As filed with the Securities and Exchange Commission on
August 12, 1996
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
OLD NATIONAL BANCORP
(Exact name of registrant as specified in its charter)
INDIANA 6021 35-1539838
------------------------------- ------------------ -------------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
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.
Corporate Secretary & General Counsel Nicholas J. Chulos, Esq.
Old National Bancorp Krieg DeVault Alexander & Capehart
420 Main Street One Indiana Square, Suite 2800
Evansville, Indiana 47708 Indianapolis, Indiana 46204-2017
(812) 464-1363 (317) 636-4341
(Agent for Service) (Copy to)
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of the proposed sale of the
securities to the public:
As soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate offering registration
to be registered registered per unit (1) price (1) fee
- ---------------------------------------------------------------------------------------------
Common Stock, up to N/A $24,213,493 $8,349.48
no par value 1,181,146 shares
- ---------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration
fee and calculated as of August 5, 1996, in accordance with Rule
457(f)(1) on the basis of the market value of the securities to
be exchanged for the common stock to be issued by the registrant.
------------------------
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
[WORKINGMENS CAPITAL HOLDINGS, INC. LETTERHEAD]
________________, 1996
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of Workingmens Capital Holdings, Inc. ("WCHI"), to
be held at the main office of WCHI located at 121 East Kirkwood
Avenue in Bloomington, Indiana, on __________________, 1996, at
____:____ ___.m., local time.
The purpose of the Special Meeting is to consider and vote
upon the Agreement of Affiliation and Merger ("Agreement"), dated
as of April 8, 1996, by and among Old National Bancorp ("ONB"),
ONB Bank, WCHI and Workingmens Federal Savings Bank ("WFSB").
Under the terms of the Agreement, WCHI will merge with and into
ONB, and each outstanding share of WCHI common stock will be
converted into the right to receive 0.64 shares of ONB common
stock, subject to adjustment as described in the Agreement, a
copy of which is attached to the accompanying Proxy Statement-
Prospectus.
The Board of Directors of WCHI believes that the proposed
affiliation between ONB and WCHI is in the best interests of the
shareholders of WCHI and the customers and employees of WFSB and
the communities which WFSB serves. Your Board of Directors has
unanimously approved the Agreement and recommends that the
shareholders approve it.
Enclosed with this letter are (i) a Notice of Special
Meeting of Shareholders, (ii) a Proxy Statement-Prospectus
containing information about the Special Meeting and the proposed
affiliation, (iii) a proxy card for you to complete, sign, date
and return, and (iv) a postage pre-paid envelope for your use to
return your proxy card to WCHI. We encourage you to read the
enclosed materials carefully and in their entirety.
Whether or not you attend the Special Meeting, your Board of
Directors requests that you complete, sign and date the enclosed
proxy card and return it in the enclosed postage pre-paid
envelope at your earliest convenience prior to the Special
Meeting. If you desire, you may cancel your proxy at any time
before it is voted at the Special Meeting.
Please give this matter your careful consideration.
Sincerely,
Richard R. Haynes
President and Chief Executive Officer
WORKINGMENS CAPITAL HOLDINGS, INC.
121 East Kirkwood Avenue
Bloomington, Indiana 47408
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on _______________, 1996
To Our Shareholders:
Notice is hereby given that, pursuant to the call of the Board of
Directors, the Special Meeting of Shareholders of Workingmens
Capital Holdings, Inc. ("WCHI") will be held on _____________,
1996, at ____:____ __.m., local time, at the main office of WCHI
located at 121 East Kirkwood Avenue in Bloomington, Indiana.
The purposes of the Special Meeting are:
1. Affiliation with Old National Bancorp. To consider and vote
upon the Agreement of Affiliation and Merger, dated as of
April 8, 1996, among Old National Bancorp, Evansville,
Indiana ("ONB"), ONB Bank, WCHI, and Workingmens Federal
Saving Bank. Under the terms of the Agreement, WCHI will
affiliate with ONB and each outstanding share of WCHI common
stock will be converted into the right to receive 0.64
shares of ONB common stock, subject to adjustment, if any,
as described in the accompanying Proxy Statement-Prospectus;
2. Other Business. To transact such other business which may
properly be presented at the Special Meeting or any
adjournment thereof.
Only shareholders of record at the close of business on
__________________, 1996, will be entitled to notice of, and to
vote at, the Special Meeting and any adjournment thereof.
___________________, 1996
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD R. HAYNES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A MAJORITY
OF THE OUTSTANDING SHARES OF WCHI COMMON STOCK
IS REQUIRED FOR APPROVAL OF THE AGREEMENT.
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE MEETING,
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED REVOCABLE PROXY IN THE ENVELOPE PROVIDED.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROSPECTUS
OF
OLD NATIONAL BANCORP
for up to
1,181,146 Shares of Common Stock
(No Par Value)
This Prospectus also constitutes
the Proxy Statement
of
WORKINGMENS CAPITAL HOLDINGS, INC.
for the
Special Meeting of Shareholders
to be held on _________________, 1996
This Proxy Statement-Prospectus ("Proxy Statement")
constitutes the Prospectus of Old National Bancorp ("ONB") with
respect to a maximum of 1,181,146 shares of ONB common stock, no
par value per share ("ONB Common Stock"), being offered to the
shareholders of WCHI in connection with the proposed affiliation
of ONB and WCHI. It also serves as the Proxy Statement of WCHI
in connection with the solicitation of proxies by the Board of
Directors of WCHI for use at the Special Meeting of Shareholders
to be held on ______________, 1996, and at any adjournment
thereof, for the purposes of considering and voting upon (1) a
proposal to approve the Agreement of Affiliation and Merger
("Agreement"), dated as of April 8, 1996, among ONB, ONB Bank,
WCHI and Workingmens Federal Savings Bank ("WFSB"), and (2) any
other business which may properly be presented at the Special
Meeting or any adjournment thereof.
As more fully discussed hereinafter, at the effective time of
the proposed affiliation, WCHI will affiliate with ONB and each
outstanding share of WCHI common stock, no par value per share
("WCHI Common Stock"), will be converted into the right to
receive 0.64 shares of ONB Common Stock ("Exchange Ratio"),
subject to adjustment, if any, in the event of certain changes in
the market price of ONB Common Stock or a recapitalization or
similar transaction involving ONB Common Stock. ONB will pay
cash for any fractional share interests resulting from the
Exchange Ratio. The proposed affiliation is subject to approval
by the holders of at least a majority of the outstanding shares
of WCHI Common Stock, receipt of required regulatory approvals
and certain other conditions set forth in the Agreement attached
hereto as Appendix A.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------------------------
The date of this Proxy Statement is ___________________, 1996.
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE . . . . . . . . . . . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF SELECTED FINANCIAL DATA . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . .
PROPOSED AFFILIATION . . . . . . . . . . . . . . . . . . .
Description of the Affiliation . . . . . . . . . . . .
Background of and Reasons for the Affiliation . . . .
Opinion of Financial Advisor to WCHI . . . . . . . . .
Recommendation of the Board of Directors . . . . . . .
Exchange of WCHI Common Stock . . . . . . . . . . . .
No Dissenters or Appraisal Rights. . . . . . . . . .
Resale of ONB Common Stock by WCHI Affiliates . . . .
Conditions to Consummation . . . . . . . . . . . . . . . .
Termination . . . . . . . . . . . . . . . . . . . . .
Restrictions Affecting WCHI . . . . . . . . . . . . .
Regulatory Approvals . . . . . . . . . . . . . . . . .
Accounting Treatment for the Affiliation . . . . . . .
Effective Time . . . . . . . . . . . . . . . . . . . .
Management, Personnel and Operations After the Affiliation
Interests of Certain Persons in the Affiliation . . .
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . .
Tax Opinion . . . . . . . . . . . . . . . . . . . . .
Tax Consequences to ONB, ONB Bank, WCHI and WFSB . . .
Tax Consequences to WCHI Shareholders . . . . . . . .
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . . . . .
Nature of Trading Market . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . .
Existing and Pro Forma Per Share Information . . . . .
PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION . . . . . . . . . . . . . . . .
DESCRIPTION OF ONB . . . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . .
Acquisition Policy . . . . . . . . . . . . . . . . . .
Incorporation of Certain Information by Reference . .
TABLE OF CONTENTS
(continued)
PAGE
DESCRIPTION OF WCHI . . . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . .
Transactions with Certain Related Persons . . . . . .
Incorporation of Certain Information by Reference . .
REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . .
Regulation of ONB and Affiliates . . . . . . . . . . .
Regulation of WCHI . . . . . . . . . . . . . . . . . .
Regulation of WFSB . . . . . . . . . . . . . . . . . .
Capital Adequacy Guidelines . . . . . . . . . . . . .
Branching and Acquisitions . . . . . . . . . . . . . .
Interstate Banking . . . . . . . . . . . . . . . . . .
FDICIA . . . . . . . . . . . . . . . . . . . . . . . .
Deposit Insurance . . . . . . . . . . . . . . . . . .
Additional Matters . . . . . . . . . . . . . . . . . .
COMPARISON OF COMMON STOCK . . . . . . . . . . . . . . . .
Authorized But Unissued Shares . . . . . . . . . . . .
Preemptive Rights . . . . . . . . . . . . . . . . . .
Dividend Rights . . . . . . . . . . . . . . . . . . .
Voting Rights . . . . . . . . . . . . . . . . . . . .
Dissenters' Rights . . . . . . . . . . . . . . . . . .
Liquidation Rights . . . . . . . . . . . . . . . . . .
Assessment and Redemption . . . . . . . . . . . . . .
Anti-Takeover Provisions . . . . . . . . . . . . . . .
Director Liability . . . . . . . . . . . . . . . . . .
Director Nominations . . . . . . . . . . . . . . . . .
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . .
APPENDICES:
A. Agreement of Affiliation and Merger . . . . . . . A-1
B. Fairness Opinion of Trident Financial
Corporation, Inc. . . . . . . . . . . . . . . . . B-1
AVAILABLE INFORMATION
ONB and WCHI are subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"),
and in accordance therewith ONB and WCHI file reports, proxy
statements and other information with the Securities and Exchange
Commission ("SEC"). Such reports, proxy statements and other
information filed by ONB and WCHI may be inspected and copied at
prescribed rates at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and may also be inspected and copied at prescribed
rates at the SEC's regional offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and at Northwestern
Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 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. ONB Common Stock is quoted on the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System and WCHI Common Stock is quoted on the
NASDAQ National Market System. Reports, proxy statements and
other information concerning ONB and WCHI are also 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.
ONB has filed with the SEC a Registration Statement on Form
S-4 under the Securities Act of 1933, as amended ("Securities
Act"), with respect to the shares of ONB Common Stock to be
issued in connection with the affiliation with WCHI. This Proxy
Statement 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.
All information contained in this Proxy Statement with
respect to WCHI has been supplied by WCHI, and all information
contained in this Proxy Statement with respect to ONB has been
supplied by ONB.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
(EXCLUDING UNINCORPORATED EXHIBITS) ARE AVAILABLE WITHOUT CHARGE
TO EACH PERSON (INCLUDING ANY BENEFICIAL OWNER) TO WHOM THIS
PROXY STATEMENT IS DELIVERED UPON WRITTEN OR ORAL REQUEST.
DOCUMENTS RELATING TO ONB MAY BE REQUESTED FROM, JEFFREY L.
KNIGHT, CORPORATE SECRETARY AND GENERAL COUNSEL, OLD NATIONAL
BANCORP, 420 MAIN STREET, P.O. BOX 718, EVANSVILLE, INDIANA
47705, (812) 464-1363. DOCUMENTS RELATING TO WCHI MAY BE
REQUESTED FROM RICHARD R. HAYNES, PRESIDENT, WORKINGMENS CAPITAL
HOLDINGS, INC., 121 EAST KIRKWOOD AVENUE, P.O. BOX 2689,
BLOOMINGTON, INDIANA 47402, (812) 332-9465. IN ORDER TO ASSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY
____________________, 1996.
-i-
The following documents previously filed by ONB (SEC File
No. 0-10888) and WCHI (SEC File No. 0-18469) with the SEC
pursuant to the Exchange Act are incorporated herein by
reference:
1. ONB's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
2. ONB's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
3. ONB's Annual Report to Shareholders for the fiscal year
ended December 31, 1995.
4. The description of ONB's common stock contained in ONB's
Current Report on Form 8-K, dated January 6, 1983, and the
description of ONB's Preferred Stock Purchase Rights
contained in ONB's Form 8-A, dated March 1, 1990, including
the Rights Agreement, dated March 1, 1990, between the
Registrant and Old National Bank, as Trustee.
5. WCHI's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
6. The following information under the captions contained in
the specified pages of WCHI's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995: (a) "Business" on
pages 1 to 29, (b) "Legal Proceedings" on page 29, (c)
"Properties" on page 29; and "Security Ownership of Certain
Beneficial Owners and Management" on page 31.
7. The following information contained in the specified pages
of WCHI's Annual Report for its fiscal year ended December
31, 1995: (a) audited consolidated financial statements of
WCHI, the notes thereto and the Independent Auditor's Report
on pages 13 to 29, (b) Common Stock Data on pages 3 and 12
(under the captions, "Selected Consolidated Financial Data
of Workingmens Capital Holdings, Inc. and Subsidiary" and
"Workingmens Capital Holdings, Inc. Quarterly Results of
Operations"), (c) Selected Consolidated Financial Data of
Workingmens Capital Holdings, Inc. and Subsidiary on page 3,
and (d) Management's Discussion and Analysis of Financial
Condition and Results of Operations on pages 4 through 11.
All documents subsequently filed by ONB pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the date
on which the Special Meeting is held shall be deemed to be
incorporated by reference into this Proxy Statement and to be a
part hereof from the date of filing such documents.
Copies of the Annual Report of WCHI for its fiscal year
ended December 31, 1995 and its Form 10-Q for the fiscal quarter
ended June 30, 1996 accompany this Proxy Statement and are
incorporated herein by reference as specified above.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Proxy Statement 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 Proxy Statement.
ANY STATEMENTS CONTAINED IN THIS PROXY STATEMENT INVOLVING
MATTERS OF OPINION, WHETHER OR NOT SO STATED, ARE INTENDED AS
SUCH AND NOT AS REPRESENTATIONS OF FACT. NO PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN
THOSE CONTAINED IN THIS PROXY STATEMENT, AND IF GIVEN OR MADE,SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY OF
THE SECURITIES OFFERED BY THIS PROXY STATEMENT, NOR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF
AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION OF THE
SECURITIES COVERED HEREBY AT ANY TIME SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF ONB OR WCHI SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROXY STATEMENT.
-ii-
SUMMARY
The following is a brief summary of certain information
contained elsewhere herein and was prepared to assist WCHI
shareholders in their review of the Proxy Statement. This
summary does not purport to be complete and is qualified in all
respects by reference to the full text of this Proxy Statement
and the appendices hereto.
THE SPECIAL MEETING:
Date, Time and Place of _______________, 1996, at ____:____
Special Meeting __.m., local time, at the main office
of WCHI, located at 121 East Kirkwood
Avenue in Bloomington, Indiana.
Purpose of Special Meeting To consider and vote upon the Agreement,
under the terms of which WCHI will merge
with and into ONB. A copy of the
Agreement, which is incorporated herein
by reference, is attached to this Proxy
Statement as Appendix A. See "NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS" and
"GENERAL INFORMATION."
Required Shareholder Vote The affirmative vote, in person or by
on Agreement proxy, of the holders of at least a
majority of the issued and outstanding
shares of WCHI Common Stock is required
for approval of the Agreement. As of
_______________, 1996, members of the
Board of Directors and executive
officers of WCHI beneficially owned in
the aggregate, directly and indirectly,
approximately _________% of the
outstanding shares of WCHI Common Stock,
including shares subject to options
which may be exercised before or
following the Affiliation (as
hereinafter defined). It is expected
that the shares held by members of the
Board of Directors and executive
officers of WCHI will be voted in favor
of the Agreement. See "GENERAL
INFORMATION," "PROPOSED AFFILIATION --
Conditions to Consummation." The
approval of the Agreement by the
shareholders of ONB is not required.
Shares Outstanding and As of _______________, 1996, there were
Entitled to Vote ___________ shares of WCHI Common Stock
issued and outstanding. Shareholders of
WCHI of record at the close of business
on _______________, 1996, are entitled
to notice of, and to vote at, the
Special Meeting. See "GENERAL
INFORMATION."
Revocable Proxies Proxies are revocable at any time before
they are exercised by means of a later
dated proxy delivered to WCHI, by
written notice delivered to the
Secretary of WCHI or in person at the
Special Meeting. See "GENERAL
INFORMATION."
-iii-
THE PARTIES TO THE
AFFILIATION:
As the largest independent bank holding
Old National Bancorp company headquartered in the State of
420 Main Street Indiana, ONB owns and operates 25
Evansville, Indiana 47708 affiliate banks with 120 offices located
(812) 464-1434 in the three state area of Indiana,
Illinois and Kentucky. As of June 30,
1996, ONB had total assets of
approximately $4.93 billion and its
ratio of total capital to risk-adjusted
assets was 15.18%. This capital ratio
is well in excess of applicable
regulatory requirements. See
"DESCRIPTION OF ONB."
ONB is currently analyzing a number of
potential acquisitions. See
"DESCRIPTION OF ONB -- Acquisition
Policy."
Workingmens Capital WCHI is an Indiana corporation operating
Holdings, Inc. as a savings and loan holding company.
121 East Kirkwood Avenue It directly owns one operating
Bloomington, Indiana 47408 subsidiary, WFSB, a federally chartered
(812) 332-9465 savings bank. As of June 30, 1996, WCHI
had total assets of approximately $208.2
million and its ratio of total capital
to risk-adjusted assets was 21.6%. WFSB
owns one corporation, Realty Investment
Service Corporation ("RISC"). RISC's
sole business is the marketing of tax-
deferred annuities as agent for WFSB's
customers. See "DESCRIPTION OF WCHI."
THE AFFILIATION:
Description of the Under the Agreement, the affiliation
Affiliation ("Affiliation") between WCHI and ONB
involves the merger of WCHI with and
into ONB ("Company Merger") and,
followed immediately thereafter, the
merger of WFSB with and into ONB Bank
("Thrift Merger"), with ONB and ONB Bank
as the surviving entities in such
mergers. ONB Bank's name will be
changed to Workingmens/ONB Bank at the
effective time of the Affiliation.
Exchange of WCHI At the effective time of the
Common Stock Affiliation, each outstanding share of
WCHI Common Stock will be converted into
the right to receive 0.64 shares of ONB
Common Stock, subject to adjustment, if
any, in the event of certain changes in
the market price of ONB Common Stock or
a recapitalization or similar
transaction involving ONB Common Stock.
