum number of shares of Old National common stock to be issued
in connection with the merger.
(3) The registration fee was calculated pursuant to Rule 457(f) under the
Securities Act of 1933, as amended as follows: .000264 multiplied by the
proposed maximum aggregate offering price.
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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)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)8(a),
MAY DETERMINE.
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3
[ANB CORPORATION2
[PERMANENT BANCORP, INC. LETTERHEAD]
_______________, 2000
Dear Shareholders:
I am pleased to invite you to attend a special meetingYour Board of shareholders
of ANB Corporation on:
_______________, __________ ___, 2000
_____:_____ __.m.
-------------------------
Muncie, Indiana 47305
The purposes ofDirectors and the Special Meeting are (1) to consider and vote upon
the Agreement of Affiliation and Merger dated as of July 29, 1999, between ANB
and Old National Bancorp, which provides for the merger of ANB into Old National
and (2) to consider and vote upon any other matters that may properly come
before the meeting. The merger agreement provides that you will receive 1.3125
shares of Old National common stock, as adjusted for the 5% stock dividend
declared by Old National on December 9, 1999, and subject to further adjustment,
for each share of ANB common stock you own. The exchange ratio will be adjusted
if, among other reasons, Old National issues a stock dividend prior to the
completion of the merger. A copy of the merger agreement is attached to the
enclosed Proxy Statement-Prospectus as Appendix A.
The Board of Directors of ANB enthusiastically supportsOld National Bancorp
have agreed that Old National will acquire Permanent Bank and Permanent Bancorp
through the merger and
believes that the proposed merger betweenof Permanent Bank into Old National and ANB is inBank followed by the
best
interestsmerger of ANB asPermanent Bancorp into a whole, including the interestswholly-owned subsidiary of the shareholders,
customers and employees of ANB. Among other benefits, yourOld National. Your
Board of Directors believes that the mergermergers 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.
ANB'sThe 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 adviser, Sandler O'Neill & Partners, L.P.advisor, Capital Resources Group, Inc., has
issued its opinion to yourthe Board of Directors of Permanent Bancorp that the
1.3125 exchange ratioconsideration to be paid in the proposed company merger is fair, from a
financial point of view, to ANB'sPermanent 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 approve it.
We haveplan to attend the special
meeting, please take the time to vote by completing and returning the enclosed
a Notice of Special Meeting of Shareholders and a
Proxy Statement-Prospectus containingproxy card in the pre-addressed envelope provided. The enclosed proxy
statement-prospectus provides you with detailed information about the special meeting
and the proposed merger.mergers. We encourage you to read this entire document carefully.
Also
enclosed is a proxy card so you can vote on the merger without attending the
special meeting. Please complete, signSincerely,
Donald P. Weinzapfel
Chairman and date the enclosed proxy card and
return it to us as soon as possible in the envelope we have provided. If you
decide to come to the special meeting, you may vote your shares in person
whether or not you have mailed us a proxy.
Please give this matter your careful consideration.
Sincerely,
James R. Schrecongost
Vice Chairman, President and CEOChief 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.
4
ANB CORPORATION
120 WEST CHARLES3
PERMANENT BANCORP, INC.
101 SE THIRD STREET
MUNCIE,EVANSVILLE, INDIANA 47305
(765) 747-757547708
(812) 428-6800
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on __________ ___,TO BE HELD ON , 2000
To Our Shareholders:
We will hold a Special Meetingspecial meeting of Shareholdersshareholders of ANB CorporationPermanent Bancorp, Inc.
on:
--------, ---------- ---, -----
_____ __.m.
-----------------------------------
-------------------------
Muncie,2000
.m. (local time)
Evansville, Indiana 4730547708
The purposes of the special meeting are:
1. To consider and vote upon the Agreement of Affiliation and Merger, dated as
of July 29,December 20, 1999, by and betweenamong Old National Bancorp, Permanent Bancorp,
Merger Corporation I (a wholly owned subsidiary of Old National), Old
National Bank and ANB,Permanent Bank, pursuant to which provides for the merger of ANBPermanent Bank will merge
with and into Old National.National Bank, and Permanent Bancorp will merge immediately
thereafter with Merger Corporation I. Under the terms of the merger
agreement, each outstanding share of ANBPermanent Bancorp common stock will be
converted into the right to receive 1.3125 shares of Old National common stock with
a value of $20.59 per share, subject to adjustment, as adjusted fordescribed in the
5% stock dividend declared
by Old National on December 9, 1999;accompanying Proxy Statement-Prospectus; and
2. To transact such other business which may properly be presented at the
special meeting or any adjournment thereof.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. Approval
and adoptionAdoption
of the merger agreement requires the affirmative vote of at least the majority
of the outstanding shares of ANBPermanent Bancorp common stock.
The merger agreement, which describes the terms of the mergermergers in great
detail, is attached as Appendix A to the accompanying Proxy
Statement-Prospectus.
Please do not send your stock certificates at this time. If the merger
ismergers 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 JAMES W. CONVY
SECRETARY
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVALADOPTION 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.
5
PROXY STATEMENT
PROSPECTUS FOR
OF SPECIAL MEETING OF SHAREHOLDERS
OLD NATIONAL BANCORP OF
ANB CORPORATION
---------------------------
Your Board of Directors and the Board of Directors of Old National
Bancorp have agreed that Old National will acquire ANB in a merger. Your Board
of Directors believes that the merger is in the best interests of ANB as a
whole, including your interests, and that it will result in a combined company
with expanded opportunities for profitable growth and enhancement of shareholder
value.
If the merger is approved by the shareholders of ANB and all other
closing conditions are satisfied, you will receive 1.3125 shares of Old National
common stock, as adjusted for the 5% stock dividend declared by Old National on
December 9, 1999, for each share of ANB common stock you own on the date the
merger is completed. If this exchange results in you owning a fractional share
of Old National common stock, Old National will pay you cash for the fractional
share. The number of shares of Old National common stock you receive as a result
of the merger will be proportionally increased or decreased if Old National
issues a stock dividend or stock split between now and the closing date of the
merger. Old National's common stock is traded on the Nasdaq National Market
System under the symbol "OLDB."
The merger cannot be completed unless the holders of at least a
majority of the outstanding shares of ANB approve it. The special meeting of ANB
shareholders to vote on the merger will be held on:
__________, __________ ___, 2000
_____ __.m.
--------------------
---------------
Muncie, Indiana 47305
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING, PLEASE TAKE THE TIME TO VOTE BY COMPLETING AND MAILING THE
ENCLOSED PROXY CARD TO US.
This document provides you with detailed information about the meeting
and the merger. In addition, you may obtain information about Old National from
documents it has filed with the Securities and Exchange Commission. We encourage
you to read this entire document carefully.
--------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION
NOR THE INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS HAS APPROVED OF THE
SECURITIES TO BE ISSUED UNDER THIS PROXY STATEMENT-PROSPECTUS OR DETERMINED IF
THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------
SHARES OF OLD NATIONAL COMMON STOCK ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
--------------------------------------------
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS ____________, 2000
AND IS BEING MAILED TO ANB SHAREHOLDERS ON THE SAME DATE.
64
TABLE OF CONTENTS
PAGE
----
Questions and Answers About the ANB/Old National Merger.......................iv
Summary .....................................................................vi
The Parties to the Merger............................................vi
The Merger..........................................................vii
Interests of Certain Persons in the Merger...........................ix
Special Shareholders' Meeting.........................................x
Comparative Per Share Market Price Information........................x
Recent Developments..................................................xi
Comparative Per Share Data...........................................xi
Summary of Selected Financial Data -- Old National..........................xiii
Summary of Selected Financial Data -- ANB.....................................xv
Special Meeting................................................................1
General .............................................................1
Matters to be Considered..............................................1
Proxies .............................................................1
Solicitation of Proxies...............................................1
Record Date and Voting Rights.........................................2
Recommendation of ANB Board of Directors..............................3
Proposed Merger................................................................3
General .............................................................3
Description of the Merger.............................................4
Background of the Merger..............................................4
Reasons for the Merger................................................5
Fairness Opinion of ANB's Financial Advisor...........................7
Recommendation of the ANB Board of Directors.........................15
Conversion of ANB Common Stock.......................................16
Treatment of ANB Stock Options.......................................16
Exchange of Certificates; Fractional Shares..........................16
No Dissenters' or Appraisal Rights...................................17
Resale of Old National Common Stock by Affiliates of ANB.............18
Conditions to the Completion of the Merger...........................19
Termination of the Merger Agreement..................................20
Restrictions Affecting ANB...........................................22
Regulatory Approvals Required for the Merger.........................24
Accounting Treatment for the Merger..................................26
Effective Time.......................................................26
Management, Personnel and Employee Benefits After the Merger.........27
Employment Agreement.................................................29
Agreement with Larry E. Thomas.......................................31
Stock Option Agreement...............................................31
Indemnification; Directors' and Officers' Liability Insurance........33
PAGE
----
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..............
i
7
Federal Income Tax Consequences...............................................34
Tax Opinion..........................................................34
Tax Consequences to Old National and ANB.............................35
Tax Consequences to ANB Shareholders.................................35
Comparative Per Share Data....................................................36
Nature of Trading Market.............................................36
Dividends............................................................38
Existing and Pro Forma Per Share Information.........................39
Pro Forma Condensed Combined Financial Information............................42
Notes to Pro Forma Condensed Combined Financial Information...................48
Description of Old National...................................................49
Overview ............................................................49
Supervision and Regulation...........................................50
Recent Developments..................................................50
Incorporation of Certain Information by Reference....................51
Description of ANB............................................................51
Business ............................................................51
Incorporation of Certain Information by Reference....................52
Comparison of Common Stock....................................................52
Authorized But Unissued Shares.......................................53
Preemptive Rights....................................................54
Dividend Rights......................................................54
Voting Rights........................................................55
Dissenters' Rights...................................................56
Liquidation Rights...................................................56
Redemption and Assessment............................................57
Anti-Takeover Provisions.............................................57
Director Liability...................................................60
Director Nominations.................................................60
Legal Opinions................................................................61
Experts .....................................................................61
Other Matters.................................................................62
Forward-Looking Statements....................................................62
Where You Can Find More Information...........................................635
PAGE
----
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..................................................
ii
8
APPENDIX A.................................................................A - 1
APPENDIX B.................................................................B - 1
APPENDIX C.................................................................C - 1
iii
96
QUESTIONS AND ANSWERS ABOUT THE ANB/OLD NATIONAL MERGERMERGERS
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 ANBPermanent 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. Your failureIf you fail to instruct your broker to
vote your shares, will result in your shares will not beingbe voted. If you fail to return a proxy carddo not vote or if
you abstain from voting, the effect will be a vote against the merger.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 ANBPermanent Bancorp prior to the shareholders' meeting. Any
earlier proxies will be revoked. Third, you may attend the ANBPermanent
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.
ANBPermanent Bancorp shareholders will exchange their ANBPermanent Bancorp common
stock certificates for Old National common stock certificates after Old National and ANB
complete the
merger.company merger is completed. Old National will send you instructions for
exchanging your ANBPermanent Bancorp common stock certificates promptly after
the company merger is completed.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: In the merger you will receive 1.3125 shares of Old National common
stock for each share of ANB common stock you own. This means that,
based on the closing price of Old National common stock on the Nasdaq
National Market on January ___, 2000, you would have received
$__________ worth of Old National common stock for each share of ANB
common stock you own. Old National will not issue fractional shares of
Old National common stock. Instead, Old National will pay you cash for
any fractional shares.
Q: WHAT IS THE "EXCHANGE RATIO?"
iv
10
A: The exchange ratio is the number of shares of Old National common stock
into which each share of ANBPermanent Bancorp common stock will be converted
when the company merger is completed. The exchange ratio is 1.3125Based 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 ANBPermanent Bancorp
common stock.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 merger ismergers are completed. As a result of the possible
adjustments to the exchange ratio,
being fixed, you will not be sure of the market value
of the Old National common stock you will receive until the time the
company merger is completed.
Q: WHEN CAN I EXPECTHOW WILL THE MERGER WILLEXCHANGE RATIO BE COMPLETED?DETERMINED?
A: In additionThe 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 approvalexchange
ratio will be determined as follows:
Step 1: $92 million plus the aggregate exercise price of ANB shareholders,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
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 ANB
also must obtain certain banking and regulatory approvals.Permanent Bancorp are unable to agree to a new exchange
ratio, Old National and ANB anticipatemay 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 completed in February, 2000.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 ANBPermanent
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, (includingincluding the fractional shares you are
deemed to have received and then are redeemed for cash)cash, will be the same as
the tax basis for your ANBPermanent Bancorp common stock and your holding
period for the Old National common stock received in the company merger,
(includingincluding the fractional shares you are deemed to have received and then
are redeemed for cash)cash, generally will include the
iv
8
holding period of your ANBPermanent 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 ANB SHAREHOLDERS, INCLUDING
SHAREHOLDERS WHO ARE NON-U.S. PERSONS OR DEALERS IN SECURITIES.
DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU MAY BE
COMPLEX. THE TAX CONSEQUENCES WILL DEPEND ON YOUR SPECIFIC SITUATION
AND ON VARIABLES NOT WITHIN YOUR CONTROL. YOU SHOULD CONSULT YOUR OWN
TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES..
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: ANBPermanent 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. ANB and Old National are corporations organized under Indiana law.
Therefore,As a Permanent Bancorp shareholder, your rights as a shareholder will continue to beare governed by
Indiana law. However, afterDelaware 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 therefore 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 ANBPermanent
Bancorp shareholders and the rights of Old National shareholders, see page
___..
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You should call Larry E. Thomas,Donald P. Weinzapfel, Chairman and Chief FinancialExecutive Officer,
of ANB,Permanent Bancorp, at (765) 747-7575.(812) 437-2265.
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119
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 119149 banking offices and 174259 ATM locations located
throughout Indiana, Illinois, Kentucky, Ohio and Kentucky.Tennessee. In addition, Old
National provides trust services and additional financial services through other
subsidiaries. At September 30,December 31, 1999, on a consolidated basis, Old National had
assets of approximately $6.963$7 billion, deposits of approximately $5.025$5 billion, and
shareholders' equity of approximately $514.9$493 million. Old National's common stock
is traded on the Nasdaq National Market under the symbol "OLDB."
ANB CORPORATION
120 West CharlesPERMANENT BANCORP, INC.
101 SE Third Street
Muncie,Evansville, Indiana 47305
(765) 747-7600
ANB47708
(812) 437-2265
Permanent Bancorp is a bankunitary savings and loan holding company,
incorporated under IndianaDelaware law and headquartered in Muncie,Evansville, Indiana.
ANBPermanent Bancorp owns and operates threeone affiliate banks and a trust
companybank, Permanent Bank, with 3311
affiliated offices and 1618 ATM locations in Indiana and Ohio.Indiana. At September 30,December 31, 1999,
ANB,Permanent Bancorp, on a consolidated basis, had assets of approximately $834$497
million, deposits of approximately $677$344 million and shareholders' equity of
approximately $74$40 million. ANB'sPermanent Bancorp's common stock is traded on the
Nasdaq National Market under the symbol "ANBC."PERM."
vi
12
THE MERGERMERGERS
Description of the merger.mergers. We propose a mergermergers in which ANBPermanent Bank will
merge withinto 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 ANBPermanent Bancorp in exchange for
their shares of ANBPermanent Bancorp common stock.
Recommendation of the Board of Directors of ANB.Permanent Bancorp. The Board of
Directors of ANBPermanent Bancorp believes that the merger ismergers are in the best
interests of ANB as a whole, including
your interests,Permanent Bancorp and its shareholders, and unanimously recommends
that you vote "FOR" the proposal to approveadopt the merger.merger agreement. See "Proposed
Merger -Mergers -- Recommendation of the Board of Directors" on page _____.
ANB. 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 merger.mergers. If the merger ismergers are completed, based on a projected purchase price
of the transaction of $92 million, you will have the right to receive 1.3125 shares of Old National
common stock with a value of $20.75, subject to adjustment, for each share of
ANBPermanent Bancorp common stock that you own ason the date the company merger is
completed. The purchase price of the effective time oftransaction may increase by up to
approximately $1.9 million depending upon the
merger. Because the1
10
number of sharesPermanent Bancorp stock options elected to be exchanged prior to
closing. See "Treatment of common stockPermanent Bancorp Stock Options." Please note that
the share price of Old National that you will receive incommon stock may fluctuate before the merger is fixed at 1.3125, subjectmergers
are completed. Moreover, as a result of the possible adjustments to
adjustments that will not decrease the economic value of the exchange
ratio, you will not be sure of the market value of the shares of Old National common stock
you will receive inuntil the mergertime the mergers are completed. For an explanation of
how the exchange ratio will fluctuate as the price of Old National common stock changes. Based upon the
closing price of Old National common stockwork, see "Proposed Mergers -- Merger
Consideration," on the Nasdaq National Market on
January ___, 2000, the market value of shares of Old National common stock you
will receive in the merger would be $_____ per share of ANB common stock.page .
You will have to surrender your ANBPermanent Bancorp common stock certificates
to receive new stock certificates representing Old National common stock. ThisYou
will not be
necessary, however, until you 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 Merger -Mergers -- Conversion of
ANBPermanent Bancorp Common Stock," "-Stock" on page and "Proposed Mergers -- Exchange of
Certificates; Fractional Shares" on pages _____.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 ANBPermanent Bancorp common stock. After
the merger becomesmergers become effective, your stock certificates for shares of ANBPermanent
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 ANBPermanent 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 market valueaverage closing price per share of Old National's common stock.stock during the
ten trading days preceding the closing of the company merger.
Company Merger generally tax-free for ANBPermanent Bancorp
shareholders. ANBPermanent Bancorp and Old National expect that your exchange of
shares of ANBPermanent 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 incomea 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 ANBPermanent Bancorp will not be obligated to complete the
company merger unless they each receive a legal opinions,opinion, dated as of the closing
date, from their respectiveOld National's legal counsel that the mergercompany and bank mergers will
be treated as a transactiontransactions of a type that isare generally tax-free for U.S.
federal income tax purposes. In that case, the U.S. federal income tax treatment
of the mergermergers will be as described above. However, thesethis legal opinionsopinion 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
ANBPermanent Bancorp urge you to consult with your personal tax
vii
13 advisor for a full
understanding of the tax consequences of the company merger to you.
2
11
No Dissenters' rights. As a shareholder of ANB,Permanent Bancorp, you do not
have any rights under IndianaDelaware law to dissent from or obtain payment of the "fair value" of your
shares as a result of, thecompany merger.
Our reasons for the merger. ANBmergers. Permanent Bancorp and Old National are
proposing to mergeaffiliate because they believe that by combining the companies they
can create a stronger and more diversified company that will provide significant
benefits to ANB'sPermanent Bancorp's shareholders and customers. The Board of
Directors of ANBPermanent 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
ANBPermanent Bancorp Board of Directors also believes that in the rapidly changing
environment of the banking industry, ANB'sPermanent Bancorp's long-term goal of
enhancing shareholder value will be reached by mergingaffiliating with Old National.
You can find a more detailed discussion of the background to the merger
agreement and ANB'sPermanent Bancorp's and Old National's reasons for the mergermergers
under "Proposed Merger -Mergers -- Reasons for the Merger"Mergers" on page _____.
ANB's.
Permanent Bancorp's financial advisor believes the exchange ratiomerger consideration is
fair, from a financial point of view, to ANB'sPermanent Bancorp's shareholders. Among
other factors considered in deciding to approve the merger,mergers, the ANBPermanent
Bancorp Board of Directors received the oral opinion, which was subsequently
delivered in writing, of its financial advisor, Sandler
O'Neill & Partners, L.P.Capital Resources Group, Inc.,
that, as of July 29,December 20, 1999, the exchange ratio was fairconsideration payable to the holders of
ANBPermanent Bancorp common stock was fair from a financial point of view. ANB has
received a writtenCapital
Resources Group, Inc. re-confirmed its opinion from Sandler O'Neill datedin writing as of the date of this
document. The opinion of Capital Resources Group is attached to this document as
Appendix C.B. You should read this opinion completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Sandler O'Neill.Capital Resources Group, Inc. See "Proposed Merger -Mergers -- Fairness Opinion of
ANB'sPermanent Bancorp's Financial Advisor" on page _____..
Conditions to completion of the merger.mergers. The completion of the merger dependsmergers
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 ANBPermanent Bancorp common stock.
- - Regulatory approvalsapproval required under federal and state banking laws areis received and
the waiting periods have expired.
- - Old National has received a letter from its independent auditors stating
its opinion that the merger will qualify for pooling of interests
accounting treatment.
See "Proposed Merger -Mergers -- Conditions to Completion of the Merger"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 merger.mergers. Old National and ANBPermanent
Bancorp can agree at any time not to complete the merger,mergers, even if the
shareholders of ANBPermanent Bancorp have approved
it.adopted the merger agreement. Also, either party can decide,Old
National and Permanent Bancorp may, under certain conditions and without the
consent of the other,parties to the merger agreement, terminate the merger agreement
if, among other reasons:
- - The other party or its subsidiary breaches any representation or any warranty
contained in the merger agreement.
-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.
-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 March 31, 1999.September 30, 1999, in which case Permanent
Bancorp may terminate.
3
12
- - ANBPermanent Bancorp experiences a material adverse change in financial
condition or results of operations from July
29, 1999.
-December 20, 1999, in which case
Old National may terminate.
- The merger ismergers are not completed by March 31,September 30, 2000.
Additionally, ANBPermanent Bancorp may terminate the merger agreement if the
average price per share of Old National common stock fluctuates sufficiently resulting inis less than $24.70 and Old
National elects not to increase the merger no longer
being intransaction value to $85.4 million. If the
best interestsshare price of ANB as a whole, including its shareholders. If
this occurs,Old National is greater than $36.10, then, unless Old National
has entered into an agreement with another entity before the right to adjusteffective time of
the viii
14
exchange ratio. This right to terminate is based upon a complex formula that
compares any decrease incompany merger providing for the valuesale of Old National common stockin a stock-for-stock
exchange, Old National may request to renegotiate the change in
value of an index of bank stocks.
This formula provides that before ANBexchange ratio. If Old
National and Permanent Bancorp are unable to agree to a new exchange ratio, Old
National may terminate the merger because ofagreement.
Termination Fee. Permanent Bancorp and Permanent Bank have agreed to pay to
Old National a declinetermination fee in the valueamount of Old National common stock,$4,600,000 upon the valueoccurrence
of Old National's
common stock must have declinedcertain actions by approximately 20% sincePermanent Bancorp or the signingsubsidiaries of the
merger agreement, and Old National's stock must be valued approximately 15% less
than the Nasdaq Bank Index during the period for valuing the stock. Assuming the
last regulatory approval was received on the date of this document, ANB would
not have the right to terminate the merger agreement on the basis of the price
of Old National's common stock.Permanent
Bancorp. See "Proposed Merger - Termination of the Merger
Agreement""Termination Fee" on page _____..
Effective time of the merger.mergers. Old National and ANBPermanent Bancorp
anticipate that the mergermergers will be completed in February,July, 2000. See "Proposed
Merger -Mergers -- Effective Time" on page _____..
Comparative shareholder rights. IfAs a Permanent Bancorp shareholder, your
rights are governed by Delaware law, the mergerstate in which Permanent Bancorp is
completed,incorporated, and by Permanent Bancorp's Certificate of Incorporation and
By-Laws. After the mergers, you will become a
shareholder of Old National. Bothan Old National shareholder, and ANB are Indiana corporations.
Therefore,
your rights as a shareholder will continue to be governed by Indiana law. However, your rights as a shareholder,law, the state in which are now governed by the
Articles of IncorporationOld National is
incorporated, and By-laws of ANB, will be governed by Old National's Articles of Incorporation and By-laws.By-Laws. See
"Comparison of Common Stock" on page _____..
INTERESTS OF CERTAIN PERSONS IN THE MERGERMERGERS
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. James R. Schrecongost.Donald P. Weinzapfel. On December 20, 1999, Old National
and James R. SchrecongostDonald P. Weinzapfel, Chairman and Chief Executive Officer of Permanent
Bancorp, entered into an employmenta consulting agreement which provides for Mr. SchrecongostWeinzapfel
to serve as Chairman ofprovide consulting services to Old National Trust Company, Old National Trust
Company-Illinois, Old National Trust Company-Kentucky, and American National
Trust and Investment Management Company.Bank following the mergers. The
agreement is effective at the time the merger ismergers are completed, is for a term of
two yearseighteen months and provides for a signing
bonusmonthly consulting fee of $875,000, salary, incentive compensation awards, and a retention bonus
as well as a variety of other standard employee benefits.$14,500. See
"Proposed Merger
EmploymentMergers -- Consulting Agreement" on page _____..
Interest of Kelly Stanley. Following the completionMr. Murray J. Brown. Under his employment agreement, Mr. Murray
J. Brown, Chairman and Chief Executive Officer of the merger, Kelly
Stanley, Chairman of ANB,Permanent Bank, will be
a director of Old National.
Interest of Larry E. Thomas. Old National and Larry E. Thomas entered into an
agreement which provides for Mr. Thomasentitled to continue as an employee of Old
National for a period of 90 days following the completion of the merger. This
agreement also requires Old National to pay to Mr. Thomas inreceive a lump sum the
money owed to him under his current employment agreement with ANB.
Stock options. At the time the mergercash payment of approximately $729,885 if, as
expected, he is effective, all outstanding options to
purchase ANB common stock under ANB's stock option plans become options to
purchasenot employed by Old National common stock.
Stock Option Agreement. As an inducement and condition to Old National's
willingness to enter into the merger agreement, ANB entered into a stock option
agreement with Old National. Under the stock option agreement, ANB grantedor Old National Bank in an
option that permits Old National to purchase up to 1,083,753 sharesequivalent capacity after the mergers. See "Proposed Mergers -- Interest of
ANB common stock, which is approximately 19.9%Murray J. Brown" on page .
For a more detailed discussion of the outstanding sharesthese and other interests of ANB common stock. The number of shares Old National may purchase will be
increased if ANB has any changecertain
persons in the numbermergers, see "Proposed Mergers -- Interests of shares of its common stock
outstanding so that Old National may purchase an amount of shares equal to 19.9%
ofCertain Persons in
the outstanding shares of common stock of ANB. The exercise price of the
option is $27.70 per share. Old National may exercise the option only
ix
15
upon the occurrence of certain specified events. These events generally relate
to the acquisition of ANB or of a substantial portion of its stock or assets by
a party other than Old National. We have attached the Stock Option Agreement to
this document as Appendix B. See "Proposed Merger - Stock Option Agreement" on
page _____.Mergers."
SPECIAL SHAREHOLDERS' MEETING
Date, time and place of special meeting. The special shareholders' meeting
will be held on __________, __________,, , 2000, at _____ __.m..m., local time, at
________________________, Muncie,the , , Evansville, Indiana 47305.47708.
Purposes of special meeting. At the ANBPermanent Bancorp special meeting, you
will be asked:
- - to approveadopt the merger agreement between
ANBagreement; and Old National; and
-
- to act upon any other items that may be submitted to a vote at the
special meeting.
4
13
As of the date of this document, the ANBPermanent 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 Merger"Mergers" on pages _____ and _____,,
respectively.
Required shareholder vote. In order to approveadopt the merger agreement, the
holders of at least a majority of the issued and outstanding shares of ANBPermanent
Bancorp common stock must vote in its favor.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 ANB,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 Secretary of ANB,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 ANBPermanent Bancorp common stock outstanding. You can vote at
the special meeting of ANBPermanent Bancorp if you owned ANBPermanent Bancorp common
stock at the close of business on that date. You can cast one vote for each
share of ANBPermanent 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 ANBPermanent Bancorp expect pooling of interestspurchase accounting
treatment. Old National and ANB expectplans to account for the merger to qualify as a poolingmergers using the purchase
method of interests. This
means that, for accounting and financial reporting purposes, Old National will
treat Old National and ANB as if they had always been one. Old National is not
required to complete the merger unless it receives a letter from its independent
accountants telling it that the merger will qualify as a "pooling of interests."accounting. See "Proposed Merger -Mergers -- Accounting Treatment for the
Merger"Mergers" on page _____..
5
14
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Old National common stock and ANBPermanent Bancorp common stock trade on the
Nasdaq National Market System.System under the symbols "OLDB" and "PERM." Some examples
of recent closing prices for Old National common stock and ANBPermanent Bancorp
common stock are as follows:
Old National ANB
---------------- ---------------
July 29, 1999 $ 28.63 $ 28.25
________, 2000
OLD NATIONAL PERMANENT
BANCORP BANCORP
------------ ---------
December 17, 1999........................................... $31.548 $15.375
, 2000.......................................... $ $
---------------- ---------------
Based on the exchange ratio in the company merger, which is 1.3125,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
ANBPermanent Bancorp shareholders will receive in the mergermergers for each share of
ANBPermanent Bancorp common stock would be:
July 29, 1999
December 17, 1999........................................... $24.61
, 2000.......................................... $
37.58
____________, 2000 $
--------------------
In addition, recently declared per share dividend information for Old
National common stock and ANBPermanent Bancorp common stock (on a calendar year
basis) is as follows:
x
16
Old National ANB
---------------- ---------------
1st Quarter 1999 $ 0.15 $ 0.19
2nd Quarter 1999 $ 0.16 $ 0.19
3rd Quarter 1999 $ 0.16 $ 0.19
4th Quarter 1999 $ 0.16 $ 0.19
OLD NATIONAL PERMANENT
BANCORP BANCORP
------------ ---------
3rd Quarter 1999............................................ $0.16 $0.07
4th Quarter 1999............................................ $0.16 $0.07
1st Quarter 2000............................................ $0.17 $0.07
Of course, the market priceprices of Old National and Permanent Bancorp common
stock will fluctuate prior to the completion of the merger, whilemergers, and Old National
common stock will continue to fluctuate after the exchange ratio is fixed.mergers. You should obtain
current stock price quotations for Old National common stock and ANBPermanent
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 registered $200 millionBancorp completed an offering of 2,000,000
of 9.50% trust preferred securities.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 completedfor the acquisitionpurpose of
Sycamore Agency, Inc., a general
insurance agency, located in Terre Haute, Indiana.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
from 1.25 to 1.3125 pursuant to the merger agreement to give effect to the stock dividend.
Additionally, all references in this document to Old National's per share
information hashave been adjusted to give effect to the stock dividend.
On December 20, 1999, Old National agreed to acquire Permanent Bancorp, Inc. and
Permanent Bank, each of Evansville, Indiana, in a transaction valued at
approximately $92 million. Old National expects this acquisition to be completed
during the third quarter of 2000.
See "Description of Old National --- Recent Developments" on page ___..
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15
COMPARATIVE PER SHARE DATA
The table below shows historical information about Old National's and
ANB'sPermanent 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 ANBPermanent 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 also assumed that itpursuant to the
merger agreement will treatbe 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 ANBthe 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 if they had
always been combined for accountinggoodwill on Old National's
consolidated financial statements and financial reporting purposes,will be amortized against income over a
method
known as pooling of interests accounting.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 1.3125..7802. Old National
and ANBPermanent Bancorp present this information to reflect the fact that ANB shareholders will receive more than one shareamount of shares
of Old National common stock that Permanent Bancorp shareholders will receive in
the company merger for each share of ANBPermanent Bancorp common stock exchanged in the merger.exchanged.
Old National expects that it will incur merger and restructuring expenses
as a result of combining the companies.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
xi
17 one set of assumptions, does not reflect
these anticipated financial benefits and, accordingly, does not attempt to
predict or suggest future results.
The information in the following table is based on the historical financial
information that Old National and ANBPermanent Bancorp have presented in their
prior SEC filings. Old National and ANBPermanent Bancorp are incorporating this
materialhistorical financial information into this document by reference. See "Where You
Can Find More Information" on page _____..
Old National ANB
------------------------------------------ ------------------------------------------
Equivalent Share
Historical Pro Forma (1) Historical Basis (1)
-------------------- -------------------- -------------------- --------------------OLD NATIONAL BANCORP PERMANENT BANCORP
---------------------- -----------------------------
EQUIVALENT SHARE
HISTORICAL PRO FORMA HISTORICAL BASIS
---------- --------- ---------- ----------------
Earnings per share (2)
Nine months ended
September 30, 1999 $ 1.30 $ 1.24 $ 1.15 $ 1.63share(1)
Twelve months ended December 31:
19981999....................................... $ 1.541.63 $ 1.491.53 $ 1.57 $ 1.96
1997 1.40 1.37 1.50 1.80
1996 1.25 1.22 1.31 1.600.72 $1.19
Dividends declared per share
Nine months ended
September 30, 1999 $ 0.47 $ 0.47 $ 0.57 $ 0.62
Twelve months ended December 31:
19981999....................................... $ 0.550.63 $ 0.55 $ 0.72 $ 0.72
1997 0.53 0.53 0.64 0.70
1996 0.50 0.50 0.55 0.660.63 $0.235 $0.49
Book value per share
At September 30, 1999 $ 10.75 $ 10.64 $ 13.41 $ 13.96
At December 31, 1998 10.86 10.63 13.04 13.951999.......................... $10.35 $11.32 $10.27 $8.83
- --------------------------------------------
(1) Considers the pending merger with ANB as well as the pending merger as of
September 30, 1999 with Heritage Financial Services, Inc. See "Pro Forma
Condensed Combined Financial Information."
(2) Old National's and ANB'sPermanent Bancorp's basic earnings per share.
xii7
1816
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 theOld National's financial statements and notes incorporated
herein by reference. See "Where You Can Find More Information."
Year Ended DecemberYEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
1994
---------- ---------- ---------- ---------- -------------------
RESULTS OF OPERATIONS
Interest income -- tax equivalent(1)......... $ 470,915583,791 $ 448,875539,391 $ 419,483510,786 $ 402,793476,304 $ 353,983455,107
Interest expense 231,613 216,868 196,289 191,835 149,809expense............................. 284,763 261,688 243,580 220,775 214,502
---------- ---------- ---------- ---------- -------------------
Net interest income 239,302 232,007 223,194 210,958 204,174-- tax equivalent(1)..... 299,028 277,703 267,206 255,529 240,605
Provision for loan losses 12,160 13,562 11,082 7,491 7,886losses.................... 14,798 14,987 15,265 12,273 9,009
---------- ---------- ---------- ---------- -------------------
Net interest income after provision for loan
losses 227,142 218,445 212,112 203,467 196,288losses..................................... 284,230 262,716 251,941 242,806 231,956
Noninterest income 58,891 51,104 47,402 42,044 36,680income........................... 82,974 72,643 62,505 59,487 51,465
Noninterest expense 167,937 158,631 156,720 153,345 152,093expense.......................... 223,583 198,644 186,345 184,288 177,636
---------- ---------- ---------- ---------- -------------------
Income before income taxes 118,096 110,918 102,794 92,166 80,875taxes................... 143,621 136,715 128,101 118,005 105,425
Income taxes 43,961 42,835 40,107 35,222 29,550taxes................................. 50,364 51,272 49,675 46,143 40,568
---------- ---------- ---------- ---------- -------------------
Net income from continuing operation 74,135 68,083 62,687 56,944 51,325operations........ 93,257 85,443 78,426 71,862 64,857
Discontinued operationsoperations...................... 4,101 (9,854) (5,005) 494 0 ---
---------- ---------- ---------- ---------- -------------------
Net incomeincome................................... $ 64,28197,358 $ 63,07875,589 $ 63,18173,421 $ 56,94472,356 $ 51,32564,857
========== ========== ========== ========== =========
PERIOD-END BALANCES
Total assets $ 6,416,611 $ 5,933,321 $ 5,602,460 $ 5,281,387 $5,081,088
Investment securities 1,636,674 1,606,930 1,573,708 1,481,267 1,419,378
Loans, net of unearned income 4,354,256 3,915,841 3,627,592 3,375,915 3,205,097
Deposits 4,668,858 4,521,010 4,479,357 4,336,406 4,028,932
Shareholders' equity 519,645 500,609 480,435 481,511 457,971
PER SHARE DATA (ON CONTINUING OPERATIONS) (1)
Net income - basic $ 1.54 $ 1.40 $ 1.25 $ 1.10 $ 0.97
Net income - diluted (2) 1.49 1.36 1.22 1.08 0.95
Cash dividends paid 0.55 0.53 0.50 0.49 0.46
Book value at year-end 10.86 10.41 9.77 9.43 8.72
SELECTED PERFORMANCE RATIOS (ON CONTINUING OPERATIONS)
Return on assets 1.21% 1.19% 1.17% 1.11% 1.04%
Return on equity (3) 14.95 14.28 13.23 12.20 11.07
Net interest margin 4.17 4.31 4.42 4.38 4.38
Average equity to average assets 8.38 8.46 8.95 9.02 9.36
Dividend payout 35.15 36.74 38.96 43.90 47.36
Primary capital to assets 9.22 9.27 9.77 9.88 10.26
Net charge-offs to average loans 0.23 0.21 0.30 0.25 0.27
End of period allowance for loan losses to end of period
loans 1.19 1.25 1.20 1.27 1.36
Non-performing loans to total loans 0.45 0.39 0.46 0.31 0.39
Leverage ratio 7.72 7.95 8.28 8.83 9.13
Tier 1 capital to risk adjusted assets 11.40 12.17 12.90 13.92 14.20
Efficiency ratio (4) 56.32 56.03 57.92 60.61 63.15
- ------------------------------------------------------
(1) Restated for all stock dividends.