No fractional shares will be issued and
ONB will pay cash for any fractional
share interests resulting from the
Exchange Ratio. Options to acquire
shares of WCHI Common Stock will, by the
-iv-
terms of the Agreement, be converted
into options to acquire shares of ONB
Common Stock following consummation of
the Affiliation. The price at which ONB
Common Stock traded on _______________,
1996, as reported by the NASDAQ National
Market System, was $________ per share.
See "PROPOSED AFFILIATION -- Exchange of
WCHI Common Stock."
Reasons for the After careful review and consideration,
Affiliation WCHI's Board of Directors has determined
that the terms of the Affiliation are
fair to, and in the best interest of,
WCHI and its shareholders. WCHI's Board
believes that the Affiliation will
provide significant value to all WCHI
shareholders and, at the same time,
enable holders of WCHI Common Stock to
participate in the expanded
opportunities for growth that the
Affiliation will make possible. WCHI's
Board also determined that the
Affiliation would have a positive, long-
term impact on the customers and
employees of WFSB and the communities it
serves. See "PROPOSED AFFILIATION --
Background of and Reasons for the
Affiliation."
Opinion of WCHI's WCHI has retained Trident Financial
Financial Advisor Corporation ("Trident") as its financial
advisor in the Affiliation. Trident
rendered its preliminary written opinion
to the Board of Directors of WCHI on
April 8, 1996, that as of the date of
such opinion, the Exchange Ratio was
fair, from a financial point of view, to
the holders of WCHI Common Stock. The
opinion was updated and confirmed on
_________________, 1996, a copy of such
opinion is attached hereto as Appendix B
and should be read in its entirety with
respect to the assumptions made and
limitations on reviews undertaken by
Trident, and other matters regarding the
opinion. See "PROPOSED AFFILIATION --
Opinion of Financial Advisor to WCHI."
Recommendation of the The Board of Directors of WCHI has
Board of Directors of unanimously approved the Agreement and
WCHI recommends that WCHI shareholders
approve the Agreement. See "PROPOSED
AFFILIATION -- "Background of and
Reasons for the Affiliation" and
"Recommendation of the Board of
Directors."
Conditions to the Consummation of the Affiliation is
Affiliation subject to certain conditions which
include, among others, (1) approval of
the Agreement by the affirmative vote of
the holders of at least a majority of
the outstanding shares of WCHI Common
Stock, (2) receipt of regulatory
approvals for the Affiliation, and
(3) receipt of an opinion of counsel
with respect to certain federal income
tax matters. See "PROPOSED
AFFILIATION -- Conditions to
Consummation."
-v-
Termination of the The Agreement may be terminated before
Affiliation the Affiliation becomes effective upon
the occurrence of certain events which
include, among others, (1) a
misrepresentation or breach of any
representation or warranty set forth in
the Agreement by ONB or WCHI, which
would result in material adverse change
in ONB, WCHI or WFSB or RISC on a
consolidated basis with WCHI, (2) a
breach of or failure to comply with any
covenant or mutual agreement set forth
in the Agreement by ONB or WCHI, (3) the
commencement or threat of certain
claims, proceedings or litigation, (4) a
material adverse change in any of ONB,
WCHI or WFSB or RISC on a consolidated
basis with WCHI since December 31, 1995,
and (5) the Affiliation not having been
consummated by March 31, 1997. The
parties may also mutually agree to
terminate the Agreement. See "PROPOSED
AFFILIATION -- Termination."
Effective Time of ONB and WCHI anticipate that the
the Affiliation will be completed in the
Affiliation third or fourth calendar quarter of
1996. See "PROPOSED AFFILIATION --
Effective Time."
Management, ONB will be the surviving corporation in
Personnel the Company Merger and, upon
and Operations After consummation thereof, WCHI's separate
the Affiliation corporate existence will cease. ONB
Bank will be the surviving institution
in the Thrift Merger under the name
"Workingmens/ONB Bank" and, upon
consummation thereof, WFSB's separate
corporate existence will cease. The
Directors of ONB serving at the
effective time of the Affiliation will
serve as Directors of ONB following the
effective time of the Affiliation until
otherwise determined by the shareholders
of ONB. The officers of ONB serving at
the effective time will continue to
serve in their respective capacities
until otherwise determined by the Board
of Directors of ONB. The Board of
Directors of ONB Bank following
consummation of the Affiliation will
consist of the members of the Boards of
Directors of WFSB and ONB Bank serving
at the effective time, plus four (4) new
directors to be elected either prior to
or following consummation of the
Affiliation. Richard R. Haynes,
President and Chief Executive Officer of
WFSB, will serve as President and Chief
Executive Officer of ONB Bank following
consummation of the Affiliation. Robert
A. Shaffer, Chairman of WFSB, will serve
as Chairman of ONB Bank following
consummation of the Affiliation.
Following the Affiliation, employees of
WFSB will receive benefits in accordance
with the current policies and employee
benefit plans of ONB, subject to the
continuation of certain of WCHI plans
through December 31st of the year in
which the consummation of the
-vi-
Affiliation occurs. See "PROPOSED
AFFILIATION -- Description of the
Affiliation" and "Management, Personnel
and Operations After the Affiliation."
Federal Income Tax ONB and WCHI will receive an opinion of
Consequences to WCHI counsel prior to or as of the effective
Shareholders time which states that, in general, WCHI
shareholders who receive solely ONB
Common Stock in exchange for their
shares of WCHI Common Stock will not
recognize gain or loss as a result of
such share exchange. Shareholders are
urged to consult with their tax advisors
with respect to the tax consequences of
the Affiliation to them. See "FEDERAL
INCOME TAX CONSEQUENCES."
No Dissenters' Shareholders of WCHI have no dissenters'
Rights or appraisal rights in connection with
the Affiliation under state law
applicable to WCHI. See "PROPOSED
AFFILIATION -- No Dissenters' or
Appraisal Rights."
Interests of Certain Certain members of management and the
Persons Board of Directors of WCHI have
in the Affiliation interests in the Affiliation that are in
addition to those of WCHI shareholders
generally. See "PROPOSED AFFILIATION --
Interests of Certain Persons in the
Affiliation."
Resale of ONB Certain resale restrictions apply to the
Common Stock sale or transfer of shares of ONB Common
Stock issued to directors and executive
officers and any other affiliates of
WCHI in exchange for their shares of
WCHI Common Stock. See "PROPOSED
AFFILIATION -- Resale of ONB Common
Stock by WCHI Affiliates."
Comparative The current rights of shareholders of
Shareholder ONB and shareholders of WCHI differ in a
Rights number of respects. Upon consummation
of the Affiliation, WCHI shareholders
who receive ONB Common Stock will take
such stock subject to its terms and
conditions. The Articles of
Incorporation of ONB contain certain
anti-takeover measures which may
discourage or render more difficult a
subsequent takeover of ONB by another
corporation. Further, ONB has adopted a
shareholder rights plan which may have a
similar effect. See "COMPARISON OF
COMMON STOCK."
Trading Market for Shares of ONB Common Stock are traded on
Common Stock the NASDAQ National Market System. The
closing price of ONB Common Stock as
reported by the NASDAQ National Market
System was $33.25 per share on April 8,
1996, the business day before the
Affiliation was publicly announced, and
was $________ per share on
_______________, 1996.
-vii-
Shares of WCHI Common Stock are traded
in the over-the-counter market and are
listed on the NASDAQ National Market
System. The high and low bid prices of
WCHI Common Stock as reported by NASDAQ
were:
- $16.25 per share on April 8, 1996,
the day before the Affiliation was
publicly announced, and
- $______ and $______ per share on
_____________, 1996.
Assuming the Affiliation had been
consummated on ______________, 1996,
WCHI shareholders entitled to receive
ONB Common Stock would have received, in
exchange for all of the shares of WCHI
Common Stock (including shares subject
to options), ________ shares of ONB
Common Stock having an aggregate market
value of approximately $________
million, which represents $________ per
share of WCHI Common Stock (including
cash received in lieu of any fractional
share interest). See "COMPARATIVE PER
SHARE DATA."
-viii-
SUMMARY OF SELECTED FINANCIAL DATA -- ONB
(Unaudited -- Dollars in thousands except per share data)
The following summary sets forth selected consolidated financial
information relating to ONB, giving effect to the consummated affiliation with
The National Bank of Carmi, Carmi, Illinois, which occurred on May 31, 1996.
This information should be read in conjunction with the financial statements
and notes incorporated herein by reference. In the opinion of ONB's
management, the consolidated interim financial information and summaries of
interim selected financial data contain all of the normal and recurring
adjustments necessary to present fairly the financial position of ONB.
Twelve Months ended December 31,
Results of Operations 1995 1994 1993 1992 1991
--------------------- ---- ---- ---- ---- ----
(Taxable equivalent basis)
Interest income $373,205 $329,297 $323,177 $337,396 $374,540
Interest expense 176,293 137,561 136,170 158,177 208,118
-------- -------- -------- -------- --------
Net interest income 196,912 191,736 187,007 179,219 166,422
Provision for loan losses 7,057 7,682 10,275 11,871 11,885
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 189,855 184,054 176,732 167,348 154,537
Noninterest income 39,435 35,023 33,780 29,343 26,715
Noninterest expense 144,540 144,634 132,598 121,037 115,474
-------- -------- -------- -------- --------
Income before income taxes 84,750 74,443 77,914 75,654 65,778
Income taxes 32,592 27,259 29,061 28,784 24,522
-------- -------- -------- -------- --------
Net income $ 52,158 $ 47,184 $ 48,853 $ 46,870 $ 41,256
======== ======== ======== ======== ========
Year-End Balances
-----------------
Total assets $4,888,686 $4,709,450 $4,558,596 $4,255,078 $4,215,787
Total loans--net of 3,071,760 2,922,302 2,645,985 2,456,661 2,429,431
Total deposits 4,029,587 3,725,512 3,755,725 3,583,842 3,494,128
Shareholders' equity 436,109 416,704 412,263 383,994 360,803
Per Share Data (1)
------------------
Net income - primary $ 2.02 $ 1.78 $ 1.84 $ 1.77 $ 1.54
Net income - fully diluted 1.98 1.74 1.80 1.70 1.50
Cash dividends paid 0.88 0.84 0.72 0.69 0.66
Book value at year-end 17.41 16.11 15.62 14.42 13.56
Selected Performance Ratios (based on averages)
-----------------------------------------------
Return on assets 1.10% 1.03% 1.10% 1.11% 1.00%
Return on equity (3) 12.38 11.18 12.37 12.70 11.95
Equity to assets 8.85 9.22 8.88 8.74 8.39
Primary capital to assets 9.75 10.16 9.76 9.60 9.19
Net charge-offs to average 0.27 0.30 0.27 0.33 0.40
Allowance for loan losses to average 1.42 1.56 1.55 1.48 1.36
(1) Restated for all stock dividends and stock splits.
(2) Assumes the conversion of ONB's subordinated debentures.
(3) Excludes unrealized gains (losses) on Investment securities.
-ix-
SUMMARY OF SELECTED FINANCIAL DATA -- ONB (continued)
(Unaudited -- Dollars in thousands except per share data)
Six Months ended June 30,
-------------------------
Results of Operations 1996 1995
--------------------- ---- ----
(Taxable equivalent basis)
Interest income $191,485 $181,871
Interest expense 88,529 84,684
-------- --------
Net interest income 102,956 97,187
Provision for loan losses 4,063 2,402
-------- --------
Net interest income after
provision for loan losses 98,893 94,785
Noninterest income 21,313 19,362
Noninterest expense 71,769 72,417
-------- --------
Income before income taxes 48,437 41,730
Income taxes 19,350 15,626
-------- --------
Net income $ 29,087 $ 26,104
======== ========
Period-End Balances
Total assets $4,930,136 $4,745,068
Total loans--net of unearned 3,190,348 3,018,770
Total deposits 3,978,261 3,846,991
Shareholders' equity 421,874 423,096
Per Share Data (1)
Net income - primary $ 1.15 $ 1.00
Net income - fully diluted (2) 1.12 0.98
Cash dividends paid 0.46 0.44
Book value at period-end 16.94 16.44
Selected Performance Ratios
(based on averages)
Return on assets 1.20% 1.11%
Return on equity (3) 13.67 12.36
Equity to assets 8.90 8.88
Primary capital to assets 9.75 9.78
Net charge-offs to average 0.13 0.07
Allowance for loan losses to 1.37 1.46
(1) Restated for all stock dividends and stock splits.
(2) Assumes the conversion of ONB's subordinated debentures.
(3) Excludes unrealized gains (losses) on investment
-x-
SUMMARY OF SELECTED FINANCIAL DATA -- WCHI
(Unaudited -- Dollars in Thousands except per share data)
The following summary sets forth selected consolidated financial
information relating to WCHI. This information should be read in conjunction
with the financial statements and notes incorporated herein by reference. In
the opinion of WCHI's management, the consolidated interim financial
information and summaries of interim selected financial data contain all of
the normal and recurring adjustments necessary to present fairly the financial
position of WCHI.
Twelve Months ended
------------------------------------------------
Results of Operations 1995 1994 1993 1992 1991
--------------------- ---- ---- ---- ---- ----
(Taxable equivalent basis)
Interest income $ 16,000 $ 14,088 $ 13,713 $ 14,008 $ 15,317
Interest expense 10,231 8,596 8,257 8,814 10,218
-------- -------- -------- -------- --------
Net interest income 5,769 5,492 5,456 5,194 5,099
Provision for loan losses 78 72 84 48 39
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 5,691 5,420 5,372 5,146 5,060
Noninterest income 242 180 213 142 121
Noninterest expense 2,761 2,650 2,488 2,414 2,342
-------- -------- -------- -------- --------
Income before income taxes 3,172 2,950 3,097 2,874 2,839
Income taxes 1,209 1,126 1,207 1,129 1,108
-------- -------- -------- -------- --------
Net income $ 1,963 $ 1,824 $ 1,890 $ 1,745 $ 1,731
======== ======== ======== ======== ========
Year-End Balances
-----------------
Total assets $213,254 $204,523 $189,516 $179,082 $169,893
Total loans -
net of unearned income 189,661 181,269 164,278 149,762 141,382
Total deposits 152,141 149,353 143,242 139,197 135,909
Shareholders' equity 25,684 24,152 23,323 22,143 20,857
Per Share Data
--------------
Net income - primary $ 1.11 $ 1.03 $ 1.05 $ 0.97 $ 0.96
Net income - fully diluted 1.11 1.03 1.05 0.97 0.96
Cash dividends paid 0.33 0.29 0.265 0.245 0.21
Book value at year-end 14.45 13.67 13.02 12.25 11.61
Selected Performance Ratios
---------------------------
(based on averages)
Return on assets 0.94% 0.92% 1.01% 1.01% 1.06%
Return on equity 7.85% 7.70% 8.27% 8.07% 8.49%
Equity to assets 12.00% 11.97% 12.23% 12.52% 12.47%
Net charge-offs to
average loans * * 0.02% 0.01% 0.01%
Allowance for loan losses to
average loans 0.18% 0.14% 0.11% 0.10% 0.07%
* Less than 0.01%
-xi-
SUMMARY OF SELECTED FINANCIAL DATA - WCHI (continued)
(Unaudited -- Dollars in thousands except per share data)
Six Months ended June
---------------------
Results of Operations 1996 1995
--------------------- ---- ----
(Taxable equivalent basis)
Interest income $ 8,084 $ 7,865
Interest expense 5,201 4,926
-------- --------
Net interest income 2,883 2,939
Provision for loan losses 42 36
-------- --------
Net interest income after provision
for loan losses 2,841 2,903
-------- --------
Noninterest income 157 131
Noninterest expense 1,525 1,385
-------- --------
Income before income taxes 1,473 1,649
Income taxes 610 639
-------- --------
Net income $ 863 $ 1,010
======== ========
Period-End Balances
Total assets $208,203 $209,713
Total loans - net of unearned income 183,401 184,148
Total deposits 149,721 154,637
Shareholders' equity 26,459 24,955
Per Share Data
Net income - primary $ 0.48 $ 0.57
Net income - fully diluted 0.47 0.56
Cash dividends paid 0.18 0.16
Book value at period-end 14.63 14.12
Selected Performance Ratios
(based on averages)
Return on assets 0.82% 0.98%
Return on equity 6.60% 8.20%
Equity to assets 12.71% 11.72%
Net charge-offs to average loans * *
Allowance for loan losses to average 0.20% 0.16%
* Less than 0.01%
-xii-
PROSPECTUS PROXY STATEMENT
OF OF
OLD NATIONAL BANCORP WORKINGMENS CAPITAL
HOLDINGS, INC.
----------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS OF
WORKINGMENS CAPITAL HOLDINGS, INC.
TO BE HELD ON _________________, 1996
----------------------------------------------
GENERAL INFORMATION
This Proxy Statement is being furnished to the shareholders of WCHI in
connection with the solicitation by the Board of Directors of WCHI of proxies
for use at the Special Meeting of Shareholders, to be held on _______________,
1996, at ____:____ __.m., local time, at the main office of the WCHI located
at 121 East Kirkwood Avenue in Bloomington, Indiana. This Proxy Statement is
first being mailed to WCHI shareholders on ________________, 1996.
The purposes of the Special Meeting of Shareholders are to (1) consider and
vote upon the Agreement, under the terms of which WCHI will merge with and
into ONB and each outstanding share of WCHI Common Stock will be converted
into the right to receive 0.64 shares of ONB Common Stock, subject to
adjustment, if any, as described hereinafter, and (2) transact such other
business which may properly be presented at the Special Meeting or any
adjournment thereof.
Only holders of WCHI Common Stock of record at the close of business on
_______________, 1996 ("Record Date") are entitled to notice of, and to vote
at, the Special Meeting. There were ____________ shares of WCHI Common Stock
outstanding on the Record Date, which were held of record by approximately
______ shareholders. A majority of outstanding shares of Common Stock of WCHI
entitled to vote, represented in person or by proxy, at the Special Meeting is
necessary for a quorum. Shareholders who abstain, cast broker non-votes or
withhold authority to vote on the Agreement will be deemed present at the
Special Meeting for purposes of determining whether a quorum is present.
The affirmative vote of the holders of at least a majority of the
outstanding shares of WCHI Common Stock is required for approval of the
Agreement, for which matter each share of WCHI Common Stock is entitled to one
vote. In this regard, it is expected that the members of the Board of
Directors and executive officers of WCHI will vote all of their shares of WCHI
Common Stock in favor of the Agreement. As of ____________, 1996, they held
________ shares of WCHI Common Stock as a group, including shares subject to
options which may be exercised before or following the Affiliation, which
represents approximately ________% of the outstanding shares of WCHI Common
Stock.
The cost of soliciting proxies will be borne by WCHI. In addition to use
of the mails, proxies may be solicited personally or by telephone or telegraph
by directors, officers and certain employees of WCHI, none of whom will be
specially compensated for such soliciting.
The shares represented by proxies properly signed and returned will be
voted at the Special Meeting as instructed by the shareholders of WCHI giving
the proxies. In the absence of specific instructions to the contrary, proxies
will be voted FOR approval of the Agreement described in this Proxy Statement
and in accordance with the recommendation of the Board of Directors of WCHI
with respect to any other matter which may properly be presented at the
Special Meeting.
Any shareholder giving a proxy has the right to revoke it at
any time before it is exercised. Therefore, execution of a proxy
will not affect a shareholder's right to vote in person if he or
she attends the Special Meeting. Revocation may be made by a
later dated proxy delivered to WCHI, by written notice delivered
to the Secretary of WCHI prior to the Special Meeting, or by
written notice delivereproxy is exercised.
PROPOSED AFFILIATION
At the Special Meeting, shareholders of WCHI will consider and vote upon
the Agreement, certain features of which are summarized below. The following
summary of certain aspects of the Agreement does not purport to be a complete
description of the terms and conditions of the Agreement and is qualified in
its entirety by reference to the Agreement, which is attached to this Proxy
Statement as Appendix A and is incorporated herein by reference.
DESCRIPTION OF THE AFFILIATION
Under the terms of the Agreement, WCHI will affiliate with ONB through a
statutory merger of WCHI with and into ONB under the laws of the State of
Indiana and, immediately thereafter, WFSB will merge with and into ONB Bank
under the laws of the United Sates of America. ONB will be the surviving
corporation in the Company Merger and, at the effective time of the Company
Merger, the separate corporate existence of WCHI will cease. ONB Bank will be
the surviving institution in the Thrift Merger under the name "Workingmens
Bank" and, at the effective time of the Thrift Merger, the separate corporate
existence of WFSB will cease.
As of June 30, 1996, WCHI had consolidated assets of $208.2 million,
consolidated deposits of $149.7 million, consolidated shareholders' equity of
$26.5 million and consolidated net earnings for the six month period then
ended of $863,000. Based upon the pro forma financial information included
elsewhere in this Proxy Statement and assuming that the Affiliation had been
consummated on June 30, 1996, WCHI represented as of such date 4.22% of the
consolidated assets of ONB, 3.76% of its consolidated deposits, 6.28% of its
consolidated shareholders' equity and, for the six month period ended June 30,
1996, 2.97% of its consolidated net income. See "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION."
BACKGROUND OF AND REASONS FOR THE AFFILIATION
Until 1985 Indiana banking laws prohibited banks located in Indiana from
expanding outside of their home counties. Moreover, until 1989 federal law
prohibited affiliations between healthy savings and loan associations and
banks or bank holding companies. The changes since that time have been swift,
first permitting in-state acquisitions of banks by bank holding companies,
then permitting regional interstate acquisitions, and currently permitting
-2-
virtual nationwide expansion opportunities, including cross-industry
acquisitions. 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 financial institution services. Compounded by
the significant increase in regulatory burdens over the past decade, these
competitive factors have created an environment in which it is increasingly
difficult for community organizations such as WCHI to achieve the economies of
scale necessary to compete effectively.
After an evaluation of the competitive and regulatory factors described
above and other financial, legal, economic and market considerations, WCHI
engaged Trident in November of 1995, to perform a financial analysis and
valuation of WCHI and to advise WCHI on its strategic alternatives. On
January 11, 1996, Trident advised the Board of Directors of WCHI that WCHI had
a value per share of between $17.00 and $21.00, and discussed with WCHI
potential acquirors to approach regarding a merger or other affiliation. The
Board decided to authorize Trident to contact ONB initially, because of ONB's
recent acquisition of another thrift in Bloomington, Indiana and the fact
that ONB had approached WCHI on several occasions regarding a possible
combination. In January and February, 1996, after ONB signed a
confidentiality agreement, ONB was provided information concerning WCHI and
performed certain due diligence investigations of WCHI and its operations. On
February 26, 1996, ONB provided WCHI with a proposal for an affiliation with
ONB. ONB was advised that the proposal was inadequate and on March 13, 1996,
ONB provided WCHI with a revised proposal. This proposal was above the high
end of the WCHI valuation range which had previously been provided by Trident
to WCHI. Ancluded that this revised proposal was in the best interests of
WCHI, its shareholders, customers, and employees. As a result, the directors
authorized Trident and its legal counsel to proceed with negotiations on
behalf of WCHI for a definitive agreement with ONB. On March 29, 1996, the
Board of Directors of WCHI met to discuss the status of those negotiations and
a draft of the definitive agreement.
On April 8, 1996, the Agreement was approved by both parties and a press
release regarding the execution of the Agreement was issued that evening. At
the April 8, 1996 meeting of the WCHI Board of Directors, Trident rendered its
preliminary written opinion to the Board to the effect that, as of such date,
the Exchange Ratio pursuant to the Affiliation was fair, from a financial
point of view, to the holders of WCHI Common Stock.
After review of regulatory considerations regarding the proposed
transaction, ONB and WCHI determined that it was in the best interests of the
parties to structure the Affiliation through the merger of WCHI with and into
ONB, followed immediately thereafter by the merger of WFSB with and into ONB
Bank. See "PROPOSED AFFILIATION -- Description of the Affiliation."
In determining to pursue the Affiliation, the Board of Directors of WCHI
specifically considered financial, managerial and other information regarding
ONB and its affiliate banks. In particular, the Board of Directors of WCHI
evaluated the respective businesses, financial conditions and future prospects
of WCHI and ONB. The earnings history and stock performance of ONB were
carefully reviewed and discussed with Trident with a view towards the
investment potential for shareholders of WCHI.
-3-
Among other items considered in this evaluation were the
prospects of WCHI and ONB, as separate institutions and as
combined; the compatibility of ONB's affiliate bank markets to
those of WCHI; the anticipated tax-free nature of the Affiliation
to WCHI shareholders receiving solely ONB Common Stock in
exchange for their shares of WCHI Common Stock; the timeliness of
a merger given the state of the economy and the stock markets, as
well as anticipated trends in both; applicable regulatory
requirements; relevant price information involving recent
comparable bank acquisitions which occurred in the Midwestern
United States; an analysis of alternatives to affiliating with
ONB, including other potential acquirors; the fact that the
consideration to be received in the Affiliation by WCHI
shareholders reflects a significant premium for WCHI Common Stock
over the market prices at which such stock had traded in the
weeks prior to the public announcement of the Affiliation on
April 9, 1996; the competitive process undertaken by WCHI with
the assistance of Trident and the expressions of interest made by
other financial institutions; the value implicit in the Exchange
Ratio in relation to the book value and earnings of WCHI and the
dividend rate that WCHI shareholders who become ONB shareholders
would be expected to enjoy as a result of the Affiliation; the
terms of the Agreement; and Trident's fairness opinion.
The Board of Directors of WCHI also considered the impact of
the Affiliation on customers and employees of WFSB and the
communities it serves. ONB's historical practice of retaining
employees of acquired institutions with competitive salary and
benefit programs was considered, as was the opportunity for
training, education, growth and advancement of WCHI's employees
within ONB or one of its affiliates. The Board of Directors of
WCHI examined ONB's continuing commitment to the communities
served by institutions previously acquired by ONB. Further, from
the standpoint of WFSB's customers, it was anticipated that more
products and services would become available because of ONB's
greater resources.
Based upon the foregoing factors, the Board of Directors of
WCHI concluded that it was advantaors relative to one another
cannot be precisely determined or stated.
OPINION OF FINANCIAL ADVISOR TO WCHI
WCHI retained Trident to act as its financial advisor and to
render a fairness opinion in connection with the Affiliation. As
part of its engagement, Trident performed a valuation analysis of
WCHI in an acquisition context. On January 11, 1996, Trident
presented its valuation report (the "Valuation Report") to WCHI's
Board of Directors.
On April 8, 1996, Trident met with WCHI's Board of Directors
to review the proposed terms of the Agreement. At that time,
Trident presented a report (the "Affiliation Analysis and Due
Diligence Report") to WCHI's Board of Directors summarizing the
financial terms of the Affiliation and providing updated market
information with respect to thrift mergers and acquisitions.
Trident also compared ONB's offer to the valuation of WCHI set
forth in the Valuation Report and analyzed the advantages and
disadvantages of the Affiliation. Trident further reported on
its financial analysis and on-site due diligence examination of
ONB. In addition, Trident rendered its written preliminary
opinion to WCHI's Board of Directors to the effect that, as of
that date, the consideration to be received by WCHI's
shareholders pursuant to the Agreement was fair to them from a
financial point of view.
-4-
Trident delivered its updated written opinion to WCHI's
Board of Directors as of _________________, 1996 stating that, as
of such date, the consideration to be received by the
shareholders of WCHI in the Affiliation is fair from a financial
point of view. Trident has consented to the inclusion of such
opinion and the related disclosure in the Proxy Statement which
will be circulated to WCHI's shareholders.
TRIDENT'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF
WCHI AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT
OF VIEW, OF THE CONSIDERATION TO BE RECEIVED BY WCHI'S
SHAREHOLDERS BASED ON CONDITIONS AS THEY EXISTED AND COULD BE
EVALUATED AS OF THE DATE OF THE OPINION. TRIDENT'S OPINION DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY WCHI SHAREHOLDER AS TO HOW
SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING, NOR DOES
TRIDENT'S OPINION ADDRESS THE UNDERLYING BUSINESS DECISION TO
EFFECT THE AFFILIATION. THIS SUMMARY OF TRIDENT'S OPINION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION, WHICH IS ATTACHED TO THIS PROXY STATEMENT AS Appendix B.
SHAREHOLDERS ARE URGED TO READ TRIDENT'S OPINION IN ITS ENTIRETY
FOR A DESCRIPTION OF THE ASSUMPTIONS MADE AND MATTERS CONSIDERED
AND THE LIMITS ON THE REVIEW UNDERTAKEN IN RENDERING SUCH
OPINION.
In connection with rendering its opinion, Trident reviewed
and analyzed, among other things, the following: (i) the
Agreement; (ii) this Proxy Statement; (iii) certain publicly
available information concerning WCHI, including the audited
financial statements of WCHI for each of the years in the three-
year period ended December 31, 1995 and the unaudited financial
statements of WCHI for the three months ended March 31, 1996;
(iv) certain publicly available information concerning ONB,
including the audited financial statements of ONB for each of the
years in the three-year period ended December 31, 1995 and
unaudited financial statements of ONB for the three months ended
March 31, 1996; (v) certain other internal information, primarily
financial in nature, concerning the business and operations of
WCHI and ONB furnished to Trident by WCHI and ONB for purposes of
Trident's analysis; (vi) certain information with respect to the
pricing and trading of WCHI Common Stock; (vii) certain
information with respect to the pricing and trading of ONB Common
Stock; (viii) certain publicly available information with respect
to other companies that Trident believed to be comparable to WCHI
and ONB and the trading markets for such other companies'
securities; and (ix) certain publicly available information
concerning the nature and terms of other transactions that
Trident considered relevant to its inquiry. Trident also met
with certain officers and employees of WCHI to discuss the
foregoing, as well as other matters which it believed relevant to
its inquiry.
In its review and analysis, and in arriving at its opinion,
Trident assumed and relied upon the accuracy and completeness of
all of the financial and other information provided to it or that
was publicly available and did not attempt independently to
verify any such information. Trident did not conduct a physical
inspection of the properties or facilities of WCHI or ONB, nor
did it make or obtain any independent evaluations or appraisals
of any of such properties or facilities.
-5-
In conducting its analyses and arriving at its opinion as
expressed herein, Trident considered such financial and other
factors as it deemed appropriate under the circumstances
including, among others, the following: (i) the historical and
current financial condition and results of operations of WCHI and
ONB, including interest income, interest expense, net interest
income, net interest margin, interest sensitivity, non-interest
expense, earnings, dividends, book value, return on assets,
return on equity, capitalization, the amount and type of non-
performing assets and the reserve for loan losses; (ii) the
business prospects of WCHI and ONB; (iii) the economies in WCHI's
and ONB's market areas; (iv) the historical and current market
for WCHI Common Stock and ONB Common Stock and for the equity
securities of certain other companies that Trident believed to be
comparable to WCHI and ONB; and (v) the nature and terms of
certain other acquisition transactions that Trident believed to
be relevant. Trident also took into account its assessment of
general economic, market, financial and regulatory conditions and
trends, as well as its knowledge of the financial institutions
industry, its experience in connection with similar transactions,
and its knowledge of securities valuation generally. Trident's
opinion necessarily was based upon conditions in existence and
subject to evaluation on the respective dates of its opinion.
Trident's opinion is, in any event, limited to the fairness, from
a financial point of view, of the consideration to be received by
the holders of WCHI Common Stock in the Affiliation and does not
address WCHI's underlying business decision to effect the
Affiliation.
Trident met with the Board of Directors of WCHI at various
times between January 11, 1996 and April 8, 1996 to present
analyses contained in a series of reports which serve as the
basis for Trident's opinion. Two key reports presented by Trident
were the Valuation Report dated January 11, 1996 and the
Affiliation Analysis and Due Diligence Report dated April 8,
1996. The following is a brief summary of the Valuation Report
presented by Trident to the Board of Directors of WCHI on January
11, 1996:
Financial Analysis of WCHI. Trident examined WCHI's
financial performance for the period December 31, 1990
through September 30, 1995 by analyzing the composition of
its balance sheet, adjusting and normalizing its earnings,
and calculating a variety of operating and financial ratios
for WCHI. Trident also studied the trading of WCHI Common
Stock for the previous twelve months, and compared the
performance of its stock to certain stock indices.
Peer Group Analysis. Trident evaluated WCHI's strengths and
weaknesses by comparing the financial performance of WCHI to
that of the following groups of SAIF-insured, OTS-regulated
thrift institutions: (i) all United States institutions;
(ii) all institutions in the Midwest; (iii) all Indiana
institutions; (iv) all United States institutions with total
assets between $100 million and $300 million; and (v)
Midwest institutions with total assets between $100 million
and $300 million (the "Aggregates"). This analysis compared
a number of WCHI's historical financial ratios to those of
the Aggregates, including but not limited to: (i) the
balance sheet composition as a percentage of total assets at
June 30, 1995; (ii) the loan portfolio as a percentage of
total assets at June 30, 1995; (iii) the investment
portfolio as a percentage of total assets at June 30, 1995;
and (iv) asset quality at June 30, 1995. Trident also
compared WCHI's growth rates between December 31, 1992 and
June 30, 1995, its yields on assets and costs of liabilities
and its income and expense data for 1994 and the six months
ended June 30, 1995 to those of the Aggregates.
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Comparison to Actively-Traded Thrifts. Trident compared
WCHI to the following groups of actively-traded thrifts as
of January 4, 1996: (i) all U.S. thrifts; (ii) U.S. thrifts
with assets between $100 million and $300 million; (iii) all
Midwest thrifts; (iv) all Indiana thrifts; and (v) sixteen
actively-traded thrifts Trident believed were most similar
to WCHI in terms of size, capital structure, profitability
and asset quality. Trident compared WCHI to the
aforementioned groups of actively-traded thrifts on the
basis of its balance sheet, GAAP capital, regulatory
capital, asset quality, loan loss reserves, asset and
deposit growth, return on average assets, return on average
equity, and the components of earnings during the trailing
four quarters. Trident also compared WCHI's pricing ratios
to the pricing ratios for other actively-traded thrifts.
Financial Projections. With input from WCHI's management,
Trident prepared six-year financial projections for WCHI
beginning September 30, 1995. The projections were based
on certain assumptions, including modest asset growth,
modest loan growth, modest deposit growth, a relatively even
interest-rate spread, a flat interest-rate environment, a
$0.04 annual increase in the cash dividend, and a 38.6% tax
rate. These financial projections were used to estimate
WCHI's valuation in an acquisition context at various future
dates, and the resulting returns to shareholders by
continuing to remain an independent financial institution.
Valuation of WCHI. Trident estimated the fair market value
of WCHI in an acquisition context. In valuing WCHI, Trident
considered three different approaches to value: the asset
approach, the income approach and the market approach.
The asset approach considers the market value of a company's
assets and liabilities, as well as any intangible value the
company may have. Trident estimated WCHI's net asset value
by adjusting the carrying value of its assets and
liabilities to reflect current market values (rather than
liquidation values). In addition, the net asset value of
WCHI was adjusted downward based on the estimated one-time
assessment on deposits to recapitalize the Savings
Association Insurance Fund ("SAIF"), the estimated
additional loan loss reserves an acquiror would assume in
its valuation of WCHI, benefit costs and contract
liabilities and estimated transaction and other costs.
Finally, Trident increased WCHI's net asset value for the
assumed exercise of outstanding options to purchase WCHI
Common Stock. Based on the adjustments discussed above,
Trident estimated WCHI's fully-diluted net asset value to be
approximately $24.7 million or $13.93 per share. After
determining WCHI's net asset value, Trident added an
intangible premium to reflect the estimated value of its
customer relationships. According to the asset approach, the
total value of WCHI is the sum of its net asset value and
its intangible value. Based on a branch purchase
methodology and intangible ("core deposit") premiums
observed in the market for thrift acquisitions, as well as
Trident's knowledge of WCHI, Trident applied premiums
between 3% and 6% of core deposits to WCHI's estimated
fully-diluted net asset value. Using the asset approach,
Trident established a reference range of $15.50 to $18.00
per share of WCHI Common Stock.
Trident also used an income approach in its valuation of
WCHI by discounting WCHI's projected future earnings plus
merger cost savings of 30% to 50 % as a result of an assumed
acquisition of WCHI. The projected earnings were discounted
to the present at rates of 13%, 15% and 17%. The discount
-7-
rates chosen were estimates of the required rates of return
for holders or prospective holders of shares of financial
institutions similar to WCHI, based on a number of factors
including prevailing interest rates, the pricing ratios of
publicly traded financial institutions, the financial
condition and operating results of WCHI, as well as
Trident's general knowledge of valuation, the securities
markets, and acquisition values in other mergers of
financial institutions. Trident adjusted the resulting
values to reflect the cost of benefit plans, contract
liabilities, the estimated additional loan loss reserves an
acquiror would assume in its valuation of WCHI and estimated
certain merger-related and other expenses. Using the income
approach, Trident established a reference range of $10.50 to
$13.50 per share of WCHI Common Stock.