(2) Assumes the conversion of Old National's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment securities.
(4) Excludes One Bank related security gains (losses) and expenses.
xiii
19
SUMMARY OF SELECTED FINANCIAL DATA -- OLD NATIONAL (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months ended September 30,
----------------------------------------
1999 1998
----------------- ------------------
RESULTS OF OPERATIONS
(Taxable equivalent basis)
Interest income $ 374,906 $ 351,426
Interest expense 183,723 172,930
----------------- ------------------
Net interest income 191,183 178,496
Provision for loan losses 8,437 9,189
----------------- ------------------
Net interest income after provision for loan losses 182,746 169,307
Noninterest income 50,186 42,879
Noninterest expense 134,695 122,442
----------------- ------------------
Income before income taxes 98,237 89,744
Income taxes 35,389 33,603
----------------- ------------------
Net income from continuing operation 62,848 56,141
Discontinued operations 3,483 (9,854)
----------------- ------------------
Net Income $ 66,331 $ 46,287
================= ==================
PERIOD-END BALANCES
Total assets $ 6,963,307 $ 6,235,978
Investment securities 1,725,378 1,611,085
Loans, net of unearned income 4,796,556 4,228,864
Deposits 5,025,330 4,592,992
Shareholders' equity 514,935 518,083
PER SHARE DATA (ON CONTINUING OPERATIONS) (1)
Net income - basic $ 1.30 $ 1.16
Net income - diluted (2) 1.26 1.13
Cash dividends paid 0.47 0.42
Book value at period-end 10.75 10.76
SELECTED PERFORMANCE RATIOS (ON CONTINUING OPERATIONS)
Return on assets 1.25% 1.23%
Return on equity (3) 15.91 15.13
Net interest margin 4.02 4.19
Average equity to average assets 7.91 8.42
Dividend payout 36.03 36.07
Primary capital to assets 8.73 9.26
Net charge-offs to average loans 0.09 0.21
End of period allowance for loans losses to end of period loans 1.21 1.23
Non-performing loans to total loans 0.40 0.38
Leverage ratio 7.51 7.80
Tier 1 capital to risk adjusted assets 11.58 11.58
Efficiency ratio (4) 55.03 55.31
- ---------------------------------------------------------------------
(1) Restated for all stock dividends.
(2) Assumes the conversion of Old National's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment securities.
(4) Excludes One Bank related security gains (losses) and expenses.
xiv
20
SUMMARY OF SELECTED FINANCIAL DATA -- ANB
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
The following table presents financial data for ANB. The financial data
below includes amounts previously reported by ANB. This summary should be read
in conjunction with the consolidated financial statements and the notes thereto
of ANB which are incorporated herein.
Year Ended December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------
RESULTS OF OPERATIONS
Interest income - tax equivalent (1) $ 51,575 $ 48,202 $ 45,794 $ 43,402 $ 36,550
Interest expense 22,665 20,785 19,848 18,926 14,296
---------- ---------- ---------- ---------- ---------
Net interest income - tax equivalent (1) 28,910 27,417 25,946 24,476 22,254
Tax equivalent adjustment (1) 1,401 1,340 1,363 1,286 1,348
---------- ---------- ---------- ---------- ---------
Net interest income 27,509 26,077 24,583 23,190 20,906
Provision for loan losses 1,502 1,027 1,156 1,144 402
---------- ---------- ---------- ---------- ---------
Net interest income after provision for loan losses 26,007 25,050 23,427 22,046 20,504
Noninterest income 10,282 7,944 7,362 6,891 6,876
Noninterest expense 23,628 20,851 20,344 19,692 19,174
---------- ---------- ---------- ---------- ---------
Income before income taxes 12,661 12,143 10,445 9,245 8,206
Income taxes 4,205 4,102 3,375 3,019 2,480
---------- ---------- ---------- ---------- ---------
Net income $ 8,456 $ 8,041 $ 7,070 $ 6,226 $ 5,726
========== ========== ========== ========== =========
BALANCE SHEET DATA
Total assets $ 708,564 $ 616,383 $ 584,944 $ 573,226 $ 527,207assets................................. $8,109,285 $7,333,386 $6,715,787 $6,320,187 $5,966,574
Total loans, net 531,414 470,457 435,699 402,190 375,876net............................. 5,714,543 5,058,370 4,526,521 4,171,851 3,862,799
Total deposits 590,800 491,881 486,106 495,832 456,721
Federal Home Loan Bank advances 36,145 39,615 14,000 2,395 395deposits............................... 5,962,499 5,436,276 5,147,271 5,080,775 4,932,296
Shareholders' equity 70,409 65,737 60,735 58,381 53,366equity......................... 584,995 605,849 579,599 552,403 549,239
PER SHARE DATADATA(2)
Net income - basic-- basic.......................... $ 1.571.63 $ 1.501.49 $ 1.311.37 $ 1.141.22 $ 1.041.07
Net income - diluted 1.54 1.48 1.29 1.12 1.03-- diluted(3)..................... 1.59 1.45 1.33 1.19 1.05
Cash dividends paid 0.72 0.64 0.55 0.46 0.41paid.......................... 0.63 0.56 0.53 0.50 0.48
Book value at year-end 13.04 12.26 11.30 10.75 9.72year-end....................... 10.35 9.77 9.20 9.51 9.16
SELECTED PERFORMANCE RATIOS
Return on assets 1.31% 1.37% 1.26% 1.16% 1.15%assets............................. 1.20% 1.23% 1.21% 1.19% 1.12%
Return on equity 12.56 12.98 12.18 11.26 11.10equity(4).......................... 15.16 14.33 14.02 13.26 12.23
Equity to assets 9.94 10.66 10.38 10.18 10.12assets............................. 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 0.26 0.20 0.15 0.23 0.06loans............. 0.17 0.24 0.21 0.28 0.24
Allowance for loan losses to average loans 0.98 1.01 1.07 1.01 1.07loans... 1.21 1.25 1.29 1.24 1.28
- ---------------------------------------------------------------------
(1) Net interest income has been presented on both a tax equivalent and non-tax
equivalent basis. The tax equivalent basis was calculated using a 34%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.
xv(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
2117
SUMMARY OF SELECTED FINANCIAL DATA -- ANB (CONTINUED)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.
Nine Months ended September 30,
----------------------------------------AT OR FOR NINE
MONTHS ENDED
DECEMBER 31, AT OR FOR YEAR ENDED MARCH 31,
------------------- ----------------------------------------------------
1999 1998 ----------------- ------------------1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
RESULTS OF OPERATIONS
Interest income - tax equivalent (1)income.................. $ 42,66525,308 $ 38,05424,680 $ 32,886 $ 30,521 $ 29,689 $ 25,892 $ 22,705
Interest expense 18,402 16,583
----------------- ------------------expense................. 15,347 15,054 19,909 19,342 18,724 16,354 13,352
-------- -------- -------- -------- -------- -------- --------
Net interest income - tax equivalent (1) 24,263 21,471
Tax equivalent adjustment (1) 718 1,061
----------------- ------------------
Net interest income 23,545 20,410income.............. 9,961 9,626 12,977 11,179 10,965 9,538 9,353
Provision for loan losses 1,090 432
----------------- ------------------losses........ 217 225 300 177 113 207 410
-------- -------- -------- -------- -------- -------- --------
Net interest income after
provision for loan losses 22,455 19,978losses...... 9,744 9,401 12,677 11,002 10,852 9,331 8,943
Noninterest income 8,299 6,988income............... 2,274 2,259 3,031 2,092 1,624 1,437 1,378
Noninterest expense 20,941 16,890
----------------- ------------------expense.............. 9,868 8,061 10,903 8,631 10,169 8,857 8,203
-------- -------- -------- -------- -------- -------- --------
Income before income taxes 9,813 10,076taxes....... 2,150 3,599 4,805 4,463 2,307 1,911 2,118
Income taxes 3,568 3,369
----------------- ------------------taxes..................... 712 1,423 1,945 1,818 1,003 662 874
-------- -------- -------- -------- -------- -------- --------
Net incomeincome....................... $ 6,2451,438 $ 6,707
================= ==================2,176 $ 2,860 $ 2,645 $ 1,304 $ 1,249 $ 1,244
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA
Total assets $ 833,876 $ 705,317assets..................... $497,158 $497,975 $492,327 $439,115 $423,698 $395,903 $342,678
Total loans, net 648,146 499,096net................. 328,759 310,289 321,018 225,349 210,189 206,910 195,278
Total deposits 676,642 580,067deposits................... 343,939 346,449 345,341 282,942 280,753 280,008 267,520
Federal Home Loan Bank
advances 56,718 42,145advances....................... 105,798 98,997 96,504 99,353 98,484 68,303 68,303
Shareholders' equity 73,575 70,157equity............. 40,492 40,464 40,864 42,683 39,095 41,494 43,488
PER SHARE DATA
Net income - basic-- basic.............. $ 1.150.37 $ 1.250.54 $ 0.72 $ 0.65 $ 0.31 $ 0.57 $ 0.54
Net income - diluted 1.13 1.22-- diluted............ 0.34 0.51 0.70 0.62 0.30 0.56 0.52
Cash dividends paid 0.57 0.53paid.............. 0.20 0.175 0.235 0.1925 0.1375 0.075
Book value at period-end 13.41 13.02year-end........... 9.73 10.45 10.27 10.41 9.52 9.72 9.36
SELECTED PERFORMANCE RATIOS
Return on assets 1.10% 1.43%assets................. 0.38 0.60% 0.60% 0.62% 0.31% 0.34% 0.36%
Return on equity 11.70 13.47equity................. 4.61 6.94 6.86 6.45 3.25 2.95 2.92
Equity to assets 8.82 9.95assets................. 8.15 8.30 8.30 9.72 9.23 10.48 12.69
Net charge-offs to average
loans 0.06 0.09loans.......................... 0.18 0.08 0.12 0.15 0.11 0.03 0.22
Allowance for loan losses to
average loans 0.93 0.95loans.................. 0.70 0.81 0.84 0.87 1.00 1.07 1.08
- -------------------------------------------------------------------------------
(1) Net interest income has been presented on both a tax equivalent and
non-tax equivalent basis. The tax equivalent basis was calculated using a
34% tax rate for all periods presented. The tax equivalent adjustment
reverses the tax equivalent basis in order to present net interest income
in accordance with GAAP, as reflected in the consolidated financial
statements.
xviCurrent annualized dividend is $0.28 per share.
9
2218
SPECIAL MEETING
GeneralGENERAL
This document is first being mailed by ANBPermanent Bancorp to the holders of
ANBPermanent Bancorp common stock on ___________________,, 2000 and is accompanied by the
notice of the ANBPermanent Bancorp special meeting and a form of proxy that is
solicited by the Board of Directors of ANBPermanent Bancorp for use at the special
meeting. The special meeting will be held on __________, __________ ___,, , 2000 at
____:____ _.m..m., local time, at the ____________________, _______________________, Muncie,, , ,
Evansville, Indiana 47305.
Matters to be Considered47708.
MATTERS TO BE CONSIDERED
The purposes of the special meeting are to consider and vote upon adoption
of the merger agreement, dated July 29, 1999, between Old National Bancorp and ANB,
which provides for the merger of ANB into Old National, and to consider and vote upon any other matters that
may properly come before the special meeting or any adjournment or postponement
of the special meeting.
ProxiesPROXIES
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
ANBPermanent 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 ANB Corporation, 120 West CharlesPermanent Bancorp, Inc.,
101 SE Third Street, Muncie,Evansville, Indiana 47305,47708, Attn: James Convy,Robert A. Cern, Secretary.
To be effective, ANBPermanent 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 ANBPermanent
Bancorp giving the proxies. If you make no specification as to your vote on the
proxy, your proxy will be voted in favor of approvaladoption 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 ANB 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
ANBSOLICITATION OF PROXIES
Permanent Bancorp will bear the entire cost of soliciting proxies from
shareholders. In addition to the solicitation of proxies by mail, ANBPermanent
Bancorp will request that banks, brokers and other record holders send
1
23 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 ANB,Permanent Bancorp, who will not be
specifically compensated for such soliciting. Record Date and Voting Rights
ANBPermanent 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 ANBPermanent Bancorp shareholders entitled to notice of, and to
vote at, the special meeting. Accordingly, only ANBPermanent 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
ANBPermanent Bancorp common stock you own on the record date entitles you to one
vote on each matter
10
19
presented for a vote at the special meeting. At the close of business on the
record date, there were ________approximately shares of ANBPermanent Bancorp common
stock outstanding held by approximately ________ holders of record. The
presence, in person or by proxy, of shares of ANBPermanent Bancorp common stock
representing a majorityat 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 ANBPermanent Bancorp common stock held by persons attending the
special meeting but not voting, and shares of ANBPermanent Bancorp common stock for
which ANBPermanent 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
ANBPermanent Bancorp common stock in nominee or "street" name"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 approvedadopted by the affirmative vote of the holders
of at least a majority of the outstanding shares of ANBPermanent Bancorp common
stock entitled to vote at the special meeting.
BECAUSE APPROVALADOPTION OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF ANBPERMANENT
BANCORP COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND
BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST APPROVALADOPTION OF THE
MERGER AGREEMENT. ACCORDINGLY, THE ANBPERMANENT 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 ANBPermanent
Bancorp owned approximately ________ shares of ANBPermanent Bancorp common stock,
entitling them to exercise _____%% of the voting power of the ANBPermanent 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 2
24
merger agreement by the ANB Board of Directors of
Permanent Bancorp, we currently expect that each director and executive officer
ANBof Permanent Bancorp will vote the shares of ANBPermanent Bancorp common stock
owned by him or her for approvaladoption of the merger agreement and the transactions contemplated by the merger agreement. As of the record date,
the banking, trust and investment management subsidiaries of ANB,Permanent Bancorp,
as fiduciaries, custodians or agents, held a total of ___________ shares of ANBPermanent
Bancorp common stock. These entities maintained sole or shared voting power with
respect to _____ of these shares of ANBPermanent 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
ANBPermanent Bancorp common stock by individuals and entities owning more than 5%
of that stock and more detailed information with respect to beneficial ownership
of ANBPermanent Bancorp common stock by directors and executive officers of
ANBPermanent Bancorp is incorporated by reference to the Annual Report on Form 10-K
of ANBPermanent Bancorp for the year ended DecemberMarch 31, 1998.1999. See "Where You Can Find
More Information."
Recommendation of ANBRECOMMENDATION OF PERMANENT BANCORP BOARD OF DIRECTORS
The Board of Directors The ANB Boardof Permanent Bancorp has unanimously approved the
merger agreement and the transactions contemplated by the merger agreement. The
ANBPermanent Bancorp Board believes that the merger agreement is in the best
interests of ANBPermanent Bancorp as a whole, including the interests of ANBPermanent
Bancorp shareholders, and recommends that the ANBPermanent Bancorp shareholders
vote "FOR"
approval11
20
adoption of the merger agreement. See "PROPOSED MERGER"Proposed Mergers -- Background of the
Merger, -Mergers, -- Reasons for the Merger, -Mergers, -- Recommendation of the ANBPermanent Bancorp
Board of Directors."
PROPOSED MERGERMERGERS
At the special meeting, the shareholders of ANBPermanent Bancorp will consider
and vote upon approvaladoption of the merger agreement, certain features of which are
summarized below. The following summary of aspects of the merger isagreement and
the transactions contemplated by the merger agreement does not a complete description ofcompletely
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.
GeneralGENERAL
The Board of Directors of each party to the merger agreement has
unanimously approved it, and the mergers provided for therein. Old National and
ANBPermanent 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 have unanimously
approvedshare of Permanent Bancorp common stock you own
on the date the company merger agreement, which providesis completed.
The exchange ratio will be based on the average per share closing price of
Old National common stock for the merger. Old National and
ANB expect to complete the merger in February, 2000. Each share of ANB common
stock issued and outstanding atten trading days immediately preceding the
effective time of the mergercompany 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 converted intodetermined as follows:
Step 1: $92 million plus the rightaggregate exercise price of the Permanent
Bancorp stock options that are elected to receive 1.3125be exchanged for cash or shares
of Old National common stock, as adjusted fordescribed below under "Treatment of
Permanent Stock Options," divided by 4,432,742 which is the 5%appropriate
total of the number of outstanding shares of Permanent Bancorp common stock
dividend declaredand the number of shares underlying Permanent Bancorp stock options.
Step 2: Divide the number resulting from Step 1 by the average Old
National on December 9,
1999,share price.
Depending upon the average Old National share price, and subjectassuming 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 further adjustmenta 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 discussedfollows:
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 this document.
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Descriptionthe exchange ratio. See "Summary -- The Merger-We
May Decide Not to Complete the Merger" and "Proposed Merger -- Termination of
the Merger Agreement."
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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, ANBPermanent 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. Old NationalMerger Corporation I will be the surviving corporation in the company
merger and the separate corporate existence of ANBPermanent Bancorp will cease.
As of September 30,December 31, 1999, ANBPermanent Bancorp had consolidated assets of
approximately $834$497 million, consolidated deposits of approximately $677$344 million,
consolidated shareholders' equity of approximately $74$40.4 million and
consolidated net income for the nine months then ended of approximately $6.2$1.4
million. Based upon the pro forma financial information included elsewhere in
this document and assuming that the merger had been consummated on September 30,December 31,
1999, ANBPermanent Bancorp represented as of such date 10.69%6% of the consolidated
assets of Old National, 11.68%5% of its consolidated deposits, 12.50%6% of its consolidated
shareholders' equity and, for the ninetwelve month period then ended, 8.60%2% of its
consolidated net income. See "Pro Forma Condensed Combined Financial
Information".
BackgroundBACKGROUND 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
the Merger
Historically banking laws in Indiana and many other states prohibited
banks from expanding outside of their home counties. Many changes to Indiana's
law have occurred since 1985, first permitting in-state acquisitions by bank
holding companies, then permitting regional interstate acquisitions and
currently permitting virtual nationwide and international expansion
opportunities. These developments stimulated aggressive acquisition activity
among financial institutions located in Indiana and neighboring states,
resulting in the entry of large bank holding companies into virtually every
attractive market in the Midwestern United States. Moreover, developments and
deregulation in the financial services industry generally have led to further
increases in competition for bank services. Compounded by the significant
increase in bank regulatory burdens overits history, Permanent Bank operated as a traditional thrift organization.
During the past several years, these
competitive factors have created an environment in which it is increasingly
difficult for regionalPermanent Bank has sought to transform itself
into a community bank, holding companies suchincreasing its commercial and consumer lending activities
and decreasing higher-cost certificate accounts as ANBa 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 compete
effectively.
In analyzing how to addresstime,
discussed the increasing competition and continuing consolidation in the banking industry,and financial services
industries and the increasing competition faced by Permanent Bank from larger
institutions which have entered Permanent Bank's market areas through
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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 considered several
strategic alternatives includingheld 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 growing through
acquisitions, and seekingcontinuing to pursue Permanent Bank's community
banking strategy. Shortly after the Board meeting, Mr. Weinzapfel sent a merger partner. A sub-committeeletter
to Mr. Risinger informing him of the BoardBoard's decision.
In October 1999, a senior representative of Directors was organized on May 10, 1999 to study these strategic alternatives.
On May 26, 1999, the sub-committee presentedCapital Resources Group met
with a report to the Board of Directors.
After evaluation of the report and financial, economic, legal and market
considerations, the Board of Directors concluded that the sub-committee should
continue to give serious attention to seeking a merger partner.
On June 21 and 22, 1999 and at the request of the sub-committee,
Sandler O'Neill & Partners, L.P., ANB's financial advisors, contacted five
regional bank holding companies, including Old National,
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26
seeking to determine the level of market interest in a potential affiliation
with ANB. As a result of the responses to Sandler O'Neill's inquiries, on June
30, 1999, members of the sub-committee discussed the merits of a potential
affiliation with senior executivesofficer of Old National. Beginning on July 7, 1999,
ANB and Old National began to exchange information and conduct preliminary due
diligence reviews for the purpose of evaluatingdiscussing a potential business
combination.
Followingbroad
range of issues affecting the receiptfinancial 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 ANBPermanent
Bancorp's Board as part of its strategic planning efforts. The Old National's formalNational
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 discussPermanent Bancorp by Old National offering to acquire Permanent Bancorp in an
affiliationall-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
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23
and Permanent Bancorp's special counsel. The Capital Resources Group
representative explained the offer terms proposed by Old National, and counsel
reviewed with ANB,the directors their fiduciary obligations in considering a sale of
Permanent Bancorp. After discussing the offer, the Board of Directors met on July
19, 1999determined to review with ANB's financial advisors available strategic
alternatives and the rationale for ANB to considerproceed
toward a merger at this time. The
Board of Directors concluded that an affiliationtransaction with Old National, was inand 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 interest of ANB as a whole, and that it would be appropriate to begin
negotiations with Old National.
Following the July 19, 1999 board meeting, ANB, Old Nationalparties and their
respective advisors continued their due diligence review and initiated
negotiations ofbegan negotiating the terms of a business combination. These discussions
culminatedthe 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 submissionprice 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 for consideration byand the Board of Directors at a meeting held on July 29, 1999. After considerationconditions to completion of the factors described under "Reasons formergers, including shareholder
and regulatory approvals.
After thoroughly discussing the Merger",terms of the Boardproposed merger agreement, and
comparing the benefits of Directors
determined that a mergerremaining independent with the advantages of combining
with Old National, was infor the best interest of ANB and
its shareholders, andreasons listed below under "Proposed
Mergers -- Reasons for the Mergers," the Permanent Bancorp Board unanimously
approved the merger agreement and the transactions contemplated therein.
Reasons formergers, and authorized execution of the
Mergermerger agreement. The merger agreement was executed on December 20, 1999.
REASONS FOR THE MERGERS
In reaching its decision to approve the merger agreement, and the stock
option agreement, the ANBPermanent
Bancorp Board consulted with management of ANB,Permanent Bancorp, as well as its
financial and legal advisors, and it considered a variety of factors, including
the following:
- The ANBPermanent 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 ANBPermanent Bancorp Board's evaluation of the financial terms of the
mergermergers and the effect of the financial terms on ANB'sPermanent Bancorp's
shareholders, including the exchange ratio which represented a 32.99%35%
premium over the closing price of ANBPermanent Bancorp common stock on
July 29,December 17, 1999 and a 54.70%83% premium to the average closing price of
ANBPermanent Bancorp common stock for the 30 trading days preceding the
approval of the merger agreement by ANB'sPermanent Bancorp's Board;
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24
- The ANBPermanent Bancorp Board's belief that the financial terms of the
mergermergers are fair and in the best interests of ANBPermanent Bancorp as a
whole and ANB'sPermanent Bancorp's shareholders and are consistent with
ANB'sPermanent Bancorp's long term strategy of maximizing shareholder value;
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27
- The business, operations, financial condition, earnings and prospects of
ANBPermanent Bancorp and Old National. In making its determination, the
ANBPermanent Bancorp Board took into account the results of ANB'sPermanent
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 ANBPermanent Bancorp and
Old National;
- The complimentary nature of the businesses of ANBPermanent Bancorp and Old
National and the earnings potential of the combined companies in varying
economic and market climates relative to ANBPermanent Bancorp on a
stand-alone basis as a result of greater geographic, asset and line-of-businessline-of-
business diversification;
- The ANBPermanent Bancorp Board's belief that the merger represents:
- an opportunity to leverage ANB'sPermanent 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 mergermergers and the terms of the merger agreement,
including the fact that the fixed exchange ratio provides
certainty as to the numbermerger consideration consists of shares of
common stock of Old National to be issued in the company merger, and that
the merger ismergers are intended to qualify as a transaction of a type that is
generally tax-free for U.S. federal income tax purposes and as a pooling of
interests for accounting purposes;
- The opinion of Sandler O'NeillCapital Resources Group, Inc. to the ANBPermanent Bancorp
Board that, based upon and subject to the considerations set forth in the
opinion, the exchange ratioconsideration to be paid to Permanent Bancorp's shareholders
was fair from a financial point of view to ANB
shareholders (see "- -"-- Fairness Opinion of
ANB'sPermanent Bancorp's Financial Advisor");
- The ANBPermanent Bancorp Board's belief that, while no assurances could be
given, the business and financial advantages contemplated in connection
with the mergermergers were likely to be achieved within a reasonable time
frame;
- The likelihood of the merger being approved by the appropriate
regulatory authorities;
- Consideration of the effect of the mergermergers on ANB'sPermanent Bancorp's other
constituencies, including ANB'sPermanent Bancorp's employees and the customers
and communities served by ANB,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 ANBPermanent Bancorp Board's analysis of alternatives to mergingaffiliating
with Old National, including merging with other potential acquirors and
itsPermanent Bancorp's analysis of relevant price information from recent
comparable bankfinancial institution mergers which occurred in the Midwest
and across the United States.
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28
This discussion of the information and factors considered by the ANBPermanent
Bancorp Board is not intended to be exhaustive, but it does include allcertain
material factors considered by the ANBPermanent Bancorp Board. In reaching its
decision to approve and recommend the merger, the ANBPermanent 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 ANBPermanent
Bancorp concluded that it was in the best interests of ANBPermanent Bancorp and its
shareholders to mergeaffiliate with Old National.
Fairness Opinion of ANB's Financial Advisor
By letter agreement dated16
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 of June 18, 1999, ANB retained Sandler
O'Neill as an independentits financial
advisor in connection with ANB's
consideration of a possible business combination with Old National. Sandler
O'Neill is a nationally recognized investment banking firm whose principal
business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler O'Neill is regularly engaged in the
valuation of financial institutions and their securities in connection with
mergers and acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to ANB in connection with the merger and participated in certain of the negotiations leadingrequested that Capital Resources Group
render its opinion with respect to the merger
agreement. At the request of the ANB Board, representatives of Sandler O'Neill
attended the July 29, 1999 meeting of the ANB Board at which the Board
considered and approved the merger agreement. At the meeting, Sandler O'Neill
delivered to the ANB Board its oral opinion, subsequently confirmed in writing,
that as of such date, the exchange ratio of 1.25 shares, prior to adjustment of
the 5% stock dividend declared by Old National on December 9, 1999, was fair to
the ANB shareholdersfairness, from a financial point of view. Sandler O'Neill has also
deliveredview,
of the merger consideration to be paid to the ANB Boardstockholders 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 datedto Permanent Bancorp's Board that, as of December 20, 1999, the datemerger
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
document
(the "Sandler Opinion") which is substantially identical toopinion as Appendix B and the July 29, 1999
opinion.related disclosure in this Proxy Statement.
THE FULL TEXT OF THE SANDLER OPINION OF CAPITAL RESOURCES GROUP, WHICH IS ATTACHED
AS APPENDIX CB TO THIS DOCUMENT. THE SANDLER OPINION OUTLINES THE PROCEDURES FOLLOWED,PROXY STATEMENT, SETS FORTH CERTAIN ASSUMPTIONS MADE,
MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY SANDLER O'NEILLCAPITAL RESOURCES
GROUP, AND SHOULD BE READ IN RENDERINGITS ENTIRETY. THE OPINION. THE SANDLER OPINION IS
INCORPORATED BY REFERENCE INTO THIS DESCRIPTIONSUMMARY OF THE OPINION ANDOF CAPITAL
RESOURCES GROUP SET FORTH IN THIS DESCRIPTIONPROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE SANDLER OPINION. ANB SHAREHOLDERS ARE URGED TO CAREFULLY READ THE SANDLERCAPITAL RESOURCES GROUP'S OPINION IN CONNECTION
WITH THEIR CONSIDERATIONSHOULD NOT BE
CONSTRUED BY HOLDERS OF THE PROPOSED MERGER.
THE SANDLER OPINION WAS DIRECTED TO THE ANB BOARD AND WAS PROVIDED TO
ANB FOR ITS INFORMATION IN CONSIDERING THE MERGER. THE SANDLER OPINION IS
DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO TO ANB SHAREHOLDERS FROM A
FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF
ANB TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE MERGER AND IS NOTPERMANENT BANCORP SHARES AS A RECOMMENDATION TO ANY ANB SHAREHOLDER AS TO HOW
SUCH SHAREHOLDERHOLDERS SHOULD VOTE AT THE SPECIAL MEETING WITH RESPECTMEETING. CAPITAL RESOURCES GROUP HAS
CONSENTED TO THE MERGER OR ANY OTHER RELATED MATTER.
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29
InINCLUSION 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 July 29, 1999opinion. 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, Sandler O'Neill performed a
variety of financial analyses.the following factors were
considered by Capital Resources Group:
(1) The following is a summaryproposed terms of the materialmerger 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
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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 performedand 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 Sandler O'Neill, but ismanagement 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 all
the analyses underlying Sandler O'Neill's opinion. The preparationperformed by Capital Resources Group in
this regard.
Overview of aValuation Methodology. In preparing its fairness opinion,
Capital Resources Group has evaluated whether the financial proposal for the
acquisition is fair from a complex process involving subjective judgments asfinancial point of view to the most
appropriate and relevant methodsstockholders of
financial analysis and the application of
those methods to the particular circumstances.Permanent Bancorp. The process, therefore, is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portionsfairness of the factors and analyses considered without considering
all factors and analyses, or attemptingacquisition offer is determined by
comparing the offer to ascribe relative weights to some or
all such factors and analyses, could createacquisition offers received by other comparable types of
companies over a time-frame that reflects a similar economic environment. The
comparison included an incomplete viewexamination of the evaluation
process underlying its opinion. Also, no company included in Sandler O'Neill's
comparative analyses described below is identical to Old National or ANB and no
transaction is identical to the merger of Old National and ANB. Accordingly, an
analysis of comparable companies or transactions is not mathematical; rather, it
involves complex considerations and judgments concerning differences inkey financial and operating characteristics of the
comparative acquisition companies, including balance sheet, earnings and other factorscredit
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 could affecthave also been the public trading valuessubject of a
proposed or merger transaction values, as the case
may be, of Old National and ANB and the companies to which they are being
compared.completed acquisition. The earnings projections for ANB and Old National relied upon by
Sandler O'Neill in its analyses were reviewed with management and were based
upon 1999 internal projections of ANB and Old National provided to Sandler
O'Neill and on published IBES consensus earnings estimates for 2000. For periods
after 2000, Sandler O'Neill assumed an annual growth rate on earning assets of
5.00%comparative group
18
27
utilized in the casefairness opinion was comprised only of ANBthrift institutions
(rather than commercial banks), given the distinctive financial, operating and
6.50% inregulatory characteristics of the case of Old National. The 1999
earnings projections furnished to Sandler O'Neillthrift industry. These thrift institutions
were prepared by the senior
managements of ANB and Old National for internal purposes only and not with a
view towards public disclosure. Those projections, as well as the other earnings
estimates relied upon by Sandler O'Neill in its analyses, were based on numerous
variables and assumptions which are inherently uncertain and accordingly, actual
results could vary materially from those set forth in such projections.
In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of ANB, Old National and Sandler O'Neill. The analyses
performed by Sandler O'Neill are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Sandler O'Neill prepared its analyses solelydivided into two broad categories for purposes of rendering its opinionthe analysis: (1)
institutions that were recently acquired; and provided such analyses(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 ANB Board ataverage and median price/tangible book value
ratios of 220.3 and 198.8 percent, respectively, for the July
29th meeting. Estimatescomparative
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 the values of companies do not purporta $11.00 per share recent trading price for Permanent Bancorp)
compared to be
appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Such estimates are inherently subject to
uncertaintyaverage and actual values may be materially different. Accordingly, Sandler
8
30
O'Neill's analyses do not necessarily reflect the value of ANB common stock or
Old National common stock or the prices at which ANB common stock or Old
National common stock may be sold at any time.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial termsmedian offer price/ trading price premiums of the
proposed transaction. Based oncomparative group of 36.6 and 46.0 percent, respectively.
In analyzing the closing pricereasonableness of Old National common
stock on July 28, 1999Permanent Bancorp's acquisition pricing
ratios relative to those of $30.00 and an exchange ratio of 1.25, Sandler O'Neill
calculated an implied transaction value per share of ANB common stock of $37.50.
The implied aggregate transaction value was approximately $212 million, based
upon 5,653,026 fully diluted shares of ANB common stock outstanding, which was
determined using the treasury stock method at the implied value of $37.50. Based
upon ANB's June 30, 1999 financial information, Sandler O'Neill calculatedcomparative group, Capital Resources Group
considered the following ratios:
Implied value/Tangible book value 3.39x
Implied value/Book value 2.85x
Implied value/Last twelve month full-diluted EPS (1) 24.61x
Implied value/Projected twelve months ended 1999 22.19x
Tangible book premium/core deposits (1)(2) 22.68%
Implied value/Total deposits 32.55%
Implied value/Total assets 27.05%
-----------------------------------------------------
(1) LTM EPS excluded one-time merger related charges
(2) Assumes 5% non-core deposits
For purposesfactors:
- Permanent Bancorp reported a lower level of Sandler O'Neill's analyses, earnings per share were based on
fully diluted earnings per share, normalized for non-recurring merger charges.
Sandler O'Neill notedprofitability compared to
that the implied transaction value represented a 30%
premium over the July 28, 1999 closing price of ANB common stock of $28.75.
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the comparative group. The Company's reported trading prices and volumereturn on assets
("ROA") of ANB common stock and Old National common
stock, and62 basis points compared to an average ROA of 98 basis points
for the relationship between the movements in the pricescomparative group.
- Permanent Bancorp's lower level of ANB common
stock and Old National common stock, respectively, to movements in certain stock
indices, including the Standard & Poor's 500 Index, the Nasdaq Bank Index and,
in the case of ANB, the median performance of a composite group of publicly
traded regional commercial banks selected by Sandler O'Neill and, in the case of
Old National, the median performance of a composite group of regional commercial
banks selected by Sandler O'Neill. During the one year period ended July 27,
1999, the ANB common stock outperformed the Nasdaq Bank Index and its composite
index, and underperformed the S&P Index. During the one year period ended July
27, 1999, Old National common stock outperformed the Nasdaq Bank Index and its
composite index, and underperformed the S&P Index.
9
31
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information for ANB
and two groups of selected financial institutions. The first group consisted of
ANB and the following 11 publicly traded regional commercial banks (the
"Regional Group"): BancFirst Ohio Corp., Peoples Bancorp, Inc., Lakeland
Financial Corp., Indiana United Bancorp, German American Bancorp, Premier
Financial Bancorp, Inc., S.Y. Bancorp, Inc., UnionBancorp, Inc., Wayne Bancorp,
Inc., Oak Hill Financial, Inc., and Belmont Bancorp. Sandler O'Neill also
compared ANBprofitability was attributable to a
group of 12 publicly traded commercial banks which had a
return on average equity (based on last twelve months' earnings) of greater than
15%moderately lower net interest margin and a price-to-tangible book value of greater than 200% (the "Highly Valued
Group").higher non-interest operating
expense ratio, partially offset by a modestly higher non-interest income
level relative to the comparative group. The Highly Valued Group was comprised of Mid-State Bancshares, Prime
Bancshares, Inc., Independent Bank Corp., Arrow Financial Corp., Suffolk
Bancorp, Great Southern Bancorp, Inc., Glacier Bancorp, Inc., Tompkins Trustco,
Inc., S.Y. Bancorp, Inc., Summit Bancshares, Inc., City Bank and Oak Hill
Financial, Inc. The analysis compared publicly available financial information
for ANB and the median data for each of the Regional Group and Highly Valued
Group as of and for each of the years ended December 31, 1994 through 1998 and
as of and for the twelve months ended March 31, 1999 or June 30, 1999, as
applicable. Sandler O'Neill also used publicly available information to performCompany's lower net interest
margin reflected a similar comparison of selected financial and market trading information for
Old National and two different groups of commercial banks. The first group
consisted of Old National andyield/cost spread but a lower net earning
asset position relative to the following 12 publicly traded regional
commercial banks (the "Midwestern Group"): Associated Banc-Corp, Commerce
Bancshares, Inc., TCF Financial Corp., FirstMerit Corp., Provident Financial
Group, Inc., UMB Financial Corp., Community First Bankshares, First Midwestcomparative group.