In the market approach, Trident analyzed certain median
pricing ratios (e.g., price to book value, price to tangible
book value, price to reported earnings, price to assets, and
the premium paid over tangible book value as a percentage of
core deposits) resulting from selected completed thrift
merger transactions, as well as recently announced pending
transactions. In applying the market approach, Trident
considered the pricing ratios for the following groups of
thrift merger transactions: (i) all pending thrift merger
transactions (57 transactions); (ii) all pending thrift
mergers announced during the 90 days prior to January 3,
1996 (the date of the market data) (20 transactions); (iii)
all pending thrift mergers involving thrifts located in the
Midwest (21 transactions); (iv) all pending thrift mergers
in which the aggregate consideration was between $25 million
and $50 million (8 transactions); (v) all pending thrift
mergers in which the target thrift had assets between $100
million and $300 million (14 transactions); (vi) all pending
thrift mergers in which the target thrift had a return on
assets of between 0.90% and 1.10% (12 transactions); (vii)
all pending thrift mergers in which the target thrift had a
return on equity of between 7% and 9% (9 transactions);
(viii) all pending thrift mergers in which the target thrift
had a tangible equity ratio of between 10% and 14% of assets
(12 transactions); and (ix) all pending thrift mergers in
which the target thrift had a nonperforming assets to assets
ratio of between 0.00% and 0.50% (26 transactions). Trident
also considered the pricing ratios for sixteen pending or
completed thrift merger transactions in which the target
thrift was of similar size and capital structure as WCHI,
and in which the target thrift had similar profitability and
asset quality. Trident then performed a comparison of a
number of financial ratios for WCHI to those of the target
thrift institutions. Based on WCHI's financial condition
and results of operations, as welthe groups of thrift
mergers noted above, Trident chose ranges of pricing ratios
to apply to WCHI. Trident chose price to book value ratios
of 125% to 145%, resulting in per share values of $17.75 to
$20.75; price to tangible book value ratios of 125% to 145%,
resulting in per share values of $17.75 to $20.75; price to
earnings multiples of 16.0 to 20.0 times earnings, resulting
in per share values of $17.75 to $22.25; price to assets
ratios of 16% to 19%, resulting in per share values of
$19.00 to $22.50; and premiums over tangible book value as a
percentage of core deposits of 4.5% to 8.0%, resulting in
per share values of $17.75 to $20.50. Based on these
derived ranges of value, Trident established a reference
range of $18.00 to $21.00 per share using the market
approach.
Trident then reviewed the results from the three approaches,
and after consideration of all relevant facts, reconciled
the acquisition values generated by each approach and
determined a final range of $17.00 to $21.00 per share for
the acquisition value of WCHI. Trident did not apply
specific weights to the three individual approaches, but
rather gave greater consideration to the asset and market
approaches which were tempered by the income approach in
-8-
reconciling the reference ranges and estimating the final
range of value for WCHI.
The following is a brief summary of the Affiliation Analysis and Due
Diligence Report presented to the Board of Directors of WCHI on April 8,
1996:
Summary of Proposed Transaction. Trident presented a
summary of the financial terms of the Affiliation. Trident
also compared the pricing ratios for the Affiliation with
the median pricing ratios for selected groups of pending
thrift mergers and acquisitions. Trident discussed the
advantages and disadvantages of the Affiliation from a
financial point of view.
Review of Due Diligence Examination of ONB. Trident
presented a summary of its on-site due diligence examination
of ONB. ONB's historical balance sheets and income
statements were presented, along with a variety of financial
ratios that analyzed ONB's financial condition and operating
results through December 31, 1995. Trident discussed ONB's
strengths and weaknesses, peer group comparisons,
profitability, dividends, financial condition, loan
portfolio composition, asset quality, loan loss reserve
coverage, stock price, business strategy, growth, ONB's
previous mergers and acquisitions, its banking subsidiaries,
recent regulatory examinations of ONB, recent bank analysts'
reports on ONB, and other issues. Trident reported that
during its investigation, Trident did not discover any
conditions that would prevent it from rendering its fairness
opinion to WCHI's Board of Directors. As discussed above,
Trident relied, without independent verification, upon the
accuracy and completeness of all of the financial and other
information provided by ONB.
ONB's Stock Pricing. Trident examined the trading of
activity of ONB common stock between April 3, 1995 and April
2, 1996, and compared the performance of ONB's stock to
certain stock indices. Trident also compared ONB and the
pricing of its common stock to other regional commercial
banks, commercial banks of a similar size and all actively-
traded commercial banks as of April 2, 1996.
The summaries of Trident's Valuation Report, Affiliation
Analysis and Due Diligence Report, and opinion set forth above
reflect all the material analysis, factors and assumptions
considered by Trident and the material valuation methodologies
used by Trident in arriving at its opinion as to fairness
described above. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial or
summary description. Trident believes that its analyses and the
summary set forth above must be considered as a whole and that
selecting portions of its analyses, without considering all of
the analyses, or all of the above summary, without considering
all factors and analyses, would create an incomplete view of the
processes underlying the analyses set forth in Trident's reports
and its opinion. Therefore, the ranges of valuations resulting
from any single analysis described above should not be taken to
be Trident's view of the actual value of WCHI or the combined
company. In performing its analyses, Trident made numerous
assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which
are beyond the control of WCHI or ONB. The results of the
specific analyses performed by Trident may differ from WCHI's
actual values or actual future results as a result of changing
economic conditions, changes in company strategy and policies, as
well as a number of other factors. Such individual analyses were
prepared to provide valuation guidance solely as part of
Trident's overall valuation analysis and the determination of the
-9-
fairness of the consideration to be received by WCHI's
shareholders, and were provided to WCHI's Board of Directors in
connection with the delivery of Trident's opinion. The analyses
do not purport to be appraisals or to reflect the prices at which
a company might actually be sold or the prices at which any
securities may trade at the present time ornd presentations to
WCHI's Board of Directors were among the many factors taken into
consideration by WCHI's Board of Directors in making its
determination to approve the Agreement.
Trident, as part of its investment banking business, is
continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwriting, and valuations for corporate and other
purposes. Trident has extensive experience with the valuation of
financial institutions. WCHI's Board of Directors selected
Trident as its financial advisor because of its previous
experience with Trident, because Trident is a nationally
recognized investment banking firm specializing in financial
institutions and because of its substantial experience in
transactions similar to the Affiliation. Trident is not
affiliated with either WCHI or ONB.
For its services as financial advisor, WCHI paid Trident a
retainer of $5,000, a fee of $10,000 upon the delivery of the
Valuation Report, and a fee of $25,000 upon execution of the
Agreement. An additional fee equal to (i) 0.75% of the aggregate
value of the Affiliation if such value is less than $41,181,550;
(ii) 0.825% of the aggregate value of the Affiliation if such
value is between $41,181,550 and $45,795,400; or (iii) 0.95% of
the aggregate value if such value is greater than $45,795,400,
less $40,000, will be payable to Trident upon consummation of the
Affiliation (a balance due of approximately $259,000 based on a
share price of $33.75 for ONB Common Stock). WCHI has also
agreed to reimburse Trident for its reasonable out-of-pocket
expenses and to indemnify Trident against certain liabilities,
including certain liabilities under federal securities laws.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF WCHI HAS CAREFULLY CONSIDERED AND
UNANIMOUSLY APPROVED THE AGREEMENT AND UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF WCHI APPROVE THE AGREEMENT.
Certain members of management and the Board of Directors of
WCHI have interests in the Affiliation that are in addition to
those of WCHI shareholders generally. See "PROPOSED
AFFILIATION -- Interests of Certain Persons in the Affiliation"
and " Management, Personnel and Operations After the
Affiliation."
EXCHANGE OF WCHI COMMON STOCK
Under the terms of the Agreement, shareholders of WCHI of
record upon consummation of the Affiliation will be entitled to
receive 0.64 shares of ONB Common Stock in exchange for each
share of WCHI Common Stock held, subject to adjustment if the
Average Price Per Share (as defined below) is above $34.75 or
below $33.00 or in the event of a recapitalization or similar
transaction involving ONB Common Stock. The Agreement may not be
terminated solely due to changes in the Average Price Per Share
of ONB Common Stock. As a result of the occurrence of the events
discussed herein:
-10-
(1) Increase in Average Price Per Share. If the Average
Price Per Share of ONB Common Stock exceeds $34.75,
then the Exchange Ratio will be adjusted such that each
issued and outstanding share of WCHI Common Stock will
be converted into the right to receive such number of
shares of ONB Common Stock determined by dividing
$22.24 by the Average Price Per Share of ONB Common
Stock.
(2) Decrease in Average Price Per Share. If the Average
Price Per Share of ONB Common Stock is less than
$33.00, then the Exchange Ratio will be adjusted such
that each issued and outstanding share of WCHI Common
Stock will be converted into the right to receive such
number of shares of ONB Common Stock determined by
dividing $21.12 by the Average Price Per Share of ONB
Common Stock.
(3) No Adjustment to Exchange Ratio. If the Average Price
Per Share of ONB Common Stock is not less than $33.00
nor more than $34.75, then there will be no adjustment
to the Exchange Ratio.
The "Average Price Per Share" of ONB Common Stock is defined
in the Agreement as the average of the per share closing prices
of ONB Common Stock, as reported on the NASDAQ National Market
System, for the first five (5) business days on which shares of
ONB Common Stock are traded within the ten (10) calendar days
immediately preceding the effective time of the Affiliation.
As of _______________, 1996 the closing price of ONB Common
Stock was $________ per share, as reported by the NASDAQ National
Market System. If the Affiliation had been consummated on such
date, the Exchange Ratio would have been adjusted to ________ due
to an increase in the market price of ONB Common Stock, and the
number of shares of ONB Common Stock exchanged in the Affiliation
would have been approximately __________ (including shares of ONB
Common Stock represented by options), with an aggregate market
value of approximately $______ million, or $_______ per share of
WCHI Common Stock. The shares of ONB Common Stock exchanged in
the merger will be newly issued shares of ONB Common Stock.
In connection with the Affiliation, each outstanding option
to purchase shares of WCHI Common Stock (a "Stock Option") held
by Directors and executive officers of WCHI will be deemed to
constitute an option to purchase such number of shares of ONB
Common Stock, rounded to the nearest whole share, as the holder
of such option would have been entitled to receive pursuant to
the Affiliation had the holder exercised the option in full
immediately prior to the effective time of the Affiliation and,
immediately thereafter, exchanged such shares solely for ONB
Common Stock based upon the Exchange Ratio at a price equal to
(A) the aggregate exercise price of WCHI Common Stock otherwise
purchasable pursuant to the option divided by (B) the number of
shares of ONB Common Stock, rounded to the nearest whole share,
deemed purchasable pursuant to the option. Accordingly, such
option shares will be exchanged for options for ONB Common Stock
at the effective time as provided above.
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 of the Stock Option to
represent shares of ONB Common Stock). ONB may deliver new or
amended agreements which reflect the terms of each Stock Option
-11-
assumed by ONB. With respect to each Stock Option, the optionee
will 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 conversion of
the Stock Option into options for shares of ONB Common Stock and
as a result of the grant and exercise of such Stock Options.
As soon as practicable after the effective time, ONB will
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 Stock
Options remain outstanding.
In the event of a stock split, stock dividend or other
recapitalization, the Exchange Ratio will be adjusted so that
WCHI shareholders will receive, in the aggregate, the same
percentage of the outstanding shares of ONB Common Stock they
would have received if the recapitalization event had not
occurred.
If, before the effective time of the Affiliation, ONB enters
into an agreement with another entity pursuant to which current
shareholders of ONB Common Stock will exchange their shares of
ONB Common Stock for stock of another entity ("Other
Transaction"), then upon consummation of the Other Transaction,
the shareholders of WCHI will be treated as though the
Affiliation had been consummated prior to the Other Transaction
and will be entitled to receive the same per share consideration
as the shareholders of ONB in the Other Transaction. ONB has
agreed to take steps to include provisions in any agreement
relating to an Other Transaction to the foregoing effect.
No fractional shares of ONB Common Stock will be issued to
shareholders of WCHI in connection with the Affiliation. Each
shareholder of WCHI who otherwise would be entitled to a
fractional interest in a share of ONB Common Stock as a result of
the Exchange Ratio will be paid a cash amount equal to such
fractional share interest multiplied by the Average Price Per Share
of ONB Common Stock.
After the effective time of the Affiliation, stock
certificates previously representing WCHI Common Stock will
represent only the right to receive shares of ONB Common Stock
and cash for any fractional shares. Following the effective time
of the Affiliation and prior to the surrender by holders of WCHI
of their stock certificates to ONB for exchange, such holders
will not be entitled to receive payment of dividends or other
distributions declared on shares of ONB Common Stock. Upon the
subsequent exchange of such certificates, however, any
accumulated dividends or other distributions previously declared
and withheld on the shares of ONB Common Stock will be paid,
without interest. At the effective time of the Affiliation, the
stock transfer books of WCHI will be closed and no transfers of
shares of WCHI Common Stock will thereafter be made. If, after
the effective time, certificates representing shares of WCHI
Common Stock are presented for registration or transfer, they
will be canceled and exchanged for shares of ONB Common Stock.
Distribution of stock certificates representing shares of
ONB Common Stock and any cash payment for fractional shares
(without interest) will be made, after the effective time of the
Affiliation, to each former shareholder of WCHI within ten (10)
business days following the shareholder's delivery to ONB of his
or her certificate(s) representing shares of WCHI Common Stock.
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Instructions as to delivery of WCHI stock certificates to ONB
will be sent to each WCHI shareholder shortly after the effective
time of the Affiliation.
NO DISSENTERS' OR APPRAISAL RIGHTS
In connection with the Affiliation, shareholders of WCHI do
not have the statutory right to dissent and require appraisal of
their shares of WCHI Common Stock and to receive cash instead of
ONB Common Stock in exchange for their shares of WCHI Common
Stock. Indiana law applicable to WCHI excepts transactions from
its dissenters' rights provisions when the stock held by
shareholders is listed on the NASDAQ National Market System as of
the Record Date. WCHI Common Stock meets this test.
Shareholders of WCHI who would otherwise dissent to the
Affiliation may sell their shares of WCHI Common Stock in the
open market at the market price prior to the effective time of
the Affiliation or sell their shares of ONB Common Stock in the
open market at the market price following the effective time.
RESALE OF ONB COMMON STOCK BY WCHI AFFILIATES
No restrictions on the sale or transfer of the shares of ONB
Common Stock issued in the Affiliation will be imposed solely as
a result of the Affiliation, other than restrictions on the
transfer of such shares issued to any WCHI shareholder who may be
deemed to be an "affiliate" of WCHI for purposes of Rule 145
under the Securities Act. Directors, executive officers and 10%
shareholders are generally deemed to be affiliates for purposes
of Rule 145.
The Agreement provides that WCHI will provide ONB with a
list identifying each affiliate of WCHI. The Agreement also
requires that each WCHI affiliate deliver to ONB within forty-
five days following the date of the Agreement a written agreement
to the effect that such affiliate (i) will not sell, pledge,
transfer, dispose of or otherwise reduce the affiliate's market
risk with respect to the shares of WCHI Common Stock directly or
indirectly owned or held by such person during the thirty (30)
day period prior to the effective time, and (ii) will not sell,
pledge, transfer or otherwise dispose of or reduce the
affiliate's market risk with respect to the shares of ONB Common
Stock to be received by such person pursuant to the Agreement
(A) until such time as financial results covering at least thirty
(30) days of combined operations of WCHI and ONB have been
published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies and
(B) unless done pursuant to an effective registration statement
under the Securities Act or pursuant to Rule 145 or another
exemption from the registration requirements under the Securities
Act. The certificates representing ONB Common Stock issued to
affiliates of WCHI in the Affiliation may contain a legend
indicating these resale restrictions.
This is only a general statement of certain restrictions
regarding the sale or transfer of the shares of ONB Common Stock
to be issued in the Affiliation. Therefore, those shareholders
of WCHI who may be deemed to be affiliates of WCHI should consult
with their legal counsel regarding the resale restrictions that
may apply to them.
CONDITIONS TO CONSUMMATION
Consummation of the Affiliation is conditioned upon, among
other items: (1) approval of the Agreement by the affirmative
vote of the holders of at least a majority of the outstanding
shares of WCHI Common Stock, (2) approval of the Agreement by
ONB, as the sole shareholder of ONB Bank, and by WCHI, as the
sole shareholder of WFSB, (3) receipt by ONB, WCHI, ONB Bank and
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WFSB of all applicable regulatory approvals required for the
Company Merger and the Thrift Merger, (4) receipt of an opinion
of counsel with respect to certain federal income tax matters,
(5) the issuance by Trident of a written fairness opinion stating
that the terms of the Affiliation are fair to the shareholders of
WCHI from a financial point of view and dated as of a date on or
prior to the date hereof and confirmed as of the effective time,
(6) receipt by ONB of certain undertakings from affiliates of
WCHI, (7) receipt by ONB and WCHI of certain officers'
certificates and legal opinions, (8) the accuracy at the
effective time of the Affiliation of representations and
warranties contained in the Agreement and (9) the fulfillment of
certain covenants and mutual agreements set forth in the
Agreement. The conditions to consummation of the Affiliation,
which are more fully enumerated in the Agreement, are
requirements subject to unilateral waiver by the party entitled
to the benefit of such conditions, as set forth in the Agreement.
See "PROPOSED AFFILIATION -- Resale of ONB Common Stock by WCHI
Affiliates," "-- Regulatory Approvals," "FEDERAL INCOME TAX
CONSEQUENCES" and Appendix A.
TERMINATION
The Agreement may be terminated before consummation of the
Affiliation by either ONB or WCHI (as specified in the Agreement)
if, among other reasons: (1) there has been a misrepresentation
or a breach of any representation or warranty set forth in the
Agreement by WCHI which has had or could be expected to have, in
the reasonable discretion of ONB, a material adverse effect on
the financial condition, results of operations, business,
prospects, assets or capitalization of WCHI or WFSB, individually
or on a consolidated basis, or RISC on a consolidated basis with
WCHI, or in the number of issued and outstanding shares of WCHI
or its subsidiaries, (2) there has been a misrepresentation or a
breach of any representation or warranty set forth in the
Agreement by ONB which has had or could be expected to have, in
the reasonable discretion of WCHI, a material adverse effect on
the financial condition, results of operations, business, assets
or capitalization of ONB on a consolidated basis, (3) ONB or WCHI
has breached or failed to comply with any covenant or mutual
agreement set forth in the Agreement, (4) consummation of the
Affiliation has become inadvisable or impracticable due to the
commencement or threat of any claim, litigation or proceeding
against ONB, WCHI or any subsidiary of ONB or of WCHI, or any
officer or director of either relating to the Agreement or which
is likely to have a material adverse effect on the financial
condition, results of operations, business, prospects, assets or
capitalization of ONB or WCHI, each on a consolidated basis,
(5) there has been a material adverse change in the financial
condition, results of operations, business, prospects, assets or
capitalization of WCHI, WFSB or ONB on a consolidated basis, or
RISC on a consolidated basis with WCHI, as of the effective time
of the Affiliation as compared to that in existence as of
December 31, 1995, (6) ONB's accountants conclude that ONB cannot
utilize the pooling-of-interests method of accounting for the
Affiliation, (7) consummation of the Affiliation has not occurred
by March 31, 1997, or (8) all joinder agreements under the WFSB
Deferred Compensation Plan have not been properly and validly
amended within 45 days of the date of the Agreement. This latter
deadline was extended to _______________ by ONB and as so
extended was met by WCHI. The parties may also mutually agree to
terminate the Affiliation. Upon termination for any of these
reasons, the Agreement will be of no further force or effect.
See Appendix A to this Proxy Statement.
-14-
RESTRICTIONS AFFECTING WCHI
The Agreement contains a number of restrictions regarding
the conduct of business of WCHI, WFSB and RISC pending
consummation of the Affiliation. Among other items, WCHI, WFSB
and RISC may not, without the prior written consent of ONB:
(1) change their capital stock accounts, (2) distribute or pay
any dividends, except that WCHI may pay to its shareholders its
normal and customary quarterly cash dividend in an amount not to
exceed $0.10 per share and WFSB may pay cash dividends to WCHI in
the ordinary course of business for payment of reasonable and
necessary business and operating expenses of WCHI and for
expenses incurred in connection with the Affiliation; provided,
however, that no dividend may be paid to shareholders of WCHI
during the quarter in which the Affiliation is consummated if,
during such quarter, WCHI shareholders will become entitled to
receive dividends on their shares of ONB Common Stock received
pursuant to the Agreement, (3) amend their respective Articles of
Incorporation, Charter or By-Laws, (4) carry on their business
other than substantially in the manner as conducted as of the
date of the Agreement and in the ordinary course of business, or
(5) negotiate or discuss with third parties relative to a merger,
combination or sale of WCHI, WFSB or RISC, except under certain
limited circumstances. See Appendix A to this Proxy Statement.
REGULATORY APPROVALS
The Affiliation requires regulatory approvals before the
Affiliation will become effective: the Thrift Merger requires the
approval of the Office of Thrift Supervision ("OTS"), while the
Company Merger requires the approvals of the Board of Governors
of the Federal Reserve System ("Federal Reserve") under the
federal Bank Holding Company Act of 1956, as amended ("BHC Act"),
and the OTS. Although applied for, such regulatory approvals
have not been obtained as of the date of this Proxy Statement.
Approval of the Affiliation is not to be interpreted as the
opinion of such regulatory authorities that the Affiliation is
favorable to the shareholders of WCHI from a financial point of
view or that such regulatory authorities have considered the
adequacy of the terms of the Affiliation. Regulatory approval in
no way constitutes an endorsement or a recommendation of the
Affiliation by such regulatory authorities.
ACCOUNTING TREATMENT FOR THE AFFILIATION
It is anticipated that the Affiliation will be accounted for
as a "pooling-of-interests" transaction and it is a condition
precedent to ONB's obligation to consummate the Affiliate that it
be so treated. Under this method of accounting, shareholders of
ONB and shareholders of WCHI will be deemed to have combined
their existing voting common stock interests. See "SUMMARY OF
SELECTED FINANCIAL DATA" and "PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION."
In order for the Affiliation to qualify for pooling-of-
interests accounting treatment, among other items, 90% or more of
the outstanding shares of WCHI Common Stock must be exchanged for
ONB Common Stock. See "PROPOSED AFFILIATION -- Termination."
-15-
EFFECTIVE TIME
The Affiliation will become effective at the close of
business on the day specified in the articles of merger filed
with the OTS with respect to the Thrift Merger and the Indiana
Secretary of State with respect to the Company Merger. The
effective time will occur at the close of business, Evansville,
Indiana time, on the last business day of the month during which
occurs (1) the fulfillment of all conditions precedent to the
Affiliation set forth in the Agreement and (2) the expiration of
all waiting periods imposed in connection with the regulatory
applications filed for approval of the Affiliation.
ONB and WCHI currently anticipate that the Affiliation will
be consummated during the fourth calendar quarter of 1996.
MANAGEMENT, PERSONNEL AND OPERATIONS AFTER THE AFFILIATION
ONB will be the surviving corporation in the Company Merger
and, upon consummation of the Company Merger, the separate
corporate existence of WCHI will cease. Consequently, the
Directors and officers of WCHI will no longer serve in such
capacities after the effective time of the Company Merger. The
Directors of ONB serving at the effective time of the Affiliation
will serve as Directors of ONB following the effective time of
the Affiliation until otherwise determined by the shareholders of
ONB. The officers of ONB serving at the effective time will
continue to serve in their respective capacities until otherwise
determined by the Board of Directors of ONB.
The Directors of WFSB and ONB Bank serving at the effective
time of the Affiliation will be Directors of ONB Bank following
consummation of the Affiliation. Additionally, four (4) new
directors will be elected to the Board of Directors of ONB Bank.
The identity of these directors will be agreed upon by ONB and
WCHI if they are elected prior to the effective time of the
Affiliation or by ONB and ONB Bank if elected following the
effective time of the Affiliation. Following the effective time
of the Affiliation, ONB, as the sole shareholder of ONB Bank,
will have the ability to elect the Board of Directors of ONB
Bank; however, ONB has agreed with WCHI and WFSB that each former
Director of WCHI will continue as a Director of ONB Bank until
such director has reached the age of seventy (70) years and that
those directors already over the age of seventy (70) and the four
new directors will serve for two (2) years following the
effective time. Robert Shaffer, Chairman of WCHI, will serve as
Chairman of ONB Bank following consummation of the Affiliation,
until the Board of Directors of ONB Bank determines otherwise.
Richard R. Haynes, President and Chief Executive Officer of WCHI,
will be the President and Chief Executive Officer of ONB Bank
following consummation of the Affiliation, until the Board of
Directors of ONB determines otherwise. The remaining officers of
ONB Bank will continue as officers of ONB Bank afthe Board of
Directors of ONB Bank determines otherwise.
In general, employees of WCHI will receive benefits in
accordance with policies of ONB following the Affiliation. In
particular, those persons who are full-time officers or employees
of WCHI as of the effective time of the Affiliation, who continue
as full-time officers or employees of ONB Bank or any other
subsidiary of ONB after the effective time, will receive
substantially the same employee benefits on substantially the
same terms and conditions that ONB may offer to similarly
situated officers and employees of its banking subsidiaries from
time to time, including participation in the ONB Employees'
Retirement Plan ("ONB Pension Plan") and the ONB Employees'
-16-
Savings and Profit Sharing Plan ("ONB Profit Sharing Plan"). In
addition, years of service of an employee of WCHI prior to the
effective time of the Affiliation will be credited to each such
employee for purposes of eligibility to participate under ONB's
employee welfare benefit plans and for purposes of eligibility
and vesting, but not for purposes of benefit accrual or
contributions, under the ONB Pension Plan and the ONB Profit
Sharing Plan.
Those employees of WFSB who otherwise meet the eligibility
requirements of the ONB Profit Sharing Plan, based upon their age
and years of service for WCHI, will become participants
thereunder as of the January 1st which coincides with or next
follows the effective time of the discontinuance of contributions
(as described below) to the Financial Institutions Thrift Plan
sponsored by WFSB ("WFSB Thrift Plan"). Those employees of WFSB
who otherwise meet the eligibility requirements of the ONB
Pension Plan, based upon their age and years of service for WCHI
or WFSB, will become participants thereunder on the January 1st
which coincides with or next follows the effective time of the
accrual of benefits (as described below) under the defined
benefit pension plan sponsored by WFSB ("WFSB Retirement Plan").
Those employees who do not meet the eligibility requirements of
the ONB Pension Plan or ONB Profit Sharing Plan on such dates
will become participants thereunder on the first "plan entry
date" (as defined in the ONB Pension Plan or the ONB Profit
Sharing Plan, as the case may be), which coincides with or next
follows the date on which such eligibility requirements are
satisfied.
In connection with effecting the changes from the WCHI
benefit plans to ONB's benefit plans, the accrual of benefits
under the WFSB Retirement Plan and contributions under the WFSB
Thrift Plan will be frozen and terminated, respectively, as of
December 31st in the year of which consummation of the
Affiliation occurs, and all accrued benefits of participants
therein will become fully vested at that time. To the extent
permitted by applicable law and the terms of the plan, benefits
under the WFSB Retirement Plan will be left in trust and payable
at the times and in the amounts provided for under that plan.
Benefits under the WFSB Thrift Plan will be fully vested upon
December 31st of the year in which the effective time occurs. The
account balances of each participant in the WFSB Thrift Plan
shall be held in and remain under the WFSB Thrift Plan and shall
be payable at the time(s) and in the forms provided for under
such plan, to the extent permitted by the WFSB Thrift Plan and
applicable law.
Further, ONB has agreed to cause ONB Bank to assume all
obligations of WFSB under the Director Deferred Compensation
Master Agreement ("WFSB Deferred Compensation Plan") and to keep
such plan in effect, without any amendment which would decrease
the percentage of the directors fees that each director presently
defers pursuant to such plan, for two (2) years following the
effective time of the Affiliation. During such two (2) year
period, ONB also has agreed to cause ONB Bank to increase the
amount deferred under the WFSB Deferred Compensation Plan for
each director of WFSB (other than the four (4) new directors of
WFSB elected pursuant to the Agreement) serving as a director of
ONB Bank by $500 per month over the amounts currently being
deferred each month by each director; provided, however, that
during such two (2) year period in no event shall the aggregate
director's fees and additional deferrals under the WFSB Deferred
Compensation Plan for any director exceed $1,000 per month. The
WFSB Deferred Compensation Plan will be terminated effective
two (2) years after the effective time of the Affiliation. WFSB
has agreed to amend (effective as of the effective time of the
Affiliation) the WFSB Deferred Compensation Plan to provide for
its automatic termination and the termination of all the Director
Deferred Compensation Joinder Agreements thereunder ("Joinder
Agreements") on the date which is two (2) years following the
effective time of the Affiliation. The provisions of such
-17-
amendments and the transactions contemplated thereby, including
the distribution of participants' benefits under the WFSB
Deferred Compensation Plan, will contain such terms and
conditions acceptable to ONB and WFSB, including the requirement
that each director who has executed a Joinder Agreement will
execute and deliver an appropriate amendment, effective as of the
effective time of the Affiliation, to provide for the automatic
termination of his Joinder Agreement on the date which is two (2)
years following the effective time of the Affiliation. Within
ten (10) business days of the date the Joinder Agreements are
terminated, Workingmens/ONB Bank will pay to each director, in
the form of a single lump sum in cash, less any applicable
withholdings, the balance of his elective contribution account
accrued under the Joinder Agreement through the date it is
terminated. Each director's elective contribution account will
be credited with interest as provided for by the Joinder
Agreement.
The changes to the WFSB Deferred Compensation Plan discussed
above will enable the Directors of WCHI to receive approximately
the same level of director benefits (including director's fees)
as they are presently receiving from WCHI for two years following
the Affiliation and do not represent an increase in their current
benefits.
Effective as of the effective time of the Affiliation, the
WFSB Director Emeritus Program will be terminated; provided,
however, that within ten (10) calendar days after the termination
of such program, ONB will make, or will cause ONB Bank to make, a
lump sum cash payment to each director of WFSB who had satisfied
the eligibility requirements for benefits under such program as
of the effective time of the Affiliation, and to Richard R.
Haynes, equal to the present value of the benefits payable under
such program as of the effective time of the Affiliation.
Present value is to be calculated based upon an interest rate
equal to the applicable federal rate as defined in Section
1274(d) of the Code, compounded semi-annually as of the effective
date. Based on current rates of interest in effect on the date
hereof, the amounts payable upon termination of the plan to all
participating directors will aggregate approximately $356,919.
INTERESTS OF CERTAIN PERSONS IN THE AFFILIATION
Each of Richard R. Haynes, President and CEO of WFSB, Joseph
A. Walker, Chief Operating Officer of WFSB, Jerry L. Hays, Senior
Vice President of WFSB and R. William Richardson, Jr., Senior
Vice President of WFSB, is a party to an employment agreement
with WFSB (collectively, the "Employment Agreements"). ONB has
agreed to cause the surviving institution in the Thrift Merger to
assume all obligations under the Employment Agreements, as
amended, in accordance with the Agreement, and to guarantee the
surviving institution's obligations under the Employment
Agreements, except as may be otherwise required by any regulatory
agency. Each Employment Agreement is for a term of three (3)
years which term is extended annually for an additional one-year
term to maintain its three-year term if the Board of Directors of
WFSB determines to so extend the Employment Agreement, unless
notice not to extend is properly given by either party to the
Employment Agreement.
Further, ONB has agreed to, or to cause ONB Bank to, provide
extended indemnification to the same extent provided by WCHI and
WFSB at the effective time to Directors or officers of ONB Bank
who previously were Directors or officers of WCHI or any of its
subsidiaries against any and all losses in connection with or
arising out of any claim which is based upon any actual or
alleged act or omission occurring at or prior to the effective
time. Indemnification of officers and Directors following the
effective time will be provided to the same extent it is provided to
-18-
individuals working in similar capacities for ONB or its
subsidiaries. In addition, ONB has agreed for a period of one
year after the effective time to use all reasonable efforts to
cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by WCHI and WFSB with
respect to claims arising from facts or events which occurred
before the effective time of the Affiliation. Following the
effective time, ONB will provide WCHI and WFSB employees who
become officers of ONB or any of its subsidiaries with the same
directors' and officers' liability insurance coverage that ONB
provides to other similarly situated Directors and officers of
ONB and its bank subsidiaries.
ONB has agreed to provide health insurance at its cost to
the current Directors of WCHI, and to their dependents at the
Directors' cost, so long as the Directors serve ONB Bank in such
capacity.
ONB has agreed to adopt supplemental retirement plans for
Richard R. Haynes and R. William Richardson, Jr. if such plans
are deemed necessary to assure that such individuals do not have
a reduction in retirement benefits as a result of the Affiliation
and their participation in the ONB Pension Plan and the ONB
Profit Sharing Plan compaution plans.
For other interests of certain persons in the Affiliation,
see "PROPOSED AFFILIATION -- Exchange of WCHI Common Stock" and
"-- Management, Personnel and Operations After the Affiliation."
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income
tax aspects of the Affiliation. This discussion does not purport
to cover all federal income tax consequences relating to the
Affiliation and does not contain any information with respect to
state, local or other tax laws.
TAX OPINION
ONB and WCHI has requested the law firm of Krieg DeVault
Alexander & Capehart to render an opinion that the Affiliation
constitutes a tax-free reorganization and, with respect to
certain federal income tax consequences of the Affiliation,
substantially to the effect that the mergers to be effected
pursuant to the Affiliation constitute tax-free reorganizations
under the Internal Revenue Code of 1986, as amended ("Code"), to
each party thereto and to the shareholders of WCHI, except with
respect to cash received by WCHI's shareholders in lieu of
fractional share interests of ONB Common Stock.
The opinion rendered by Krieg DeVault Alexander & Capehart
will be based upon the assumption of certain facts to be stated
in the opinion. Under the Agreement, the obligations of each of
ONB and WCHI to consummate the Affiliation is conditioned upon
the receipt of an opinion of counsel substantially to the effect
as set forth above.
-19-
TAX CONSEQUENCES TO ONB, ONB BANK, WCHI AND WFSB
The merger of WCHI with and into ONB and the merger of WFSB
with and into ONB Bank constitute statutory mergers under
applicable law. Consequently, based upon the assumption of
certain facts to be stated in the opinion, the merger of WCHI
with and into ONB and the merger of WFSB with and into ONB Bank
should constitute a tax-free organization. As a result, ONB, ONB
Bank, WCHI and WFSB will recognize neither gain nor loss as a
result of the Affiliation for federal income tax purposes.
TAX CONSEQUENCES TO WCHI SHAREHOLDERS
A. WCHI Shareholders Receiving Solely ONB Common Stock
A WCHI shareholder who receives solely ONB Common Stock in
exchange for all of the shares of WCHI Common Stock actually
owned by the shareholder will not recognize any gain or loss upon
such exchange for federal income tax purposes. See paragraph B.
following for a discussion of the tax consequences of the receipt
of cash in lieu of fractional share interests of ONB Common
Stock.
B. Cash Received in Lieu of Fractional Shares
A WCHI shareholder who receives cash in lieu of a fractional
share interest of ONB Common Stock will be treated as having
received such fraction of a share of ONB Common Stock and then as
having received cash in redemption of the fractional share
interest, subject to the provisions of Section 302 of the Code.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON THE
FEDERAL INTERNAL REVENUE CODE AS IN EFFECT ON THE DATE OF THIS
PROXY STATEMENT WITHOUT CONSIDERATION OF ANY STATE LAWS OR THE
PARTICULAR FACTS OR CIRCUMSTANCES OF ANY WCHI SHAREHOLDER. THE
ABOVE DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
ACQUIRED PURSUANT TO THE EXERCISE OF STOCK OPTIONS OR OTHERWISE
RECEIVED AS COMPENSATION. SHAREHOLDERS ARE URGED TO CONSULT WITH
THEIR TAX ADVISOR WITH RESPECT TO ALL TAX CONSEQUENCES OF THE
AFFILIATION TO THEM, INCLUDING THE EFFECT OF FEDERAL, STATE AND
LOCAL TAX LAWS AND ANY OTHER TAX CONSEQUENCES.
COMPARATIVE PER SHARE DATA
NATURE OF TRADING MARKET
Shares of ONB Common Stock are traded in the over-the-
counter market and share prices are reported by the NASDAQ
National Market System under the symbol OLDB. On April 8, 1996,
the business day immediately preceding the public announcement of
the Affiliation, the closing price of ONB Common Stock reported
by the NASDAQ National Market System was $33.25 per share. On
____________, 1996, the closing price of ONB Common Stock
reported by the NASDAQ National Market System was $________ per
-20-
share. The following table sets forth, for the periods
indicated, the high and low per share bid closing prices of ONB
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 ONB.
Year Ended December 31 HIGH LOW
---------------------- ---- ---
1994
----
First Quarter $ 35-7/8 $34-1/2
Second Quarter 34-3/4 34-1/4
Third Quarter 35-1/2 34-1/4
Fourth Quarter 35-1/4 34-3/4
1995
----
First Quarter $ 35-1/4 $34-1/2
Second Quarter 34-3/4 34
Third Quarter 34-1/2 34-1/4
Fourth Quarter
1996
----
First Quarter $ 35 $32-3/4
Second Quarter 37 33
Third Quarter
(through __________, 1996)
Shares of WCHI Common Stock are traded in the over-the-
counter market and share prices are reported by NASDAQ National
Market System under the symbol WCHI. On April 8, 1996, the
business day immediately preceding the public announcement of the
Affiliation, the high and low bid prices of WCHI Common Stock
reported by NASDAQ was $16.25. On _____________, 1996, the high
and low bid prices of WCHI Common Stock reported by NASDAQ were
$________ and $________ per share.