- Permanent Bancorp Inc., Citizens Banking Corp., Sky Financial Group, Inc., AMCORE
Financial, Inc. and Republic Bancorp, Inc. Sandler O'Neill also compared Old
National torecorded a group of 11 publicly traded commercial banks which had alower return on equity of greater than 17% (based on last twelve months' earnings) and a
price-to-tangible book value of greater than 290% ("The High Performing Group"ROE"). The
High Performing Group consistedCompany'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
following 11 publicly traded
commercial banks: Associated Banc-Corp, North Fork Bancorp, Synovus Financial
Corp., TCF Financial Corp., CCB Financial Corp., Cullen/Frost Bankers, Inc.,
National Commerce Bancorp, City National Corp., Valleypeer group.
19
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, Commerce Bancorp, Inc. and Westamerica Bancorp. The analysis compared publicly
available financial information for Old National and the median data for the
Midwestern Group and the High Performing Group as of and for each of the years
ended December 31, 1994 through 1998 and as of and for the twelve months ended
March 31, 1999 or June 30, 1999, as applicable. The table below sets forth the
comparative data as of and for the twelve months ended June 30, 1999.
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32
High
Regional Highly Midwestern Performing
ANB Group Valued Old National Group Group
------------ ------------- ------------ ------------ ------------ ------------
Total assets $ 783,677 $ 791,685 $ 788,931 $ 6,898,400 $ 6,898,400 $ 6,902,000
Annual growth rate of total 10.60% 14.72% 10.60% 10.81% 7.26% 10.06%
assets
Tangible equity/assets 7.68% 7.25% 8.82% 7.46% 7.25% 7.80%
Intangible assets/total equity 16.00% 14.55% 1.19% 2.75% 7.73% 3.40%
Net loans/total assets 78.48% 63.96% 71.32% 66.98% 66.98% 65.51%
Cash & securities/total assets 16.32% 30.13% 23.19% 28.67% 30.82% 27.24%
Gross loans/total deposits 95.24% 83.39% 88.72% 97.34% 90.91% 85.40%
Total borrowings/total assets 7.35% 7.96% 8.28% 21.61% 17.43% 12.09%
Non-performing assets/total 0.22% 0.40% 0.34% 0.28% 0.41% 0.24%
assets
Loan loss reserve/gross loans 0.86% 1.19% 1.25% 1.20% 1.34% 1.34%
Net interest margin 4.47% 4.03% 4.88% 4.07% 4.15% 4.62%
Loan loss provision/average 0.23% 0.22% 0.22% 0.17% 0.29% 0.17%
assets
Non-interest income/average 1.42% 0.78% 1.39% 0.95% 1.50% 1.50%
assets
Non-interest expense/average 3.32% 2.78% 3.13% 2.66% 3.41% 3.10%
assets
Efficiency ratio 63.51% 57.81% 52.82% 55.38% 57.53% 54.86%
Return on average assets 1.12% 0.96% 1.59% 1.26% 1.26% 1.70%
Price/tangible book value per 255.08% 250.49% 261.50% 269.03% 276.85% 377.46%
share
Price/earnings per share 18.54x 17.29x 14.86x 17.55x 16.73x 16.31x
Dividend yield 2.69% 2.25% 1.78% 2.05% 2.33% 2.01%
Dividend payout ratio 49.87% 38.58% 24.80% 35.68% 39.59% 38.92%
ANALYSIS OF SELECTED MERGER TRANSACTIONS Sandler O'Neill reviewed
certain other transactions involving publiclyPermanent Bancorp's stock was traded commercial banks as
acquired institutions with transaction values greater than $15 million. Sandler
O'Neill reviewed 77 transactions announced nationwide from January 1, 1999 to
July 26, 1999 ("Nationwide Transactions") and 30 transactions announced from
January 1, 1999 to July 26, 1999 in the Midwestern region, comprised of
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, North
Dakota, Ohio, South Dakota, and Wisconsin ("Midwestern Transactions"). Sandler
O'Neill reviewed the ratios of transaction value to last four quarters'
earnings, transaction value to book value, transaction value to tangible book
value, tangible book premium to core deposits, transaction value to total assets
and premium to market and computed high, low, mean, and median ratios and
premiums for the respective groups of transactions. These multiples were applied
to ANB's financial information as of and for the twelve months ended June 30,
1999. As illustrated in the
11
33
following table, Sandler O'Neill derived an imputeda price range of values$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 ANB common stock of $32.84 to $39.66 based upon the median multiples for
Nationwide Transactions and $33.42 to $40.48 based upon the median multiples for
Midwestern Transactions. As calculated by Sandler O'Neill, the implied
transaction value$21.28 per share, this results in
average annual return of ANB common stock inapproximately 27 percent on the merger was $37.50.
Nationwide Transactions Midwestern Transactions
------------------------------- -------------------------------
Median Implied Median Implied
Multiple Value Multiple Value
------------- -------------- ------------- -------------
Deal price/LTM EPS (1) 21.65x $33.01 21.92x $33.42
Deal price/Book Value 2.74x 36.03 2.87x 37.72
Deal price/Tangible book value 2.97x 32.84 3.04x 33.58
Tangible book premium/Core deposits 22.46% 36.18 21.28% 34.85
Deal price/Total assets 24.49% 34.86 24.43% 34.78
Deal price/Total deposits 30.28% 35.83 30.03% 35.54
- -------------------------------------------------
(1) Based on a normalized EPSoriginal conversion
price of $1.52.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill$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 estimatedwas based on an estimate of Permanent Bancorp's future
cash dividend streams to shareholders and the Company's future streamstock 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
after-tax4 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 flows of ANB through December 31, 2004 under various circumstances,
assuming ANB's current dividend payout ratio and that ANB performed in
accordance with the earnings forecasts reviewed with management.payments.
To approximate the range of terminal valuevalues of ANBPermanent Bancorp common
stock at December 31, 2004, Sandler O'Neillthe end of a three year and five year period, Capital Resources Group
applied price/earnings multiples ranging from 10x to 25xa price-to-earnings multiple of 24.0x and applied multiples
of a price/tangible book value
ranging from 150% to 400%.ratio of 220 percent. The dividend income streams
andresulting terminal values and dividend streams were
then discounted to present values using differenta discount rate of 11 percent, and a
range of discount rates ranging from 9% to 15%above and below 11 percent were also chosen to reflect
different assumptions regarding required rates of return of holders or
prospective buyers of ANBPermanent Bancorp common stock.
As illustrated in the following table, thisThe analysis indicated an
imputed range of values per share of ANBa present value for Permanent Bancorp common stock
and future dividend payments of $15.68 to $43.60 when
applying$19.03, based on a 11 percent discount rate,
assuming the price/earnings multiplesBank is acquired after three years and $17.51 to $54.05 when applying
multiples of tangible book value. As calculated by Sandler O'Neill, the implied
transaction value per share of ANB common stock in the merger was $37.50.
Price/Earnings Multiples Tangible Book Value Multiples
---------------------------------------- ----------------------------------------
Discount Rate 10x 25x 1.50x 4.00x
- --------------------------- ------------------ ------------------ ------------------ ------------------
9% $19.51 $43.60 $23.06 $54.05
11 18.11 40.30 21.00 48.83
13 16.84 37.32 19.16 44.15
15 15.68 34.61 17.51 39.95
12
34
In connection with its analysis, Sandler O'Neill considered and
discussed with the ANB Board how thea 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 would be affectedconfirmed that the
consideration being offered by changes in the underlyingOld National Bancorp to Permanent Bancorp
stockholders was fair and reasonable.
In preparing its analyses, Capital Resources Group made numerous
assumptions including variations with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the growth ratecontrol of assets, net interest spread, non-interest income, non-interest
expensesCapital
Resources Group and dividend payout ratio. Sandler O'Neill noted that the discounted
dividend stream and terminal value analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, and the results thereofPermanent Bancorp. The analyses performed by Capital
Resources Group are not necessarily indicative of actual values or future results.
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential
pro forma effects of the merger, based upon the exchange ratio of 1.25, Old
National's and ANB's current and projected income statements and balance sheets,
and assumptions regarding the economic environment, accounting and tax treatment
of the merger, charges associated with the merger, operating efficiencies and
other adjustments discussed with the senior managements of ANB and Old National.
As illustrated in the following table, this analysis indicated that the merger
would be accretive to ANB's projected earnings per share, tangible book value
per share and dividend as of December 31, 2000. Also, the analysis indicated
that the merger would be dilutive to Old National's earnings and tangible book
value per share for the year ended December 31, 2000. The actual results, achieved by Old National and ANB may vary from projected results and the
variationswhich may be
material.
Year ending December 31, 2000 Old National ANB
- ------------------------------------ ----------------------------------- -----------------------------------
Stand-alone Pro Forma Stand-alone Pro Forma(1)
--------------- --------------- --------------- ----------------
Projected EPS $ 1.94 $ 1.93 $ 1.88 $ 2.41
Projected tangible book value 13.06 12.60 13.04 15.75
Projected dividend .76 .76 .79 .95
Projected leveraged capital ratio 8.18% 7.86% NM NM
- ----------------------------------------
(1) Determined by multiplying the Old National values by the exchange ratio of
1.25.
In connection with rendering its July 29, 1999 opinion, Sandler O'Neill
reviewed, among other things: (1) the merger agreement and exhibits thereto; (2)
the Stock Option Agreement, dated July 29, 1999, by and between ANB and Old
National; (3) certain publicly available financial statements of ANB and other
historical financial information provided by ANB that they deemed relevant; (4)
certain publicly available financial statements of Old National and other
historical financial information provided by Old National that they deemed
relevant; (5) certain internal financial analyses and forecasts of ANB prepared
by and reviewed with management of ANB and the views of senior management of
ANB, based on certain limited discussions with certain members of senior
management, regarding ANB's past and current business, financial condition,
results of operations and future prospects; (6)
13
35
certain internal financial analyses and forecasts of Old National prepared by
and reviewed with management of Old National and the views of senior management
of Old National, based on certain limited discussions with certain members of
senior management, regarding Old National's past and current business, financial
condition, results of operations and future prospects; (7) the pro forma impact
of the merger; (8) the publicly reported historical price and trading activity
for ANB's and Old National's common stock, including a comparison of certain
financial and stock market information for ANB and Old National with similar
publicly available information for certain other companies the securities of
which are publicly traded; (9) the financial terms of recent business
combinations in the commercial banking industry, to the extent publicly
available; (10) the current market environment generally and the banking
environment in particular; and (11) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as they
considered relevant.
In connection with rendering the Sandler Opinion, Sandler O'Neill
confirmed the appropriateness of its reliance on the analyses used to render its
July 29, 1999 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the other factors considered in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and
relied upon the accuracy and completeness of all the financial information,
analyses and other information that was publicly availablesignificantly more or otherwise
furnished to, reviewed by or discussed with it, and Sandler O'Neill did not
assume any responsibility or liability for independently verifying the accuracy
or completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of ANB or Old National or
any of their respective subsidiaries, or the collectibility of any such assets,
nor was it furnished with any such evaluations or appraisals. Sandler O'Neill is
not an expert in the evaluation of allowances for loan losses and it has not
made an independent evaluation of the adequacy of the allowance for loan losses
of ANB or Old National, nor has it reviewed any individual credit files relating
to ANB or Old National. With ANB's consent, Sandler O'Neill has assumed that the
respective allowances for loan losses for both ANB and Old National are adequate
to cover such losses and will be adequate on a pro forma basis for the combined
entity. In addition, Sandler O'Neill has not conducted any physical inspection
of the properties or facilities of ANB or Old National. With respect to all
financial projections reviewed with each company's management and used by
Sandler O'Neill in its analyses, Sandler O'Neill assumed that they reflected the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of ANB and Old National and that
such performances will be achieved. Sandler O'Neill expressed no opinion as to
such financial projections or the assumptions on which they were based.
14
36
Sandler O'Neill's opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of its
opinion. Sandler O'Neill assumed, in all respects material to its analysis, that
all of the representations and warranties contained in the merger agreement and
all related agreements are true and correct, that each party to such agreements
will perform all of the covenants required to be performedless favorable than suggested by such party under
such agreements and that the conditions precedent in the merger agreement are
not waived. Sandler O'Neill also assumed, with ANB's consent, that there has
been no material change in ANB's and Old National's assets, financial condition,
results of operations, business or prospects since the date of the last publicly
filed financial statements available to them, that ANB and Old National will
remain as going concerns for all periods relevant to its analyses, and that the
merger will be accounted for as a pooling of interests and will qualify as a
tax-free reorganization for federal income tax purposes.
ANB has agreed to pay Sandler O'Neill a transaction fee in connection
with the merger, a substantial portion of which is contingent upon the closing
of the merger. Based on the closing price of ANB common stock on _________, 2000
(the latest practicable date prior to the date of this document), ANB would pay
Sandler O'Neill a transaction fee of approximately $__ million, of which
approximately $529,287 has been paid and the balance will be paid when the
merger is closed. ANB paid Sandler O'Neill a fee of $250,000 for rendering its
fairness opinion, which will be credited against that portion of the transaction
fee due upon closing of the merger. ANB has also agreed to indemnify Sandler
O'Neill and its affiliates and their respective partners, directors, officers,
employees, agents, and controlling persons against certain expenses and
liabilities, including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment
banking services to ANB and has received compensation for such services. In the
ordinary course of its business as a broker-dealer, Sandler O'Neill may also
purchase securities from and sell securities to ANB and Old National and may
actively trade the equity or debt securities of ANB and Old National and their
respective affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Recommendation of the ANB Board of Directors
THE BOARDanalyses.
CONVERSION OF DIRECTORS OF ANB HAS CAREFULLY CONSIDERED AND UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF ANB VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT.
15
37
Conversion of ANB Common StockPERMANENT BANCORP COMMON STOCK
Under the terms of the merger agreement, upon completion of the company
merger, it is expected that shareholders of ANB of record
when the merger is completedPermanent Bancorp will be entitled
to receive 1.3125from 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 declaredpaid by Old National on
December 9, 1999January 28, 2000 and subject to further adjustment, if any, for additional stock
dividends or for stock splits stock dividends or any similar recapitalization of Old National orNational.
The consideration to be exchanged in the mergers also is subject to adjustment
if Old National elects to adjust the exchange ratioincrease such consideration following ANB'sPermanent
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. Becausestock or if Permanent
Bancorp and Old National renegotiate the exchange ratio is fixedfollowing a
20
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 because"Proposed Mergers -- Termination of the Merger Agreement." Because
the market price of Old National common stock prior to the effective time of the
mergermergers may fluctuate, the value of the shares of Old National common stock that
you will receive if and when the merger ismergers are completed may increase or decrease
prior to and following the merger.
Asmergers.
TREATMENT OF PERMANENT BANCORP STOCK OPTIONS
Holders of _______________, 2000,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 was $_____ per share,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 reported by the
Nasdaqoption holder's "option value."
Exchange for Stock. By providing written notice to Old National Market System. Ifat least
five business days before the effective time of the company merger, had been consummated on that date,a Permanent
Bancorp option holder may elect to exchange his or her option for the number of
shares of Old National common stock, exchanged into be issued by Old National after the
merger would have been ________, with an
aggregate marketmergers, determined by dividing the option holder's option value by the average
closing price per share of approximately $________.
TreatmentOld National common stock during the ten trading days
immediately preceding the effective time of ANB Stock Options
Eachthe company merger.
Convert to Old National Options. Any Permanent Bancorp stock option to acquire ANB commonwhich
will not be exchanged for cash or Old National stock granted under ANB's stock
option and incentive plans outstanding andwhich 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 a stockan option to
purchase shares of Old National common stockstock. 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 same terms
that were applicable to the stock option at the effective time of the merger.
Old National will assume the obligations of ANB with respect to each outstanding
option to purchase ANB common stock.exchange ratio.
The number of shares of Old National common stock subject to the new Old National optionsconverted
option will be equal to the product of the number of Permanent Bancorp shares of ANB common stock
subject to the ANB stock optionsoption prior to its conversion times the exchange ratio, as then in effect, rounded
to the nearest whole share. The exercise price per share of Old National common stock subject to the new Old
National stock optionsconverted option
will be equal to the aggregate exercise price for Permanent Bancorp shares of ANB common stockprior
to the conversion divided by the number of shares of Old National common
stock,shares, rounded to the
nearest whole share, deemed purchasable pursuant to the stock options. Additionally, stockconverted option. Stock
options that are incentive"incentive stock optionsoptions" under the Internal Revenue Code will
be adjusted insubject to further adjustments to the mannerextent required by the Code.
Exchange of Certificates; Fractional SharesEXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Immediately after the effective time of the merger,mergers, Old National will mail
a letter of transmittal to ANBPermanent Bancorp shareholders. This transmittal
letter will contain instructions with respect to the surrender of certificates
representing shares of ANBPermanent Bancorp common stock. YOU SHOULD NOT RETURN
YOUR ANBPERMANENT BANCORP STOCK
16
38 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
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 ANBPermanent 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 merger,mergers, stock certificates previously
representing ANBPermanent 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 mergermergers and prior to the surrender by
holders of ANBPermanent 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 ANBPermanent Bancorp of shares
of ANBPermanent Bancorp issued and outstanding immediately prior to the effective
time. Following the effective time of the merger,mergers, the shares of ANBPermanent
Bancorp common stock will no longer be traded on the Nasdaq National Market. If,
after the effective time of the merger,mergers, you present certificates representing
shares of ANBPermanent 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 ANBPermanent Bancorp in connection with the merger.mergers. Each
shareholder of ANBPermanent 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 fiveten days on which shares
of Old National common stock were traded immediately before the effective time
of the merger.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 ANBPermanent Bancorp as soon as
practical following the shareholder's delivery to Old National of his or herthe
certificate(s) representing the shareholder's shares of ANBPermanent Bancorp common
stock.
No Dissenters' or Appraisal Rights
In connection withDISSENTERS' RIGHTS
Holders of shares of Permanent Bancorp common stock are not entitled to
dissent to the company merger under IndianaDelaware law since Permanent Bancorp common
stock is quoted and traded on the Nasdaq National Market and because Permanent
Bancorp shareholders of ANB
do not have the statutory right to dissent and require appraisal of theirwill receive shares
of ANB common stock.
17
39
Resale of Old National Common Stock by Affiliatescommon stock, with cash
in lieu of ANBfractional 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 ANBPermanent Bancorp
shareholders in the company merger have been registered under the Securities Act
of 1933, as amended. Shares of Old National common stock issued in the mergerThese shares may be traded freely and without restriction
by those shareholders not considered to be affiliates (as that term is defined by the Securities Act)below) of
ANB.Permanent Bancorp. However, shares held by any person who is an affiliate of
ANBPermanent Bancorp at the time of the mergermergers is submitted for a vote at the
special meeting will not, under existing law, require: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
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 ANBPermanent Bancorp is a person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, ANB.Permanent Bancorp. These restrictions are expected to apply
to the directors and executive officers of ANBPermanent Bancorp and theany holders of
10% or more of the ANBPermanent Bancorp common stock. The same restrictions apply
to certain relatives or the spousespouses 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 ANBPermanent 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.
SEC guidelines regarding qualifying for the pooling of interests method
of accounting also limit sales of shares of the acquiring and acquired company
by affiliates of either company in a business combination. SEC guidelines
indicate that the pooling of interests method of accounting will generally not
be challenged on the basis of sales by affiliates of the acquiring or acquired
company if those affiliates do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection with
a merger during the period beginning 30 days before the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
Each affiliate of ANBPermanent Bancorp delivered to Old National on July 29,December
20, 1999, a written agreement to the effect that the affiliate (1) will not
sell, pledge,
transfer, dispose of or otherwise reduce the affiliate's market risk with
respect to the shares of ANB common stock directly or indirectly owned or held
by such person during the thirty day period prior to the effective time of the
merger, and (2) will not sell,exchange, pledge, transfer, or otherwise dispose of or
reduce the affiliate's market risk with respect to the shares of Old
18
40
National common stock to be received by such person pursuant to the merger
agreement, (i) untilunless such time as financial results covering at least thirty daysshares of combined operations of ANB and Old National have been published withincommon stock are made in a manner
and to the meaning of Section 201.01 ofextent permitted by Rule 145 under the Securities and Exchange Commission's
CodificationAct of Financial Reporting Policies and (ii) unless done1933 or are
made pursuant to an effective registration statement under, the Securities Act or pursuant to Rule
145 or anotheran exemption from
the registration requirements underof, the Securities Act.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 ANBPermanent Bancorp after July 29,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 merger,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 ANBPermanent Bancorp who may be
deemed to be affiliates of ANBPermanent Bancorp should consult with their legal
counsel regarding the resale restrictions that may apply to them.
Conditions to the Completion of the Merger
ANB'sCONDITIONS TO THE COMPLETION OF THE MERGERS
Permanent Bancorp's and Old National's obligations to complete the mergermergers
are subject to the satisfaction of the followingcertain conditions at or prior to the
effective time of the merger:mergers, including the following:
- The merger agreement has been approvedadopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of ANBPermanent
Bancorp common stock;
- Old National and ANBPermanent Bancorp have received all regulatory approvals
required for the merger; omergers;
- Old National and ANBPermanent Bancorp have each received the
opinionsan opinion of their respectiveOld
National's counsel dated as of the effective time of the company merger,
with respect to the fact that the mergermergers will be treated as tax-free for
U.S. federal income tax purposes;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 ANBPermanent Bancorp have received certain officers'
certificates and other closing documents;
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32
- The representations and warranties contained in the merger agreement are
accurate at the effective time of the merger;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 merger alsomergers is subjectcontingent upon the repayment in full by Permanent of
its $3 million in indebtedness owed to an unaffiliated financial institution,
and the conditionrelease of that it has received an opinion from its independent auditors dated as
of the effective time of the merger, to the effect that the merger will qualify
for pooling of interests accounting treatment.
19
41institution's security interest in Permanent Bank's
common stock.
The conditions to consummation of the merger,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 Merger -Mergers -- Resale of Old National Common Stock by
Affiliates of ANB,Permanent Bancorp," "-"-- Regulatory Approvals Required for the
Merger", "Federal Income Tax Consequences" and Appendix A.
TerminationTERMINATION 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 Merger Agreement
Thefollowing events
occurs without the prior written consent of Old National:
(i) following the date of the merger agreement, contains provisions allowingany 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 ANBthe acquirer has (a)
publicly announced its opposition to terminatethe 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
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 for various reasons.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 ANBPermanent
Bancorp, before or after the shareholders of ANBPermanent Bancorp have approvedadopted 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 written consent of the BoardBoards of Directors of Old National and
ANB;Permanent Bancorp;
- by either Old National or ANBPermanent Bancorp if the merger hasmergers have not been
completed by March 31,September 30, 2000;
- by either the Old National Board or Permanent Bancorp in the ANB Boardevent 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
ANB,Permanent Bancorp or Permanent Bank, in the case of termination by Old
National, or by Old National, in the case of termination by ANB,Permanent
Bancorp, and the breach has not been cured within 30 days after written
notice to the breaching party of the breach;
- by either the Old National Board or the ANB BoardPermanent Bancorp if there has been a breach of
any of the covenants or agreements contained in the merger agreement by
ANB,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 ANB,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 ANBPermanent Bancorp if the terminating party
reasonably determines that the merger hasmergers have become impracticable because
of (1) the commencement or threat of any claim or litigation against Old
National, ANB,Permanent Bancorp, any subsidiary of Old National or ANB,Permanent
Bancorp, or any director or officer of any of these companies relating to
the mergermergers 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 mergermergers or merger agreement orand which is likely to
have a material adverse effect on Old National, if the terminating party
is ANB;Permanent Bancorp; or
- by either Old National or ANBPermanent Bancorp if the shareholders of ANB do not
approve the merger andPermanent Bancorp fulfills
its obligation to submit the merger agreement to a vote by its
shareholders and ANB has satisfied
its obligationthe shareholders vote not to obtain shareholder approval.
20adopt the merger agreement.
25
4234
Additionally, Old National may terminate the merger agreement if:
- the merger will not qualify for pooling of interests accounting
treatment; or
- there has been a material adverse change in the business, assets,
capitalization, financial condition or results of operations of ANB andPermanent
Bancorp or any of its subsidiaries (considered as a whole) as of the
effective time of the mergermergers compared to that in existence as of
July 29,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 merger.mergers.
Further, ANBPermanent 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 March 31,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 merger;
- prior to approval of the shareholders of ANB of the merger,
without breaching its covenant relating to negotiations with other
potential acquirors, ANB enters into a definitive agreement with a
third party that provides for an acquisition of ANB or a
subsidiary of ANB on terms determined in good faith by the ANB
Board to be more favorable to the shareholders of ANB than the
merger with Old National and that the ANB Board has determined
that to proceed with the merger with Old National would violate
their fiduciary duties to ANB's shareholders;mergers; or
- at any time during the five-day period beginning on the date on
which the last required regulatory approval is obtained, both of
the following conditions are satisfied:
(1) the number obtained by dividing the average of the closing price of aper share of Old National common stock onduring
the Nasdaq
National Market System for the 20 consecutiveten trading days ending onimmediately preceding the day prior toeffective time of the
day the last required
regulatory approval is obtained by $28.51 (the "Old National
Ratio")company merger is less than 0.80; and
(2)$24.70, subject, however, to the Old National Ratio is less than a number obtained by
dividing two index numbers derived from the Nasdaq Bank Index
as reportedconditions
described in the Bloomberg News Service ("the Index
Ratio"). The Index Ratio is calculated by dividing the
21
43
average of the index value of the Nasdaq Bank Index for the
20 consecutive trading days ending on the trading day prior
to the day the last regulatory approval is obtained by $28.51
and then subtracting 0.15.following three sentences. If ANBPermanent Bancorp elects
to terminate the merger for this reason,exercise its termination right, it must give written notice to Old
National, which notice of its desireelection to terminate may be withdrawn at any
time within the merger within a five dayfive-day period which begins
ondescribed in the dayfollowing sentence.
During the last regulatory approval is received. Afterfive-day period commencing with its receipt of such notice,
Old National receiveswill have the notice of termination, Old National
has five days to determine, at its option to increase the consideration to be
received by ANB shareholdersthe holders of Permanent Bancorp common stock, by adjusting
the exchange ratio of 1.3125. The exchange ratio would be
adjusted(calculated to the nearest one ten-thousandth) to
equal the lesser of:
(a) a number obtainedquotient arrived at by dividing (a) the productquotient arrived at by
dividing (x) the sum of $28.51, 0.80
and$85,427,011 plus the aggregate strike price of
the Permanent Bancorp stock options, the holders of which elected to
exchange ratiothe options for cash or shares of Old National common stock, (y)
by the averagetotal 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 of aper
share of Old National common stock on the
Nasdaq National Market System during the period of 20
consecutiveten trading days
ending onimmediately preceding the day before the day
the last regulatory approval is obtained; and
(b) a number obtained by dividing the producteffective time of the Index
Ratio by the exchange ratio (as then in effect) by the
Old National Ratio.company merger. If Old
National elects to adjust the exchange ratio,makes this election, it must give ANB prompt written notice to
Permanent Bancorp of thisthe election and of the revised exchange ratio. Assuming the last regulatory approval was received on the
date of this document, the average of the closing price of a
share ofIf Old
National common stock for the above calculation
would be $________. The Old National Ratio would equal
$________ ($________ divided by $________). As a result of
the Old National Ratio being less than .80, ANB would not
have the right to terminategives this notice, the merger agreement onwill not be terminated
and will remain in effect in accordance with its terms except for the
basis
ofrevision to the price of Old National's common stock.
Uponexchange ratio.
Otherwise, upon termination for any of these reasons, the merger agreement will
be of no further force or effect.
Restrictions Affecting ANBRESTRICTIONS AFFECTING PERMANENT BANCORP
The merger agreement contains a number of restrictions regarding the
conduct of business of ANBPermanent Bancorp until the merger ismergers are completed. Among
other items, ANBPermanent Bancorp or any subsidiary of ANBPermanent Bancorp may not,
without the prior written consent of Old National:
22
44
- change its capital stock accounts, except for the ANB's Dividend
Reinvestment and Stock Purchase Plan and the issuance of up to
391,624364,144 shares of ANBPermanent Bancorp common stock under the 1996 Directors'Permanent
Bancorp 1999 Omnibus Incentive Plan and Permanent Bancorp 1993 Stock
Option Plan, ANB Corporation Stock Option Plan and ANB Corporation
1995 Stock OptionIncentive Plan;
- authorize any additional class of stock or issue securities other than or
in addition to the securities which were issued and outstanding as of the
date of the merger agreement;
- distribute or pay any dividends or make any other distributions to its shareholders
except that (1) American NationalPermanent Bank and Trust
Company of Muncie, Peoples Loan and Trust Bank, Farmers State Bank
of Union City, Ohio and American National Trust and Investment
Management Company may pay cash dividends to ANBPermanent
Bancorp in the ordinary course of business and to provide funds for
ANB'srepayment of its $3 million indebtedness to an unaffiliated financial
institution and for Permanent Bancorp's dividends to itsPermanent Bancorp's
shareholders; and (2) ANBPermanent
26
35
Bancorp may pay a quarterly cash dividend of no more than $0.19$0.07 per share
for any quarter prior to the quarter in
whicheffective time of the company merger, is completed; providedexcept
that no dividend may be paid forduring the quarterly periodquarter in which the merger ismergers are
completed, if, during this quarter, ANBPermanent Bancorp shareholders will
be entitled to receive dividends on their shares of Old National common
stock received pursuant to the merger;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;
o- make any loan or commitment to lend money or accept any deposit except in
accordance with existing banking practices;
- amend or restate its ArticlesCertificate 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 thePermanent Bank's reserve for loan and lease losses of its
subsidiaries financial institutions;losses;
- elect or appoint any new executive officers or directors of ANBPermanent
Bancorp or any of its subsidiaries;
- hire or employ additional employees, of ANB or any subsidiary,
except those which are reasonably
necessary for the proper operation of their businesses;its business; or
- negotiate or discuss with third parties a possible sale, merger or
combination of ANB,Permanent Bancorp, unless the failure to do so would be
breach of the fiduciary duties of the ANBPermanent 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
ANB.Permanent Bancorp. Please refer to the merger agreement, attached as Appendix A,
for a complete listing of the restrictions.
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45
Regulatory Approvals Required for the MergerREGULATORY APPROVALS REQUIRED FOR THE MERGERS
Old National and ANBPermanent 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 Board of
GovernorsOffice of the Federal Reserve System ("Federal Reserve"),Comptroller of the Indiana
Department of Financial InstitutionsCurrency (the "OCC") and the
Ohio DivisionOffice of Financial
Institutions. The merger cannot be completed without these approvals. It is
possible we may not obtainThrift Supervision. Old National Bank and Permanent Bank have filed
the required regulatory approvals and, if we do, we
do not know whenapplication with the regulators will give approvals.OCC for approval of the bank merger. Approval
of the bank merger by the Federal Reserve and the state regulatorsOCC is not to be interpreted as the opinion of the regulatory authoritiesOCC
that the bank merger isare favorable to the shareholders of ANBPermanent Bancorp from
a financial point of view or that the regulatory authorities haveOCC has considered the adequacy of the
terms of the bank merger. An approval by the Federal Reserve or a state regulatory agencyOCC in no way constitutes an
endorsement or a recommendation of the bank merger by such
regulatory authority.
- FEDERAL RESERVE
The merger is subject to approval by the Federal Reserve. Old National
has filed the required application and notification with the Federal Reserve for
approval of the merger.OCC. Assuming the Federal ReserveOCC
approves the bank merger, Old National Bank and ANBPermanent Bank may not complete
the bank merger until 30 days after thatthe approval.
During that time,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
on
antitrust grounds. Withwith respect to the approvalcompetitive factors of the Federal Reserve and the Department
of Justice, the waiting period may be reduced to no fewer than 15 days.bank merger under federal
antitrust laws. The commencement of an antitrust action by the Department of
Justice would stay the effectiveness of Federal ReserveOCC approval of the bank merger, unless
a court specifically orders otherwise. The Federal Reserve is prohibitedDepartment of Justice has formally
requested competitive information from approving any transaction underOld National and Permanent Bancorp
regarding the applicable statutes that (1) would result in a monopoly, (2) would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any party of the United States, or (3) may
have the effect in any section of the Unites States of substantially lessening
competition, tending to create a monopoly or resulting in a restraint of trade,
unless it finds that the anti-competitive effects of the transaction are clearly
outweighed in the public interest by the probable effect of the transaction in
meetingproposed bank merger on the convenience and needs of the communities to be served.
In reviewing a transaction under the applicable statutes, the Federal
Reserve will consider the financial and managerial resources of the companies
and their subsidiary banks and the convenience and needs of the communities to
be served. As part of, or in addition to, consideration of these facts,Evansville banking
market. Old National and ANB anticipate thatPermanent Bancorp are cooperating with the Federal Reserve will consider the
regulatory statusDepartment
of Old National
24Justice regarding its request for competitive information.
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46
and ANB, current and projected economic conditions in the areas of the
Midwestern United States where36
Old National and ANB operate, andPermanent Bancorp believe that the overall
capital and safety and soundness standards established by the Federal Deposit
Insurance Corporation Improvement Act of 1991 (the "FDICIA") and the regulations
promulgated under the FDICIA.
Furthermore, the Federal Reserve will assess the degree to which Old
National and ANB and their subsidiaries have taken appropriate steps to assure
that electronic data processing systems and those of their vendorsproposed mergers are
year 2000
compliant. Additional information about Old National's and ANB's year 2000
compliance efforts to date may be found in each company's Annual Report on Form
10-K for the year ended December 31, 1998. See "Where You Can Find More
Information."
Under the Community Reinvestment Act of 1977, as amended (the "CRA"),
the Federal Reserve must take into account the record of performance of each Old
National and ANB in meeting the credit needs of the entire community, including
low and moderate-income neighborhoods, served by each company and their
subsidiaries. Each of Old National's and ANB's subsidiary depository
institutions has either an outstanding or satisfactory CRA rating with the
appropriate federal regulator. None of the subsidiary banks of Old National or
ANB received any negative comments from its respective federal regulator in its
last CRA examination relating to those ratings that were material and remain
unresolved.
The BHC Act and Federal Reserve regulations require publication or
notice of, and the opportunity for public comment on, the application submitted
by Old National for approval of the merger, and authorize the Federal Reserve to
hold a public meeting in connection with the application if the Federal Reserve
determines that a meeting would be appropriate. Any meeting or comments provided
by third parties could prolong the period during which the application is
subject to review by the Federal Reserve.
Old National's rights to exercise its options under the option
agreement are alsonot subject to the prior approval of the Federal Reserve. The Federal Reserve
has requested Old National to file financial information relating to the extent that the exercise of the options under the option agreement would result
in Old National owning more than 5% of the outstanding shares of ANB common
stock. In considering whether to approve Old National's right to exercise its
option, including its right to purchase more than 5% of the outstanding shares
of ANB common stock, the Federal Reserve would generally apply the same
statutory criteria it will apply to its consideration of the merger.
- INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS
The merger requires the approval of the Indiana Department of Financial
institutions ("DFI") under Chapter 28-2-14 of the Indiana Financial Institutions
Act. In determining whether to approve the merger, the DFI will consider, among
other factors, whether the merger will jeopardize the interests of
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47
depositors, creditorsmergers
and the public, whether Old National proposes to provide
adequate services in the communities served by ANB and whether the banks already
controlled by Old National are operated in a safe, sound and prudent manner. Old National has filed the appropriate applicationcomplied with DFI.
- OHIO DIVISION OF FINANCIAL INSTITUTIONSthis request.
ACCOUNTING TREATMENT FOR THE MERGERS
The merger also requires the approvalacquisition of the Ohio Division of Financial
Institutions pursuant to Section 1115.06 of the Ohio Revised Code. The Ohio
Division of Financial Institutiones will consider, among other factors, whether
the merger would result in a monopoly in any of the markets servedPermanent Bancorp by ANB in
Ohio and whether the financial condition of Old National might jeopardize the
financial stability of ANB, in determining whether to approve the merger. Old
National has filed a copy of the Federal Reserve notice with the Ohio DFI in
satisfaction of its application requirements.
Accounting Treatment for the Merger
Old National and ANB anticipate that the merger will be accounted for
as a poolingby using the purchase method of interests transaction under GAAP.accounting. Under thisthe purchase method of
accounting, shareholdersall of the assets and liabilities of Permanent Bancorp acquired by
Old National and ANB will be deemedadjusted to have combined
their existing voting common stock interests by virtueestimated fair market value as of the
exchangeclosing date, and the resultant discounts and premiums will be credited into or
amortized against income over the expected economic lives of shares
of ANB common stockthe related assets
and liabilities. The purchase price for shares of Old National common stock. Accordingly,Permanent Bancorp will exceed the booknet
fair market value of the assets acquired and the liabilities and shareholders' equityassumed in the
acquisition of each of ANB,
as reported on its consolidated balance sheet,Permanent Bancorp by at least $52 million. The difference will be
carried over to the
balance sheet ofrecorded as goodwill on Old NationalNational's consolidated financial statements and no goodwill
will be created. The parties have
prepared the unaudited, pro forma financial information contained in this
documentamortized against income over a period not to exceed twenty years using
the pooling of interests accounting method to account for the
merger. See "Old National Bancorp Pro Forma Condensed Combined Financial
Information".
Effective Timestraight-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 ANBPermanent Bancorp with and into Old
NationalMerger 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 mergermergers will occur on the later of (1) JanuaryJuly 31, 2000 or
(2) the last business day of the month following (a) the fulfillment of all
conditions precedent to the mergermergers set forth in the merger agreement and (b)
the expiration of all waiting periods in connection with the bank regulatory
applications filed for approval of the merger,mergers, unless, in each case, otherwise
mutually agreed to by Old National and ANB.Permanent Bancorp.
Old National and ANBPermanent Bancorp currently anticipate that mergermergers will
be consummated in February,July, 2000. However, completion of the mergermergers could be
delayed if there is a delay in obtaining the required regulatory approvals or in
satisfying other conditions to the merger.
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48
Management, Personnel and Employee Benefits After themergers.
MANAGEMENT, PERSONNEL AND EMPLOYEE BENEFITS AFTER THE MERGERS
Merger Old NationalCorporation I will be the surviving corporation in the company
merger and, upon consummation of thesuch merger, the separate corporate existence
of ANBPermanent Bancorp will cease. Consequently, the directors and officers of
ANBPermanent Bancorp will no longer serve in such capacities after the effective
time of the merger, except Kelly Stanley will
become a director ofcompany merger.
Old National.
American National Bank Peopleswill be the surviving institution in the bank merger and,
upon consummation of such merger, the separate corporate existence of Permanent
Bank Farmers State Bankwill cease. Following the mergers, Perma Service Corp., Permanent Insurance
Agency, Inc. and American
National TrustPermanent, Inc. will become wholly-owned subsidiaries of Old
National. ANB
Financial Planning will remain a wholly-owned subsidiary of American National
Bank. The Boards of Directors and officers of all of ANB'sPermanent Bancorp's
subsidiaries, other than Permanent Bank, serving at the effective time of the
mergermergers will continue as the Boards of Directors and officers of the respective
subsidiary after the effective time of the merger.mergers. Following the effective time
of the merger,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
ANBPermanent Bancorp will continue in their respective positions after the merger,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 ANBPermanent 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 thePermanent Bancorp
and its subsidiaries of ANB as of the effective time of the merger,mergers, provided that
these persons continue as full-time officers or employees of the former
subsidiaries of ANBPermanent Bancorp or any other subsidiary of Old National after
the effective time of the merger,mergers, will receive substantially the same employee
benefits on substantially the same terms
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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 ANBPermanent 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 ANBPermanent 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 ANBPermanent 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 on the
first day of the calendar month which coincides with or next followsat the effective time of the merger.mergers.
Those officers and employees who do not meet the eligibility
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49 requirements of the
Old National Pension Plan, Old National Profit Sharing Plan or the Old National
ESOP on such date will become participants in these plans on the on the first "planplan
entry date" (as defined in the Old National Pension Plan,
the Old National Profit Sharing Plan or the Old National ESOP, as the case may
be)date which coincides with or next follows the date on which such
eligibility requirements are satisfied.
The ANB Corporation Savings and Incentive Plan ("ANB 401(k)") will be
merged with the Old National Profit Sharing Plan. All account balances
maintainedPermanent Bank shall withdraw as a participating employer under the
ANB 401(k) Plan will become fully vested on the day on
which the 401(k) Plan merger occurs. Until such 401(k) Plans are merged, ANB and
its subsidiaries may continue to make contributions to the ANB 401(k) Plan so
long as the contributions are in comparable amounts to past contributions to
such plan.
The ANB Corporation Employee's Pension Plan will be merged with the Old
National Pension Plan as of the January 1 or July 1 that coincides with or next
follows the effective time of the merger, or as soon as feasible after these
dates. All benefits accrued under the ANB Pension Plan will become fully vested
on the day on which the plan merger occurs. Until the date theFinancial Institution Retirement Fund (Permanent Bank's multi-employer defined
benefit pension plans are
merged, ANB and its subsidiaries will contribute to the ANB Pension Plan at
least the amounts necessary to prevent an accumulated funding deficiency, within
the meaning of the Internal Revenue Code.
The ANB Corporation Long Term Disability Plan will be terminatedplan) 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 oragreement 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 afterfollowing the effective time. Thelater
of (1) the date of termination willof 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 benefits payable to
employees entitled to disabilityqualification of the
ESOP or the related trust for favorable tax treatment, all vested and
non-forfeitable benefits under the plan.Plan shall be distributed to its participants
pursuant to the Plan provisions.
The ANB Corporation Group Health Planwelfare 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. ThroughAs 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 the Group Health Plan, ANB and it subsidiarieshis or
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38
her directorship, will continue to fund all expensesbecome covered as of the plan attributable to claims incurredeffective 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
or
prior to the date the Group Health Plan terminates. The ANB Corporation Sec. 125
Plan ("ANB Cafeteria Plan")behalf of its eligible employees will be terminated onas of the samelast day of the
ANB
Corporation Group Health Plan is terminated. Until the date the ANB Cafeteria
Plan terminates, ANB and its subsidiaries will continue to contribute to the
plan the pre-tax amountscalendar month in which the plan participants elect to defer from
compensation in order to pay his or her portioncompany merger occurs.
The cash bonus program currently sponsored by Permanent Bancorp and
Permanent Bank on behalf of the cost of coverage under
the ANB's Group Health Plan.
The ANB Corporation Supplemental Executive Retirement Plan ("ANB SERP")eligible employees will be terminated as of the
effective time of the merger. The accumulated
benefit obligations in the ANB SERP will be transferredmergers. Prior to and become benefit
obligations under the Old National Non-Qualified Defined Contribution Plan for
Executive Employees of Old National.
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50
The ANB Corporation Group Term Life Insurance Plan will be terminated
as of the first day of the first month following the effective time of the company
merger, or as soon as administratively feasible after the effective time. ANBPermanent Bancorp and its subsidiaries willPermanent Bank may continue to pay cash bonuses
under the insurance premiums necessaryprogram provided the amounts of such bonuses, individually or in the
aggregate, are comparable to continue the plan's death benefits untilamounts of any past bonuses under the plan is terminated.
The ANB Corporation Directors'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 be
mergedcease.
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 Old National's Directors' Deferred Compensation Planthe plans, until all benefit liabilities accrued under the plans
as of the effective time of the merger or as administratively feasible thereafter. Untilmergers are distributed to the participants
entitled to such benefits. Upon the distribution of these accrued benefits, the
plans are merged, ANB and its subsidiaries may continue to allow plan
participants to elect to defer all or a portionthe trust will terminate and any residual assets of the director fees he or she
would receive andtrust will be
returned to credit the fees to the director's individual account under
the plan.
The Stock Investment Plan of ANB will remain in effect and continue to
be funded by employee and employer contributions through the effective time of
the merger.Old National.
As of the effective time of the merger,mergers, Permanent Bancorp must terminate
the shares of ANB common
stock owned by each participant will be converted into whole shares of Old
National common stock inPermanent Bancorp Recognition and Retention Plan, the same manner as outstanding shares of ANB common
stock held outside the plan by application of the exchange ratio. Fractional
share interests resulting from the conversion will be paid in cash. The
administrator of the ANB1993 Stock Investment Plan will transfer the shares of Old
National common stock held on behalf of each participant in the plan to the
administrator of the Old National Direct Stock PurchaseOption and
Incentive Plan and Dividend
Reinvestmentthe 1999 Omnibus Incentive Plan. The converted shares will be held, administered and
distributed or surrendered pursuant toUnder the terms of the
Old National Direct
Stock Purchase Plan. However,Permanent Bancorp 1999 Omnibus Incentive Plan, stock options granted under the
ANB participants' distribution rights cannot
be materially adversely affected by the transfer of the converted shares to the
Old National Plan.
The ANB Corporation Severance Policyplan which have not yet vested will be terminated as of the
effective time of the merger. Individuals covered by the severance policy on the
date of its termination will receive a severance benefit, if within twelve
months after the effective timevest and become exercisable in full upon
adoption of the merger (a) his or her employment is
terminated involuntarily without cause, (b) his or her compensation is
materially reduced, or (c) he or she is assigned duties, without his or her
consent, that are materially inconsistent with his or her duties prior toagreement by Permanent Bancorp's shareholders at the
datespecial meeting. Under the terms of the Permanent Bancorp 1993 Stock Option and
Incentive Plan, upon adoption of the merger agreement. The individual's severance benefit will be a
salary continuation, which will beagreement at the greater of (a) the amount the individual
would have receivedspecial meeting,
stock options granted under the terminated ANB Corporation Severance Policy hadplan which have not yet vested will vest and
become exercisable for a period of 60 days, after which the policy not been terminated, or (b)options will revert
to their original vesting schedules. On December 13, 1999, the amount the individual would receivedcommittee
administering Permanent Bancorp's Recognition and Retention Plan caused all
unvested restricted shares of Permanent Bancorp common stock awarded under the
Old National Severance Policy, if any, applicableRecognition and Retention Plan to vest and become free of all restrictions on
such shares. See also "Proposed Mergers -- Interests of Certain Persons in the
individual.
Employment Agreement
James R. Schrecongost, ViceMergers -- Stock Options" and "-- Restricted Stock."
INTEREST OF CERTAIN PERSONS IN THE MERGERS
Donald P. Weinzapfel. Donald P. Weinzapfel, Chairman President and CEOChief Executive
Officer of ANB,Permanent Bancorp, entered into a two-year employmenteighteen month consulting agreement
with Old National, which becomes effective when the merger ismergers are completed. This employmentBy
executing this consulting agreement with Old National, terminates Mr. Schrecongost's currentWeinzapfel
voluntarily terminated his employment agreement
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51
with ANBand all officer and other positions held
by him at the closingPermanent Bancorp and Permanent Bank, effective as of the merger without any further payments or
obligations thereunder. After the effective
time of the merger,company merger.
Under the consulting agreement, Mr. SchrecongostWeinzapfel 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
employed as the Chairmanpaid a fee of Old National Trust Company; Old National
Trust Company-Illinois; Old National Trust Company-Kentucky; and American
National Trust and Investment Management Company, with an initial annual base
salary of $255,000. Mr. Schrecongost also will serve as a member of the
Chairman's Committee of Old National while employed by Old National.
When the merger is completed,$14,500 per month. In addition, Old National will pay Mr. Schrecongost a
signing bonus of $875,000. Additionally, Old National will granttransfer and
assign to Mr. Schrecongost executive performance awards, stock options, stock appreciation
rights, bonusesWeinzapfel 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 incentive grants at least in equal amounts and
substantially the same as those awarded to other executivescosts of Old National
during the term of Mr. Schrecongost's employment agreement.
In addition to this compensation, if Mr. Schrecongost (1) remains
employed by Old National until the expiration of the employmentmembership. The
consulting agreement (2)
ismay be terminated by Old National without "cause" (as defined in the employment
agreement) during the term of the agreement, or (3) Mr. Schrecongost terminates
his employment forWeinzapfel at any
reason after the first anniversary of the agreement, Old
National will pay Mr. Schrecongost a retention bonus of $65,000. However, if Old
National terminates Mr. Schrecongost's employment for "cause" during the first
year of the employment agreement, Mr. Schrecongost is not entitled to receive
the retention bonus.
If Old National terminates Mr. Schrecongost's employment with Old
National,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. Schrecongost,
among other items, any unpaid portionWeinzapfel (or to Mr. Weinzapfel's estate, in the event of his base salary throughdeath)
the consulting fee of $14,500 per month for the remaining term of the agreement and a single lump sum payment ofagreement.
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39
When the amounts he ismergers are completed, Mr. Weinzapfel will not be entitled to
receive under Old National's Short Term Incentive Plan that are earned but unpaid for
the year preceding terminationor participate in any salary, bonus, compensation or other payments or
any employee benefits, such as retirement, pension, profit-sharing and for the year during which termination occur.
Additionally,insurance
plan and policies, of or from Old National, must causeOld 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 Mr. Schrecongost's incentive
compensation awardsPermanent Bank,
will be entitled to be nonforfeitable and vested.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 employment agreement, Mr. Schrecongost agreesPermanent Bancorp 1999 Omnibus
Incentive Plan, stock options granted under the plan which have not solicit any of Old National's customers or employees for a term of one year
after his employment with Old National ends or the expirationyet vested
will vest and become exercisable in full upon adoption of the termmerger 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 employment agreement. Additionally, Mr. Schrecongost agreesmerger 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 to compete with
Old National or be employed by Old National's competitors within Indianayet vested will vest and the
counties in other states in which ANB has offices. This restriction isbecome
exercisable for a period of one year60 days, after Mr. Schrecongost's employment with Old National ends orwhich the termoptions 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 employmentmerger agreement ends.
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52
Agreement with Larry E. Thomas
Larry E. Thomas, CFOat the special
meeting.
Restricted Stock. On December 13, 1999, the committee administering
Permanent Bancorp's Recognition and Retention Plan caused an aggregate of ANB, entered into6,960
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 with Old
National which becomes effective when the merger is completed. Mr. Thomas is to
continue employmentprovides that for a period of 90 days following the closing of the merger
and Old National will pay him at his current rate of salary. This agreement
also provides that Old National will pay to Mr. Thomas $488,219 in a lump sum in
satisfaction of the amounts owed under his current employment agreement with ANB
due to the change of control of ANB resulting from the merger. Additionally, Old
National will pay Mr. Thomas cash in an amount necessary to pay for the income
taxes associated with the transfer to him of his split-dollar life insurance
plan.
Stock Option Agreement
GENERAL. At the time of the execution of the merger agreement, ANB
entered into a stock option agreement which ANB granted Old National an
irrevocable option to purchase from ANB up to 1,083,753 shares of ANB common
stock or a lesser or greater amount of shares that is equal to 19.9% of the
outstanding ANB common stock at the time the option is exercised, subject to
certain adjustments. The exercise price of the ANB option is $27.70 per share,
subject to certain adjustments. The following summary of aspects of the stock
option agreement, which presents its material terms and conditions, is not a
complete description of the terms and conditions of the stock option agreement
and is qualified in its entirety by reference to the stock option agreement,
which is attached to this document as Appendix B and is incorporated herein by
reference.
EXERCISE. The option becomes exercisable, in whole or in part and
subject to regulatory approval, only if one of the following "exercise events"
occurs or has occurred without the prior approval of Old National:
- ANB or any of its subsidiaries accepts a proposal from, regardless
of how conditional the proposal may be, or ANB or any of its
subsidiaries executes a letter of intent, agreement in principle or
other agreement (whether or not binding) with, any entity, person
or group other than Old National to:
1. acquire ANB by merger, consolidation, purchase of all or
substantially all of ANB's or any of its subsidiaries assets or
capital stock or any other similar transaction; or
2. make a tender or exchange offer for any shares of ANB common
stock or the capital stock of any of its subsidiaries.
- Any entity, person or group, other than Old National, acquires the
beneficial ownership of 15% or more of the shares of ANB common
stock or the capital stock of any of its subsidiaries, and if:
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53
1. the entity, person or group (a) has publicly announced its
opposition to the merger agreement or the merger or its
intention not to vote the shares of ANB common stock it owns in
favor of the merger agreement or merger and (b) has solicited
or indicated its intention to solicit proxies or votes against
the merger agreement or the merger; or
2. the entity, person or group has proposed, indicated an
intention to propose or entered into an agreement to merge,
consolidate or otherwise combine with ANB or any of its
subsidiaries.
Instead of exercising the option if any of the events listed above
occur, Old National may require ANB to pay it an amount equal to the difference
between the highest price paid or to be paid by any entity, person or group for
any share of ANB common stock (or the total amount of consideration paid for the
assets of ANB or any subsidiary of ANB divided by the number of shares of ANB
common stock outstanding) and Old National's purchase price for the shares
covered by the option agreement.
As of the date of this document, to the knowledge of Old National and
ANB, no event has occurred that would allow Old National to exercise its option.
REPURCHASE OF THE OPTION SHARES. The option agreement permits Old
National to require that ANB repurchase any shares issued to Old National under
the option agreement. The repurchase price is an amount which is equal to the
highest price paid or to be paid by any entity, person or group for any share of
ANB common stock in a transaction that triggers Old National's right to exercise
the option (or the total amount of consideration paid for the assets of ANB
divided by the number of shares of ANB common stock then outstanding) multiplied
by the total number of shares to be repurchased. Additionally, ANB must pay Old
National interest at the rate of 8% per annum from the date Old National
purchases shares under the option agreement through the date of the repurchase
of the shares.
If Old National has purchased any shares under the option agreement and
the merger agreement is terminated in accordance with its terms, ANB has the
right to purchase, and Old National must sell to ANB, all of the shares of ANB
purchased by Old National pursuant to the option agreement. The purchase price
for each share held by Old National is computed in the same manner as if Old
National required ANB to repurchase shares pursuant to the option agreement.
EXPIRATION OF THE OPTION. Old National's ability to purchase shares of
ANB common stock under the option agreement automatically expires:
- atsix years after the
effective time of the company merger, with ANB;
- 12 months after the first occurrence of an exercise event listed
above; or
32
54
- at the termination of the merger agreement prior to the occurrence
of an exercise event; however, if Old National terminates the
merger agreement in accordance with its terms, the option expires
12 months from the date of the termination of the merger agreement
if Old National is not in wilful and material breach of any
representation, warranty or covenant in the merger agreement.
ADJUSTMENT. The option agreement provides for the adjustment to the
number of shares and the exercise price of the option upon the occurrence of
various changes to the capital structure of ANB or certain events or
transactions.
REGULATORY MATTERS. Some rights and obligations of Old National as the
optionee and ANB as the issuer under the option agreement are subject to the
receipt of the necessary regulatory approvals. Old National must obtain the
approvals of the Federal Reserve Board and the Indiana Department of Financial
Institutions to acquire more than 5% of the outstanding shares of ANB common
stock.
REGISTRATION RIGHTS. If Old National exercises its option and desires
to sell any of the shares it purchased by exercise of the option, ANB must use
its reasonable best efforts to assist Old National in complying with the federal
and state laws that govern the sale of the shares no later than thirty days
after Old National requests assistance. If ANB receives an opinion from its
legal counsel that a registration statement is not required for the proposed
sale of the shares, it then is not required to provide Old National with
assistance in complying with the laws. Old National has additional rights if, at
any time after it has exercised its option for all of the shares covered by the
option agreement, ANB proposes to offer any of its equity securities for sale to
the public. If ANB makes a public offering, it must give notice to Old National
of its intent to do so. If Old National requests ANB to do so, ANB must include
in ANB's registration statement the number of shares of ANB common stock Old
National has acquired through exercise of the option which Old National
identifies in the request. However, ANB does not need to include these shares in
the registration statement if it receives an opinion of its legal counsel the
shares do not need to be included in the registration statement in order for Old
National to sell or distribute the shares.
Indemnification; Directors' and Officers' Liability Insurance
The merger agreement provides that Old National will indemnify, defend and
hold harmless any person who is or has been a director or officerthe present directors, officers and employees of ANB or
was serving at the request of ANB as a director or officer of any corporation,
joint venture, trust employee benefit plan or other enterprisePermanent Bancorp
and its subsidiaries against all losses arising out of any claim that is based upon or in any way relates to
any act or omission occurring at or prior to the effective time of the company
merger in the person's capacity as a director, officer or officer. Old National will indemnify officers
and directors of the subsidiaries of ANB following the effective time of
33
55
the mergeremployee, to the
samefullest extent it indemnifies otherPermanent Bancorp is now entitled to indemnify and advance
expenses to such persons working in similar
capacities for Old National orunder its subsidiaries.certificate of incorporation and bylaws. The
merger agreement also provides that Old National will maintain in effect for not less thanat
least two years from the effective time of the company merger the directors' and
officers' liability insurance policies carried by ANB. However, Old National mayPermanent Bancorp or
substitute other
liability insurance policies if the policies provide substantiallyproviding similar coverage.
31
40
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
to holders of ANBPermanent 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 ANBPermanent 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 ANBPermanent 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 OpinionTAX OPINION
Old National hasand Permanent Bancorp have each requested the law firm of
Krieg DeVault Alexander & Capehart, LLP and ANB has requested the law firm of Sullivan & Cromwell to render opinionsan opinion that the mergermergers to
be effected pursuant to the merger agreement constitutes a tax-free
reorganization under the Code to each party thereto and to the shareholders of
ANB,Permanent Bancorp, except with respect to cash received by ANB'sPermanent Bancorp's
shareholders for fractional share interests of Old National common stock.
In rendering their opinions,its opinion, Krieg DeVault Alexander & Capehart, LLP
and Sullivan & Cromwell may
require and rely upon representations contained in letters received from Old
National and ANB,Permanent Bancorp, and may rely on customary assumptions of certain
facts. Under the merger agreement, the obligations of each of Old National and
ANBPermanent Bancorp to consummate the merger is conditioned upon the receipt of an
opinion of their respectiveOld National's counsel substantially to the effect as set forth
above. However, thesethis legal opinionsopinion will not bind the Internal Revenue Service,
which could take a different view.
34
56
Tax Consequences to Old National and ANBTAX CONSEQUENCES TO OLD NATIONAL AND PERMANENT BANCORP
Assuming the merger of ANB with andPermanent Bank into Old National isBank and the merger
of Permanent Bancorp into Merger Corporation I are consummated as described in
the merger agreement and constitutes aconstitute statutory mergermergers under Indiana law, then
for United States federal income tax purposes, the merger of
ANB with and into Old Nationalmergers will constitute
a tax-free reorganization.reorganizations. As a result, Old National and ANBno party to the merger agreement will
recognize neither gain noror loss as a result of the mergermergers for federal income tax
purposes.
Tax Consequences to ANB ShareholdersTAX CONSEQUENCES TO PERMANENT BANCORP SHAREHOLDERS
- ANBPERMANENT BANCORP SHAREHOLDERS RECEIVING SOLELY OLD NATIONAL COMMON STOCK
An ANBA Permanent Bancorp shareholder who receives solely Old National common
stock in exchange for shares of ANBPermanent 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 ANBPermanent 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
An ANBA 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
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 ANBPermanent Bancorp shareholder. If treated
as a sale and not a dividend, the ANBPermanent 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 ANBPermanent 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 ANBPermanent Bancorp common stock is greater than one year.
35
57
- BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of cash to a person surrendering shares of ANBPermanent 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 ANBPERMANENT BANCORP URGE SHAREHOLDERS TO
CONSULT WITH THEIR PERSONAL TAX ADVISORADVISORS WITH RESPECT TO ALL TAX CONSEQUENCES OF
THE MERGERMERGERS TO THEM, INCLUDING THE EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS
AND ANY OTHER TAX CONSEQUENCES.CONSEQUENCES INCLUDING THE EFFECTS OF FOREIGN TAX LAWS.
COMPARATIVE PER SHARE DATA
Nature of Trading MarketNATURE 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."OLDB." On July 29,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 $28.51$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.
36
58
PRICE RANGE OF
COMMON STOCK
---------------
HIGH LOW
---- --------- ------
1997
----
First Quarter $ 21.74 $ 20.88Quarter............................................... $21.74 $20.88
Second QuarterQuarter.............................................. 25.63 21.59
Third QuarterQuarter............................................... 26.21 25.19
Fourth QuarterQuarter.............................................. 28.65 25.63
1998
----
First Quarter $ 28.87 $ 27.22Quarter............................................... $28.87 $27.22
Second QuarterQuarter.............................................. 29.63 28.87
Third QuarterQuarter............................................... 33.70 28.91
Fourth QuarterQuarter.............................................. 35.37 30.39
33
42
PRICE RANGE OF
COMMON STOCK
---------------
HIGH LOW
------ ------
1999
----
First Quarter $ 35.00 $ 28.57Quarter............................................... $35.00 $28.57
Second QuarterQuarter.............................................. 33.57 28.57
Third QuarterQuarter............................................... 30.00 26.43
Fourth QuarterQuarter.............................................. 32.08 27.50
2000
First Quarter............................................... $33.06 $23.56
Second Quarter (through , 2000).................
- ANBPERMANENT BANCORP
Shares of ANBPermanent 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 ANBC."PERM." On July 29,December 17, 1999, the closing price
of ANBPermanent Bancorp common stock reported by the Nasdaq National Market System
was $28.25.$15.375. On _______________,April 19, 2000, the closing price of ANBPermanent 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 ANBPermanent Bancorp common stock as reported by the Nasdaq National
Market System.
PRICE RANGE OF
COMMON STOCK
-----------------
HIGH LOW
---- ---------- -------
1997
----
First QuarterQuarter............................................... $ 19.7511.38 $ 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 19.50 18.00
Third Quarter 21.88 19.50
Fourth Quarter 26.25 21.50(through , 2000).................
3734
59
PRICE RANGE OF
COMMON STOCK
HIGH LOW
---- ---
1998
----
First Quarter $ 28.63 26.00
Second Quarter 29.00 27.88
Third Quarter 28.13 25.63
Fourth Quarter 25.75 22.50
1999
----
First Quarter $ 23.88 20.00
Second Quarter 23.13 19.44
Third Quarter 35.75 23.38
Fourth Quarter 40.75 34.19
Dividends43
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 ANBPermanent 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).
PERMANENT
OLD NATIONAL ANBBANCORP
COMMON COMMON
STOCK (1) STOCK (2)STOCK(1) STOCK(2)
------------ -------------------
1997
----
First QuarterQuarter............................................... $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 $ 0.130.055
Second Quarter.............................................. 0.14 0.055
Third Quarter............................................... 0.14 0.06
Fourth Quarter.............................................. 0.14 0.06
1999
First Quarter............................................... $0.15 $ 0.150.06
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 0.13 0.15
Third Quarter 0.13 0.17
Fourth Quarter 0.14 0.17
1998
----
First Quarter $ 0.13 $ 0.17
Second Quarter 0.14 0.17
Third Quarter 0.14 0.19
Fourth Quarter 0.14 0.19(through , 2000)................. 0.07
38
60
OLD NATIONAL ANB
COMMON COMMON
STOCK (1) STOCK (2)
------------ ----------
1999
----
First Quarter $ 0.15 $ 0.19
Second Quarter 0.16 0.19
Third Quarter 0.16 0.19
Fourth Quarter 0.16 0.19
- ---------------
(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 ANBPermanent Bancorp may continue to pay its
customary quarterly dividends of up to $0.19$0.07 per share.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 ANBPermanent Bancorp in the ordinary
course of business for payment of reasonable and necessary business and
operating expenses of ANBPermanent Bancorp and to provide funds for ANB'sPermanent
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 issuedpaid by
Old National on January 28, 1999, the 5% stock dividend declaredpaid by Old National on
December 9, 1999January 28, 2000 and a three-for-two stock split paid on May 24, 1999.
Equivalent per share data is calculated by
35
44
multiplying the pro forma Old National information by the exchange ratio
of 1.3125 provided by the merger agreement.
As Reported
------------------------------------------------
Cash Book Value
Old National Net Income (1) Dividends at Period EndAS REPORTED
-----------------------------------------
CASH BOOK VALUE
OLD NATIONAL NET INCOME(1) DIVIDENDS AT PERIOD END
- ------------------------------------------------ ------------- -------------------- -------------
Nine months ended September 30, 1999 1.30 0.47 10.75
Year Ended December 31, 1998 1.54 0.55 10.86
1997 1.40 0.53 10.41
1996 1.25 0.50 9.771999............................. $1.63 $0.63 $10.35
39
61
As Reported
-----------------------------------------------
Cash Book Value
ANB Net Income (1) Dividends at Period EndAS REPORTED
-----------------------------------------
CASH BOOK VALUE
PERMANENT BANCORP NET INCOME(1) DIVIDENDS AT PERIOD END
- ----------------------------------------------------- ------------- ------------------- -------------
Nine months ended September 30, 1999 $ 1.15 0.57 13.41
Year endedEnded December 31, 1998 1.57 0.72 13.04
1997 1.50 0.64 12.26
1996 1.31 0.55 11.301999............................. $0.72 $0.235 $10.27
Net Income (1)
------------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma (2) Equivalent(2) Pro Forma(3) Equivalent(3)
-------------NET INCOME(1)
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA EQUIVALENT
------------ ------------ ------------------------------
Nine months ended September 30, 1999 $ 1.24 1.63 1.24 1.63
Year endedEnded December 31, 1998 1.49 1.96 1.49 1.96
1997 1.37 1.80 1.37 1.80
1996 1.22 1.60 1.22 1.601999................................ $1.53 $1.19
Cash Dividends
------------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma(2) Equivalent(2) Pro Forma(3) Equivalent(3)CASH DIVIDENDS
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA EQUIVALENT
------------ ------------- ------------ -----------------------------
Nine months ended September 30, 1999 $ 0.47 0.62 0.47 0.62
Year endedEnded December 31, 1998 0.55 0.72 0.55 0.72
1997 0.53 0.70 0.53 0.70
1996 0.50 0.66 0.50 0.661999................................ $0.63 $0.49
Shareholders' Equity
----------------------------------------------------------------
Old National ANB Old National ANB
Pro Forma(2) Equivalent(2) Pro Forma(3) Equivalent(3)
-----------SHAREHOLDERS' EQUITY
--------------------------------
OLD NATIONAL PERMANENT BANCORP
PRO FORMA(1) EQUIVALENT(1)
------------ ----------- -------------
As of September 30, 1999 $ 10.68 14.02 10.64 13.96
As of December 31, 1998 10.71 14.06 10.63 13.95
40
62
Market Value of Common Stock
--------------------------------------
Old National ANB Equivalent
------------ -------------------------------
As of July 29, 1999 (4) $ 28.63 37.58December 31, 1999..................................... $11.32 $8.83
MARKET VALUE OF COMMON STOCK
--------------------------------
PERMANENT BANCORP
OLD NATIONAL EQUIVALENT
------------ -----------------
As of December 17, 1999(2).................................. $31.54 $15.37
- --------------------------------------------------------------
(1) Only includes net income from continuing operations for Old National. Old
National's and ANB's basic earnings per share.
(2) Considers the pending merger with ANB.of Permanent Bancorp. See "Pro Forma Condensed Combined
Financial Information."
(3) Considers the pending merger with ANB and the pending merger as of
September 30, 1999 with Heritage Financial Services, Inc. See "Pro Forma
Condensed Combined Financial Information."
(4)PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION.
(2) Represents the last business day prior to the public announcement of the
proposedexecution of the merger of ANB and Old National.
41agreement.
36
6345
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The accompanying financial statements present aan Unaudited Pro Forma
Condensed Combined Balance Sheet of Old National as of September 30,December 31, 1999 and Pro
Forma Condensed Combined StatementsStatement of Income for the nine months ended September 30,
1999 and for the yearsyear ended December 31,
1998, 1997, and 1996.1999.
The Unaudited Pro Forma Condensed Combined StatementsStatement of Income for the nine
months ended September 30, 1999 and the yearsyear
ended December 31, 1998, 1997 and
1996 are1999 is presented giving effect to the pending merger as of
January 1 of each
of the yearsyear presented.
The pro forma information is based upon historical financial statements.
The assumptions give effect to the proposed merger under the pooling
of interestspurchase 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.
4237
6446
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30,AS OF DECEMBER 31, 1999
(Unaudited - Dollars in Thousands)(UNAUDITED -- DOLLARS IN THOUSANDS)
ANB
ASSETS Old National Corporation Adjustments Pro Forma
- ------------------------------------------------- --------------- --------------- --------------- ---------------
Cash and due from banks.......................... $ 156,439 $ 27,104 $ 183,543
Money market investments......................... 11,917 5,877 17,794
Investment securities............................ 1,725,378 116,832 1,842,210
Loans............................................ 4,796,556 653,678 5,450,234
Reserve for loan losses.......................... (58,117) (5,532) (63,649)
Excess cost over assets acquired................. 14,077 11,220 25,297
Other intangibles 0 0 0
Premises and equipment........................... 90,880 13,601 104,481
Other assets..................................... 226,177 11,096 237,273
--------------- --------------- --------------- ---------------
$ 6,963,307 $ 833,876 $ 0 $ 7,797,183
=============== =============== =============== ===============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits......................................... $ 5,025,330 $ 676,642 $ 5,791,972
Medium term notes................................ 96,300 0 96,300
Subordinated debentures.......................... 17,808 0 17,808
Other borrowings................................. 1,220,824 77,991 1,298,815
Other liabilities................................ 88,110 5,668 93,778
--------------- --------------- --------------- ---------------
Total liabilities....................... 6,448,372 760,301 0 7,208,673
--------------- --------------- --------------- ---------------
Common stock..................................... 45,635 5,485 1,714(a) 52,834
Capital surplus.................................. 331,711 13,622 (1,714)(a) 343,619
Retained earnings................................ 154,632 55,097 209,729
Net unrealized gain.............................. (17,043) (629) (17,672)
--------------- --------------- --------------- ---------------
Total shareholders' equity.............. 514,935 73,575 0 588,510
--------------- --------------- --------------- ---------------
$ 6,963,307 $ 833,876 $ 0 $ 7,797,183
=============== =============== =============== ===============
Outstanding common shares........................ 47,917 55,116
=============== ===============
Shareholders' equity per share................... 10.75 10.68
=============== ===============
ASSETS Heritage Adjustments Pro Forma
- ------------------------------------------------- --------------- ---------------- ---------------
Cash and due from banks.......................... $ 9,063 $ 192,606
Money market investments......................... 2,040 19,834
Investment securities............................ 27,649 1,869,859
Loans............................................ 182,777 5,633,011
Reserve for loan losses.......................... (2,650) (66,299)
Excess cost over assets acquired................. 16 25,313
Other intangibles 412 412
Premises and equipment........................... 11,187 115,668
Other assets..................................... 3,540 240,813
--------------- ---------------- ---------------
$ 234,034 $ 0 $ 8,031,217
=============== ================ ===============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits......................................... $ 198,861 $ 5,900,833
Medium term notes................................ 0 96,300
Subordinated debentures.......................... 0 17,808
Other borrowings................................. 13,701 1,312,516
Other liabilities................................ 2,533 96,311
--------------- ---------------- ---------------
Total liabilities....................... 215,095 0 7,423,768
--------------- ---------------- ---------------
Common stock..................................... 1,210 791(b) 54,835
Capital surplus.................................. 6,671 (791)(b) 349,499
Retained earnings................................ 11,305 221,034
Net unrealized gain.............................. (247) (17,919)
--------------- ---------------- ---------------
Total shareholders' equity.............. 18,939 0 607,449
--------------- ---------------- ---------------
$ 234,034 $ 0 $ 8,031,217
=============== ================ ===============
Outstanding common shares........................ 57,117
===============
Shareholders' equity per share................... 10.64
===============
- -----------------------------------------------------
See "Notes to Pro Forma Condensed Combined financial Information."