The following table sets forth, for the periods indicated,
the high and low per share bid prices of WCHI Common Stock as
reported by NASDAQ, adjusted for all stock splits and stock
dividends (if any).
Year Ended December 31 HIGH LOW
---------------------- ---- ---
1994
----
First Quarter $ 13-1/8 $12-3/8
Second Quarter 15-1/4 11-7/8
Third Quarter 15-1/8 14-1/8
Fourth Quarter 14-7/8 13
-21-
1995
----
First Quarter $ 17 $13
Second Quarter 19 15-1/4
Third Quarter 18 15-3/4
Fourth Quarter 18 16
1996
----
First Quarter $ 18-1/4 $15
Second Quarter 20-1/2 16
Third Quarter
(through ____________, 1996)
DIVIDENDS
The following table sets forth the per share cash dividends
paid on shares of ONB Common Stock and shares of WCHI Common
Stock since January 1, 1994. All dividends have been adjusted to
give effect to their respective stock dividends and stock splits
(if any).
ONB Common Stock(1) WCHI Common Stock(2)
------------------- --------------------
Year Ended December 31
----------------------
1994
----
First Quarter $ .22 $ .07
Second Quarter .22 .07
Third Quarter .22 .07
Fourth Quarter .22 .08
1995
----
First Quarter $ .23 $ .08
Second Quarter .23 .08
Third Quarter .23 .08
Fourth Quarter .23 .09
1996
----
First Quarter $ .23 $ .09
Second Quarter .23 .09
(1) There can be no assurance as to the amount of future
dividends that may be declared or paid on shares of ONB
Common Stock since dividend policies are subject to the
discretion of the Board of Directors of ONB, general
business conditions and dividends paid to ONB by its
affiliate banks. For certain restrictions on the payment of
dividends on shares of ONB Common Stock per quarter, see
"COMPARISON OF COMMON STOCK -- Dividend Rights."
-22-
(2) The Agreement provides that WCHI shareholders will not
receive in any quarter in which the proposed Affiliation is
consummated a cash dividend from both WCHI and ONB.
Further, the Agreement provides that WCHI may pay its normal
and customary quarterly cash dividend to its shareholders in
an amount not to exceed $0.10 per share of WCHI Common
Stock. See "COMPARISON OF COMMON STOCK -- Dividend Rights."
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 25 through 31 and has been restated to give
effect to all stock dividends. Equivalent per share data is
calculated by multiplying the pro forma ONB information by the
Exchange Ratio under the Agreement.
As Reported
---------------------------------
Net Cash Book Value at
ONB Income Dividends Period End
- ---------------- ------ --------- -------------
Six Months Ended
June 30, 1996 1.15 0.46 16.94
Year Ended December 31,
1995 2.02 0.88 17.41
1994 1.78 0.84 16.11
1993 1.84 0.72 15.62
WCHI
- ----------------
Six Months Ended
June 30, 1996 0.48 0.18 14.20
Year Ended December 31,
1995 1.11 0.33 14.45
1994 1.03 0.29 13.67
1993 1.05 0.27 13.02
Net Income
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Six Months Ended
June 30, 1996 1.13 0.72
Year Ended December 31,
1995 2.01 1.29
1994 1.77 1.13
1993 1.84 1.18
-23-
Cash Dividends
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Pro Forma(1) Equivalent(1)
Six Months Ended
June 30, 1996 0.46 0.29
Year Ended December 31,
1995 0.88 0.56
1994 0.84 0.54
1993 0.72 0.46
Shareholders' Equity
-----------------------------
ONB WCHI
Pro Forma(1) Equivalent(1)
------------ -------------
Pro Forma(1) Equivalent(1)
As of June 30, 1996 17.20 11.01
As of December 31, 1995 17.41 11.14
Market Value of Common Stock
-------------------------------------
ONB WCHI
Historical Historical Equivalent(1)
---------- ---------- -------------
As of April 8, 1996 (2) $33.25 $16.25 $21.28
(1) Considers the pending merger with WCHI. See "PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION."
(2) Represents the last business day prior to the public
announcement of the Affiliation.
-24-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Unaudited)
The accompanying financial statements present a Pro Forma
Condensed Combined Balance Sheet of ONB as of June 30, 1996 and
Pro Forma Condensed Combined Statements of Income for the six
months ended June 30, 1996 and for the years ended December 31,
1995, 1994, and 1993.
The Pro Forma Condensed Combined Statements of Income for
the six months ended June 30, 1996 and the years ended December
31, 1995, 1994, and 1993 is presented giving effect to the
affiliation with The National Bank of Carmi as of January 1 of
each of the years presented.
The pro forma information is based upon historical financial
statements. The Pro Forma Condensed Combined income statements
have been presented using ONB's fiscal year end of December 31
and the most recent interim date. The assumptions give effect to
the Affiliation under the pooling-of-interests method of
accounting. The information has been prepared in accordance with
the rules and regulations of the Securities and Exchange
Commission 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 mergers been effected on
January 1 of the years presented.
-25-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited - Dollars in Thousands)
ONB Workingmens Adjustments Pro Forma
--- ----------- ----------- ---------
ASSETS
Cash and due from banks $146,326 $1,002 $147,328
Money market investments 14,413 $5,894 20,307
Investment securities 1,438,734 13,239 1,451,973
Loans 3,190,348 183,777 3,374,125
Reserve for loan losses (42,563) (376) (42,939)
Excess cost over assets acquired 13,494 13,494
Other intangibles 998 998
Premises and equipment 75,345 1,362 76,707
Other assets 93,041 3,305 96,346
---------- -------- ----- ----------
$4,930,136 $208,203 $0 $5,138,339
========== ======== ===== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits $3,978,261 $149,721 $4,127,982
Medium term notes 44,000 0 44,000
Subordinated debentures 30,570 0 30,570
Other borrowings 400,143 31,011 431,154
Other liabilities 55,288 1,012 56,300
---------- -------- ----- ----------
Total liabilities 4,508,262 181,744 0 4,690,006
---------- -------- ----- ----------
Common stock 24,908 8,341 (7,184) (a) 26,065
Capital surplus 230,755 0 7,184 (a) 237,939
Retained earnings 170,867 18,262 189,129
Net unrealized gain (4,656) (144) (4,800)
---------- -------- ----- ----------
Total shareholders' equity 421,874 26,459 0 448,333
---------- -------- ----- ----------
$4,930,136 $208,203 $0 $5,138,339
---------- -------- ----- ----------
Outstanding common shares 24,907,786 26,065,286
========== ======== ===== ==========
Shareholders' equity per share 16.94 17.20
========== ======== ===== ==========
See Notes to Pro Forma Financial Information.
-26-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
Interest income $184,753 $8,084 $192,837
Interest expense 88,529 5,201 93,730
-------- ------ --------
Net interest income 96,224 2,883 99,107
Provision for loan losses 4,063 42 4,105
-------- ------ --------
Net interest income after
provision for loan losses 92,161 2,841 95,002
Noninterest income 21,313 157 21,470
Noninterest expense 71,769 1,525 73,294
-------- ------ --------
Income (loss) before income
taxes 41,705 1,473 43,178
Provision for income taxes 12,618 610 13,228
-------- ------ --------
Net income (loss) $ 29,087 $ 863 $ 29,950
======== ====== ========
Net income per common share:(b)
Assuming no dilution $ 1.15 $ 1.13
======== ========
Assuming full dilution $ 1.12 $ 1.10
======== ========
Weighted average common
shares outstanding: (b)
Assuming no dilution 25,247,981 26,405,481
========== ==========
Assuming full dilution 26,615,616 27,773,116
========== ==========
See Notes to Pro Forma Financial Information.
-27-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
Interest income $ 359,972 $ 16,000 $ 375,972
Interest expense 176,293 10,231 186,524
-------- --------- ---------
Net interest income 183,679 5,769 189,448
Provision for loan losses 7,057 78 7,135
-------- --------- ---------
Net interest income after
provision for loan losses 176,622 5,691 182,313
Noninterest income 39,435 241 39,676
Noninterest expense 144,540 2,760 147,300
-------- --------- ---------
Income (loss) before income
taxes 71,517 3,172 74,689
Provision for income taxes 19,359 1,209 20,568
-------- --------- ---------
Net income (loss) $ 52,158 $ 1,963 $ 54,121
======== ========= =========
Net income per common share:(b)
Assuming no dilution $ 2.02 $ 2.01
======== =========
Assuming full dilution $ 1.98 $ 1.96
======== =========
Weighted average common
shares outstanding: (b)
Assuming no dilution 25,758,911 26,916,411
========== ===========
Assuming full dilution 27,166,176 28,323,676
========== ===========
See Notes to Pro Forma Financial Information.
-28-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
Interest income $ 316,656 $ 14,088 $ 330,744
Interest expense 137,561 8,596 146,157
--------- --------- ---------
Net interest income 179,095 5,492 184,587
Provision for loan losses 7,682 72 7,754
--------- --------- ---------
Net interest income after
provision for loan losses 171,413 5,420 176,833
Noninterest income 35,023 180 35,203
Noninterest expense 144,634 2,650 147,284
--------- --------- ---------
Income (loss) before income
taxes 61,802 2,950 64,752
Provision for income taxes 14,618 1,126 15,744
--------- --------- ---------
Net income (loss) $ 47,184 $ 1,824 $ 49,008
========= ========= =========
Net income per common share:(b)
Assuming no dilution $ 1.78 $ 1.77
========= =========
Assuming full dilution $ 1.74 $ 1.73
========= =========
Weighted average common
shares outstanding: (b)
Assuming no dilution 26,484,832 27,642,332
========== ==========
Assuming full dilution 28,183,454 29,340,954
========== ==========
See Notes to Pro Forma Financial Information.
-29-
OLD NATIONAL BANCORP
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(Unaudited -- Dollars in Thousands, Except Share and Per Share
Data)
ONB WORKINGMENS PRO FORMA
--- ----------- ---------
Interest income $311,664 $ 13,713 $325,377
Interest expense 136,170 8,257 144,427
-------- --------- --------
Net interest income 175,494 5,456 180,950
Provision for loan losses 10,275 84 10,359
-------- --------- --------
Net interest income after
provision for loan losses 165,219 5,372 170,591
Noninterest income 33,780 213 33,993
Noninterest expense 132,598 2,489 135,087
-------- --------- --------
Income (loss) before income
taxes 66,401 3,096 69,497
Provision for income taxes 17,548 1,206 18,754
-------- --------- --------
Net income (loss) $ 48,853 $ 1,890 $ 50,743
======== ========= ========
Net income per common share:(b)
Assuming no dilution $ 1.84 $ 1.84
======== ========
Assuming full dilution $ 1.80 $ 1.79
======== ========
Weighted average common
shares outstanding: (b)
Assuming no dilution 26,482,703 27,640,203
========== ==========
Assuming full dilution 28,271,146 29,428,646
========== ==========
See Notes to Pro Forma Financial Information.
-30-
OLD NATIONAL BANCORP
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) Exchange of 100% of WCHI for 1,157,500 shares of ONB Common
Stock.
(b) Restated for all stock dividends. Net income per share on a
fully diluted basis assumes the conversion of ONB's
convertible subordinated debentures.
-31-
DESCRIPTION OF ONB
BUSINESS
ONB is a multi-bank holding company with 25 affiliate banks
located in the tri-state area comprised of southwestern Indiana
and neighboring portions of Illinois and Kentucky. With total
consolidated assets of $4.93 billion as of June 30, 1996, ONB is
the largest independent bank holding company headquartered in the
State of Indiana. Since 1985, ONB has acquired 35 financial
institutions, 10 of which were combined with existing affiliate
banks, and has increased its banking offices to 120.
The principal activity of ONB is to own, manage and
supervise its affiliate banks and its non-bank subsidiaries, each
of which is held by ONB as a separate wholly-owned subsidiary.
The primary sources of ONB's revenues are dividends and fees
received from its subsidiaries. There are various legal
limitations on the extent to which the affiliate banks may
finance, pay dividends to or otherwise supply funds to ONB. See
"REGULATORY CONSIDERATIONS."
ONB's affiliate banks engage in a wide range of commercial
and consumer banking activities and provide other services
relating to the general banking business. Set forth below is a
list of ONB's affiliate banks by state.
Illinois Indiana Kentucky
-------- ------- --------
-The National Bank of -Bank of Western Indiana -City National Bank
Carmi (Covington) (Fulton)
-First National Bank -Citizens National Bank -Farmers Bank & Trust
(Oblong) (Tell City) Company
-Palmer-American National -Clinton State Bank (Henderson)
Bank (Danville) (Clinton) -Farmers Bank & Trust
-Peoples National Bank -Dubois County Bank Company
(Lawrenceville) (Jasper) (Madisonville)
-Security Bank & Trust -First Citizens Bank & Trust -First State Bank
Company (Mt. Carmel) Company (Greencastle) (Greenville)
-First National Bank -Gibson County Bank -Morganfield National
(Harrisburg) (Princeton) Bank
-Merchants National Bank
(Terre Haute)
-Old National Bank (Evansville)
-ONB Bank (Bloomington)
-Orange County Bank (Paoli)
-People's Bank & Trust
Company (Mt. Vernon)
-Rockville National Bank
(Rockville)
-Security Bank & Trust
Company (Vincennes)
-United Southwest Bank
(Washington)
In addition to these affiliate banks, ONB has eight non-bank
affiliates. Indiana Old National Insurance Company reinsures
credit life, accident and health insurance of installment
consumer borrowers of ONB's affiliate banks; Old National Realty
Company, Inc. owns real properties which are incidental to ONB's
-32-
operations; Old National Service Corporation provides data
processing services to ONB's affiliate banks and to third
parties; and Consumer Acceptance Corporation is a consumer
finance company. ONB Investment Services, Inc., a subsidiary of
Old National Bank in Evansville and a registered broker/dealer,
provides brokerage services to a number of the customers of ONB's
affiliate banks. ONB's other three (3) non-banking affiliates
include Old National Trust Company, Old National Trust Company --
Illinois and Old National Trust Company -- Kentucky, all of which
provide trust services in their respective states.
On May 31, 1996, ONB completed its acquisition of The
National Bank of Carmi, a national banking association located in
Carmi, Illinois. The acquisition of The National Bank of Carmi
was accomplished pursuant to the merger of The National Bank of
Carmi into an interim subsidiary of ONB and the exchange of
shares of ONB Common Stock for shares of common stock of The
National Bank of Carmi.
ACQUISITION POLICY
ONB anticipates that it will continue its policy of
geographic expansion through consideration of acquisitions of
financial institutions and insurance agencies located in Indiana,
Kentucky and Illinois. Management of ONB currently is reviewing
and analyzing potential acquisitions, as well as engaging in
discussions or negotiations preliminary to letters of intent or
agreements in principle concerning potential acquisitions. There
can be no assurance that any of these discussions or negotiations
will result in definitive agreements or consummated transactions.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning ONB does not purport to
be complete. For additional information, see the documents filed
by ONB and listed under "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" in this Proxy Statement which are specifically
incorporated herein by reference.
DESCRIPTION OF WCHI
BUSINESS
WCHI, an Indiana corporation, became a unitary savings and
loan holding company upon the conversion of WFSB from a federal
mutual savings and loan institution to a federal stock savings
bank in June, 1990. WCHI and WFSB conduct business from a single
office in Bloomington, Monroe County, Indiana, and WFSB operates
a branch office in Ellettsville, Indiana. WFSB is and
historically has been among the top real estate mortgage lenders
in Monroe County and is one of the largest independent financial
institutions headquartered in Monroe County. WFSB offers a
variety of retail deposit and lending services. WCHI has no
other business activity than being the holding company for WFSB.
WCHI is the sole shareholder of WFSB.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
WCHI has followed the policy of offering loans to its
Directors, officers and employees for the financing of their
principal residences and for other personal loan purposes,
-33-
including overdraft and credit card lines of credit. All such
loans made since the adoption of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 and all such loans
in excess of $60,000 were made in the ordinary course of business
on substantially the same terms and collateral as those of
comparable transactions prevailing at the time and do not involve
more than the normal risk of collectibility or present other
unfavorable features.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The foregoing information concerning WCHI does not purport
to be complete. For additional information, see the documents
filed by WCHI and listed under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" in this Proxy Statement which are
specifically incorporated herein by reference.
REGULATORY CONSIDERATIONS
REGULATION OF ONB AND AFFILIATES
ONB Regulation. ONB is registered as a bank holding company
and is subject to the regulations of the Federal Reserve under
the BHC Act. Bank holding companies are required to file
periodic reports with and are subject to periodic examination by
the Federal Reserve. The Federal Reserve has issued regulations
under the BHC Act requiring a bank holding company to serve as a
source of financial and managerial strength to its subsidiary
banks. It is the policy of the Federal Reserve that, pursuant to
this requirement, a bank holding company should stand ready to
use its resources to provide adequate capital funds to its
subsidiary banks during periods of financial stress or adversity.
Additionally, under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), a bank holding company is
required to guarantee the compliance of any insured depository
institution subsidiary that may become "undercapitalized" (as
defined in the statute) with the terms of any capital restoration
plan filed by such subsidiary with its appropriate federal
banking agency up to the lesser of (i) an amount equal to 5% of
the institution's total assets at the time the institution became
undercapitalized, or (ii) the amount that is necessary (or would
have been necessary) to bring the institution into compliance
with all applicable capital standards as of the time the
institution fails to comply with such capital restoration plan.
Under the BHC Act, the Federal Reserve has the authority to
require a bank holding company to terminate any activity or
relinquish control of a nonbank subsidiary (other than a nonbank
subsidiary of a bank) upon the Federal Reserve's determination
that such activity or control constitutes a serious risk to the
financial soundness and stability of any bank subsidiary of the
bank holding company.
ONB and its affiliate banks are subject to the Federal
Reserve Act, which restricts financial transactions between banks
and affiliated companies. The statute limits credit transactions
between a depository institution and its executive officers and
its affiliates, prescribes terms and conditions for affiliate
transactions deemed to be consistent with safe and sound banking
practice, and restricts the types of collateral security
permitted in connection with an institution's extension of credit
to an affiliate.
Affiliate Regulation. The affiliate banks of ONB which are
national banks are supervised, regulated and examined by the
Office of the Comptroller of the Currency ("OCC"). The affiliate
-34-
banks of ONB which are state banks chartered in Indiana are
supervised, regulated and examined by the Indiana Department of
Financial Institutions. ONB's affiliate banks chartered in
Kentucky are supervised, regulated and examined by the Kentucky
Department of Financial Institutions and those affiliate banks
chartered in Illinois are supervised, regulated and examined by
the Illinois Commissioner of Banks and Trust Companies. In
addition, those ONB affiliate banks which are state banks and
members of the Federal Reserve are supervised and regulated by
the Federal Reserve and those which are not members of the
Federal Reserve are supervised and regulated by the Federal
Deposit Insurance Corporation ("FDIC"). Each regulator has the
authority to issue cease-and-desist orders if it determines that
activities of the bank regularly represent an unsafe and unsound
banking practice or a violation of law.
Both federal and state law extensively regulate various
aspects of the banking business such as reserve requirements,
truth-in-lending and truth-in-savings disclosure, equal credit
opportunity, fair credit reporting, trading in securities and
other aspects of banking operations. Current federal law also
requires banks, among other things, to make deposited funds
available within specified time periods.
Each affiliate of ONB has the power to engage in the
business of banking as provided by the law of its state of
incorporation. These laws differ from state to state and from
federal law to state law. However, insured state-chartered banks
are prohibited under FDICIA from engaging as principal in
activities that are not permitted for national banks under
federal law, unless (i) the FDIC determines that the activity
would pose no significant risk to the appropriate deposit
insurance fund, and (ii) the bank is, and continues to be, in
compliance with all applicable capital standards.
REGULATION OF WCHI
WCHI is regulated as a "non-diversified savings and loan
company" within the meaning of the Home Owners' Loan Act, as
amended ("HOLA") and subject to regulatory oversight of the
Director of the OTS. As such, WCHI is registered with the OTS
and thereby subject to OTS regulations, examinations, supervision
and reporting requirements. As a subsidiary of a savings and
loan holding company, WFSB is subject to certain restrictions in
its dealings with WCHI and with other companies affiliated with
WCHI.
HOLA general prohibits a savings and loan company, without
prior approval of the Director of OTS, from (i) acquiring control
of any other savings association or savings and loan holding
company or controlling the assets thereof or (ii) acquiring or
retaining more than 5 percent of the voting shares of a savings
association or holding company thereof which is not a subsidiary.
Additionally, under certain circumstances a savings and loan
holding company is permitted to acquire, with the approval of the
Director of the OTS, up to 15 percent of previously unissued
voting shares of an under-capitalized savings association for
cash without that savings association being deemed controlled by
the holding company. Except with the prior approval of the
Director of the OTS, no director or officer of a savings and loan
holding company or person owning or controlling by proxy or
otherwise more than 25% of such company's stock, may also acquire
control of any savings institution, other than a subsidiary
institution, or any other savings and loan holding company.
-35-
WCHI is a unitary savings and loan holding company. There
are generally no restrictions on the permissible business
activities of a unitary savings and loan holding company.
However, if the Director of the OTS determines that there is
reasonable cause to believe that the continuation by a savings
and loan holding company of an activity constitutes a serious
risk to the financial safety, soundness, or stability of its
subsidiary savings association, the Director of the OTS may
impose such restrictions as deemed necessary to address such risk
and limiting (i) payment of dividends by the savings association,
(ii) transactions between the savings association and its
affiliates, and (iii) any activities of the savings association
that might create a serious risk that the liabilities of the
holding company and its affiliates may be imposed on the savings
association.
Notwithstanding the above rules as to permissible business
activities of unitary savings and loan holding companies, if the
savings association subsidiary of such a holding company fails to
meet the Qualified Thrift Lender ("QTL") test, then such unitary
holding company would become subject to the activities
restrictions applicable to multiple holding companies.
(Additional restrictions on securing advances from the FHLB also
apply.) See "REGULATORY CONSIDERATIONS -- Regulation of WFSB,
Qualified Thrift Lender Requirement." At June 30, 1996, WFSB's
asset composition was in excess of that required to qualify WFSB
as a Qualified Thrift Lender.
If WCHI were to acquire control of another savings
institution other than through a merger or other business
combination with WFSB, WCHI would thereupon become a multiple
savings and loan holding company. Except where such acquisition
is pursuant to the authority to approve emergency thrift
acquisitions and where each subsidiary savings association meets
the QTL test, the activities of WCHI and any of its subsidiaries
(other than WFSB) or other subsidiary savings associations)
would thereafter be subject to further restrictions. HOLA
provides that, among other things, no multiple savings and loan
holding company or subsidiary thereof which is not a savings
association shall commence or continue for a limited period of
time after becoming a multiple savings and loan holding company
or subsidiary thereof, any business activity other than
(i) furnishing or performing management services for a subsidiary
savings association, (ii) conducting an insurance agency or
escrow business, (iii) holding, managing, or liquidating assets
owned by or acquired from a subsidiary savings institution,
(iv) holding or managing properties used or occupied by a
subsidiary savings institution, (v) acting as trustee under deeds
of trust, (vi) those activities previously directly authorized by
the FSLIC by regulation as of March 5, 1987, to be engaged in by
multiple holding companies or (vii) those activities authorized
by the FRB as permissible for bank holding companies, unless the
Director of the OTS by regulation prohibits or limits such
activities for savings and loan holding companies. Those
activities described in (vii) above must also be approved by the
Director of the OTS prior to being engaged in by a multiple
holding company.
The Director of the OTS may also approve acquisitions
resulting in the formation of a multiple savings and loan holding
company which controls savings associations in more than one
state, if the multiple savings and loan holding company involved
controls a savings association which operated a home or branch
office in the state of the association to be acquired as of
March 5, 1987, or if the laws of the state in which the
institution to be acquired is located specifically permit
institutions to be acquired by state-chartered institutions or
savings and loan holding companies located in the state where the
acquiring entity is located (or by a holding company that
controls such state-chartered savings institutions). Also, the
Director of the OTS may approve an acquisition resulting in a
-36-
multiple savings and loan holding company controlling savings
associations in more than one state in the case of certain
emergency thrift acquisitions.
Indiana law permits acquisitions of certain federal and
state SAIF-insured savings associations and their holding
companies ("Savings Associations") located in Indiana, Ohio,
Kentucky, Illinois, and Michigan (the "Region") by other Savings
Associations located in the Region. Savings Associations with
their principal place of business in one of the states in the
Region (other than Indiana) may acquire Savings Associations with
their principal place of business in Indiana if, subject to
certain other conditions, the state of the acquiring association
has reciprocal legislation permitting the acquisition of Savings
Associations and their holding companies in that state by Indiana
Savings Associations. Each of the states in the Region has, at
least to a certain degree, reciprocal legislation. The Indiana
statute also authorizes Indiana Savings Associations to acquire
other Savings Associations in the Region. Following the
acquisition, an acquired Indiana Savings Association and any
other Indiana Savings Association subsidiary owned by the
acquiror must hold no more than 15% of the total Savings
Association deposits in Indiana.
No subsidiary savings association of a savings and loan
holding company may declare or pay a dividend on its permanent or
nonwithdrawable stock unless it first gives the Director of the
OTS 30 days advance notice of such declaration and payment. Any
dividend declared during such period or without giving notice
shall be invalid.
Regulation of WFSB
General. As a Savings Association Insurance Fund
("SAIF")-insured savings association, WFSB is subject to
supervision and regulation by the Director of the OTS, as is ONB
Bank. Following the Affiliation, ONB Bank will continue to be
supervised and regulated by the OTS. Under OTS regulations, WFSB
is required to obtain audits by independent auditors and to be
examined periodically by the Director of the OTS. WFSB is
subject to assessments by the OTS and the FDIC to cover the costs
of such examinations. The Director of the OTS also is authorized
to promulgate regulations to ensure the safe and sound operations
of savings associations and may impose various requirements and
restrictions on the activities of savings associations.
The activities of savings associations are governed by HOLA
and, in certain respects, the Federal Deposit Insurance Act, as
amended ("FDI Act").
Qualified Thrift Lender Requirement. In order for WFSB to
exercise the powers granted to federally-chartered savings
associations and maintain full access to Federal Home Loan Bank
advances, it must be a "qualified thrift lender" ("QTL"). A
savings institution is a QTL if its qualified thrift investments
continue to equal or exceed 65% of the savings institution's
portfolio assets on a monthly average basis in 9 out of 12
months. As of June 30, 1996, WFSB's qualified thrift investments
represented 98.57% of its portfolio assets. Qualified thrift
investments generally consist of (i) various housing related
loans and investments (such as residential construction and
mortgage loans, home improvement loans, manufactured housing
loans, home equity loans and mortgage-backed securities),
(ii) certain obligations of the FSLIC, the FDIC, the FSLIC
Resolution Fund and the Resolution Trust Corporation (for limited
periods), and (iii) shares of stock issued by any Federal Home
Loan Bank, the Federal Home Loan Mortgage Corporation or the
Federal National Mortgage Association.
-37-
Liquidity. Under applicable federal regulations, savings
associations are required to maintain an average daily balance of
liquid assets (including cash, certain time deposits, certain
banker's acceptances, certain corporate debt securities and
highly rated commercial paper, securities of certain mutual funds
and specified United States government, state or federal agency
obligations) of not less than 5% of the average daily balance of
the savings association's net withdrawable deposits plus
short-term borrowings during the preceding calendar month. As of
June 30, 1996, WFSB's liquid assets represented 7.09% of its net
withdrawable deposits plus short-term borrowings during the
preceding calendar month. Under HOLA, this liquidity requirement
may be changed from time to time by the Director of the OTS to
any amount within the range of four percent to ten percent,
depending upon economic conditions and the deposit flows of
member institutions. A savings institution is also required to
maintain an average daily balance of short-term liquid assets of
not less than 1% of the average daily balance of its net
withdrawable deposits and short-term borrowings during the
preceding calendar month. At March 31, 1996, WFSB was in
compliance with these liquidity requirements.
Loans-to-One-Borrower Limitations. HOLA generally requires
savings associations to comply with the loans-to-one-borrower
limitations applicable to national banks. In general, national
banks may make loans to one borrower in amounts up to 15% of the
bank's unimpaired capital and surplus, plus an additional 10% of
capital and surplus for loans secured by readily marketable
collateral. At June 30, 1996, WFSB's loan-to-one-borrower
limitation was approximately $3.8 million. Under certain OTS
regulations, a savings institution may make loans to one borrower
for residential housing developments in amounts up to 30% of the
bank's unimpaired capital and surplus upon prior notice to and
approval of the OTS and provided that all loans made in reliance
upon the increased lending limit do not, in the aggregate, exceed
150% of the bank's unimpaired capital and surplus. At June 30,
1996, all of WFSB's loans complied with these limits.
Commercial Real Property Loans. HOLA limits the aggregate
amount of commercial real estate loans that a federal savings
institution may make to an amount not in excess of 400% of the
savings institution's capital.
WFSB's Subsidiaries. The OTS regulations permit federal
savings associations to invest in the capital stock, obligations
or specified types of securities of subsidiaries (referred to as
"service corporations") and to make loans to such subsidiaries
and joint ventures in which such subsidiaries are participants in
an aggregate amount not exceeding three percent of an
institution's assets, provided any investment over two percent is
used for specified community or inner-city development purposes.
In addition, federal regulations permit institutions to make
specified types of loans to such subsidiaries, in which the
institution owns more than ten percent of the stock, in an
aggregate amount not exceeding 50% of the institution's
regulatory capital if the institution's investment is in
compliance with applicable loans-to-one-borrower regulations. A
savings institution which acquires a non-savings institution
subsidiary, or which elects to conduct a new activity within a
subsidiary, must give the FDIC and the OTS at least 30 days'
advance written notice. The FDIC may, after consultation with
the OTS, prohibit specific activities if it determines such
activities pose a serious threat to SAIF. WFSB's one such
subsidiary is RISC.
Branching. The rules of the OTS on branching by
federally-chartered savings associations permit nationwide
branching to the extent allowed by federal statute. This permits
federal savings associations with interstate networks to
diversify their loan portfolio and lines of business. The OTS
-38-
authority pre-empts any state law purporting to regulate
branching by federal savings associations.
CAPITAL ADEQUACY GUIDELINES
Bank holding companies are required to comply with the
Federal Reserve's risk-based capital guidelines which require a
minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities such as standby letters of
credit) of 8%. At least half of the total required capital must
be "Tier 1 capital," consisting principally of common
shareholders' equity, noncumulative perpetual preferred stock, a
limited amount of cumulative perpetual preferred stock and
minority interest in the equity accounts of consolidated
subsidiaries, less certain goodwill items. The remainder ("Tier
2 capital") may consist of a limited amount of subordinated debt
and intermediate-term preferred stock, certain hybrid capital
instruments and other debt securities, cumulative perpetual
preferred stock, and a limited amount of the general loan loss
allowance. In addition to the risk-based capital guidelines, the
Federal Reserve has adopted a Tier 1 (leverage) capital ratio
under which the bank holding company must maintain a minimum
level of Tier 1 capital to average total consolidated assets of
3% in the case of bank holding companies which have the highest
regulatory examination ratings and are not contemplating
significant growth or expansion. All other bank holding
companies are expected to maintain a ratio of at least 1% to 2%
above the stated minimum.
The following are ONB's regulatory capital ratios as of June
30, 1996:
Tier 1 Capital: 13.04%
Total Capital: 15.18%
Leverage Ratio: 8.35%
Depository institution affiliates of ONB and WFSB are
required to meet similar capital adequacy ratios. The FDIC, OCC
and OTS have adopted risk-based capital ratio guidelines to which
depository institutions under their respective supervision are
subject. The guidelines establish a systematic analytical
framework that makes regulatory capital requirements more
sensitive to differences in risk profiles among banking
organizations. Risk-based capital ratios are determined by
allocating assets and specified off-balance sheet commitments to
four risk weighted categories, with higher levels of capital
being required for the categories perceived as representing
greater risk.
Like the capital guidelines established by the Federal
Reserve, these guidelines divide an institution's capital into
two tiers. Depository institutions are required to maintain a
total risk-based capital ratio of 8%. The agencies may, however,
set higher capital requirements when an institution's particular
circumstances warrant. Depository institutions experiencing or
anticipating significant growth are expected to maintain capital
ratios, including tangible capital positions, well above the
minimum levels.
In addition, the agencies established guidelines prescribing
a minimum Tier 1 leverage ratio of 3% for depository institutions
that meet certain specified criteria, including that they have
the highest regulatory rating and are not experiencing or
anticipating significant growth. All other institutions are
-39-
required to maintain a Tier 1 leverage ratio of 3% plus an
additional 100 to 200 basis points.
All of ONB's affiliate banks as well as WFSB exceed the
risk-based capital guidelines as of June 30, 1996. For
additional information pertaining to WCHI's regulatory capital,
see "Liquidity and Capital Resources" under the caption
"Management Discussion and Analysis of Financial Condition and
Results of Operations" contained in WCHI's Annual Report to
Shareholders for the fiscal year ended December 31, 1995.
The OTS has promulgated a rule which sets forth the
methodology for calculating an interest rate risk component to be
incorporated into the OTS regulatory capital rule, although it
has delayed implementation of the rule. Under the rule, only
savings associations with "above normal" interest rate risk
(institutions whose portfolio equity would decline in value by
more than 2% of assets in the event of a hypothetical 200-basis
point move in interest rates) will be required to maintain
additional capital for interest rate risk under the risk-based
capital framework. An institution with an "above normal" level
of exposure will have to maintain additional capital equal to
one-half the difference between its measured interest rate risk
(the most adverse change in the market value of its portfolio
resulting from a 200-basis point move in interest rates divided
by the estimated market value of its assets) and 2%, multiplied
by the market value of its assets. That dollar amount of capital
is in addition to an institution's existing risk-based capital
requirement. The OTS decided to delay implementation of this
rule, pending the testing of an OTS appeals process for certain
institutions subject to capital deductions under the new rule.
However, during this delay, the OTS has stated that it will
continue to closely monitor interest rate risk at individual
institutions and it retains the authority, on a case-by-case
basis, to impose additional capital requirements for individual
institutions with significant interest rate risk.
The OCC, Federal Reserve, and FDIC issued a joint policy
statement providing guidance in sound practices for managing
interest rate risk. This policy statement replaces a prior
proposed policy statement which the agencies had issued regarding
a supervisory homework measure and assessing bank's interest rate
exposure.
The capital requirements described above are minimum
requirements. Higher capital levels will be required by the
federal banking regulators if warranted by the particular
circumstances or risk profiles of individual institutions. For
example, the regulations of both the FDIC and the OCC provide
that additional capital may be required to take adequate account
of the risks posed by concentrations of credit and nontraditional
activities, interest rate risk and the bank's ability to manage
such risks. As of June 30, 1996, none of ONB's affiliate banks
or WFSB had been directed by its primary federal regulator to
maintain capital at a level in excess of the minimum regulatory
requirements.
It is too early to assess the impact, if any, these new
rules and related proposals will have on ONB or its subsidiaries.
BRANCHING AND ACQUISITIONS
Branching. Branching by ONB affiliate banks in Indiana,
Kentucky and Illinois is subject to the jurisdiction, and
requires the prior approval, of the bank's primary federal
regulatory authority and, if the branching bank is a state bank,
of the Indiana Department of Financial Institutions, Kentucky
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Department of Financial Institutions or Illinois Commissioner of
Banks and Trust Companies (depending upon the location of the
principal office of the bank). Under current law, branches may
be established by banks in Illinois and Indiana throughout the
state; whereas in Kentucky, branches may only be established in
the home county of the bank. As discussed below, Congress
recently authorized interstate branching, with certain
limitations, beginning in 1997, and Indiana and Illinois have
adopted legislation permitting interstate branching under certain
circumstances.
Acquisitions. Bank holding companies, such as ONB, are
prohibited by the BHC Act from acquiring direct or indirect
control of more than 5% of the outstanding shares of any class of
voting stock or substantially all of the assets of any bank or
savings association or merging or consolidating with another bank
holding company without prior approval of the Federal Reserve.
Additionally, ONB is prohibited by the BHC Act from engaging in
or from acquiring ownership or control of more than 5% of the
outstanding shares of any class of voting stock of any company
engaged in a nonbanking business unless such business is
determined by the Federal Reserve to be so closely related to
banking as to be a proper incident thereto. The BHC Act does not
place territorial restrictions on the activities of such
nonbanking-related activities.
The BHC Act specifically authorizes a bank holding company,
upon receipt of appropriate approvals from the Federal Reserve
and the Director of the OTS, to acquire control of any savings
association or holding company thereof wherever located.