43
65
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
As Reported As Reported
-------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------PERMANENT
ONB BANCORP ADJUSTMENTS PRO FORMA
---------- --------- ----------- --------- -------- ----------
Interest income ................................................. $362,574ASSETS
Cash and due from banks..................... $ 41,947 $404,521211,337 $ 13,905 $418,426
Interest expense ................................................ 183,722 18,402 202,124 5,930 208,05411,388 $ 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
---------- -------- -------- --------
Net interest income ............................................. 178,852 23,545 202,397 7,975 210,372
Provision for loan losses ....................................... 8,437 1,090 9,527 1,079 10,606----------
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)
---------- -------- -------- --------
Net interest income after provision for loan losses ............. 170,415 22,455 192,870 6,896 199,766
Noninterest income .............................................. 50,186 8,299 58,485 3,063 61,548
Noninterest expense ............................................. 134,696 20,941 155,637 6,464 162,101----------
Total shareholders' equity........ 584,995 40,491 51,509 676,995
---------- -------- -------- -------- -------- --------
Income before income taxes ...................................... 85,905 9,813 95,718 3,495 99,213
Provision for income taxes ...................................... 23,057 3,568 26,625 1,209 27,834
-------- -------- -------- -------- --------
Net income from continuing operations ........................... 62,848 6,245 69,093 2,286 71,379
Discontinued operations ......................................... 3,483 0 3,483 0 3,483
-------- -------- -------- -------- --------
Net income ......................................................----------
$8,109,285 $497,158 $ 66,331 $ 6,245 $ 72,576 $ 2,286 $ 74,86251,509 $8,657,952
========== ======== ======== ======== ======== ========
Net income from continuing operations==========
Outstanding common shares................... 56,518 59,804
========== ==========
Shareholders' equity per common share: (c)
Assuming no dilution ................................... $ 1.30 $ 1.24 $ 1.24
======== ======== ========
Assuming full dilution ................................. $ 1.26 $ 1.21 $ 1.21
======== ======== ========
Weighted average common shares outstanding: (c)
Assuming no dilution ................................... 48,393 55,526 57,450
======== ======== ========
Assuming full dilution ................................. 50,232 57,486 59,413
======== ======== ========share.............. 10.35 11.32
========== ==========
See "Notes- ---------------
Notes:
(a) Exchange of 100% of Permanent Bancorp common stock for shares of ONB Common
Stock.
(b) Permanent's balances will be marked to Pro Forma Condensed Combined financial Information."
44market at acquisition date.
Adjustments, except for investments, are currently being determined.
38
6647
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)1999
(UNAUDITED -- DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
As Reported As Reported
-------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------AS REPORTED
--------------------
PERMANENT
ONB BANCORP ADJUSTMENTS PRO FORMA
-------- --------- ----------- --------- --------- ----------
Interest income .................................................income................................. $565,867 $33,670 $ 456,528 $ 50,174 $ 506,702 $ 16,813 $ 523,515137(a) $599,674
Interest expense ................................................ 231,614 22,665 254,279 7,411 261,690
--------- --------- --------- --------- ---------expense................................ 284,763 20,202 304,965
-------- ------- ------- --------
Net interest income ............................................. 224,914 27,509 252,423 9,402 261,825income............................. 281,104 13,468 137 294,709
Provision for loan losses ....................................... 12,160 1,502 13,662 1,325 14,987
--------- --------- --------- --------- ---------
Net interest income after provision for loan losses ............. 212,754 26,007 238,761 8,077 246,838
Noninterest income .............................................. 58,891 10,282 69,173 3,952 73,125
Noninterest expense ............................................. 167,937 23,628 191,565 7,553 199,118
--------- --------- --------- --------- ---------
Income before income taxes ...................................... 103,708 12,661 116,369 4,476 120,845
Provision for income taxes ...................................... 29,573 4,205 33,778 1,624 35,402
--------- --------- --------- --------- ---------
Net income from continuing operations ........................... 74,135 8,456 82,591 2,852 85,443
Discontinued operations ......................................... (9,854) 0 (9,854) 0 (9,854)
--------- --------- --------- --------- ---------
Net income ...................................................... $ 64,281 $ 8,456 $ 72,737 $ 2,852 $ 75,589
========= ========= ========= ========= =========
Net income from continuing operations per common share: (c)
Assuming no dilution ................................... $ 1.54 $ 1.49 $ 1.49
========= ========= =========
Assuming full dilution ................................. $ 1.49 $ 1.45 $ 1.46
========= ========= =========
Weighted average common shares outstanding: (c)
Assuming no dilution ................................... 48,204 55,274 57,161
========= ========= =========
Assuming full dilution ................................. 50,373 57,594 59,489
========= ========= =========
See "Notes to Pro Forma Condensed Combined financial Information."
45
67
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
As Reported As Reported
------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- --------- ----------
Interest income .......................................... $ 435,038 $ 46,862 $ 481,900 $ 13,616 $ 495,516
Interest expense ......................................... 216,868 20,785 237,653 5,922 243,575
--------- --------- --------- --------- ---------
Net interest income ...................................... 218,170 26,077 244,247 7,694 251,941
Provision for loan losses ................................ 13,562 1,027 14,589 676 15,265
--------- --------- --------- --------- ---------
Net interest income after provision for loan losses ...... 204,608 25,050 229,658 7,018 236,676
Noninterest income ....................................... 51,104 7,944 59,048 3,476 62,524
Noninterest expense ...................................... 158,631 20,851 179,482 6,869 186,351
--------- --------- --------- --------- ---------
Income before income taxes ............................... 97,081 12,143 109,224 3,625 112,849
Provision for income taxes ............................... 28,998 4,102 33,100 1,323 34,423
--------- --------- --------- --------- ---------
Net income from continuing operations .................... 68,083 8,041 76,124 2,302 78,426
Discontinued operations .................................. (5,005) 0 (5,005) 0 (5,005)
--------- --------- --------- --------- ---------
Net income ............................................... $ 63,078 $ 8,041 $ 71,119 $ 2,302 $ 73,421
========= ========= ========= ========= =========
Net income from continuing operations per common share: (c)
Assuming no dilution.................... ........ $ 1.40 $ 1.37 $ 1.37
========= ========= =========
Assuming full dilution........................... $ 1.36 $ 1.33 $ 1.33
========= ========= =========
Weighted average common shares outstanding: (c)
Assuming no dilution............................. 48,488 55,510 57,343
========= ========= =========
Assuming full dilution........................... 51,135 58,290 60,143
========= ========= =========
See "Notes to Pro Forma Condensed Combined financial Information."
46
68
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited - Dollars in Thousands, Except Share and Per Share Data)
As Reported As Reported
------------------------- ---------------------
ANB
Old National Corporation Pro Forma Heritage Pro Forma
------------ ----------- --------- --------- ----------
Interest income .......................................... $405,669 $ 44,431 $450,100 $ 10,846 $460,946
Interest expense ......................................... 196,289 19,848 216,137 4,629 220,766
-------- -------- -------- -------- --------
Net interest income ...................................... 209,380 24,583 233,963 6,217 240,180
Provision for loan losses ................................ 11,082 1,156 12,238 485 12,723
-------- -------- --------losses....................... 14,798 292 15,090
-------- --------
Net interest income after provision for loan
losses ...... 198,298 23,427 221,725 5,732 227,457losses........................................ 266,306 13,176 137 279,619
Noninterest income ....................................... 47,402 7,362 54,764 3,372 58,136income.............................. 82,974 3,325 86,299
Noninterest expense ...................................... 156,720 20,344 177,064 5,780 182,844expense............................. 223,583 13,090 2,617(b) 239,290
-------- -------- -------- --------------- ------- --------
Income before income taxes ............................... 88,980 10,445 99,425 3,324 102,749taxes...................... 125,697 3,411 (2,480) 126,628
Provision for income taxes ............................... 26,293 3,375 29,668 1,219 30,887taxes...................... 32,440 1,288 33,728
-------- -------- -------- --------------- ------- --------
Net income from continuing operations .................... 62,687 7,070 69,757 2,105 71,862operations........... 93,257 2,123 (2,480) 92,900
Discontinued operations .................................. 494operations......................... 4,101 0 494 0 4944,101
-------- -------- -------- --------------- ------- --------
Net income ...............................................income...................................... $ 63,18197,358 $ 7,0702,123 $(2,480) $ 70,251 $ 2,105 $ 72,35697,001
======== ======== ======== =============== ======= ========
Net income from continuing operations per common
share: (c)(b)
Assuming no dilution....................dilution.......................... $ 1.251.63 $ 1.22 $ 1.22
========1.53
======== ========
Assuming full dilution..................dilution........................ $ 1.221.59 $ 1.19 $ 1.19
========1.49
======== ========
Weighted average common shares outstanding: (c)(b)
Assuming no dilution.................... 50,134 57,211 58,982
========dilution.......................... 57,261 60,547
======== ========
Assuming full dilution.................. 52,772 59,973 61,785
========dilution........................ 59,215 62,501
======== ========
See "Notes to Pro Forma Condensed Combined financial Information."
47
69
OLD NATIONAL BANCORP
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION- ---------------
Notes:
(a) ExchangeReflects accretion of 100%discount on Investment Securities of ANB common stock for 7,198,671 shares$822 over the
average remaining life (6 years) of Old National
common stock.the portfolio using the level-yield
method.
(b) ExchangeReflects amortization of 100% of Heritage Financial Services, Inc. common stock for
2,001,166 of Old National common stock.
(c) Net income per sharegoodwill arising from the Merger on a
fully dilutedstraight-line basis assumes the conversion of Old
National's convertible subordinated debentures.over a 20-year period.
39
48 70
DESCRIPTION OF OLD NATIONAL
OverviewOVERVIEW
Old National is a bank holding company that operates 119149 banking offices
and 174259 ATM locations in Indiana, Illinois, Kentucky, Ohio and KentuckyTennessee 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 3841 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.
49
71
Supervision and RegulationSUPERVISION 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, 19981999, 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
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 would beis now able to underwrite and sell
securities and insurance. It wouldis also be able to acquire, or be acquired by,
brokerage firms and insurance underwriters. Old National has not had an
opportunity to assess the impact of the legislation on its operations, but at
the present time does not anticipate significant changes in its products or
services.
Recent DevelopmentsRECENT DEVELOPMENTS
On September 22, 1999,March 14, 2000, Old National registered $200 million in capitalcompleted 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 wholly-owned$25 per security. The securities were sold through ONB Capital Trust I,
a business trusts. Following the effective date of the
registration statement related to those securities,trust formed by Old National may begin
selling thesefor the purpose of offering the
securities. 50
72Net 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 contained in this document have been adjusted
from 1.25 to 1.3125 pursuant to the merger agreement to give effect to the stock
dividend and references to Old National's per share information
contained in this document have been adjusted to give effect to the stock
dividend.
On December 20, 1999, Old National announced that it had agreed to
acquire Permanent Bancorp and Permanent Bank, each located in Evansville,
Indiana, in a stock exchange for stock transaction valued at approximately $92
million. Permanent Bancorp has assets of approximately $500 million.
On December 31, 1999, Old National, through a subsidiary bank of Old
National, acquired Sycamore Agency, located in Terre Haute, Indiana, through a
share exchange valued at approximately $10.8 million. Sycamore operates a
general insurance agency with a focus on commercial property and casualty
business.
Incorporation of Certain Information by ReferenceINCORPORATION 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, various
benefit plans (including stock option plans), voting securities, including the principal holders of
those securities, certain relationships and related transactions and other
matters as to Old National is incorporated by reference from or set forth in Old
National's Annual Report on Form 10-K for the year ended December 31, 19981999 and
other documents filed by Old National and listed under "Where You Can Find More
Information" in this document, which are specifically incorporated herein by
reference. If you desire copies of any of these documents, you may contact Old
National at its address or telephone number indicated under "Where You Can Find
More Information."
DESCRIPTION OF ANB
Business
ANBPERMANENT BANCORP
BUSINESS
Permanent Bancorp is a multibankunitary savings and loan holding company with a trust company and three affiliate
banks located in
Indiana and Ohio and engages in the business of commercial
banking and trust and asset management. ANBEvansville, Indiana. Permanent Bancorp provides its commercial banking trustthrough its
affiliate bank, Permanent Bank, and asset management products and services through 33Permanent Bank's 11 affiliated offices
throughout northeastern Indiana and western Ohio.southwestern Indiana. As of September 30,December 31, 1999, ANBPermanent Bancorp had
consolidated assets of approximately $834$497 million, consolidated deposits of
approximately $344 million and stockholders' equity of approximately $40
million. ANBPermanent Bancorp also conducts its business through its financial
51
73
institutionssubsidiaries,
Perma Service Corp., Permanent Insurance Agency, Inc. and trust subsidiaries, American National Bank and Trust, American
National Trust and Investment Management Company, Peoples Loan and Trust Bank
and Farmers State Bank.Permvest, Inc. These
subsidiaries provide a broad range of financial services to their customers.
ANB'sPermanent Bancorp's principal office is located at 120 West Charles101 S.E. Third Street,
Muncie,Evansville, Indiana 47305.47708. Its telephone number is (765) 747-7600.
Incorporation of Certain Information by Reference(812) 437-2265.
ADDITIONAL INFORMATION AND INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning ANBPermanent Bancorp does not purport to
be complete. Certain information relating to the business, management, executive
and director compensation, various
benefit plans (including stock option plans), voting securities, including the principal holders of
those securities, certain relationships and related transactions and other
matters as to ANBPermanent Bancorp is incorporated by reference from or set forth
in ANB'sPermanent Bancorp's
41
50
Annual Report on Form 10-K10-K/A for the fiscal year ended DecemberMarch 31, 19981999 and other
documents filed by ANBPermanent 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
ANBPermanent 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 merger,mergers, the rights of former ANBPermanent 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 ANBPermanent Bancorp are presently governed by the laws of the State of
Indiana,Delaware, the state in which ANBPermanent Bancorp is incorporated, and by ANB's ArticlesPermanent
Bancorp's Certificate of Incorporation as amended and By-Laws, as amended. The rights of
the shareholders of ANBPermanent 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
ANBPermanent 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 and ANB's Articles of
Incorporation and theirBy-Laws and Permanent Bancorp's Certificate of Incorporation
and By-Laws.
52
74
Authorized But Unissued SharesAUTHORIZED BUT UNISSUED SHARES
- OLD NATIONAL
Old National's Articles of Incorporation authorize the issuance of
75,000,000150,000,000 shares of Old National Common Stock, of which approximately
47.946,851,000 million shares were outstanding as of September 30, 1999.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
("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 September 30, 1999,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 1.41.0 million shares of its common stock reserved for issuance
upon conversion of its outstanding 8% convertible subordinated debentures.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
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 the interestsholders of Old National shareholders.common
stock by diluting their voting and ownership interests.
- ANB
ANB's ArticlesPERMANENT BANCORP
Permanent Bancorp's Certificate of Incorporation authorizes the issuance of
20,000,000up to 9,000,000 shares of ANBPermanent common stock, of which 5,484,702 were issued
and outstanding as of September 30, 1999. ANB, 2000. Permanent has 250,0001,000,000 shares of
preferred stock authorized. Noauthorized, 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 are presently outstanding.up to
the amounts authorized under its Certificate of Incorporation without
shareholder approval. Following the company merger, each outstanding share of
ANBPermanent common stock will convert tointo the right to receive
1.3125
53
75 shares of Old
National common stock as adjusted for the 5% stock dividend
declared by Old National on December 9, 1999, and subject to further adjustment
for stock dividends and stock splits. Seedescribed in "Proposed MergerMergers -- Conversion of
ANBPermanent Common Stock."
Preemptive RightsPREEMPTIVE RIGHTS
As permitted by Indiana law, Old National's Articles of Incorporation do
not provide for preemptive rights to subscribe for any new or additional Old
National common stock or other securities. Preemptive rights may be granted to
Old National's shareholders if Old National's Articles of Incorporation are
amended accordingly. Under ANB's Articlesto permit such rights. As permitted by Delaware law, Permanent's
Certificate of Incorporation shareholders of ANB
dodoes not haveprovide for preemptive rights to subscribe
for any new or additional ANBshares of Permanent common stock or other securities.
Dividend RightsDIVIDEND RIGHTS
The holders of common stock of Old National and ANB are entitled to dividends and
other distributions when, as and if declared by their respective boards of
directors out of funds legally available therefor. Old National or ANB
may not pay a
dividend if, after giving it effect to the dividend, (1) Old National or ANB,
respectively, would not be
able to pay its debts as they become due in the usual course of business, or (2)
Old National's or ANB's respective total assets would be less than the sum of its total liabilities
plus, unless Old National's or
ANB's respective Articles of Incorporation permitted otherwise, the
amount that would be needed to satisfy the preferential rights upon dissolution
of shareholders whose preferential rights are superior to those receiving the
dividend if Old National or ANB respectively were to be dissolved at the time of the dividend. 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
54
76
declared by a Kentucky bank in any calendar year exceeds the bank's net profit
for that year and the net retained profits from the preceding two years, less
any transfers to surplus or a fund for retirement of preferred stock or debt.
Old National's national affiliate banks and Indiana-chartered affiliate banks
may pay cash dividends
43
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
ANBOld National by Farmers State Bank, as anits Ohio-chartered bank,affiliate banks, are limited by Ohio law to
the undivided profits of the Farmers.banks. However, prior to the declaration of any
dividend, the Bankbanks 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 Farmersthe 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.
Voting RightsCash 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
ANBPermanent Bancorp common stock are entitled to one vote per share on all matters
presented for shareholder vote. Shareholders of Old National and ANBPermanent
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 ANB's ArticlesPermanent's
Certificate of Incorporation provide that certain business combinations may,
under certain
44
53
circumstances, require approval of more than a simple majority of the issued and
outstanding shares of Old National common stock. See "Comparison of Common
Stock -- Anti-Takeover Provisions".
55
77Provisions."
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 most 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 permitsand Delaware
law permit a corporation in its articles or certificate of incorporation to
prescribe a higher shareholder vote for certain amendments to the articles of incorporation.amendments. Old National's
Articles of Incorporation and Permanent's Certificate of Incorporation each
require a super-majority shareholder vote of eighty percent (80%)80% of thetheir outstanding shares of Old National
common stock for the amendment of certain significant provisions.
Dissenters' Rights
TheOld 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 business corporations possess dissenters' rights in
connection with certain mergers and other significant corporate actions. Under
Indiana law, a shareholder is entitled to dissent from and obtain payment of the
fair value of the shareholder's shares in the event of (1) consummation of a
plan of merger, if shareholder approval is required and the shareholder is
entitled to vote thereon,on the plan,
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(2) consummation of a plan of share exchange by which the shareholder's shares
will be acquired, if the shareholder is entitled to vote thereon,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 thereon,on the sale or exchange, (4) approval of a control"control share
acquisitionacquisition" 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 a
merger, share exchange or sale or exchange of propertyany 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 System
or a similar market. As of the date of this Proxy Statement,Statement-Prospectus,
shares of Old National common stock and ANB common stock are traded on the Nasdaq National Market
System and, therefore, Old National and ANB shareholders presently are not entitled to
assert dissenters' rights under Indiana law with respect to any of the
transactions discussed above.
Liquidation RightsUnder 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
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rights of creditors and holders of shares of Old National preferred stock then
outstanding. Shareholders of ANBPermanent have similar liquidation rights.
Redemption and AssessmentREDEMPTION AND ASSESSMENT
Under Indiana law, shares of Old National common stock and ANB common stock are not liable to
further assessment. Old National may redeem or acquire shares of Old National
common stock with funds legally available therefor, and shares so acquired
constitute authorized but unissued shares. The Old National
Board of Directors authorized the purchase or redemption of up to the number of
shares to be issued to the shareholders of Permanent Bancorp relating to Old
National's acquisition of Permanent Bancorp. Old National may not redeem or
acquire shares of Old National common stock if, after giving such redemption or
acquisition effect, Old National would not be able to pay its debts as they
become due in the usual course of business, or Old National's total assets would
be less than the sum of its total liabilities plus, unless Old National's
Articles of Incorporation permitted otherwise, the amount that would be needed
to satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those whose stock is being redeemed or
acquired if Old National were to be dissolved at the time of the redemption or
acquisition.
ANB has similar redemption rights and limitations under Indiana
law.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 and ANB must give prior notice
to the Federal Reserve if the consideration to be paid by themOld National for any
redemption or acquisition of their respectiveits shares, when aggregated with the consideration
paid for all redemptions or acquisitions for the preceding twelve (12)12 months, equals or
exceeds 10% of their respectiveits consolidated net worth.
Anti-Takeover Provisions46
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ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to Old National asand 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.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.
INDIANA LAW.Old National-Indiana Business Corporation Law. Under the business
combinations provision of the Indiana law,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 (5) 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 57
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either the acquisition of such interest or the proposed
business combination. Further, the corporation andIf such board approval is not obtained, then five years
after a 10% shareholder may not consummatehas become such, a business combination unlesswith 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 law.Business Corporation Law.
An Indiana corporation may elect to remove itself from the protection
provided by the Indiana business combinations provision butthrough 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 eighteen (18)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 and ANB areis subject to the business combinations provision of
Indiana law, but such provision does not apply to the merger between Old
National and ANB.Permanent. The constitutional validity of the business combinations
provision of the Indiana lawBusiness 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 lawBusiness
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. Indiana law provides that,Under the control share
acquisition provision, unless otherwise provided in an Indianathe corporation's articles
of incorporation or by-laws, certain acquisitions ofif a shareholder acquires shares of the
corporation's commonvoting stock will be
accorded voting rights only if(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 disinterested shareholders
approves a resolution grantingcontrol share acquisition must be obtained before the potential acquiroracquiring shareholder
may vote the ability to votecontrol shares. If such shares. Upon disapproval of the resolution,approval is not obtained, the shares held
by the acquiror shallwill be redeemed by the corporation at the fair value of the
shares as determined by the control share acquisition provision.
ThisThe 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 or exchange provisions and is a party to the plan of merger or plan of
share exchange. Old National and ANB
areis 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 betweenagreement.
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
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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 and ANB.
OLD NATIONAL'S ARTICLES OF INCORPORATION.National's Articles of Incorporation. In addition to the protections
provided by the Indiana law,Business Corporation Law, Old National's Articles of
Incorporation require the affirmative vote of the holders of at least eighty percent (80%)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 58
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liquidation or dissolution of Old National or any material
subsidiary of Old National. Further, this provision cannot be altered, amended
or repealed without the affirmative vote of the holders of at least eighty percent (80%)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 fifteen percent (15%)15% of the then issued and
outstanding stock of Old National to pay equal consideration in connection with
the acquisition of any further shares. These provisions require an eighty percent (80%)80%
affirmative vote of the issued and outstanding shares of Old National common
stock entitled to vote thereon in order to be altered, amended or repealed.
OLD NATIONAL PREFERRED STOCK.Old National Series A Preferred Stock and Shareholder Rights Plan. The
shares of Old National Series A preferred stock are nonredeemablenon-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 antidilutionanti-dilution
provisions. OLD NATIONAL'S SHAREHOLDER RIGHTS PLAN.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.
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On January 25, 1990, the Board of Directors of Old National adopted the Old
National shareholder rights plan and declared a dividend of one (1) right for each
issued and outstanding share of Old National common stock ("Right"). See
"Comparisonas of Common Stock -- Authorized But Unissued Shares". The dividend was
payable on March 15,1, 1990
to holders of recordand each share of Old National common stock atissued after that date (including
Old National shares issued to holders of Permanent common stock pursuant to the
close of business on March 1, 1990.merger agreement). See "-- Authorized But Unissued Shares-Old National." Each
Rightright entitles the registeredits holder to purchase from Old National one one-hundredth (1/100) of a
share of Old National Series A preferred stock at an initial Purchase Pricepurchase price of
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$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 Rightsrights 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 foregoing information concerningabove description of Old
National's shareholder Rights
Planrights plan does not purport to be complete. For
additional information, see Thethe Rights Agreement, dated March 1, 1990, between Old National and Old National Bank in
Evansville, as Trustee, which is specifically
incorporated herein by reference. See "Incorporation"Where You Can Find More Information."
Holders of Certain Documents by Reference." The sharesPermanent common stock will receive one Old National right for each
share of Old National common stock that they receive pursuant to be received by ANB shareholders in the merger
will be
subject to theagreement. Permanent does not have a shareholder rights under the Old National Shareholder Rights Plan.
ANB'S ARTICLES OF INCORPORATION.plan.
Permanent's Certificate of Incorporation. In addition to the protections
provided by Indiana law, ANB's Articlesthe Delaware General Corporation Law, Permanent's Certificate of
Incorporation include theprovides that certain business combinations provision of Indiana law which was discussed above. This provision
cannotinvolving any 10%
shareholder must be altered, amended or repealed without the affirmative vote ofapproved by the holders of at least two-thirds80% of the issued and outstandingvoting power
of the then-outstanding shares of ANB
commonPermanent stock entitled to vote thereon,in the
election of directors, unless (1) the Boardbusiness combination has been approved in
advance by a majority of Directors unanimously
approves the amendment.
ANB'sdisinterested 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 also include a provision requiringcontain no such limitation; however, under Indiana law, certain
shareholders of Old National may have their voting rights limited upon crossing
the ANB Board of Directors to consider non-financial factorsownership thresholds specified in the evaluationIndiana control share acquisition
statute. See "-- Old National's Articles of business combinations andIncorporation."
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 offers. This provision requires
two-thirds affirmative voteoffer made to all
shareholders, (2) pursuant to an open market repurchase program approved by a
majority of the issued and outstanding sharesdisinterested directors or (3) made at no more than market
price. Neither the Indiana Business Corporation Law nor Old National's Articles
of ANB common
stock entitled to vote thereon in order to be altered, amended or repealed,
unless the ANB Board of Directors unanimously recommends the amendment.
Director LiabilityIncorporation contain an "anti-greenmail" provision.
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DIRECTOR LIABILITY
Under Indiana law, a director of Old National or ANB will not be liable to
shareholders for any action taken as a director, or any failure to take any
action, unless (1) the director has breached or failed to perform his duties as
a director in good faith with the care an ordinarily prudent person in a like
position would exercise under similar circumstances and in a manner the director
reasonably believes to be in the best interests of the corporation and (2) such
breach or failure to perform constitutes willful misconduct or recklessness.
Director NominationsPursuant 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 ByLaws,By-Laws, the Nominating
Committee of the Board of Directors of Old National ("Nominating Committee") is required to submit to the
entire Board of Directors its recommendation of nominees for election as
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directors of Old National prior to each annual or special meeting of
shareholders at which directors will be elected.
The Nominating Committee is comprised of five (5) directors of Old
National, none of whom is an officer or employee of Old National. The Nominating
Committee maintains the responsibility to recruit potential director candidates,
recommend changes to the entire Board of Directors concerning the size,
composition and responsibilities of the Board of Directors, review proxy
documents received from shareholders relating to the Board of Directors and
review suggestions of shareholders regarding nominees for election as directors.
All such suggestions of shareholders with respect to director nominations must
be submitted in writing to the Nominating Committee not less than 120 days prior
to the date of the annual or special meeting of shareholders at which directors
will be elected.
ANB'sPermanent's By-Laws requireprovide that all nominations for election as directors of
ANB willmay
be made in accordance with the By-Laws. Under the By-Laws, a
shareholder who desires to nominate an individual for election toonly (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 makebe 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 in writing and delivernotice 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 mailsuch prior public
disclosure of the nomination
to ANB's President not less than 10 days no more than 50 days prior to anydate of the meeting at which directors will be elected.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 mergermergers 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 ANBPermanent Bancorp by SullivanSilver, Freedman & Cromwell, 125 Broad Street,Taff, L.L.P,
1100 New York New York 10004-2490.Avenue, N.W., Washington, D.C. 20005.
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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 reportreports 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 Arthur Andersen LLPDeloitte & Touche and upon the authority
of such firm as experts in auditing and accounting.
The consolidated financial statements of ANBOld 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.
Such
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consolidated financial statements have been so incorporated into this document
in reliance upon the report of Olive LLP and upon the authority of such firm as
experts in auditing and accounting.
Representatives of Olive LLPPricewaterhouseCoopers, 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 ANBPermanent 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 ANBPermanent
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.
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FORWARD-LOOKING STATEMENTS
This document (including information included or incorporated by reference
herein) contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of each of Old National and ANB,Permanent Bancorp, as well
as certain information relating to the merger,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 mergermergers and Old National's other recent acquisitions may not be
fully realized or realized within the expected time frame; (b) revenues
following the mergermergers 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 mergermergers 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 businessbusinesses in which Old National isand Permanent are engaged; (g)
technological changes (including "Year 2000" data
systems compliance issues) may be more difficult or expensive than anticipated; and
(h) changes may occur in the securities markets.
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WHERE YOU CAN FIND MORE INFORMATION
Old National and ANBPermanent 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:
Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661-2511
Copies of such material may also be obtained at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding Old National and ANB,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 ANBPermanent Bancorp common stock is quoted on the Nasdaq National
Market System and reports, proxy statements and other information concerning Old
National and ANBPermanent 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 ANB.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 ANBPermanent 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
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 63
85
below that Old National
and ANBPermanent 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 Quarterly Report on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999.
- Old National's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
-1999 and the portions of Old National's Annual Reportproxy statement
relating to Shareholders forits annual meeting of shareholders to be held on April 20,
2000 that have been incorporated by reference into the fiscal year
ended December 31, 1998.Form 10-K.
- The description of Old National's common stock contained in Old
National's Current ReportReports 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 July 29, 1999.
- The Current Report on Form 8-K filed on December 1, 1999.April 19, 2000.
The following documents previously filed by ANBPermanent Bancorp (SEC File No.
0-18925)0-23370) with the SEC pursuant to the Exchange Act are incorporated herein by
reference:
- ANB'sPermanent Bancorp's Quarterly ReportReports on Form 10-Q for the quarters ended
March
31, 1999, June 30, 1999, and September 30, 1999 and December 31, 1999.
- ANB'sPermanent Bancorp's Annual Report on Form 10-K, as amended, for the
fiscal year ended DecemberMarch 31, 1998.1999, 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.
- ANB's Annual Report to Shareholders for the fiscal year ended
December 31, 1998.
- ANB'sThe Current Report on Form 8-K filed on May 7,July 23, 1999.
- ANB'sThe Current Report on Form 8-K filed on January 6,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 ANBPermanent 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 ANBPermanent 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.
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86
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 ANBPermanent Bancorp
has supplied all relevant information relating to ANB.Permanent Bancorp.
You can obtain any of the documents incorporated by reference in this
document through Old National or ANB,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
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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:
Old National Bancorp ANB Corporation
420 Main Street 120 West Charles Street
P. O. Box 718 Muncie, Indiana 47305
Old National Bancorp Permanent Bancorp, Inc.
420 Main Street 101 SE Third Street
P. O. Box 718 Evansville, Indiana 47708
Evansville, Indiana 47705 Attn: Larry E. Thomas, Chief
Attn: Jeffrey L. Knight, Corporate Financial Officer
Attn: Jeffrey L. Knight, Corporate (812) 437-2265
Secretary and General Counsel (765) 747-7575
(812) 464-1363
If you would like to request documents, please do so by _______________,, 2000 to
receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, promptly after we receive your request.
Old National and ANBPermanent Bancorp have not authorized anyone to give any
information or make any representation about the mergermergers 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 65
87
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.
6654
8863
LIST OF APPENDICES
Agreement of Affiliation and Merger, dated July 29,December 20,
1999, betweenby and among Old National Bancorp, Permanent
Bancorp, Inc., Merger Corporation I, Old National Bank and
ANB CorporationPermanent Bank............................................ Appendix A
Stock Option Agreement, dated July 29, 1999 between Old National Bancorp
and ANB Corporation Appendix B
Fairness Opinion of Sandler O'Neill & Partners, L.P.Capital Resources Group, Inc............ Appendix CB
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8964
APPENDIX A
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement") is made and entered
into effective as of the 29th20th day of July,December, 1999, by and betweenamong OLD NATIONAL
BANCORP ("ONB"), PERMANENT BANCORP, INC. ("Permanent"), MERGER CORPORATION I
("Merger Corporation"), OLD NATIONAL BANK, and ANB CORPORATION ("ANB"PERMANENT BANK (the "Bank").
W I T N E S S E T H: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, ANBOld National Bank, a wholly-owned subsidiary of ONB, is an Indianaa national
banking association with its principal office in Lawrenceville, Illinois; and
WHEREAS, Permanent is a Delaware corporation registered as a bankan unitary
savings and loan holding company under the BHCSavings and Loan Holding Company Act,
as amended, with its principal office located in Muncie, DelawareEvansville, Vanderburgh County,
Indiana; and
WHEREAS, ANBPermanent is the sole owner, directly or indirectly, of all of the
outstanding capital stock of (i) American Nationalthe Bank, and Trust Company of Muncie, a national banking
associationfederal savings bank, located in
Evansville, Vanderburgh County, Indiana, (ii) Perma Service Corp. ("American National Bank"Perma
Service"), (ii) Peoples Loan & Trust Bank,a service corporation, (iii) Permanent Insurance Agency, Inc.
("Permanent Insurance"), an Indiana state-chartered bank ("Peoples Bank"), (iii) Farmers State Bank of Union
City, Ohio, an Ohio state-chartered bank ("Farmers State Bank")insurance agency and (iv) American National Trust and Investment Management Company, a national trust
companyPermavest, Inc.
("ANTIM"Permavest") (collectively, the "Subsidiaries"); and
WHEREAS, ONB and ANBPermanent seek to affiliate through a corporate
reorganization whereby ANBthe Bank will first merge into Old National Bank, and
Permanent will merge withimmediately thereafter into Merger Corporation, an Indiana
corporation and intowholly-owned subsidiary of ONB, and each of American
Nationalthe Bank Peoples Bank, Farmers State Bank and ANTIM will thereby become
a wholly-owned subsidiary of ONB, and ANB Financial Planning Services, Inc. ("ANB
Financial") (American National Bank, Peoples Bank, Farmers State Bank, ANTIM and
ANB Financial are herein referred to collectively as the "Subsidiaries") will
continue to be a wholly-owned subsidiary of American National Bank;ONB; and
WHEREAS, ONB, Permanent, Merger Corporation, Old National Bank and ANBthe Bank
intend thatfor the Merger (as hereinafter defined)
constitute a tax-free reorganization pursuantmergers to qualify as reorganizations within the meaning of
Section 368368(a)(2)(D) and related sections of the Internal Revenue Code of 1986,
as amended ("Code");, and WHEREAS,agree to cooperate and to take such actions as a conditionmay be
reasonably necessary to assure such result; and concurrently with the execution of,
this Agreement, ONB and ANB are entering into a certain Stock Option Agreement
(the "Stock Option Agreement"), attached hereto as Exhibit A; and
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WHEREAS, the Board of Directors of each of ONB and ANBthe parties hereto has
determined that it is in the best interests of its respective corporationcorporations 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 merger.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 ANBthe Bank
hereby make this Agreement and prescribe the terms and conditions of the
affiliation of ONB and
ANBA-1
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Permanent and Old National Bank and the Bank and the mode of carrying such
mergermergers into effect as follows:
SECTION 1
THE MERGERMERGERS
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),
ANBimmediately prior to the Company Merger (as hereinafter defined), the Bank shall
mergebe merged with and intounder 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 ONBMerger Corporation ("Company
Merger") (the Bank Merger and the Company Merger are hereinafter collectively
referred to as the "Mergers"). ONBMerger 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.
Upon consummation of the Merger, each of American
National Bank, Peoples Bank, Farmers State Bank(b) Name, Offices and ANTIM shall become a
wholly-owned subsidiary of ONB.
1.02. Name, Officers, Directors and Management. (a) The name of the Surviving Corporation
shall be "Old National Bancorp.""Merger Corporation I". Its principal office shall be located at 420
Main Street, Evansville, Indiana 47708. (b)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 ONBMerger Corporation serving
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at the Effective Time shall continue to
serve asbe 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, James
R. Schrecongost shall become the Chairman of each of following wholly-owned
subsidiaries of ONB: Old National Trust Company, Old National Trust
Company-Illinois and Old National Trust Company-Kentucky.
(c) The directors of ONB as of the Effective Time and Kelly Stanley
shall be the directors of the Surviving Corporation, until such time as their
successors have been duly elected and have been qualified or until their earlier
resignation, death or removal from office.
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1.03. Capital Structure. The capital of the Surviving
Corporation shall be not less than the capital of ONBMerger Corporation immediately
prior to the Effective Time.
1.04.(d) Articles of Incorporation and By-Laws. The Articles of Incorporation
and By-Laws of ONBMerger 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.
1.05. Assets and Liabilities. At(e) Effect of Company Merger. The effect of the Effective Time, the title to all
assets, real estate and other property owned by ANB shall vest in ONB without
reversion or impairment. At the Effective Time, all liabilities of ANBCompany Merger upon
consummation thereof shall be assumed by ONB.
1.06. Tax-Free Reorganizationas 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 Accounting Treatment. ONB and ANBthe Bank intend for the MergerMergers to qualify as a reorganization
within the meaning of Section 368368(a) and related sections of the Code, and for the Merger to be accounted
for as a pooling of interests transaction. ONB and ANB agree
to cooperate and to take such actionactions as may be reasonably necessary to achieveassure
such results.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 ANBPermanent
Common Stock (as defined in Section 5.034.03 hereof) shall be converted into the
right to receive One and Twenty-Five One-Hundredths (1.25)such number of shares of ONB common stock ("Exchangeas provided by
Section 2.01(b), 2.01(c) or 2.01(d) hereof (the "Exchange Ratio"), subject to
adjustment, if any,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 provisionsTotal 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 2.032.01(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
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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 shareholderstockholder of ANBPermanent who would
otherwise have been entitled to a fraction of a share of ONB common stock shall
be paid in cash following the Effective Time an amount equal to such fraction
multiplied by the average of the per share closing price of ONB common stock as
reported on the Nasdaq National Market System for the final five (5)ten (10) business
days on which shares of ONB common stock were traded immediately preceding the
Effective Time.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
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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 Exchange Ratio shall be adjusted so that ANB's shareholders shall receive, in
the aggregate, such number of sharesAverage Price Per Share of ONB common stock representingin
Sections 2.01 and 9.01(c)(v) hereof shall also be adjusted to give effect to the
same
percentage of outstanding sharesRecapitalization. All references to the Average Price Per Share of ONB common
stock atshall be adjusted by multiplying each Average Price Per Share of ONB
common stock by a fraction, the Effective Time as
would have been represented bynumerator of which shall be equal to the number
of shares of ONB common stock such
shareholders would have received if anyoutstanding immediately prior to the
Recapitalization and the denominator of which shall be equal to the foregoing actions had not
occurred.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 ANB shareholderPermanent stockholder a letter of
transmittal providing instructions as to the transmittal to ONB of certificates
representing shares of ANBPermanent 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 shareholderstockholder
of ANBPermanent as soon as practical following delivery to ONB of the shareholder'sstockholder's
certificate(s) representing its shares of ANBPermanent 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
ANBPermanent Common Stock shall be deemed to evidence ownership of ONB common stock
for all corporate purposes other than the payment of dividends or other
distributions. No dividends or other distributions otherwise payable subsequent
to the Effective Time on shares of ONB common stock shall be paid to any
ANB
shareholderPermanent stockholder entitled to receive the same until such shareholderstockholder has
surrendered to ONB his or her certificate or certificates representing ANBPermanent
Common Stock in exchange for a certificate or certificates representing ONB
common stock. Upon surrender of the certificates representing shares of
ANBPermanent 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
ANBPermanent 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 ANBPermanent Common Stock.
(e) With respect to any certificate for shares of ANBPermanent 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 A - 4
93
destroyed stock certificate, both in form and substance reasonably
satisfactory to ONB, and upon compliance by the
ANB shareholderA-4
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Permanent stockholder with all other reasonable requirements of ONB in
connection with lost, stolen or destroyed stock certificates.
SECTION 3
DISSENTING SHAREHOLDERS
ShareholdersSTOCKHOLDERS
Stockholders of ANBPermanent are not entitled to any dissenters' rights under
Chapter 44Section 262 of the Indiana BusinessDelaware General Corporation Law, as amended, since ANBPermanent
Common Stock is quoted and traded on Nasdaq. ANBPermanent shall take no action
which would result in the loss of such listing prior to the Effective Time.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF ANBPERMANENT
On or prior to the date hereof, ANBPermanent 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 ANBPermanent 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 ANBPermanent 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
ANBPermanent and the Subsidiaries taken as a whole, or (ii) would materially impair
the ability of ANBPermanent to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
MergerMergers 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 MergerMergers or
restructuring charges taken in connection with the Merger,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.
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No representation or warranty of ANBPermanent contained in this Section 4,
except SectionsSection 4.03, and 4.21, shall be deemed untrue, incomplete or incorrect, and
ANBPermanent 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, circumstancescircumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in this Section 4, has had or is reasonably likely to have a Material
Adverse Effect on ANB.
ANBPermanent.
Permanent and the Bank accordingly hereby representsrepresent and warrantswarrant to ONB as
follows:
4.01. Organization and Authority. (a) ANBPermanent is a corporation duly
organized and validly existing under the laws of the State of Indiana. ANBDelaware.
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. ANBPermanent has a
class of stock registered pursuant to Section 12, and is subject to the
reporting requirements, of the Securities Exchange Act of 1934, as amended
("1934 Act"). Except as set forth in the Disclosure Schedule, ANB'sPermanent's only
direct subsidiaries are American
National Bank, Peoples Bank, Farmers Statesubsidiary is the Bank and ANTIM and itPermanent has no other direct subsidiaries and
owns no voting stock or equity securities of any corporation, partnership,
association or other entity.
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(b) American NationalThe Bank is a national banking associationfederal savings bank duly organized and validly existing
under the federal banking laws of the United States of America. American NationalThe Bank has no
direct subsidiaries, except for ANB Financial. American
NationalPerma Service and Permavest. The Bank is subject
to primary regulatory supervision and examination by the Office of Thrift
Supervision (the "OTS") and the Comptroller of the Currency ("OCC"Federal Deposit Insurance Corporation (the
"FDIC"). American NationalThe Bank has full power and authority (corporate and otherwise) to own
and lease its properties as presently owned and leased and to conduct its
business in the manner and by the means utilized as of the date hereof.
(c) Peoples BankPerma Service is an Indiana state-chartered banka service corporation duly organized and validly
existing under the laws of the State of Indiana. Peoples BankPerma 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. Peoples BankPerma Service
is subject to primary regulatory supervision and examination by the Indiana DepartmentOffice of
Financial Institutions ("DFI"). Peoples
BankThrift 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) Farmers State BankPermanent Insurance is an Ohio state-chartered bankinsurance agency duly organized and validly
existing under the laws of the State of Ohio. Farmers State BankIndiana. Permanent Insurance has no
subsidiaries. Farmers State Bank is subject to primary regulatory supervision
and examination by the Ohio Division of Financial Institutions ("ODFI"). Farmers
State Bank has full power and authority (corporate and otherwise) to own and
lease
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its properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
(e) ANTIM is a national trust association duly organized and validly
existing under the laws of the United States of America. ANTIM has no
subsidiaries, except ANTIM owns 3,531 shares (15%) of the common stock of
Indiana Trust & Investment Management Company, an Indiana state-chartered trust
company, and has the obligation, subject to conditions, to purchase the
remaining shares in accordance with the terms of a Stock Acquisition Agreement
dated August 8, 1997. Under the terms of such agreement, assuming ONB is a
Permitted Successor to ANB, ONB shall succeed to its rights and obligations
thereunder subject to the price adjustment contemplated by Section 2.4(c) of the
Stock Acquisition Agreement. ANTIM is subject to primary regulatory supervision
and examination by the OCC. ANTIMPermanent 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.
(f) ANB Financial(e) Permavest is an Indianaa corporation duly organized and validly existing under
the laws of the State of Indiana. ANB Financial hasDelaware. 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. ANB FinancialPermavest 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) ANBEach 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 (f)(g) hereof. As of the date hereof, ANBneither
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 ANBPermanent and
the Bank have been duly authorized and approved by the Board of Directors of
ANBPermanent and the Bank, respectively, and, assuming due execution and delivery
by ONB and Old National Bank, constitutes a valid and binding obligation of
ANB,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 MergerMergers contemplated hereby: (i)
conflicts with or violates ANB's ArticlesPermanent'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 A - 7
96
regulatory agencies
or authorities required for consummation of the MergerMergers 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 ANBPermanent or any Subsidiary
is a party or by which ANBPermanent 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
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70
(other than ONB)ONB or Old National Bank) or any other adverse interest, upon any
right, property or asset of ANBPermanent 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 ANBPermanent or any Subsidiary is bound or with respect
to which ANBPermanent 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 MergerMergers by
ANBPermanent or any Subsidiary.the Bank.
4.03. Capitalization. (a) The authorized capital stock of ANBPermanent as of
the date hereof consists, and at the Effective Time will consist, of 250,0001,000,000
shares of preferred stock, no$0.01 par value, none of which shares are issued or
outstanding and 20,000,0009,000,000 shares of common stock, $1.00$0.01 par value per share, 5,445,995 of
which 4,103,095 shares are issued and outstanding as of the date hereof, which
number of issued shares of ANB
Common StockPermanent common stock is subject to increase to a total of
5,837,6194,467,239 shares (not
including any shares of ANB Common Stock which may be granted under(such number referred to herein as the Stock
Option Agreement and ANB (1994) Dividend Reinvestment and Stock Purchase Plan
(the "DRIP")"Total Outstanding
Shares") pursuant to the exercise of options (collectively, the "Stock Options")
granted under the ANB Corporation 1996 Directors'1999 Omnibus Incentive Plan and the 1993 Stock Option Plan,
ANB Corporation Stock Option Plan and
ANB Corporation 1995 Stock OptionIncentive Plan (collectively, the "Stock Option Plans") to purchase an aggregate
of 391,624364,144 shares of common stock of ANB (such issued and outstandingPermanent (all of such shares of common
stock are referred to herein as "ANB"Permanent Common Stock"). Such issued and
outstanding shares of ANBPermanent Common Stock have been duly and validly
authorized by all necessary corporate action of ANB,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 ANB
shareholder. ANBPermanent 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 ANBPermanent Common Stock, except pursuant to the terms (as of the date of this Agreement) of
the ANB DRIP.
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97Stock.
(b) The authorized capital stock of American Nationalthe Bank as of the date hereof
consists, and at the Effective Time will consist, of 160,0001,000,000 shares of
preferred stock, none of which shares are issued or outstanding and of 9,000,000
shares of common stock, $20.00$0.01 par value per share, all2,380,500 of which shares are
issued and outstanding (such issued and outstanding shares are referred to
herein as "American National Bank"Bank Common Stock"). Such issued and outstanding shares of
American National Bank
Common Stock have been duly and validly authorized by all necessary corporate
action of American Nationalthe Bank, are validly issued, fully paid and nonassessable, (except to the extent provided by 12 U.S.C. ss. 55, as
amended), and have
not been issued in violation of any pre-emptive rights of any present or former
American National Bank shareholder. AllThe 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 American Nationalthe Bank
Common Stock are owned by ANBPermanent free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. American
NationalThe Bank has no capital stock
authorized, issued or outstanding other than as described in this Section
4.03(b) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of American
National Bank Common Stock.
(c) The authorized capital stockAll of Peoples Bank as of the date hereof
consists, and at the Effective Time will consist, of 130,000 shares of common
stock, $10.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Peoples Bank Common Stock"). Such issued and outstanding shares of Peoples BankPerma Service's common
stock ("Perma Service Common StockStock") have been duly and validly authorized by
all necessary corporate action of Peoples Bank,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 Peoples BankPerma 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
Peoples BankPerma Service Common Stock are owned by ANBthe 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. Peoples BankPerma 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 Peoples BankPerma Service Common Stock.
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71
(d) The authorized capital stock of Farmers State Bank asAll of the date
hereof consists, and at the Effective Time will consist, of 1,000 shares of
common stock, $2,500.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Farmers State Bank Common Stock"). Such issued and outstanding shares of Farmers State BankPermanent Insurance's
common stock ("Permanent Insurance Common StockStock") have been duly and validly
authorized by all necessary corporate action of Farmers State Bank,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 Farmers State BankPermanent 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 Farmers State BankPermanent Insurance Common Stock are owned by
ANBPerma Service free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
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98
and of all other rights or claims of any other person, corporation or entity
with respect thereto. Farmers State BankPermanent 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 Farmers State BankPermanent Insurance Common Stock.
(e) The authorized capital stockAll of ANTIM as of the date hereof
consists, and at the Effective Time will consist, of 100,000 shares of common
stock, $100.00 par value per share, 21,000 of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as "ANTIM
Common Stock"). Such issued and outstanding shares of ANTIMPermavest's common stock
("Permavest Common StockStock") have been duly and validly authorized by all
necessary corporate action of ANTIM,Permavest, are validly issued, fully paid and
nonassessable, (except to the extent provided by
12 U.S.C. ss. 55, as amended), and have not been issued in violation of any pre-emptive rights
of any present or former ANTIMPermavest 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 ANTIMPermavest Common Stock
are owned by ANBthe 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. ANTIMPermavest 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 ANTIMPermavest Common Stock.
(f) The authorized capital stock of ANB Financial as of the date hereof
consists, and at the Effective Time will consist, of 1,000 shares of common
stock, no par value, all of which shares are issued and outstanding (such issued
and outstanding shares are referred to herein as "ANB Financial Common Stock").
Such issued and outstanding shares of ANB Financial Common Stock have been duly
and validly authorized by all necessary corporate action of ANB Financial, are
validly issued, fully paid and nonassessable, and have not been issued in
violation of any pre-emptive rights of any present or former ANB Financial
shareholder. All of the issued and outstanding shares of ANB Financial Common
Stock are owned by American National Bank free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. ANB Financial has no capital stock
authorized, issued or outstanding other than as described in this Section
4.03(f) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of ANB Financial Common Stock.
(g) Except as set forth in the Disclosure Schedule and except for options
granted under the Stock Option Agreement and the Stock Option Plans, there are no options, warrants,
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any shares of ANBPermanent Common Stock, or any
securities convertible into or representing the right to purchase or otherwise
A - 10
99
acquire any common stock or debt securities of ANB,Permanent, by which ANBPermanent is
or may become bound. ANBPermanent does not have any outstanding contractual or
other obligation to repurchase, redeem or otherwise acquire any of the issued
and outstanding shares of ANBPermanent Common Stock.
(h)(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.
(m)(h) Except as set forth in the Disclosure Schedule, ANBPermanent has no
knowledge of any person or entity which beneficially owns 5% or more of its
outstanding shares of common stock.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 ArticlesCertificate of Incorporation
and By-Laws of ANB, Peoples Bank, Farmers State Bank and ANB
Financial,Permanent and the respective Articles of AssociationCharter and By-Laws of American
Nationalthe Bank, and ANTIM, representing
true, accurate and complete copies of such corporate documents in effect as of
the date of this Agreement, have been delivered to ONB.
4.05. Compliance with Law. (a) Neither ANBPermanent 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. ANBPermanent
A-8
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 ANBPermanent nor
any of the SubsidiariesSubsidiary or propertiestheir 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 OCC,OTS,
the Federal Reserve Board and Federal Deposit Insurance Corporation)the FDIC) or the supervision or regulation of
ANBPermanent or any of its Subsidiaries.Subsidiary. There are no uncured violations, or violations with
respect to which refunds or restitutions may be required, cited in any
A - 11
100
examination report of ANBPermanent 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 ANBPermanent or any Subsidiary.
4.06. Accuracy of Statements Made and Materials Provided to ONB. (a) No
representation, warranty in this Section 4 or other statement made, or any
information provided, by ANBPermanent 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 ANBPermanent or any Subsidiary to ONB through and including the Effective Time
in connection with this Agreement or the MergerMergers contemplated hereby (including,
without limitation, any written information which has been or shall be supplied
by ANBPermanent and the Subsidiaries with respect to their financial condition,
results of operations, business, assets, capital or directors and officers for
inclusion in the proxy statement-prospectus and registration statement relating
to the Merger)Mergers), contains or shall contain (in the case of information relating
to the proxy statement-prospectus at the time it is mailed to ANB's shareholders)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 ANBPermanent after due inquiry,
threatened in any court or before any government agency or authority,
arbitration panel or otherwise (nor does ANBPermanent have any knowledge of a basis
for any claim, action, suit, proceeding, litigation, arbitration or
investigation) against, by or affecting ANBPermanent 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 ANBPermanent 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 ANBPermanent
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 ANBPermanent 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. ANBPermanent has delivered to ONB
copies of the following financial statements and reports of ANBPermanent and the
Subsidiaries, including the notes thereto (collectively, the "ANB"Permanent
Financial Statements"):
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101
(a) Consolidated Balance Sheets and the related Consolidated Statements of
Income and Consolidated Statements of Changes in Shareholders'Stockholders' Equity of
ANBPermanent as of and for the years ended DecemberMarch 31, 1996, 1997, 1998 and 1998,1999, and as of
and for the fiscal quarter ended March 31,September 30, 1999;
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73
(b) Consolidated Statements of Cash Flows of ANBPermanent for the years ended
DecemberMarch 31, 1996, 1997, 1998 and 1998,1999, and for the fiscal quarter ended March 31,September 30,
1999;
(c) Consolidated Statements of Changes in Financial Position of ANBPermanent
for the years ended DecemberMarch 31, 19971998 and 1998,1999, and for the fiscal quarter ended
March 31, 1999;September 30, 1999.
(d) Thrift Financial Reports of Condition and Income ("Call Reports") for American
National Bank and Peoplesthe Bank as of the close of business on
December 31, 1995,
1996, 1997 and 1998;1998 and September 30, 1999; and
(e) Financial Statements of ANBPermanent on Form FRY-9LP and Form FRY-9CH-(b)(11) filed with the
BoardOffice of Governors of the Federal Reserve SystemThrift Supervision at the close of business on DecemberMarch 31, 19971998 and
1998.1999.
The ANBPermanent Financial Statements present fairly the consolidated
financial position of ANBPermanent as of and at the dates shown and the
consolidated results of operations for the periods covered thereby. The
ANBPermanent 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 ANBPermanent 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 ANBPermanent
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 ANBPermanent and the
Subsidiaries and the principal buildings and structures located thereon and
each lease of real property to which ANBPermanent or any Subsidiary is a
party, identifying the parties thereto, the annual rental payable, the
expiration date of the lease and a brief description of the property
covered;
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102
(ii) a list of all agreements, contracts, leases, licenses, lines of
credit, understandings, commitments or obligations of ANBPermanent or any
Subsidiary which individually or in the aggregate:individually:
(A) will involve payment or receipt by ANBPermanent or any Subsidiary
(other than as disbursements of loan proceeds to customers, loan
payments by customers or customer deposits) of more than $100,000;$50,000;
(B) will involve payments based on profits of ANBPermanent or any
Subsidiary;
(C) will relate to the purchase of goods, products, supplies or
services in excess of $100,000;$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 ANBPermanent 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 ANBPermanent 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 ANBPermanent and
the Subsidiaries are, and, to the best knowledge of ANBPermanent after due inquiry,
all other parties thereto are, in compliance with the provisions thereof, and
ANBA-10
74
Permanent and the Subsidiaries are not in default in the performance, observance
or fulfillment of any obligation, covenant or provision contained therein.
NoneExcept as set forth in the Disclosure Schedule, none of the foregoing requires
the consent of any party to its assignment in connection with the MergerMergers
contemplated by this Agreement. Other than as disclosed pursuant to this Section
4.09, to the best knowledge of ANBPermanent 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 A - 14
103
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 ANBPermanent nor any Subsidiary is, to the best knowledge of
ANB
after due inquiry,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
ANBPermanent Financial Statements, Subsequent ANBPermanent Financial Statements and in
the Disclosure Schedule, except for unfunded loan commitments and obligations on
letters of credit to customers of American Nationalthe Bank Peoples Bank and Farmers State
Bank (collectively, the "Banks"), except for trade payables incurred in the
ordinary course of ANB's and the Banks'Bank's business, and except for the transaction
contemplated by this Agreement, neither ANBPermanent 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)
ANBPermanent or the Subsidiaries,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 ANBPermanent Financial Statements as of March 31,September 30,
1999; good title to all personal property reflected as owned in the ANBPermanent
Financial Statements as of March 31,September 30, 1999, other than personal property
disposed of in the ordinary course of business since March 31,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
ANBPermanent and the Subsidiaries purportspurport to own or which ANBPermanent or any
Subsidiary uses in its business; good title to, or right to use by terms of a
valid and enforceable lease or contract, all other property used in their
respective businesses; and good title to all property and assets acquired and
not disposed of or leased since March 31,September 30, 1999. All of such properties and
assets are owned by ANBPermanent 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 ANBPermanent 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 A - 15
104
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 ANBPermanent 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 ANBPermanent 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.
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(b) ANBPermanent and the Subsidiaries have conducted their respective
businessbusinesses 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 ANBPermanent after due inquiry, threatened,
claims, actions or proceedings by any local municipality, sewage district or
other governmental entity against ANBPermanent 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 ANBPermanent or any
Subsidiary, as presently conducted. Neither ANBPermanent 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. ANBPermanent 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 ANBPermanent nor any
Subsidiary has any liability for any clean-up or remediation under any of the
Environmental Laws with respect to any real property.
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4.12. Loans. (a) Except as set forth in the Disclosure Schedule, there is
no loan by anythe Bank in excess of $50,000 that has been classified by bank
regulatory examinersregulators 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 eachthe Bank and a list of all
loans in excess of $50,000 which anythe 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 ANBPermanent Financial Statements as of
March 31,September 30, 1999 and which have been made, extended, renewed, restructured,
approved, amended or acquired since March 31,September 30, 1999: (i) to the best
knowledge of ANB after
due inquiry,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 ANBPermanent or any Subsidiary has a
security interest in collateral or a mortgage securing such loans, by perfected
security interests or recorded mortgages naming ANBPermanent or aany 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 ANBPermanent Financial
Statements are to the best of Permanent's knowledge, adequate in all respects
under the requirements of generally accepted accounting principles
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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. ShareholderStockholder Rights Plan. Except as otherwise provided in this
Agreement, the Disclosure Schedule and ANB's ArticlesPermanent's Certificate of Incorporation
and By-Laws, ANBPermanent has no shareholderstockholder rights plan or any other plan, program
or agreement involving, restricting, prohibiting or discouraging a change in
control or merger of ANBPermanent 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 ANBPermanent or
any Subsidiary, whether written or oral, in which ANBPermanent or any Subsidiary
participates as a participating employer; to which ANBPermanent or any Subsidiary
contributes and including any such plans which within the preceding six years
have been terminated, merged into another plan of ANBPermanent or any Subsidiary,the Bank, frozen
or discontinued (collectively, "ANB"Permanent Plans") except as set forth on A - 17
106
the
Disclosure Schedule: (i) all such ANBPermanent 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 ANBPermanent 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 ANBPermanent is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter; (iii) except for the ANBPermanent Common Stock held by its trustee as an
asset of the ANB Pension
Plan,Permanent ESOP, no ANBPermanent Plan (or its related trust) holds any
stock or other securities of ANBPermanent or any related or affiliated person or
entity; (iv) ANBPermanent has not engaged in any transaction that may subject
ANB,Permanent, or any ANBPermanent 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
ANBPermanent Plan; (vi) there are no actions, suits, proceedings or claims pending
(other than routine claims for benefits) or, to the best knowledge of ANBPermanent
after due inquiry, threatened, against ANB,Permanent, any Subsidiary, any ANBPermanent
Plan, any fiduciary of any ANBPermanent Plan or the assets of any ANBPermanent Plan as
to which ANBPermanent or any Subsidiary would have liability.
(b) ANBPermanent 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 employee benefit plans, or agreements, maintained
or sponsored, participated in, or contributed to by ANBPermanent 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 ANBPermanent or any Subsidiary is entitled to any
benefit under any welfare benefit plans (as defined in Section 3(1) of ERISA)
after termination of employment with ANB,Permanent, except that such individuals may
be entitled to continue their group health care coverage pursuant to the retiree
health coverage provisions of the ANB Corporation Group Health PlanPermanent'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 the Planthat 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 ANBPermanent or any Subsidiary, in which
ANBPermanent or any Subsidiary participates as a A - 18
107
participating employer or to which
ANBPermanent or any Subsidiary contributes, no director, officer, employee or agent
of ANBPermanent or any Subsidiary has engaged in any action or failed to act in
such a manner that,
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as a result of such action or failure to act, would cause a tax to be imposed on
ANBPermanent 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 ANBPermanent 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 ANBPermanent Plan have been timely made or have been reflected on
the Audited Financial Statements or the PreliminaryPermanent Financial Statements. Neither any ANBPermanent 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 ANBPermanent under Section 4001 of ERISA or sectionSection 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
ANBPermanent nor any of its Subsidiaries hasSubsidiary 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, ANBPermanent and each Subsidiary has since January 1, 19951995: (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 ANBPermanent 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). ANBPermanent has
established, and shall establish in the Subsequent ANBPermanent Financial
Statements, in accordance with generally accepted accounting principles, a
reserve for taxes in the ANBPermanent Financial Statements adequate to cover all of
ANB'sPermanent's and the Subsidiaries' tax liabilities (including, without
limitation, income taxes, payroll taxes and withholding, and franchise fees) for
the periods then ending. Neither ANBPermanent nor any Subsidiary has, nor will any one of them
have, any liability for taxes of any nature for or with respect to the operation
of their respective businesses, including the business of any subsidiary, or
ownership of their assets, including the assets of any subsidiary, from the date
hereof up to and including the Effective Time, except to the extent set forth in
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the Subsequent ANBPermanent Financial Statements (as hereinafter defined) or as
accrued or reserved for on the books and records of ANB.Permanent. Neither ANBPermanent
nor any Subsidiary is currently under audit by any state or federal taxing
authority. No federal, state or local tax returns of ANBPermanent have been audited
by any taxing authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of the BanksBank are insured by the FDIC
in accordance with the Federal Deposit Insurance Act, as amended, and ANBPermanent
and eachthe 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 ANBPermanent or any Subsidiary
on the date hereof or with respect to which ANBPermanent 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 ANBPermanent and the
Subsidiaries have been fully, properly and accurately maintained.
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4.20. Broker's, Finder's or Other Fees. Except for reasonable fees of
ANB'sPermanent's attorneys, accountants, proxy solicitors and investment bankers, all
of which shall be paid by ANBPermanent prior to the Effective Time, no agent,
broker or other person acting on behalf of ANBPermanent or any Subsidiary or under
any authority of ANBPermanent 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
MergerMergers contemplated hereby.
4.21. Interim Events. (a) Except as set forth in the Disclosure Schedule,
between the period from March 31,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
March 31,September 30, 1999 to the date of this Agreement, ANBPermanent and the Subsidiaries
have carried on their respective businesses in the ordinary and usual course consistent
with their past practices (excluding the incurrence of fees and A - 20
109
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 ANBPermanent
Common Stock;Stock, except as provided by Section 6.03(a)(iii); or
(ii) any split, combination or reclassification of any capital stock
of ANBPermanent or any subsidiarySubsidiary 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 ANBPermanent Common Stock, except for issuances of
ANBPermanent 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. ANBPermanent 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 ANBPermanent 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, shareholderstockholder or agent against liability or hold the
same harmless from liability other than as expressly provided in the ArticlesCertificate
of Incorporation or ByLawsBy-Laws of ANB, Peoples Bank, Farmers State Bank and ANB
Financial andPermanent or the Articles of Association andor By-Laws of American National Bank
and ANTIM.any
Subsidiary.
(b) No claims have been made against or filed with ANBPermanent or any
Subsidiary nor have, to the best knowledge of ANBPermanent after due inquiry, any
claims been threatened against ANBPermanent or any Subsidiary, for indemnification
against liability or for reimbursement of any costs or expenses incurred in
connection A - 21
110
with any legal or regulatory proceeding by any present or former
director, officer, shareholder,stockholder, employee or agent of ANBPermanent 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 ANBPermanent and the Subsidiaries to
carry on itstheir 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
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calculated to result in no disruption of any of ANB'sPermanent's or the Subsidiaries'
business operations. Neither ANBPermanent nor any of the Subsidiary has received, or
reasonably expects to receive, a deficiency notice for any federal or state
regulator relating to their failure to be Year 2000 Compliant. For purposes of
this Section 4.24, "Year 2000 Compliant" means that such Systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) ANBPermanent 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 ANBPermanent 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. ShareholderStockholder Approval. The affirmative vote of the holders of a
majority of the ANBPermanent Common Stock (which are issued and outstanding on the
record date relating to the meeting of shareholders)stockholders) is required for shareholderstockholder
approval of this Agreement and the Company Merger.
4.26. Nonsurvival of Representations and Warranties. The representations
and warranties of ANBPermanent and the Bank contained in this Agreement shall
expire at the earlier of the termination of this Agreement andor the Effective
Time, and thereafter ANBPermanent and all directors, officers and employees of
ANBPermanent shall have no further liability with respect thereto, except for fraud
or for false or misleading statements made intentionally or knowingly in
connection with such representations and warranties.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF ONB
On or prior to the date hereof, ONB has delivered to ANBPermanent 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
MergerMergers 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 MergerMergers or
restructuring charges taken in connection with the Merger,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.
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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, circumstancescircumstance 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 ANBPermanent 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,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 A - 23
112
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 ANB,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 MergerMergers
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 MergerMergers are obtained)
or any court or administrative judgment, order, injunction, writ or decree;
(iii) conflicts with, results in a breach of or constitutes a default under any
note, bond, indenture, mortgage, deed of trust, license, contract, lease,
agreement, arrangement, commitment or other instrument to which ONB is a party
or by which ONB is subject or bound; (iv) results in the creation of or gives
any person, corporation or entity the right to create any lien, charge, claim,
encumbrance or security interest, or results in the creation of any other rights
or claims of any other party (other than ANB)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, A - 24no notice
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no notice81
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
MergerMergers contemplated by this Agreement.
5.03. Capitalization. (a) The authorized capital stock of ONB as of the
date hereof consists of (i) 75,000,000 shares of common stock, no par value per
share, of which approximately 46,158,66345,600,000 shares were issued and outstanding as
of JuneSeptember 30, 1999, and (ii) 2,000,000 shares of preferred stock, no shares
of which have been or are presently intended to be issued, other than in
connection with any obligations of ONB to issue such preferred stock under its
shareholders' rights plan. Such issued and outstanding shares of ONB capital
stock have been duly and validly authorized by all necessary corporate action of
ONB, are validly issued, fully paid and nonassessable, and have not been issued
in violation of any pre-emptive rights of any present or former ONB shareholder.
All of the issued and outstanding shares of common stock of ONB's subsidiaries
are owned by ONB free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights or claims of any other person, corporation or entity
with respect thereto. Except as described in this Section 5.03, ONB has no other
authorized capital stock.
Except for shares of ONB common stock to be issued in
connection with: (i) ONB's dividend reinvestment and stock purchase plan; (ii)
ONB's outstanding convertible subordinated debentures; (iii) acquisitions by ONB
of other financial institutions or holding companies; and (iv) ONB's restricted
stock plan and other employee benefit plans, ONB has no intention or obligation
to authorize or issue any other capital stock or any additional shares of ONB
capital stock.
(b) Except for shares of ONB common stock beneficially owned by its trust
affiliates, ONB has no knowledge of any person or entity who beneficially owns
5% or more of its issued and outstanding shares of common stock.
5.04. Organizational Documents. The Articles of Incorporation and
By-Laws of ONB in force as of the date of this Agreement have been delivered to
ANB and represent true, accurate and complete copies of such corporate documents
of ONB in effect as of the date of this Agreement.
5.05. Compliance With Law. Neither ONB nor any of its subsidiaries has
engaged in any activity nor taken or omitted to take any action which has
resulted or could result in the violation of any local, state, federal or
foreign law, statute, rule, regulation, ordinance, order, restriction or
requirement or of any order, injunction, judgment, writ or decree of any court
or government agency or body. ONB and each of its subsidiaries possesses and
holds all licenses, franchises, permits, certificates and other authorizations
necessary for the continued conduct of their business without interference or
interruption.
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5.06. Regulatory Filings. ONB and each of its subsidiaries have filed and
will continue to file in a timely manner all required filings with the SEC,
including, but not limited to, all reports on Form 8-K, Form 10-K and Form 10-Q
and proxy statements, and with all other federal and state regulatory agencies
as required by applicable law. All filings by ONB with the SEC and with all
other federal and state regulatory agencies complied or will comply in all
respects as to form with the applicable requirements and were and will be true,
accurate and complete in all respects as of the dates of the filings, and no
such filings contained or will contain any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements,
at the time and in the light of the circumstances under which they were made,
not false or misleading.
5.05. 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
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actual or alleged violations of any law, statute, rule, regulation or ordinance;
or (iii) the subject of any pending or, to the best knowledge of ONB after due
inquiry, threatened proceeding by any government regulatory agency or authority
having jurisdiction over its business, assets, capital, properties or
operations.
5.08. Financial Statements and Reports. (a) ONB or its agents have
delivered to ANB copies of the following financial statements and reports of ONB
and its subsidiaries, including the notes thereto (collectively, the "ONB
Financial Statements"):
(i) Consolidated Balance Sheets and related Consolidated
Statements of Income and Consolidated Statements of Changes in
Shareholders' Equity of ONB as of and for the years ended
December 31, 1996, 1997 and 1998, and for the fiscal quarter
ended March 31, 1999; and
(ii) Consolidated Statements of Cash Flows of ONB for the years
ended December 31, 1996, 1997 and 1998 and for the fiscal
quarter ended March 31, 1999.
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(b) The ONB Financial Statements present fairly the consolidated
financial position of ONB and its subsidiaries as of and at the dates shown and
the consolidated results of operations for the periods covered thereby. The ONB
Financial Statements described in clauses (i) and (ii) above, which consist of
fiscal year-end information, are audited financial statements and have been
prepared in conformance with generally accepted accounting principles applied on
a consistent basis except as may otherwise be indicated in any accountants'
notes or reports with respect to such financial statements. The ONB Financial
Statements do not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, absolute or contingent, or any
other facts, which inclusion or omission would render any of the ONB Financial
Statements false, misleading or inaccurate in any respect.
5.09. Shares to be Issued in Merger. The shares of ONB common stock
which ANB shareholders will be entitled to receive upon consummation of the
Merger pursuant to this Agreement will, at the Effective Time, be duly
authorized and will, when issued in accordance with this Agreement, be validly
issued, fully paid and nonassessable and will have been registered under the
Securities Act of 1933, as amended ("1933 Act") and listed for trading on the
Nasdaq National Market System.
5.10. Shareholder Approval. Approval by ONB's shareholders of the
Merger or for any other actions contemplated by this Agreement is not required.
5.11. Accuracy of Statements Made to ANB.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 ANBPermanent
through and including the Effective Time in connection with this Agreement or
the MergerMergers contemplated hereby (including, without limitation, any written
information which has been or shall be supplied by ONB with respect to its
financial condition, results of operations, business, assets, capital or
directors and officers for inclusion in the proxy statement-prospectus and
registration statement relating to the Merger)Mergers), contains or shall contain (in
the case of information relating to the proxy statement-prospectus at the time
it is mailed to ANB's shareholders)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.
5.12. Broker's, Finder's or Other Fees. Except for reasonable fees of
ONB's attorneys and accountants and investment bankers, no agent, broker or
other person acting on behalf of ONB or under any authority of ONB is or shall
be entitled to any commission, broker's or finder's fee or any other form of
compensation or payment from any of the parties hereto relating to this
Agreement and the Merger contemplated hereby.
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5.13. Accounting Treatment. As of the date of this Agreement, it is
aware of no reason why the Merger will fail to qualify for "pooling of
interests" accounting treatment.
5.14 Taxes, Returns and Reports. Except as set forth in the Disclosure
Schedule, ONB has since January 1, 1995 (a) duly filed all federal, state, local
and foreign tax returns of every type and kind required to be filed, and each
such return is true, accurate and complete in all respects; (b) paid or
otherwise adequately reserved in accordance with generally accepted accounting
principles for all taxes, assessments and other governmental charges due or
claimed to be due upon ONB or its income, properties or assets; and (c) not
requested an extension of time for any such payments (which extension is still
in force). ONB has established, and shall establish in its subsequent financial
statements, in accordance with generally accepted accounting principles, a
reserve for taxes in the ONB Financial Statements adequate to cover all of its
tax liabilities (including, without limitation, income taxes, payroll taxes and
withholding, and franchise fees) for the periods then ending. ONB does not have,
nor will it have, any liability for taxes of any nature for or with respect to
the operation of their respective businesses, including the business of any
subsidiary, or ownership of their assets, including the assets of any
subsidiary, from the date hereof up to and including the Effective Time, except
to the extent set forth in its subsequent financial statements or as accrued or
reserved for on the books and records of ONB. ONB is not currently under audit
by any state or federal taxing authority. No federal, state or local tax returns
of ONB have been audited by any taxing authority during the past five (5) years.
5.14.5.10. 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
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(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 ANBPermanent true, accurate and complete copies
of the following (including all plans and programs which have been terminated):
(i) pension, retirement, profit-sharing, savings, stock purchase, stock bonus,
stock ownership, stock option and stock appreciation right plans and all
amendments thereto and all summary plan descriptions thereof (including any
modifications thereto); (ii) all employment, deferred compensation (whether
funded or unfunded), salary continuation, consulting, bonus, severance and
collective bargaining agreements, arrangements or understandings; (iii) all
executive and other incentive compensation plans, programs and agreements; (iv)
all group insurance and health insurance contracts, policies or plans; and (v)
all other incentive, welfare or employee benefit plans, or agreements,
maintained or sponsored, participated in, or contributed to by ONB or any of its
subsidiaries for its current or former directors, officers or employees.
(c) No current or former director, officer or employee of ONB or any of its
subsidiaries is entitled to any benefit under any welfare benefit plans (as
defined in Section 3(1) of ERISA) after termination of employment with ANB,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
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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.
5.165.11. 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.
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5.175.13. 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 5.17,5.13, "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.
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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 andor the Effective Time and, thereafter, ONB and
all directors, officers and employees of ONB shall have no further liability
with respect thereto, except for fraud or for false or misleading statements
made intentionally or knowingly in connection with such representations and
warranties.
SECTION 6
COVENANTS OF ANB
ANB covenantsPERMANENT
Permanent and agreesthe Bank covenant and agree with ONB, Old National Bank and
covenantsMerger Corporation and agreescovenant and agree to cause the Subsidiaries, to act as
follows:
6.01. ShareholderStockholder Approval. (a) Subject to Section 6.06 hereof, ANBPermanent
shall submit this Agreement to its shareholdersstockholders for approval and adoption at a
meeting to be called and held in accordance with A - 30
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applicable law and the
ArticlesCertificate of Incorporation and By-Laws of ANBPermanent at the earliest possible
reasonable date. Subject to Section 6.06 hereof, the Board of Directors of
ANBPermanent shall recommend to ANB's shareholdersPermanent's stockholders that such shareholdersstockholders
approve and adopt this Agreement and the Company Merger contemplated hereby and shall solicit
proxies voting in favor of this Agreement from ANB's shareholders.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.
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(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) ANBPermanent 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 MergerMergers on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
(b) Any materials or information provided by ANBPermanent 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 ANBPermanent nor any Subsidiary shall, without the prior written
consent of ONB:
(i) make any changes in its capital stock accounts (including, without
limitation, any stock split, stock dividend, recapitalization or
reclassification), except for the ANB DRIP and the
issuance of up to 391,624364,144 shares of
ANBPermanent 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 shareholdersstockholders except that (A) American Nationalthe Bank
Peoples Bank, Farmers State Bank and ANTIM
may pay cash dividends to ANBPermanent in the ordinary course of business for
payment of reasonable and necessary business and operating expenses of
ANBPermanent and for purposes of retiring the debt referenced in Section
8.01(i) hereof and to provide funds for ANB's
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shareholdersstockholders in accordance with this Agreement, and (B) ANBPermanent may pay to
its shareholdersstockholders its usual and customary quarterly cash dividend of no
greater than nineteen centsSeven Cents ($0.19)0.07) per share for any
quarterly period,each such dividend until the
Effective Time; provided, however, that no dividend may be paid forto
Permanent stockholders during the quarterly period in which the Merger isMergers are
consummated if, during such period, ANB shareholdersPermanent stockholders will become
entitled to receive dividends on their shares of ONB common stock received
pursuant to this Agreement;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;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 necessary to manage their
investment portfolios;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
Banks)Bank) or fixed asset constituting a capital investment in excess of $100,000$50,000
individually or $200,000$100,000 in the aggregate;
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(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 ANBPermanent or any
Subsidiarythe
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;
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(x) promote to a new position or increase the rate of compensation or
enter into any agreement to promote to a new position or increase the rate
of compensation, of any director, officer or employee of ANBPermanent 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 ANBPermanent 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 ANBPermanent 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 ANBPermanent 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 ANBPermanent or any Subsidiary;
(xiii) hire or employ any new or additional employees of ANBPermanent 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
ANBPermanent or any Subsidiary who are not presently serving in such
capacities;
(xv) amend, modify or restate ANB's, Peoples Bank's,
Farmers State Bank's, or ANB Financial's ArticlesPermanent's Certificate of Incorporation
or By-Laws or American National Bank'sthe Articles, Charter or ANTIM's ArticlesBy-Laws of Association or By-Lawsany Subsidiary from those
in effect on the date of this Agreement and as delivered to ONB hereunder;
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(xvi) give, dispose of, sell, convey or transfer; assign, hypothecate,
pledge or encumber; or grant a security interest in or option to or right
to acquire any shares of common stock or substantially all of the assets of
ANBPermanent or any Subsidiary, or enter into any agreement or commitment
relative to the foregoing;foregoing, except as provided by Section 6.06(b) hereof;
(xvii) fail to continue to make additions to in accordance with the
Banks'Bank's past practices and to otherwise maintain in all respects the Banks'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 Statement,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
ANBA-23
87
Permanent Financial Statements or the Subsequent ANBPermanent Financial
Statements, (A) borrow any money (except for capital purposes related to
the Subsidiaries)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 Merger)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
(xxi)(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) ANBPermanent 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 A - 34
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liabilities and hazards as are currently insured
by ANBPermanent 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, ANBPermanent 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. ANBPermanent 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 ANBPermanent 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
ANBPermanent following the date of this Agreement, ANBPermanent 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 ANBPermanent 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 ANBPermanent following the date of this
Agreement, a written agreement, substantially in the form as attached hereto as
Exhibit B, providing that such person: (a) shall not sell, pledge,
transfer, dispose of or otherwise reduce his or her market risk with respect to
the shares of ANB Common Stock directly or indirectly owned or held by such
person during the thirty (30) day period prior to the Effective Time; and (b)
will not sell, pledge, transfer, dispose of or otherwise reduce his or her
market risk with respect to the shares of ONB common stock to be received by
such person pursuant to this Agreement: (i) until such time as financial results
covering at least 30 days of combined operations of ONB and ANB have been
published as and when required and within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, and (ii) unless such sales
are pursuant to an effective Registration Statement under the 1933 Act or
pursuant to Rule 145 under the 1933 Act or another exemption from registration
under the 1933 Act.A. On or prior to the Effective Time, ANBPermanent shall use its best
efforts to obtain from each director, executive officer and other A - 35
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person who may
be deemed to be an affiliate of ANBPermanent 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 ANBPermanent nor
any Subsidiary shall permit ornor authorize their respective directors, officers,
employees, agents or representatives to, directly or indirectly, initiate,
solicit or encourage, or provide information to, any corporation,
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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 ANBPermanent or any Subsidiary or to which ANBPermanent or any Subsidiary may
become a party (all such transactions are hereinafter referred to as
"Acquisition Transactions").
(b) ANBPermanent 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. ANBPermanent 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 ANB'sPermanent's
Board of Directors determines in good faith by majority vote, after consultation
with its financial advisors and outside legal counsel, that failing to take such
action would be a breach of the fiduciary duties of ANB'sPermanent's Board of
Directors.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 ANBPermanent nor any
Subsidiary shall issue any news or press releases or make any other public
announcements or disclosures relating to the MergerMergers without the prior consent
of ONB, which consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. ANBPermanent 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 ANBPermanent contained herein
incorrect, untrue or misleading. A - 36
125No 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 ANBPermanent 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 ANBPermanent 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 ANBPermanent and the Subsidiaries.
Upon request, ANBPermanent 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 ANBPermanent or any
Subsidiary, their auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by ANBPermanent 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
ANBPermanent 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 ANBPermanent herein. ONB
shall not use any such information obtained pursuant to this Agreement for any
purpose unrelated to the Merger.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
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ONB or, at ANB'sPermanent's request, returned to ANBPermanent 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 ANBPermanent Financial Statements. As soon as reasonably
available after the date of this Agreement, ANBPermanent shall deliver to ONB the
monthly unaudited consolidated balance sheets and profit and loss statements of
ANBPermanent prepared for its internal use, CallThrift Financial Reports of the Banks and ANTIMBank
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 ANBPermanent
Financial Statements"). The Subsequent ANBPermanent 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 A - 37
126
absence of footnotes for interim statements. The
Subsequent ANBPermanent Financial Statements, including the notes thereto, will not
include any assets, liabilities or obligations or omit to state any assets,
liabilities or obligations, absolute or contingent, or any other facts, which
inclusion or omission would render such financial statements inaccurate,
incomplete or misleading in any respect.
6.11. Employee Benefits. Neither the termsTransition of Section 7.03 hereof nor
the provision of any employee benefits by ONB or any of its subsidiaries to
employees of ANB shall: (a) create any employment contract, agreement or
understanding with or employment rights for, or constitute a commitment or
obligation of employment to, any of the officers or employees of ANB; or (b)
prohibit or restrict ONB or its subsidiaries, whether before or after the
Effective Time, from changing, amending or terminating any employee benefits
provided to its employees from time to time.
6.12. Merger of ANB Corporation Savings and IncentiveDefined Benefit Plan. As soon as
administratively feasible after the Effective Time, the ANB Corporation Savings
and Incentive Plan ("ANB 401(k) Plan")Permanent shall be merged with and into the ONB
Savings Plan. All account balances maintained under the ANB 401(k) Plan shall
become fully vested and nonforfeitable on the day on which the plan merger
occurs. From the date of this Agreement through the date on which the ANB 401(k)
Plan is merged into the ONB Savings Plan, ANB and the Subsidiaries may continue to make
contributions to the ANBFinancial 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 so long(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
any past employer contributions to the ESOP. In the event the amount of such
plan.
6.13. Mergercontributions 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 ANB Corporation Employees' Pension Plan. Asunallocated 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.
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In addition, Permanent shall take, or cause to be taken, all actions
necessary to cause the fiduciaries of the first January 1ESOP 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 July 1 coinciding with or next followingcause 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 soon as administratively feasible thereafter,of the ANB Corporation
Employee's Pension Plan ("ANB Pension Plan") shall be merged with and intoEffective Time. All account
balances of the ONB Employees' Retirement Plan ("ONB Pension Plan"). All benefits accrued under
the ANB Pension PlanESOP participants shall be fully vested and non-forfeitable onas
of such termination date. As soon as administratively feasible following the
day on
which the plan merger occurs. Fromlater of (1) the date of this Agreement throughtermination of the date
on whichESOP, or (2) the ANB Pension Plan is merged intoreceipt by
Permanent of the ONB Pension Plan, ANBfavorable determination letter described in the preceding
paragraph, all vested and non-forfeitable benefits under the ESOP shall be
distributed to its Subsidiaries shall contributeparticipants pursuant to the ANB Pension Plan at least the amounts
calculated by the plan's actuary to be necessary to prevent an accumulated
funding deficiency within the meaningprovisions of Section 13.5 of
the Section 412 of the Code.
6.14ESOP (Voluntary Termination).
6.14. Termination of Group Health Plan. The ANB Corporation Group Health
Plan ("ANB Health Plan") shall be terminatedWelfare Benefit Plans. Effective as of the last day of
the calendar month in which occurs the Effective Time, occurs. From the dategroup health, dental,
life and long term disability plans, and any other employee welfare benefit
plan, sponsored by Permanent on behalf of this Agreement
through the date as of which the ANB Health Plan terminates, ANB and the
Subsidiaries shall continue to fund all expenses of the plan, including but not
limited to, benefits, stop loss insurance premiums and administrative fees,
attributable to claims incurred on or prior to the date the ANB Health Plan
terminates. As of the date the ANB Health Plan terminates, ANB and the
Subsidiaries shall have funded a reserve account for the purpose of paying
covered claims incurred,
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but not yet paid, as of the plan termination date. The amount of such reserve
account shall not be less than twenty-five percent (25%) of the total claims
paid for the plan year ending September 30, 1999.
6.15 Termination of Long Term Disability Plan. The ANB Corporation Long
Term Disability Plan ("ANB LTD Plan")its eligible employees shall be terminated as of the Effective
Time, or as soon as administratively feasible thereafter, but such termination
shall not affect the benefits payable to any ANB covered employee who became
entitled to a disability benefit under the ANB LTD Plan prior to the termination
of said plan. From the date of this Agreement through the date as of which the
ANB LTD Plan terminates, ANB and the Subsidiaries shall continue to pay the
insurance premiums necessary to continue the ANB LTD Plan benefits.
6.16 Termination of Sec. 125 Plan. The ANB Corporation Sec. 125 Plan
("ANB Cafeteria Plan') shall be terminated as of same date the ANB Health Plan
is
terminated. From the date of this Agreement through the date as of which the
ANB Cafeteria Plan terminates, ANB and the Subsidiaries shall continue to
contribute toeach
such plan the pre-tax amounts which the ANB Cafeteria Plan
participants elect to defer from compensation in order to pay the employee
portion of the cost of coverage under the ANB Health Plan.
6.17 Termination of ANB Corporation Group Life Plan. The ANB
Corporation Group Term Life Insurance Plan ("ANB Group Life Plan") shall be
terminated as of the first day of the first calendar month following the
Effective Time or as soon as administratively feasible thereafter. From the date
of this Agreement through the date on which the ANB Group Life Plan terminates ANB and the SubsidiariesPermanent shall continue to pay the insurance premiums
necessary to continue the death benefits currently provided byunder such plan.
6.18 Terminationplans. As of the ANB Corporation SERP. The ANB Corporation
Supplemental Executive Retirement Plan (the "ANB SERP") shall be terminated as
of the day on which
the Effective Time, occurs. No employeeeach individual who has qualified for retiree health
coverage under the Permanent group health plan, either as a retiree or a spouse
or dependent of ANBa 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 Subsidiaries who has been designated as an eligible participant under the ANB
SERP shall accrue any additional benefits thereunder subsequent to the December
31 coincident withtermination of his
or next preceding the date the ANB SERP terminates. The
accumulated benefit obligations in the ANB Corporation SERP shall, upon the
Effective Time, be transferred to, andher directorship, shall become a benefit obligation under
the ONB Non-Qualified Defined Contribution Plan For Executive Employees of ONB.
Such transferred benefit shall thereafter be administered pursuant to the terms
and conditions of the transferee plan.
6.19 Termination of the ANB Corporation Directors' Plan. The ANB
Corporation Directors' Deferred Compensation Plan (the "ANB Directors' Plan"),
and all participation agreements in effect
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128
thereunder, shall be terminatedcovered as of the Effective Time.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
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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 whichbehalf of its eligible
employees shall terminate. From the ANB Directors'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
is terminated, ANB
and(collectively, the Subsidiaries"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 plan.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 terminationdistribution 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 ANB Directors' Plan the balance in
each individual account thereunder shall be distributed in a lump sum payment to
the participant entitled thereto. The Boarddate of Directors of ANB, andthis Agreement the
Board of Directors of eachPermanent shall take all actions necessary to ensure that
no further awards of Restricted Stock are granted to any participant under the
Subsidiaries which is participating inRecognition and Retention Plan (the "RRP"); the ANB
Directors'1993 Stock Option and Incentive
Plan shall, prior to(the "1993 Plan"); or the day on which1999 Omnibus Incentive Plan (the "1999 Plan"). As
of the Effective Time, occurs,
amend or causePermanent shall take all actions necessary to terminate
the amendmentRRP, the 1993 Plan and the 1999 Plan. As of the date each such plan
terminates, any Restricted Period with respect to provide that upon the termination
ofRestricted Stock theretofore
awarded to any participant under each such plan shall lapse. To the accrued benefits thereunderextent 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 immediately paid in a lump
sum paymentexchanged for unrestricted common
stock of ONB pursuant to the individuals entitled to such accrued benefits, subject,
however, to the termsprovisions of the ANB Directors' Plan.
6.20Section 2.01 hereof.
6.19. Disposition of the ANB Corporation Stock Investment Plan. FromOptions and Stock Rights. As of the date of this
Agreement through the day on which the Effective Time occurs, the
Stock Investment Plan of ANB Corporation ("ANB Stock Investment Plan") shall
remain in effect, shall continue to be funded by both employer and employee
contributions, and shall continue to be administered, all in accordance with its
current provisions. As of the day on which the Effective Time occurs, the shares
of ANB Common Stock owned by each participant under said plan shall be converted
into whole shares of ONB common stock pursuant to the applicable provisions of
Section 2 of this Agreement. Fractional share interests resulting from such
conversion shall be paid in cash at such time and in such amount determined
under Section 2.02 of this Agreement. ANB shall cause the administrator of the
ANB Stock Investment Plan to thereafter transfer the shares of ONB common stock
held on behalf of each participant in the ANB Stock Investment Plan to the
administrator of the ONB Direct Stock Purchase Plan and Dividend Reinvestment
Plan ("ONB Stock Purchase Plan"). Upon receipt of such shares the administrator
of the ONB Stock Purchase Plan shall credit the number of such shares, on a per
participant basis, to the individual account established on the participant's
behalf under the ONB Stock Purchase Plan by the administrator thereof.
Thereafter such converted shares shall be held, administered and distributed or
surrendered pursuant to the applicable provisions of the ONB Stock Purchase
Plan; provided, however, that the distribution rights of the participants under
the ANB Stock Investment Plan shall not be materially adversely affected by the
transfer of the converted shares to the ONB Stock Purchase Plan.
6.21 Termination of ANB Corporation Severance Policy. The ANB
Corporation Severance Policy, covering eligible employees of ANB, American
National Bank and ANTIM, shall be terminated as of the Effective Time. With
respect to an individual covered by such severance policy on the date of its
termination, in the event that he or she incurs, within twelve months from the
Effective Time, (i) the involuntary termination of employment for reasons other
than cause, (ii) a material reduction in compensation or (iii) without the prior
written consent of such person, the assignment to him or her of
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any duties materially inconsistent with his or her duties and responsibilities
prior to the date of this Agreement, he or she shall be entitled to receive a
severance benefit. The severance benefit shall be a salary continuation the
amount of which shall be the greater of (i) the amount payable to such
individual under the salary continuation provisions of the terminated ANB
Corporation Severance Policy had such policy not been terminated, or (ii) the
amount payable to such individual under the salary continuation provisions of
the ONB Severance Policy, if any, then applicable to such individual. An
individual who is entitled to a benefit under the ONB Severance Policy shall
also be entitled to a continuation of employee benefits as determined solely by
the applicable provisions of the ONB Severance Policy. The Board of Directors of each of ANB, American National Bank and ANTIM,Permanent shall prior to the execution of
this Agreement, amend, or cause the amendment of, the ANB Severance Policy to
provide that the sole events for which a severance benefit is payable thereunder
shall be (i) the involuntary termination of a covered individual's employment
for reasons other than cause, (ii) a material reduction in compensation or (iii)
without the prior written consent of an employee, the assignment to him or her
of any duties materially inconsistent with his or her duties and
responsibilities prior to the date of this Agreement.
6.22. Disposition of Farmers State Bank Plans. ANB shall use its best
efforts to complete the merger of the Farmers State Bank of Union City, Ohio,
Employees' 401(k) Plan with and into the ANB 401(k) Plan, and shall complete the
merger of the Farmers State Bank of Union City, Ohio Employees' Pension Plan
with and into the ANB Pension Plan, no later than December 31, 1999 with respect
to each such plan merger.
6.23. Disposition of ANB Stock Option Plans. At or prior to the
Effective Time, ANB shall use its best efforts, including using its best efforts
to obtain any necessary consents from optionees, with respect to the Stock
Option Plans to permit the conversion of each outstanding option to acquire
shares of common stock of ANB Corporation which was properly granted pursuant to
a stock option agreement executed in accordance with the provisions of the Stock
Option Plans by ONB pursuant to Section 7.05 of this Agreement, and to permit
ONB to assume the sponsorship and administration of the Stock Option Plans. ANB
shall also take all actionactions necessary
to amend the Stock Option Plans to
eliminate additionalensure 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 awardsany combination thereof, as defined
therein, shall be awarded to any participant under such
plans subsequent tothe 1993 Plan or the 1999
Plan. As of the Effective Time.
6.24.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. ANBPermanent shall:
(a) Additional Information. Furnish such additional information, statements
and other reports with respect to ANB'sPermanent's Year 2000 compliance (and its
approach to and progress towards achieving compliance) discussed in Section 4.24
hereof as ONB may reasonably request from time to time.
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(b) Notice of Changes. In the event of any change in circumstances that
causes or will likely cause any of ANB'sthe 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 ANBPermanent shall promptly, and in any event within ten (10)
days of receipt of information regarding a Change in Circumstances, provide ONB
with written notice ("Notice") that describes in reasonable detail the Change in
Circumstances and how such Change in Circumstances caused or will likely cause
ANB'sthe representations and warranties set forth in Section 4.24 hereof to no longer
be true. ANBPermanent shall, within ten (10) days of a request, also provide ONB
with any additional
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information ONB reasonably requests of ANBPermanent in connection with the Notice
and/or a Change in Circumstances.
(c) Audits. Give any representative of ONB reasonable access during all
business hours to, and permit such representative to examine, copy or make
excerpts from, any and all books, records and documents in the possession of ANB
and the Subsidiaries and relating to their affairs, and to inspect any
of the properties and Systems of ANBPermanent and the Subsidiaries, and to project test the
Systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of ONB.
6.25. SEC and Other6.21. Reports. Promptly upon its becoming available, furnish to ONB one (1)
copy of each financial statement, report, notice, or proxy statement sent by
ANBPermanent to its shareholdersstockholders generally and of each regular or periodic report,
registration statement or prospectus filed by ANBPermanent with Nasdaq
or the SEC or any
successor agency, and of any order issued by any Governmental Authority in any
proceeding to which ANBPermanent is a party.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 ANBPermanent or any of its business, operations or
properties.
6.26.6.22. Adverse Actions. ANBPermanent shall not (a) take any action while
knowing that such action would, or is reasonably likely to, prevent or impede
the MergerMergers from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a reorganization within the meaning of Section
368 of the Code; or (b) knowingly take any action that is intended or is
reasonably likely to result in (i) any of its representations and warranties set
forth in this Agreement being or becoming untrue, subject to the standard set
out in the second paragraph to Section 4, in any respect at any time at or prior
to the Effective Time, (ii) any of the conditions to the MergerMergers 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 MergerMergers except, in
each case, as may be required by applicable law or regulation.
A - 426.23. 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,
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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.
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(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, covenantsOld National Bank and agreesMerger Corporation covenant and agree with
ANBPermanent 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 Merger.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 ANB'sPermanent's legal counsel
a reasonable opportunity to review such applications prior to their filing and
shall provide to ANB'sPermanent'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 MergerMergers 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.
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(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 ANB,Permanent, prepared for
use in connection with the meeting of shareholdersstockholders of ANBPermanent 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 ANBPermanent and its counsel with a copy of the
Registration Statement and each such other filing and provide ana 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.
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(c) All filings by ONB with the SEC and with all other federal and state
regulatory agencies shall be true, accurate and complete in all material
respects as of the dates of the filings, and no such filings shall contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements, at the time and in light of the circumstances
under which they were made, not false or misleading.
(d) ONB will use reasonable best efforts to list for trading on the Nasdaq
National Market System (subject to official notice of issuance) prior to the
Effective Time, the shares of ONB common stock to be issued in the Merger.Mergers.
7.03. Employee Benefit Plans. (a) As of the Effective Time, ONB will make
available to the employees of ANBPermanent and the Subsidiaries who continue as
employees of ONB or any subsidiary of ONB after the Effective Time, and, further,
subject to
Section 7.03(b), and (c) and (d) hereof, substantially the same employee benefits on
substantially the same terms and conditions as ONB offers to similarly situated
officers and employees. Until such time as the employees of ANBPermanent and the
Subsidiaries become covered by the ONB welfare benefit plans, the employees of
ANBPermanent and the Subsidiaries shall remain covered by the ANBPermanent Plans which
cover such employees, subject to the terms of such plans. Except as otherwise
provided in Sections 6.13, 6.18 and 6.21,6.11 through 6.19, ONB will honor in accordance with their
terms (i) all employee benefit obligations to current and former officers,
and employersdirectors and employees of ANBPermanent 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 ANBPermanent
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
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Employee Stock Ownership Plan ("ESOP"). Those officers and employees of
ANBPermanent 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
ANBPermanent or any Subsidiary, shall become participants thereunder on the first day of the calendar month which coincides with or next
followsat the
Effective Time. Those officers and employees of ANBPermanent or any Subsidiary who
otherwise meet the eligibility requirements of the ONB Pension Plan, based upon
their age and years of ANBPermanent or any Subsidiary service, shall become
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133
participants thereunder no later than the January 1st which coincides with or
next follows the Effective Time. Those officers or employees who do not meet the
eligibility requirements of the ONB Pension Plan, ONB Profit Sharing Plan or
ESOP on such dates shall become participants thereunder on the first plan entry
date under the ONB Pension Plan, the ONB Profit Sharing Plan or ESOP, as the
case may be, which coincides with or next follows the date on which such
eligibility requirements are satisfied.
(c) No full-time officer or employeeIn accordance with the provisions of ANBthe Health Insurance Portability
and Accountability Act ("HIPAA") and the terms of the ONB group health plan,
officers and employees of Permanent or any Subsidiary serving
as ofwho become participants in
the Effective Time shallONB group health plan will be subject to anygiven "creditable coverage" credit for their
coverage under the Permanent Group Health Plan under the ONB group health plan's
pre-existing condition exclusionslimitation 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 any of ONB's welfare benefit plans if such officer, employee or
individual was covered by the corresponding ANB welfare benefit plan on the day
immediately preceding the Effective Time.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 ANBPermanent 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 ANBPermanent or
any Subsidiary; or (ii) prohibit or restrict ONB or its subsidiaries, whether
before or after the Effective Time, from changing, amending or terminating any
employee benefits provided to its employees from time to time.
(e) ONB shall take any and all actions reasonably necessary to
effectuate the disposition of the ANB Plans provided by Section 6.12 through
6.23.
7.04. Employment Agreements. Following the Effective Time, ONB agrees to honor and abide by the
terms of the written employment agreements set forth in the Disclosure Schedule,
except as may be otherwise required by anya government regulatory agency.
7.05.(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 ANBPermanent with respect to
each outstanding option to purchase shares of ANB Common Stock (pursuant to the Stock Options)Option which was properly granted pursuant to a stock
option agreement executed in accordance with athe Stock Option PlanPlans 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
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stock, rounded to the nearest whole share, as the holder of such Stock Option
would have been entitled to receive pursuant to the MergerMergers 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 ANBPermanent
Common Stock otherwise purchasable pursuant to such Stock Option divided by (B)
the number of shares of ONB common stock, rounded to the nearest whole share,
deemed
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134 purchasable pursuant to such Stock Option; provided, however, that in the
case of any Stock Option to which Section 422 of the Code applies, the option
price, the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option shall be determined in accordance with
the foregoing, subject to such adjustments as are necessary in order to satisfy
the requirements of Section 424(a)4.24(a) of the Code. By way of example and illustration
only, if any option holder has been granted and is vested in options to acquire
1,000 shares of ANB Common Stock for $20.00 per share, then after the Effective
Time, such option holder's same option would be converted into the option to
acquire, 1250 shares of ONB common stock at $16.00 per share. In no event shall ONB be
required to issue fractional shares of ONB common stock pursuant to the Stock
Options.
(b)(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 7.057.04
after giving effect to the MergerMergers and the assumption by ONB as set forth
above); provided, however, to the extent necessary to effectuate the provisions
of this Section 7.05,7.04, 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 7.057.04 and as a result of the grant and exercise of such Stock Options.
(c) As soon as practicable after(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.
7.06.7.05. 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 ANBPermanent with respect to the MergerMergers without the prior
consent of ANB,Permanent, which consent shall not be unreasonably withheld.
7.07.7.06. Indemnification. (a) From and afterFollowing the Effective Time and for a period of
six (6) years thereafter, ONB shall indemnify, defend and hold harmless to the
fullest extent permitted by
applicable federalpresent directors, officers and state law each person who is on the date hereof,employees of Permanent and its Subsidiaries
(each, an "Indemnitee") against all costs or has
been atexpenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any time prior to the date hereofclaim, action, suit,
proceeding or who becomes prior to the Effective
Time, a directorinvestigation, whether civil, criminal, administrative or
officer of ANB or was serving at the request of ANB as a
director or officer of any domestic or foreign corporation, joint venture,
trust, employee benefit plan or other enterprise
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(collectively, the "Indemnitees")investigative, arising out of ANB's Articles of Incorporationactions or By-Laws in effect at the Effective Time against any and all losses in
connection with or arising out of any claim which is based upon, arises out of
or in any way relates to any actual or alleged act or omissionomissions occurring at or prior to the
Effective Time in(including without limitation, the Indemnitee's capacity as a director or
officer (whether elected or appointed), of ANB. Indemnification oftransactions contemplated by
this Agreement) to the fullest extent that Permanent is permitted to indemnify
(and advance expenses to) its directors, officers, and directorsemployees under
Permanent's Certificate of Incorporation and Permanent's By-Laws as in effect on
the Subsidiaries following the Effective Time will be provided to
the same extent it is provided from time to time to other persons working in
similar capacities for ONB or its subsidiaries following the Effective Time.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 7.07.7.06.
(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 ANB;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
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may be incurred by any Indemnitee in enforcing the indemnity and other
obligations provided for in this Section 7.07.7.06.
(d) The provisions of this Section 7.077.06 are intended to be for the benefit
of, and shall be enforceable by, each Indemnitee and their respective heirs and
representatives.
7.087.07. Adverse Actions. ONB shall not (a) take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the MergerMergers
from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a reorganization within the meaning of Section 368 of the
Code; or (b) knowingly take any action that is intended or is reasonably likely
to result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue, subject to the standard set out in the
second paragraph to Section 5, in any respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the MergerMergers 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 MergerMergers except, in each
case, as may be required by applicable lowlaw or regulation.
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1367.08. 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 MERGERMERGERS
8.01. ONB. The obligation of ONB to consummate the MergerMergers is subject to
the satisfaction and fulfillment of each of the following conditions on or prior
to the Effective Time, unless waived in writing by ONB:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of ANB with respect to itselfPermanent and the SubsidiariesBank 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 ANBPermanent 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 ANBPermanent 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 shareholdersstockholders of ANBPermanent in accordance with
this Agreement with the SEC pursuant to the
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1933 Act, and all state securities and Blue Sky approvals, authorizations and
exemptions required to offer and sell such shares shall have been received by
ONB. The Registration Statement with respect thereto shall have been declared
effective by the SEC and no stop order shall have been issued or threatened.
(e) Regulatory Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby, shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof
shall have expired and no such approvals shall contain any conditions,
restrictions or requirements which the board of directors of ONB reasonably
determines in good faith would (i) following the Effective Time, have a Material
Adverse Effect on ONB and its subsidiaries taken as a whole or (ii) reduce the benefits of the transactions
contemplated hereby to such a degree that ONB would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof.
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137hereof which reduction in benefits shall not include any divestiture of
branches of the Bank necessary to make the Mergers not anti-competitive.
(f) ShareholderPermanent Stockholder Approval. The shareholdersstockholders of ANBPermanent shall
have approved and adopted this Agreement as required by applicable law and its
ArticlesCertificate 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. ANBPermanent 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 ANBPermanent have been complied with from the date
of this Agreement through and as of the Effective Time; and (iii) that ANBPermanent
has satisfied and fully complied with all conditions necessary to make this
Agreement effective as to ANB.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 MergerMergers to be effected pursuant to this Agreement will
constitute a tax-free reorganization under the Code (as described in Section
1.061.03 hereof) to each party hereto and to the shareholdersstockholders of ANB,Permanent, except
with respect to cash received by ANB's shareholdersPermanent's stockholders for fractional shares
resulting from application of the Exchange Ratio.Ratio and pursuant to Section
7.04(a)(i) hereof. In rendering such opinion, counsel may require and rely upon
customary representation letters of ONB and ANBthe parties hereto and rely upon customary
assumptions.
(i) PoolingSatisfaction of Interests Opinion.Debt. The Boardexisting debt of DirectorsPermanent owed to an
unaffiliated financial institution ("Lender") in the principal amount of
ONBapproximately $3 million shall have received a written opinion from its independent auditors, dated as ofbe paid by Permanent at or prior to the Effective
Time and the security interest of the Lender in formthe Bank Common Stock shall be
released. At the Effective Time, all of the issued and content satisfactory to ONB,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 effectMergers to be mailed to the stockholders of Permanent) its
fairness opinion stating that the MergerExchange Ratio relating to be effected pursuantthe Mergers is fair
to this Agreement will qualify for poolingthe stockholders of interests accounting treatment for ONB.Permanent from a financial point of view.
8.02. ANB.Permanent. The obligation of ANBPermanent and the Bank to consummate the
MergerMergers is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by
ANB: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.
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(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. ANBPermanent shall have received from ONB at the
Closing the items and documents, in form and content reasonably satisfactory to
ANB,Permanent, listed in Section 11.02(a) hereof.
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(d) Registration Statement Effective. ONB shall have registered its shares
of common stock to be issued to shareholdersstockholders of ANBPermanent 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 ANBPermanent
reasonably determines in good faith would (i) following the Effective Time, have
a Material Adverse Effect on ANB and
its subsidiaries taken as a wholePermanent or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that ANBPermanent 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 shareholdersstockholders of ANBPermanent shall
have approved and adopted this Agreement as required by applicable law and its
ArticlesCertificate of Incorporation. (g)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 ANBPermanent 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.
(h)(i) Tax Opinion. The Board of Directors of ANBPermanent shall have received a
written opinion of the law firm of SullivanKrieg DeVault Alexander & Cromwell,Capehart, LLP,
dated as of the Effective Time, in form and content satisfactory to ANB,Permanent,
to the effect that the MergerMergers to be effected pursuant to this Agreement will
constitute a tax-free reorganization under the Code (as described in Section
1.061.03 hereof) to each party hereto and to the shareholdersstockholders of ANB,Permanent, except
with respect to cash received by ANB's shareholdersPermanent's stockholders for fractional shares
resulting from application of the Exchange Ratio.Ratio and pursuant to Section
7.04(a)(i). In rendering such opinion, counsel may require and rely upon
customary representation letters of ONB and ANBthe parties hereto and rely upon customary
assumptions.
(i)(j) Fairness Opinion. ANB'sPermanent's investment bankbanker shall have issued its
written fairness opinion stating that the Exchange Ratio relating to the Merger
is fair to the shareholders of ANB from a financial
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point of view. Such written fairness opinion shall be (i) in form and substance
reasonably satisfactory to ANB and (ii) dated as(as
of a date not later than the mailing date of the proxy statement-prospectus
relating to the MergerMergers to be mailed to shareholdersthe stockholders of ANB.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.
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SECTION 9
TERMINATION OF MERGERMERGERS
9.01. Manner of Termination. This Agreement and the MergerMergers may be
terminated at any time prior to the Effective Time by written notice delivered
by ONB to ANB,Permanent, or by ANBPermanent to ONB as follows:
(a) By ONB or ANB,Permanent, if:
(i) the MergerMergers contemplated by this Agreement hashave not been
consummated by March 31,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 ANBPermanent mutually
agree to terminate this Agreement.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) the Merger will not qualify for pooling of interests
accounting treatment for ONB; or
(ii) at any time prior to the Effective Time, ONB's Board of Directors
soreasonably determines, in the event of either
(A) a breach by ANBPermanent 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 ANBPermanent
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 ANBPermanent 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
ANBPermanent 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
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(iii)(ii) it shall reasonably determine that the MergerMergers contemplated by
this Agreement hashave become impracticable by reason of commencement or
threat of any claim, litigation or proceeding against ONB, ANB,Permanent, any
Subsidiary, or any subsidiary of ONB, or any director or officer of any of
such entities relating to this Agreement or the Merger;Mergers; or
(iv)(iii) there has been a material adverse change in the business,
assets, capitalization, financial condition or results of operations of
ANB and its SubsidiariesPermanent or any Subsidiary taken as a whole subsidiary as of the Effective Time as
compared to that in existence as of the date of this Agreement other than
any change resulting primarily by reason of changes in banking and similarlaws 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 MergerMergers or restructuring charges taken in
connection with the Merger,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
(v) ANB(iv) Permanent fulfills the requirements of Section 6.01 hereof but
the shareholdersstockholders of ANBPermanent do not approve and adopt this Agreement and
the Merger and this Agreement.Company Merger.
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(c) By ANB,Permanent, if:
(i) at any time prior to the Effective Time, ANB'sPermanent's Board of
Directors soreasonably 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, A - 52
141
individually or in the aggregate
with other breaches, to result in a Material Adverse Effect;Effect on ONB; or
(ii) there has been a material adverse change in the financial
condition, results of operations, business, assets or capitalization of ANBONB
on a consolidated basis as of the Effective Time as compared to that in
existence on March 31,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 MergerMergers or restructuring charges taken in connection with the
Merger,Mergers, in each case in accordance with generally accepted accounting
principles, effects of any action taken with the prior written consent of
ANBPermanent 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 MergerMergers contemplated by
this Agreement hashave become impracticable by reason of commencement or
threat of any material claim, litigation or proceeding against ONB, (A)Old
National Bank or Merger Corporation relating to this Agreement or the
Merger or
(B)Mergers and which is likely to have a Material Adverse Effect on ONB; or
(iv) ANBPermanent fulfills the requirements of Section 6.01 hereof but
the shareholdersstockholders of ANBPermanent do not approve and adopt this Agreement and
the Merger and this Agreement;Company Merger; or
(v) prior to the approval by the shareholders of ANB of
the Merger contemplated in this Agreement, if
without breaching Section 6.06, ANB shall
contemporaneously enter into a definitive agreement
with a third party providing for an Acquisition
Transaction on terms determined in good faith by the
board of directors of ANB, after consulting with and
considering the advice of ANB's independent counsel
and financial advisors, to be more favorable to the
shareholders of ANB than the Merger and with respect
to which the board of directors has determined after
such consultation and consideration that to proceed
with the Merger would violate the fiduciary duties of
the board of directors to the ANB's shareholders; or
(vi) at any time during the five-day period commencing
with the Determination Date if both of the following
conditions are satisfied:
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(A) the number obtained by dividing the Average Closing Price by the Starting Price (the "ONB Ratio") shall bePer Share of ONB common stock is less than
0.80; and
(B) the ONB Ratio shall be less than the number obtained by
dividing the Final Index Value by the Index Value on the Starting Date
and subtracting 0.15 from the quotient in this clause (B) (such number
being referred to herein as the "Index Ratio");$26.00, subject, however, to the following three sentences. If ANBPermanent
elects to exercise its termination right pursuant to this Section
9.01(c)(vi)(v), it shall give written notice to ONB (provided that such notice
of election to terminate may be withdrawn at any time within the aforementionedfollowing
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 ANBPermanent Common Stock
hereunder, by adjusting the Exchange Ratio (calculated to the nearest one
one-thousandth)ten-thousandth) to equal (a) the lesser of (x) a number (rounded to the nearest
thousandth) obtainedquotient arrived at by dividing (A)(x) the
productsum of $85,427,011 plus the StartingAggregate Strike Price 0.80 and(y) by the Exchange Ratio (as then in effect)Total
Outstanding Shares by (B)(b) the Average Closing Price and (y)
a number (rounded to the nearest one one-thousandth) obtained by dividing (A)
the productPer Share of the Index Ratio and the Exchange Ratio (as then in effect) by (B)
the ONB Ratio.common stock.
If ONB so elects within such five-day period, it shall give prompt written
notice to ANBPermanent of such election and the revised Exchange Ratio.
WhereuponRatio,
whereupon no termination shall have occurred pursuant to this Section
9.01(c)(vi)(v) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified).
For purposes of Section 9.01(c)(vi), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the closing
price of a share of ONB Common Stock on the Nasdaq National Market
System (as reported in The Wall Street Journal, or if not reported
therein, in another authoritative source) during the period of 20
consecutive trading days ending on the trading day prior to the
Determination Date, rounded to the nearest whole cent.
"Determination Date" shall mean the date on which the last
required approval required under Section 8.01(e) and 8.02(e) hereof is
obtained, without regard to any requisite waiting period in respect
thereof.
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"Final Index Value" shall mean the average of the Index Value
for the 20 consecutive trading days ending on the trading day prior to
the Determination Date.
"Index Value," on a given date, shall mean the index value on
such date of the Nasdaq Bank Index, as such index value is reported by
Bloomberg News Service on such date.
"Starting Date" shall mean the last trading day immediately
preceding the date of the first public announcement of entry to this
Agreement.
"Starting Price" shall mean the closing price of a share of
ONB common stock on the Nasdaq National Market System (as reported in
The Wall Street Journal, or if not reported therein, in another
authoritative source) on the Starting Date.
9.02. Effect of Termination. Upon termination by written notice, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of ONB or ANBPermanent
and their respective directors, officers, employees, agents and shareholders or
stockholders, except as provided in compliance withwith: (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
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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 MERGERMERGERS
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 ANBPermanent 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) JanuaryJuly 31, 2000 or (ii) the last
business day of the month following (a) the fulfillment of all conditions
precedent to the MergerMergers set forth in Section 8 of this Agreement and (b) the
expiration of all waiting periods in connection with the bank regulatory
applications filed for the approval of the Merger.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
MergerMergers ("Closing") shall take place on the Effective
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144 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 ANBPermanent the
following:
(i) the officers' certificate contemplated by Section 8.02(g) hereof;
(ii) copies of all approvals by government regulatory agencies
necessary to consummate the Merger;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 Merger;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 ANBPermanent or its legal counsel may
reasonably request.
(b) At the Closing, ANBPermanent shall deliver to ONB the following:
(i) the officers' certificate contemplated by Section 8.01(g) hereof;
(ii) a list of ANB's shareholdersPermanent's stockholders as of the Effective Time
certified by the President and Secretary of ANB;Permanent;
(iii) copies of (A) the resolutions adopted by the Board of Directors
of ANBPermanent certified by the Secretary of ANB,Permanent, relative to the
approval of this Agreement and (B) the Merger;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.
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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 shareholdersstockholders of ANBPermanent shall affect
the rights of such shareholdersstockholders in any manner
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145 which is materially adverse to
such shareholders.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, 7.05 and 7.077.06
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 ANB shareholdersPermanent
stockholders shall not be decreased by such an amendment following the adoption
and approval of the MergerMergers and this Agreement by the ANB shareholders;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 Merger.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) ThisSubject 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:
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If to ONB: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
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If to Permanent or the Bank: with a copy to (which shall not
constitute notice):
Old NationalPermanent Bancorp, Krieg DeVault AlexanderInc.
101 SE Third Street Silver, Freedman & Capehart, LLP
420 Main Street One Indiana Square, Suite 2800
P.O. Box 718 Indianapolis, Indiana 46204-2017Taff, P.C.
Evansville, Indiana 4770547708 1100 New York Avenue, NW,
ATTN: Karol K. Sparks, Esq.Donald P. Weinzapfel, Seventh Floor
Chairman and Chief Washington, DC 20005
Executive Officer ATTN: Jeffrey L. Knight, Secretary Telephone: (716) 264-0118
and General Counsel Telecopier: (317) 636-1507M. Werthan, Esq.
Telephone: (812) 464-1363428-6800 Telephone: (202) 414-6100
Telecopier: (812) 464-1567
If to ANB: with a copy to (which shall not
constitute notice):
ANB Corporation Sullivan & Cromwell
ATTN: James R. Schrecongost, President 125 Broad Street
120 W. Charles Street New York, New York 10004
Muncie, Indiana 47305 ATTN: David M. Huggin, Esq.
Telephone: (765) 747-7600 Telephone: (212) 558-3526428-6812 Telecopier: (765) 741-0290 Telecopier: (212) 558-3588(202) 682-0354
or such substituted address or person as any of them have given to the other in
writing. All such notices, requests or other communications shall be effective:
(a) if delivered by hand, when delivered; (b) if mailed in the manner provided
herein, five (5) business days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
business day after deposit with such service; and (d) if by telecopier, on the
next business day if also confirmed by mail in the manner provided herein.
12.04. Headings. The headings in this Agreement have been inserted solely
for ease of reference and should not be considered in the interpretation or
construction of this Agreement.
12.05. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
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147
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 regardreference to any choice of law provisions, principles or rules thereof
(whether of conflictsthe State of law.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 MergerMergers or matters
contemplated herein and constitutes the entire agreement between the parties
hereto. Upon the execution of this Agreement by all the
parties hereto, the preliminary non-binding Indication of Interest letter, dated
July 14, 1999, from ONB and any and all other prior writings of either party
relating to the Merger, except for the Confidentiality Agreement, dated July 28,
1999 bywhich shall continue in full
force and between ONB and ANB, shall terminate and shall be rendered of no
further force or effect.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 MergerMergers contemplated hereby. ANBhereby, including all
expenses related to banking applications and filing fees with the SEC. Permanent
and the Bank shall pay its expenses incidental to the MergerMergers contemplated
hereby.
12.1012.10. Certain References. Whenever in this Agreement a singular word is
used, it also shall include the plural wherever required by the context and
vice-versa. Except expressly stated otherwise, all references in this Agreement
to periods of days shall be construed to refer to calendar, not business, days.
The term "business day" shall mean any day except Saturday and Sunday when Old
National Bank in Evansville, the lead bank of ONB, is open for the transaction of business.
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148106
IN WITNESS WHEREOF, ONB and ANBPermanent have made and entered into this
Agreement as of the day and year first above written and have caused this
Agreement to be executed, attested in counterparts and delivered by their duly
authorized officers.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
-------------------------------------------------------------------
Ronald B. Lankford, President
and Chief Operating Officer
ATTEST:
By: /s/ JEFFREY L. KNIGHT
----------------------------------------------------------------------
Jeffrey L. Knight, Corporate
Secretary
ANB CORPORATIONOLD NATIONAL BANK
By: /s/ JAMESMICHAEL R. SCHRECONGOST
---------------------------------
JamesHINTON
----------------------------------
Michael R. Schrecongost,Hinton, President
ATTEST:
By: /s/ JAMES W. CONVY
-------------------------
James W. Convy,GAIL A. LEHR
--------------------------------
Gail A. Lehr, Secretary
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149
APPENDIX B
STOCK OPTION AGREEMENT
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.
THIS STOCK OPTION AGREEMENT ("Agreement"), is made and entered into as
of the 29th day of July, 1999, by and between OLD NATIONAL BANCORP ("ONB"), an
Indiana corporation, and ANBMERGER CORPORATION ("ANB"), an Indiana corporation,
W I T N E S S E T H:
WHEREAS, ONB and ANB have entered into an Agreement of Affiliation and
Merger ("Merger Agreement") dated of even date herewith contemporaneously with
the execution of this Agreement. The Merger Agreement provides for, among other
items, the conversion of each issued and outstanding share of common stock of
ANB at the Effective Time (as defined in the Merger Agreement) into the right to
receive one and twenty-five one-hundredths (1.25) shares of common stock of ONB,
as may be adjusted under the Agreement, from ONB; and
WHEREAS, ONB has paid to ANB the sum of One Thousand Dollars ($1,000)
in consideration for the grant of the Option (as hereinafter defined) by ANB to
ONB, which has been granted to further induce ONB to enter into the Merger
Agreement; and
WHEREAS, ONB has advised ANB that the grant by ANB of the Option
pursuant to this Agreement is a condition to ONB agreeing to the terms of the
Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the cash
payment referenced therein, the receipt of which is hereby acknowledged, the
mutual covenants and obligations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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150
Section 1. Grant of Option.
ANB hereby grants to ONB an irrevocable option (the "Option") to
purchase up to 1,083,753 shares ("Option Shares") of common stock of ANB (the
"Common Stock") at a price per Option Share of $27.70 (the "Purchase Price");
provided, however, that this Agreement and the Option shall automatically expire
and be of no further force or effect (i) at the Effective Time (as defined in
the Merger Agreement); (ii) 12 months after the first occurrence of an event set
forth in Section 3 hereof (an "Exercise Event"); and (iii) at the termination of
the Merger Agreement in accordance with the terms thereof prior to the
occurrence of an Exercise Event (provided that if the Merger Agreement is
terminated by ONB pursuant to Section 9.01 of the Merger Agreement, then the
Option shall expire 12 months from the date of termination of the Merger
Agreement and provided further that if ONB is in willful and material breach of
any representation, warranty or covenant in the Merger Agreement then the Option
shall expire immediately).
Section 2. Exercise of Option. Subject to Sections 1 and 3 hereof, the
Option may be exercised by ONB, in whole or in part, at any time, and from time
to time, prior to its expiration pursuant to Section 1 hereof. In the event ONB
wishes to exercise the Option, ONB shall deliver a written notice(s) to ANB
specifying the total number of Option Shares that it will purchase and a place
and date not earlier than ten (10) days and not later than sixty (60) days from
the date of delivery of such notice for the closing ("Closing") of such
purchase; provided, however, that if the approval of any governmental authority
required for purchasing the Option Shares shall not have been obtained prior to
the Closing, the date of the Closing shall be postponed to a date five (5)
business days following receipt of all such required governmental approvals;
provided, further, that ONB, at any time prior to the Closing, may rescind such
notice of intent to purchase the Option Shares and shall not thereafter be
obligated to purchase any or all of the Option Shares.
Section 3. Conditions to Exercise of Option. ONB may exercise the
Option only if any of the following events occurs or has occurred without the
prior written consent of ONB:
(a) The acquisition, following the date of this Agreement, by any
entity, person or group, other than ONB, of beneficial ownership of fifteen
percent (15%) or more (in the aggregate) of the shares of ANB Common Stock or
the capital stock of any Subsidiary (as defined in the Merger Agreement) (for
purposes of this Section 3, the terms "group" and "beneficial ownership" shall
have the same meanings ascribed to them in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the regulations promulgated thereunder),
but only if (i) such entity, person or group has publicly announced its
opposition to the Merger Agreement or the Merger (as defined in the Merger
Agreement) or its intention not to vote the common stock beneficially owned by
the entity, person or group in favor of the
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Merger Agreement or the Merger and has solicited or indicated its intention to
solicit proxies or votes against the Merger Agreement or the Merger; or (ii)
such entity, person or group has proposed, indicated an intention to propose, or
entered into an agreement to effect a merger, consolidation, share exchange or
other combination with ANB or any Subsidiary.
(b) The acceptance by ANB or any Subsidiary of any proposal (however
conditional or future) of, or the execution by ANB or any Subsidiary of any
letter of intent, agreement in principle or other agreement (whether binding or
non-binding) with, any entity, person or group, other than ONB, to (i) acquire
ANB by merger, consolidation, share exchange, combination, purchase of all or
substantially all of ANB's or any of the Subsidiaries' assets or capital stock
or any other similar transaction, or (ii) make a tender or exchange offer for
any shares of ANB Common Stock or the capital stock of any Subsidiary.
Section 4. Payment and Delivery of Certificate(s). At any Closing
hereunder (a) ONB shall pay to ANB the aggregate purchase price for the Option
Shares so purchased by delivery of a cashier's or certified check or other
immediately available funds payable to the order of ANB, and (b) ANB shall
promptly thereafter issue the Option Shares in compliance with all applicable
laws and regulations and deliver to ONB a certificate or certificates
representing Option Shares as purchased, free and clear of all liens, claims,
pledges, security interests, charges and rights of any third parties.
Section 5. Representations, Warranties and Covenants of ANB. ANB
hereby represents, warrants and covenants to ONB as follows:
(a) This Agreement and the consummation by ANB of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action on the part of ANB, have been duly executed and delivered by an
authorized officer of ANB and constitute a valid and binding obligation of ANB.
ANB is an Indiana corporation duly organized and validly existing under the laws
of the State of Indiana and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
(c) ANB has taken all necessary corporate and other action to authorize
and reserve and to permit it to issue the Option Shares pursuant hereto. At all
times from the date hereof until such time as the obligation to deliver the
Option Shares hereunder terminates, ANB will have reserved for issuance upon
exercise of the Option by ONB sufficient shares of common stock of ANB, all of
which, upon issuance pursuant hereto, shall be duly authorized, validly issued,
fully paid and nonassessable, shall be free and clear of all liens, claims,
pledges, security interests, charges and rights of any third parties.
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(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of or be in conflict with, result in acceleration or termination
of or constitute a default under any term or provision of the Articles of
Incorporation or By-Laws of ANB or of any agreement, note, bond, indenture,
instrument, obligation, judgment, decree, order, binding upon or applicable to
ANB or any Subsidiary or any of their respective properties or assets.
(e) Upon any exercise of the Option, whether in whole or in part, the
Option Shares (i) shall be entitled to vote on all matters to come before the
shareholders of ANB at any meeting thereof, (ii) shall be entitled to the same
preferences, limitations and relative voting and other rights (including
dividend and distribution rights) as possessed by all other holders of ANB
Common Stock.
(f) The representations and warranties of ANB contained herein are
true, accurate and complete on and as of the date hereof in all material
respects, shall survive the execution of this Agreement and shall continue to be
true, accurate and complete during the period that the Option may be exercised
by ONB. ANB shall comply with the covenants applicable to it contained herein
from the date of this Agreement through and until such time as the Option
terminates.
Section 6. Representations and Warranties of ONB. ONB hereby
represents and warrants to ANB as follows:
(a) This Agreement and the consummation by ONB of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action on the part of ONB, have been duly executed and delivered by an
authorized officer of ONB and constitute a valid and binding obligation of ONB.
ONB is a corporation duly organized and validly existing under the laws of the
State of Indiana and has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) ONB is purchasing the Option, and any shares of common stock of ANB
issued upon exercise of the Option, for its own account and not with a view to
the public distribution thereof and will not sell, assign or transfer the Option
or any such shares of common stock issued to ONB upon exercise of the Option
except in compliance with all applicable laws and regulations and a legend to
such effect shall be noted on the certificate or certificates representing the
Option Shares issued upon exercise of the Option and stock transfer restrictions
may be given will respond thereto any transfer agent.
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(c) The representations and warranties of ONB contained herein are
true, accurate and complete on and as of the date hereof, shall survive the
execution of this Agreement and shall continue to be true, accurate and complete
during the period that the Option may be exercised by ONB.
Section 7. Certain Rights.
(a) In the event that ONB exercises the Option and desires to sell any
of the Option Shares, and so requests in writing, ANB agrees to use its
reasonable best efforts to assist ONB (at ONB's expense) in complying with all
applicable federal laws relating to such sale and any applicable state laws
(including, without limitation, providing ONB with appropriate information
relating to ANB to be included in no more than one registration statement filed
by ONB), not later than thirty (30) days after ONB requests such assistance,
with respect to that number of the Option Shares beneficially owned by ONB for
which ONB requests such assistance, unless, in the opinion of counsel to ANB
addressed to ONB, which opinion shall be in form and substance reasonably
satisfactory to ONB and its counsel, a registration statement is not required
for the proposed sale or distribution of such Option Shares. All registration
statements and all actions relating to compliance with federal and state law
pursuant to this Section 7(a) shall be completed at ONB's expense except for any
fees and disbursements of counsel for ANB, which shall be paid by ANB.
(b) In addition to the foregoing rights, if at any time after exercise
by ONB of the Option for all of the Option Shares, ANB proposes to offer for
sale for cash in an offering to the general public any of its equity securities,
ANB at such time will provide written notice to ONB of its intention to do so.
Upon written request of ONB, given within fifteen (15) days after the providing
of any such notice to ONB by ANB (which request shall state the intended method
of disposition of such shares), ANB shall cause that number of the Option Shares
as to which ONB identifies in such request to be included in ANB's registration
statement in compliance with all applicable federal and state securities laws.
Such Option Shares so identified by ONB shall be included in ANB's registration
statement proposed to be filed by ANB, unless, in the opinion of counsel to ANB
addressed to ONB, which opinion shall be in form and substance reasonably
satisfactory to ONB and its counsel, inclusion of such shares in such
registration statement is not required for any proposed sale or distribution of
such Option Shares by ONB. All registration statements and all actions relating
to compliance with federal and state law pursuant to this Section 7(b) shall be
completed at ANB's expense except for any fees and disbursements of counsel for
ONB, which shall be paid by ONB. ANB would have the right not to include such
shares if in the reasonable opinion of the underwriters to do so would adversely
affect the proposed offering by ANB.
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Section 8. Adjustment Upon Changes in Capitalization. (a) In the event
of any change in, or distributions in respect of, the Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, issuance of additional shares or
the like (including any stock dividend split-up or subdivision announced prior
to the date hereof but not yet effective), the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of Option Shares that remain subject to the Option shall be increased
so that, after such issuance and together with Option Shares previously issued
pursuant to the exercise of the Option (as adjusted on account of any of the
foregoing changes in the Common Stock), it equals 19.9% of the number of shares
of Common Stock then issued and outstanding. Nothing contained in this Section
8(b) or elsewhere in this Agreement shall be deemed to authorize ANB to breach
any provision of the Merger Agreement.
(b) Whenever the number of Option Shares purchasable upon exercise
hereof is adjusted as provided in this Section 8, the Purchase Price shall be
adjusted by multiplying the Purchase Price by a fraction, the numerator of which
shall be equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
purchasable after the adjustment.
Section 9. Right of Repurchase.
(a) In the event that ONB has purchased any of the Option Shares
pursuant to this Agreement, and ONB so requests in writing, ANB shall repurchase
all the Option Shares held by ONB at a price equal to the highest price paid or
to be paid by any entity, person or group referenced in Section 3 hereof for any
share of ANB Common Stock (or the aggregate consideration paid for the assets of
ANB divided by the number of shares of ANB Common Stock then outstanding), as
the case may be, multiplied by the total number of Option Shares to be redeemed
under this Section 9(a), plus interest at the rate of 8% per annum from the date
of the purchase of the Option Shares through the repurchase contemplated hereby
(the value of any such price or consideration other than cash to be determined,
in the case of consideration with a readily-ascertainable market value, on the
basis of such market value and, in the case of any other consideration, by
mutual agreement of ONB and ANB in good faith less the amount of any dividends
received or to be received on the Option Shares).
(b) In the event that (i) ONB has purchased any of the Option Shares
pursuant to this Agreement and (ii) the Merger Agreement has been duly executed
and delivered but subsequently has been terminated in accordance with the terms
thereof, then ANB shall have the right to purchase, and
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ONB shall be obligated to sell to ANB, for cash, all, but not less than all, of
the Option Shares theretofore purchased by ONB pursuant to this Agreement. If
ANB exercises its right to purchase, the Option Shares so held ANB shall give
written notice of its intention to so exercise its right to ONB within fifteen
(15) days after the event giving rise to such right. The purchase price for each
Option Share held by ONB shall be a cash amount equal to the highest price paid
or to be paid by any entity, person or group referenced in Section 3 hereof for
any share of ANB Common Stock (or the aggregate consideration paid for the
assets of ANB divided by the number of shares of ANB Common Stock then
outstanding), as the case may be, multiplied by the total number of Option
Shares to be redeemed under this Section 9(b), plus interest at the rate of 8%
per annum from the date of the purchase of the Option Shares through the
repurchase contemplated hereby (the value of any such price or consideration
other than cash to be determined, in the case of consideration with a
readily-ascertainable market value, on the basis of such market value and, in
the case of any other consideration, by ONB in good faith).
(c) In lieu of exercising the Option if any of the events specified in
Section 3 hereof shall occur during the period in which ONB is entitled to
exercise the Option, ONB may, upon not less than 90 days written notice, require
ANB to pay to ONB an amount in cash equal to the difference between the highest
price paid or to be paid by any entity, person or group for any share of ANB
Common Stock (or the aggregate consideration paid for the assets of ANB or any
Subsidiary divided by the number of shares of ANB Common Stock then outstanding)
and the Purchase Price, multiplied by the total number of Option Shares to be
redeemed under this Section 9(c) (the value of any such price or consideration
other than cash to be determined, in the case of consideration with a
readily-attainable market value, on the basis of such market value and, in the
case of any other consideration, by determination by ONB in good faith). If ONB
exercises its rights under this Section 9(c), then the rights granted to ONB
under Sections 9(a) and 9(b) hereof and the rights to exercise the Option shall
terminate.
(d) The closing of any of the transactions contemplated by this Section
9 shall be made within ten (10) business days of any request made pursuant to
this Section 9. Payment for the Option Shares shall be made by ANB to ONB at the
closing by delivery of cash or immediately available funds. Any closing pursuant
to this Section 9 may be delayed to a date no later than ten (10) business days
after the receipt of any applicable regulatory clearance, and ANB shall promptly
file any notice or application for such clearance simultaneously with such
closing this Agreement shall terminate.
Section 10. Injunction; Specific Performance. Each of the parties
hereto hereby acknowledges that the other party will suffer irreparable damage
and injury and will not have an adequate remedy at law in the event of any
breach of any of its obligations under this Agreement. Accordingly, in the event
of such a breach or of a threatened or attempted breach, in addition to all
other remedies to which each party hereto is entitled to at law, each party
shall be entitled to a temporary and
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permanent injunction (without the necessity of showing any actual damage) or a
decree of specific performance of the provisions hereof, and no bond or other
security shall be required in that connection. The remedies described in this
Section 10 shall not be exhaustive and shall be in addition to all other
remedies that either party may have at law, in equity or otherwise.
Section 11. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that neither party may assign this Agreement without the prior written
consent of the other party.
(b) This Agreement may be modified, amended or supplemented only by a
written agreement executed by the parties hereto.
(c) All notices, requests and other communications hereunder shall be
in writing and shall be delivered by hand, by certified United States mail
(return receipt requested, first-class postage pre-paid) or by overnight express
receipted delivery service (i) to Old National Bancorp, at 420 Main Street,
Evansville, Indiana 47708, attention: Jeffrey L. Knight, Corporate Secretary and
General Counsel, and (ii) to ANB Corporation, at 120 W. Charles Street, Muncie,
Indiana 47305, attention: James R. Schrecongost, President.
(d) In case any one or more of the provisions contained herein shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein.
(e) This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
(f) The headings in this Agreement have been inserted solely for
convenience and ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana without giving effect to the choice of law
principles thereof.
(h) This Agreement supersedes all other prior understandings,
commitments, representations, negotiations or agreements, whether oral or
written, between the parties hereto relating
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to the matters contemplated by this Agreement and constitutes the entire
agreement between the parties hereto relating to the subject matter hereof.
(i) No waiver by any party hereto of any right or provision of this
Agreement shall be effective unless the same shall be in writing and signed by
the waiving party. The failure in one or more instances of any party to enforce
any term or provision of this Agreement or to exercise any right or remedy shall
not prohibit any subsequent enforcement or exercise thereof or constitute a
waiver of any such term, provision, right or remedy. The waiver by any party
hereto of a breach of or noncompliance with any term, covenant, restriction or
provision of this Agreement shall not operate or be construed as a continuing
waiver or as a waiver of any other or subsequent breach or noncompliance
hereunder.
* * * * * * *
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IN WITNESS WHEREOF, the undersigned have executed, entered into and
delivered this Agreement as of the day and year first above written.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
-------------------------------
Ronald B. Lankford,THOMAS F. CLAYTON
----------------------------------
Thomas F. Clayton, President
ATTEST:
By: /s/ JEFFREY L. KNIGHT
----------------------------------------------------------------------
Jeffrey L. Knight, Corporate Secretary
ANB CORPORATIONA-43
107
PERMANENT BANCORP, INC.
By: /s/ JAMES R. SCHRECONGOST
-------------------------------
James R. Schrecongost, PresidentDONALD P. WEINZAPFEL
--------------------------------
Donald P. Weinzapfel, Chairman
and Chief Executive Officer
ATTEST:
By: /s/ JAMES W. CONVEY
--------------------------------------
James W. Convy,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
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APPENDIX B
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APPENDIX C
__________, 2000December 20, 1999
Board of Directors
ANB Corporation
120 West CharlesPermanent Bancorp, Inc.
101 Southeast Third Street
Muncie, IN 47305
Ladies and Gentlemen:
ANB Corporation ("ANB") and Old National Bancorp ("ONB") have entered
into an Agreement of Affiliation and Merger, dated as of July 29, 1999 (the
"Agreement"), pursuant to which ANB will be merged with and into ONB (the
"Merger"). Upon consummation of the Merger, each share of ANB common stock, par
value $1.00 per share, issued and outstanding immediately prior to the Merger
(the "ANB Shares") will be converted into the right to receive 1.3125 shares
(the "Exchange Ratio") of ONB common stock, no par value (together with the
rights attached thereto issued pursuant to the Rights Agreement, dated as of
March 1, 1990, between ONB and Old National Bank in Evansville, as Rights
Agent). The terms and conditions of the Merger are more fully set forth in the
Agreement.Indiana 47708
Dear Board Members:
You have requested our opinion as to the fairness from a financial point of
view of the Exchange Ratio to the holders of ANB Shares.
Sandler O'Neill & Partners, L.P.,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 its investment banking
business,our specialization in
financial institutions, is regularly engaged in the valuationfinancial valuations and
analyses of financial institutionsbusiness enterprises and
their securities in connection with mergers and
acquisitions, valuations for initial and secondary stock offerings, divestiture
and other corporate transactions. Inpurposes. 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 thisthe 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.
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MATERIALS REVIEWED
In the course of rendering our opinion we have, reviewed, among other things:
(i)(1) Reviewed the terms of the Agreement and exhibits thereto; (ii)discussed the Stock Option Agreement dated aswith
management and the Board of July 29, 1999, byDirectors of the Company, and between ANB and ONB; (iii) certain publicly
availablethe Company's legal
counsel, Silver, Freedman & Taff, P.C.;
(2) Reviewed the following financial data of the Company:
- the audited financial statements of ANBthe 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 historical financialmiscellaneous internally-generated management information
provided by ANB that we deemed relevant; (iv) certainreports 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 statements of ONBdata and other historical financial information provided
by ONB that we deemed relevant; (v) certain internal financial analyses and
forecasts of ANB prepared by and reviewedtrends;
(4) Discussed with executive management of ANB and the views
of senior management of ANB, based on certain limited discussions with certain
members of senior management, regarding ANB's past and currentCompany, the business,
operations, recent financial condition results of operations and future prospects; (vi) certain
internal financial analyses and forecasts of ONB prepared by and reviewed with
management of ONB, (vii) the views of senior management of ONB, based on certain
limited discussions with certain members of senior management, regarding ONB's
past and current business, financial condition,operating results of operations and future
prospects including the pro forma impact of ONB's acquisitions of Sycamore
Agency, Inc., Permanent Bancorp, Inc. and Heritage Financial Services; (viii)
the
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pro forma impact of the Merger; (ix)Company;
(5) Compared the publicly reported historicalCompany'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 for ANB's and ONB'svolume and information on
options to purchase shares of common stock,stock;
(8) Performed such other financial and pricing analyses and investigations
as we deemed necessary, including a comparisoncomparative financial analysis and review of
certain financial and stock market information for ANB and ONB with similar
publicly available information for certain other companies the securities of
which are publicly traded; (x)
the financial terms of recent business
combinations in the commercial banking industry,other pending and completed acquisitions of companies we
consider to be generally similar to the extent publicly
available; (xi)Company;
(9) Examined the current marketCompany's economic operating environment generally and the
bankingcompetitive environment in particular; and (xii) such other information,of the Company's market area;
(10) Reviewed available financial studies,
analyses and investigationsreports and financial economicdata for ONB,
including Annual Reports to shareholders and market criteria asForm 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 considered relevant.
In performing our review, we have assumed and relied upon the accuracy and
completeness of all the financial information analysesprovided to us by the various parties mentioned
above, upon public information and other
information that was publicly available or otherwise furnished to, reviewed by
or discussed with us, and we do not assume any responsibility or liability for
independently verifying the accuracy or completeness thereof. We did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities (contingent or otherwise) of ANB or ONB or
any of their subsidiaries, or the collectibility of any such assets, nor have we
been furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of ANB
or ONB nor have we reviewed any individual credit files relating to ANB and ONB
and, with your permission, we have assumed that the respective allowances for
loan losses for both ANB and ONB are adequate to cover such losses and will be
adequate on a pro forma basis for the combined entity. With respect to the
financial projections reviewed with management, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of the respective future
financial performance of ANB and ONB and that such performances will be
achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in ANB's or ONB's assets, financial condition, results of
operations, business or prospects since the date of the most recent financial
statements made available to us. We have assumed in all respects material to our
analysis that ANB and ONB will remain as going concerns for all periods relevant
to our analyses, that all of theupon representations and warranties contained in the
Agreement, and all related agreements are true and correct, that each partyhave not conducted any independent investigations to verify any
such agreements will perform allinformation or performed any independent appraisal of the covenants required to be performedCompany's or
ONB's assets.
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This fairness opinion is supported by such party under such agreements, that the conditions precedentdetailed information and analysis
contained in the Agreement
are not waivedEvaluation and that the MergerAnalysis Report dated December 20, 1999
("Report"), which has been produced by Capital Resources and will be accounteddelivered
to the Company. We have relied on the Report for aspurposes of rendering this
current fairness opinion.
The Report contains a poolingbusiness description and financial analysis of intereststhe
Company, an analysis of current economic conditions in the Company's primary
market area, and will qualify as a tax-free reorganizationfinancial 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 federal income tax
purposes.
Ourat
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 is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to usthat, as of
December 20, 1999, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the
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161
valueconsideration proposed by ONB for shares of ONB common stock
will be when issued to ANB's shareholders pursuantof the Company is fair to the Agreement or the prices at which ANB's or ONB's common stock will trade at
any time.
We have acted as ANB's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummationshareholders of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for ANB and have received compensation for such
services.
In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to ANB and ONB. We may also
actively trade the debt and equity securities of ANB and ONB for our own account
and for the accounts of our customers and, accordingly, may at any time hold a
long or short position in such securities.
Our opinion is directed to the Board of Directors of ANB in connection
with its consideration of the Merger and does not constitute a recommendation to
any shareholder of ANB as to how such shareholder should vote at any meeting of
shareholders called to consider and vote upon the Merger. Our opinion is not to
be quoted or referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall this opinion be
used for any other purposes, without Sandler O'Neill's prior written consent;
provided, however, that we hereby consent to the inclusion of this opinion as an
appendix to ANB's and ONB's Joint Proxy Statement/Prospectus dated the date
hereof and to the references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair,Company from a financial point
of view, to
the holders of ANB Shares.
Very truly yours,
C - 3view.
Respectfully submitted,
CAPITAL RESOURCES GROUP, INC.
B-3
162111
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation provide that the Registrant will
indemnify any person who is or was a director, officer or employee of the
Registrant or of any other corporation for which he is or was serving in any
capacity at the request of the Registrant against all liability and expense that
may be incurred in connection with any claim, action, suit or proceeding with
respect to which such director, officer or employee is wholly successful or
acted in good faith in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Registrant or such other corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. A director, officer or employee of the Registrant
is entitled to be indemnified as a matter of right with respect to those claims,
actions, suits or proceedings where he has been wholly successful. In all other
cases, such director, officer or employee will be indemnified only if the Board
of Directors of the Registrant or independent legal counsel finds that he has
met the standards of conduct set forth above.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following Exhibits are being filed as part of this Registration
Statement:
2 Agreement of Affiliation and Merger (included as Appendix A to
Prospectus)
3(i) Articles of Incorporation of the Registrant (incorporated by
reference to Registrant's Registration Statement on Form S-3,
File No. 333-87573, dated September 22, 1999)
3(ii) By-Laws of the Registrant (incorporated by reference to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, File No. 333-72117, dated May 14, 1999)
4 (a) the description of Registrant's common stock contained in
its Current Report on Form 8-K, dated January 6, 1983
(incorporated by reference thereto), and (b) the description
of Registrant's Preferred Stock Purchase Rights contained in
Registrant's Form 8-A, dated March 1, 1990, including the
Rights Agreement, dated March 1, 1990, between the Registrant
and Old National Bank in Evansville, as Trustee (incorporated
by reference thereto)
II - 1