Similarly, a savings and loan holding company may acquire control
of a bank. A savings association acquired by a bank holding
company cannot continue any non-banking activities not authorized
for bank holding companies. Savings associations acquired by a
bank holding company may, if located in a state where the bank
holding company is legally authorized to acquire a bank, be
converted to the status of a bank, but deposit insurance
assessments and payments continue to be paid by the association
to the SAIF. A savings association so converted to a bank
becomes subject to the branching restrictions applicable to
banks. Also, any insured depository institution may merge with,
acquire the assets of, or assume the liabilities of any other
insured depository institution with the appropriate regulatory
approvals if (i) continued payments of deposit insurance premiums
are made on the acquired depository institution's deposits
(including an assumed rate of growth in such deposits) to SAIF
(if the acquired institution was a SAIF member) or to the Bank
Insurance Fund ("BIF") (if the acquired institution was a BIF
member), (ii) the acquiring institution and any holding company
in control thereof meet all applicable capital requirements at
the time of the transaction, and (iii) if the acquiring
institution is a BIF member, the transaction meets any
limitations on geographic expansion.
INTERSTATE BANKING
In 1994, Congress enacted sweeping changes to the interstate
branching and expansion powers of depository institutions and
their holding companies in The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("Riegle-Neal"), which allows
for interstate banking and interstate branching without regard to
whether such activity is permissible under state law. Beginning
on September 29, 1995, bank holding companies were permitted to
acquire banks anywhere in the United States subject to certain
state restrictions. Beginning on June 1, 1997, an insured bank
may merge with an insured bank in another state without regard to
whether such merger is prohibited by state law, unless the state
opts out of this new legislation before June 1, 1997.
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Additionally, an out-of-state bank may acquire the branches of an
insured bank in another state without acquiring the entire bank;
provided, however, that the law of the state where the branch is
located permits such an acquisition. States may permit
interstate branching earlier than June 1, 1997, where both states
involved with the bank merger expressly permit it by statute.
Further, bank holding companies may merge existing bank
subsidiaries located in different states into one bank, as
permitted under this new statute.
Indiana now permits interstate branching (both de novo and
by acquisition) in accordance with Riegle-Neal subject to certain
conditions. Illinois enacted interstate branching legislation
which will be effective as of June 1, 1997. The Illinois
legislation does not permit de novo branching into Illinois by an
out-of-state bank or the acquisition of a branch in Illinois
without the acquisition of the entire bank. Kentucky has not
adopted legislation pertaining to Riegle-Neal.
An insured bank subsidiary may act as an agent for an
affiliated bank or, subject to certain limitations, a savings
association in offering limited banking services (receive
deposits, renew time deposits, close loans, service loans and
receive payments on loans obligations) both within the same state
and across state lines.
FDICIA
FDICIA accomplished a number of sweeping changes in the
regulation of depository institutions. FDICIA requires, among
other things, federal bank regulatory authorities to take "prompt
corrective action" with respect to banks which do not meet
minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized.
The FDIC has adopted regulations to implement the prompt
corrective action provisions of FDICIA. Among other things, the
regulations define the relevant capital measures for the five
capital categories. An institution is deemed to be "well
capitalized" if it has a total risk-based capital ratio of 10% or
greater, a Tier 1 risk-based capital ratio of 6% or greater, and
a leverage ratio of 5% or greater, and is not subject to a
regulatory order, agreement or directive to meet and maintain a
specific capital level for any capital measure. An institution
is deemed to be "adequately capitalized" if it has a total risk-
based capital ratio of 8% or greater, a Tier 1 risk-based capital
ratio of 4% or greater, generally a leverage ratio 4% or greater
and does not meet the definition of a well-capitalized
institution. An institution is deemed to be "undercapitalized"
if it has a total risk-based capital ratio of less than 8%, a
Tier 1 risk-based capital ratio of less than 4%, or generally a
leverage ratio of less than 4%, and "significantly
undercapitalized" if it has a total risk-based capital ratio of
less than 6%, a Tier 1 risk-based capital ratio of less than 3%,
or a leverage ratio of less than 3%. An institution is deemed to
be "critically undercapitalized" if it has a ratio of tangible
equity (as defined in the regulations) to total assets that is
equal to or less than 2%.
"Undercapitalized" banks are subject to growth limitations
and are required to submit a capital restoration plan. A bank's
compliance with such plan is required to be guaranteed by any
company that controls the undercapitalized institution as
described above. If an "undercapitalized" bank fails to submit
an acceptable plan, it is treated as if it is significantly
undercapitalized. "Significantly undercapitalized" banks are
subject to one or more of a number of requirements and
restrictions, including an order by the FDIC to sell sufficient
voting stock to become adequately capitalized, requirements to
reduce total assets and cease receipt of deposits from
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correspondent banks, and restrictions on compensation of
executive officers. "Critically undercapitalized" institutions
may not, beginning 60 days after becoming "critically
undercapitalized," make any payment of principal or interest on
certain subordinated debt or extend credit for a highly leveraged
transaction or enter into any transaction outside the ordinary
course of business. In addition, "critically undercapitalized"
institutions are subject to appointment of a receiver or
conservator.
On July 10, 1995, the federal banking regulators, including
the FDIC, the OCC and the OTS, published final guidelines
establishing operational and managerial standards to promote the
safety and soundness of federally insured depository
institutions. The guidelines, which took effect on August 9,
1995, establish standards for internal controls, information
systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, and
compensation, fees and benefits. In general, the guidelines
prescribe the goals to be achieved in each area, and each
institution will be responsible for establishing its own
procedures to achieve those goals. If an institution fails to
comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the
institution to submit a plan for achieving and maintaining
compliance. The preamble to the guidelines states that the
agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such
severity that it could threaten the safe and sound operation of
the institution. Failure to submit an acceptable compliance
plan, or failure to adhere to a compliance plan that has been
accepted by the appropriate regulator, would constitute grounds
for further enforcement action. The federal banking agencies
have also published for comment proposed asset quality and
earnings standards which, if adopted, would be added to the
safety and soundness guidelines. This proposal, like the final
guidelines discussed above, would establish the goals to be
achieved with respect to asset quality and earnings, and each
institution would be responsible for establishing its own
procedures to meet such goals.
DEPOSIT INSURANCE
The deposits of ONB's affiliate banks are insured up to
$100,000 per insured account, by the BIF, except for deposits
acquired in connection with affiliations with savings
associations, which deposits are insured by the SAIF. WFSB's
deposits are insured by SAIF. Accordingly, ONB pays deposit
insurance premiums to both BIF and SAIF and will continue to pay
SAIF premiums with respect to all deposits of WFSB acquired in
the Affiliation. If the FDIC believes that an increase in the
insurance rates is necessary, it may increase the insurance
premiums applicable to BIF or SAIF. Currently SAIF premiums are
significantly higher than BIF premiums; however, Congress is
considering a number of alternatives to address this issue and
maintain relative equality among premium payments, including a
large one-time assessment on savings associations, requiring
banks to help finance the bonds issued to recapitalize the thrift
industry, and merging SAIF and BIF. Some Congressional
proposals also require savings associations to convert to bank
charters. It is difficult at this time to assess whether
Congress will address the SAIF/BIF premium differential and, if
so, what impact its legislative solution to that problem will
have on ONB and its subsidiaries, WCHI, and WFSB.
The amount each institution pays for FDIC deposit insurance
coverage is determined in accordance with a risk-based assessment
under which all insured depository institutions are placed into
one of nine categories and assessed insurance premiums based upon
their level of capital and supervisory evaluation. Institutions
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classified as well-capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that
are less than adequately capitalized (as defined by the FDIC) and
considered of substantial supervisory concern pay the highest
premium. For the semi-annual assessment period ended June 30,
1996, BIF assessments ranged from nearly 0% (statutory minimum
assessment of $1,000 paid to the BIF) to 0.27% of deposits while
SAIF assessments ranged from 0.23% to 0.31% of deposits. For the
semi-annual assessment period beginning on July 1, 1996, the BIF
and SAIF assessments will remain as provided above. Risk
classification of all insured institutions is made by the FDIC
for each semi-annual assessment period.
The supervisory subgroup to which an institution is assigned
by the FDIC is confidential and may not be disclosed. Deposit
insurance assessments may increase depending upon the category
and subcategory, if any, to which the bank is assigned by the
FDIC. Any increase in insurance assessments could have an
adverse effect on the earnings of ONB and its affiliate banks,
WCHI and WFSB, and any decrease could have a positive effect on
the earnings of ONB and its affiliate banks, WCHI and WFSB.
ADDITIONAL MATTERS
In addition to the matters discussed above, ONB's affiliate
banks and WFSB are subject to additional regulation of their
activities, including a variety of consumer protection
regulations affecting their lending, deposit and collection
activities and regulations affecting secondary mortgage market
activities.
The extensive regulation, supervision and examination of
financial institutions by the bank regulatory agencies is
intended primarily for the protection of the insurance fund and
depositors. Moreover, such regulation imposes substantial
restrictions on the operations and activities of such
institutions, and grants to regulators broad discretion in
connection with their supervisory and enforcement activities and
examination policies, including policies with respect to
classification of assets and establishment of adequate loan loss
reserves. Any changes in such regulations, whether by
legislation or regulatory action, could have a material impact on
ONB affiliates and their operations. ONB cannot predict what, if
any, future actions may be taken by legislative or regulatory
authorities or what impact any such actions may have on the
operations of its affiliates.
The earnings of financial institutions are also affected by
general economic conditions and prevailing interest rates, both
domestic and foreign and by the monetary and fiscal policies of
the United States Government and its various agencies,
particularly the Federal Reserve.
Additional legislation and administrative actions affecting
the banking industry are being considered and in the future may
be considered by the United States Congress, state legislatures
and various regulatory agencies, including those referred to
above. It cannot be predicted with certainty whether such
legislation of administrative action will be enacted or the
extent to which the banking industry in general or ONB and its
affiliate banks, WCHI and WFSB in particular would be affected
thereby.
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COMPARISON OF COMMON STOCK
The rights of holders of WCHI Common Stock who receive ONB
Common Stock in the Affiliation will be governed by the laws of
the State of Indiana, the state in which ONB is incorporated, and
by ONB's Amended and Restated Articles of Incorporation ("ONB's
Articles of Incorporation") and ONB's By-Laws, as amended ("ONB's
By-Laws"). The rights of WCHI shareholders are presently
governed by the laws of the State of Indiana, the state in which
WCHI is incorporated, and by WCHI's Articles of Incorporation and
By-Laws. The rights of WCHI shareholders differ in certain
respects from the rights they would have as ONB shareholders,
including for ONB 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 ONB Common
Stock and WCHI Common Stock includes all material features of
such shares but does not purport to be complete and is qualified
in its entirety by reference to ONB's Articles of Incorporation
and By-Laws and the Articles of Incorporation and By-Laws of
WCHI.
AUTHORIZED BUT UNISSUED SHARES
ONB's Articles of Incorporation currently authorize the
issuance of 50,000,000 shares of ONB Common Stock, of which
approximately 24,907,786 million shares were outstanding as of
June 30, 1996. The remaining authorized but unissued shares of
common stock may be issued upon authorization of the Board of
Directors of ONB without prior shareholder approval. ONB 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 ONB. No
shares of preferred stock are presently outstanding.
The Board of Directors of ONB has authorized a series of
preferred stock designated as Series A preferred stock. The
Board of Directors of ONB has designated 200,000 shares of Series
A preferred stock in connection with the shareholder rights plan
of ONB. The ONB 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 --
ONB's Shareholder Rights Plan" below.
The shares of ONB Series A preferred stock are nonredeemable
and, unless otherwise provided in connection with the creation of
a subsequent series of preferred stock, are subordinate to all
other series of preferred stock of ONB. Each share of ONB 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 ONB Common Stock. In addition, the ONB Series A
preferred stock is entitled to 100 times any non-cash dividends
(other than dividends payable in equity securities) declared on
the ONB Common Stock, in like kind. In the event of liquidation,
the holders of ONB 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 ONB Common Stock. Each share of ONB Series A
preferred stock will have 100 votes, subject to adjustment,
voting together with the ONB Common Stock and not as a separate
class unless otherwise required by law or ONB's Articles of
Incorporation. In the event of any merger, consolidation or
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other transaction in which common shares are exchanged, each
share of ONB Series A preferred stock will be entitled to receive
100 times the amount received per share of ONB Common Stock. The
rights of the ONB Series A preferred stock as to dividends,
voting rights and liquidation are protected by antidilution
provisions. See "COMPARISON OF COMMON STOCK -- Anti-Takeover
Provisions."
As of June 30, 1996, ONB had 1,540,053 million shares of ONB
Common Stock reserved for issuance under ONB's dividend
reinvestment and stock purchase plan and 1,339,923 million shares
of its common stock reserved for issuance upon conversion of its
outstanding 8% convertible subordinated debentures. Such
debentures are convertible at any time prior to maturity, unless
previously redeemed, into shares of ONB Common Stock at a
conversion rate of 44.643 shares per $1,000 principal amount of
debentures (equivalent to a conversion price of approximately
$22.40 per share), subject to adjustment in certain events.
The issuance of additional shares of ONB Common Stock to
persons who were not holders of ONB Common Stock prior to such
issuance or the issuance of ONB preferred stock may adversely
affect the interests of ONB shareholders.
The Articles of Incorporation of WCHI authorizes the
issuance of 5,000,000 shares of WCHI Common Stock, no par value
per share, of which __________ shares were issued and outstanding
as of the Record Date, and options for __________ shares were
outstanding on that date. Following the Affiliation, all of the
outstanding shares of WCHI Common Stock will be cancelled, and
any outstanding options at the effective time will be converted
into options for ONB Common Stock. See "PROPOSED AFFILIATION -
Exchange of WCHI Common Stock."
WCHI has 2,000,000 shares of Preferred Stock, no par value,
authorized, of which none are issued. Such shares are available
to be issued without shareholder approval under the Articles of
Incorporation of WCHI; however, pursuant to the Agreement, WCHI
is restricted in issuing such shares.
PREEMPTIVE RIGHTS
Neither ONB's nor WCHI's shareholders have preemptive rights
to subscribe for any new or additional ONB Common Stock or WCHI
Common Stock, respectively, or other securities. Preemptive
rights may be granted to ONB's and WCHI's shareholders if their
respective Articles of Incorporation are amended accordingly.
DIVIDEND RIGHTS
The holders of ONB Common Stock and WCHI Common Stock are
entitled to dividends and other distributions when, as and if
declared by their respective Boards of Directors out of funds
legally available therefor. A dividend may not be paid by ONB if,
after giving it effect, (1) ONB would not be able to pay its
debts as they become due in the usual course of business, or
(2) ONB's total assets would be less than the sum of its total
liabilities plus, unless ONB's Articles of Incorporation
permitted otherwise, the amount that would be needed to satisfy
the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the dividend
if ONB were to be dissolved at the time of the dividend. The
same dividend limitations apply to WCHI shareholders.
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The amount of dividends, if any, that may be declared by ONB
in the future will necessarily depend upon many factors,
including, without limitation, future earnings, capital
requirements, business conditions and capital levels of
subsidiaries (since ONB is primarily dependent upon dividends
paid by its subsidiaries for its revenues), the discretion of
ONB's Board of Directors and other factors that may be
appropriate in determining dividend policies.
Cash dividends paid to ONB 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 ONB by its Indiana-chartered
affiliate banks in excess of total net profits for the year of
declaration plus retained net profits for the previous two (2)
years may not be declared without approval of the Indiana
Department of Financial Institutions. Cash dividends paid to ONB
by its Kentucky-chartered affiliate banks are limited by Kentucky
law to so much of the net profits of the banks, after deducting
all expenses, losses, bad or suspended debts and interest and
taxes accrued or due from the banks, as the boards of directors
of the banks deem expedient. In addition, the approval of the
Kentucky Commissioner of Banks is required if the total of all
dividends declared by a Kentucky bank in any calendar year
exceeds the bank's net profit for that year and the net retained
profits from the preceding two years, less any transfers to
surplus or a fund for retirement of preferred stock or debt.
ONB's national affiliate banks may pay cash dividends on their
common stock only out of adjusted retained net profits for the
year in which the dividend is paid and the two preceding years.
The ability of ONB Bank, as a savings association, to pay
dividends to ONB is limited by OTS regulations, as is WFSB. The
OTS regulations impose limitations on capital distributions by
savings associations, including ONB Bank and WFSB. Under the
OTS's rule, a savings institution is classified as a tier 1
institution, a tier 2 institution, or a tier 3 institution,
depending upon its level of regulatory capital both before and
after giving effect to a proposed capital distribution. A tier 1
institution may generally make capital distributions in any
calendar year up to 100% of its net income to date during the
calendar year plus the amount that would reduce by one-half its
"surplus capital ratio" (i.e., the percentage by which the
institution's capital-to-assets ratio exceeds the ratio of its
capital requirements to its assets) at the beginning of the
calendar year. No regulatory approval of the capital
distribution is required, but prior notice must be given to the
OTS. Restrictions exist on the ability of tier 2 and tier 3
institutions to make capital distributions. For purposes of this
regulation, ONB Bank and WFSB are each a tier 1 institution.
Dividends paid by ONB's affiliate banks and WFSB may 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. See "REGULATORY
CONSIDERATIONS." 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 ONB's affiliate banks nor WFSB is
currently subject to such a restriction.
VOTING RIGHTS
The holders of the outstanding shares of ONB Common Stock
and WCHI Common Stock are entitled to one vote per share on all
matters presented for shareholder vote. ONB and WCHI
shareholders do not have cumulative voting rights in the election
of directors. Under cumulative voting, the number of shares a
shareholder is entitled to vote multiplied by the number of
Directors to be elected represents the number of votes a
shareholder may cast at such election, and a shareholder may cast
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all such 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 render it more difficult for a
minority shareholder to elect a nominee as a Director.
Indiana law generally requires that mergers, consolidations,
sales, leases, exchanges or other dispositions of all or
substantially all of the assets of a corporation be approved by
the affirmative vote of a majority of the issued and outstanding
shares entitled to vote at the shareholders meeting, subject in
each case to provisions in the corporation's articles of
incorporation requiring a higher percentage vote for certain
transactions. ONB's and WCHI's Articles of Incorporation provide
that certain business combinations may, under certain
circumstances, require approval of more than a simple majority of
the issued and outstanding shares of ONB Common Stock. Indiana
law permits a corporation in its articles of incorporation to
prescribe a higher shareholder vote for certain amendments to the
articles of incorporation. See "COMPARISON OF COMMON STOCK --
Anti-Takeover Provisions."
Indiana law requires shareholder approval for most
amendments to a corporation's articles of incorporation -- under
Indiana law, 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). Indiana law permits a
corporation in its articles of incorporation to prescribe a
higher shareholder vote for certain amendments to the Articles of
Incorporation. ONB's Articles of Incorporation require a super-
majority shareholder vote of eighty percent (80%) of the
outstanding shares of ONB Common Stock for the amendment of
certain significant provisions. Amendments to WCHI's Charter
require a super-majority shareholder vote of eighty percent (80%)
of the outstanding shares of WCHI Common Stock for the amendment
of certain significant provisions.
DISSENTERS' RIGHTS
The holders of WCHI Common Stock and ONB Common Stock
possess no dissenters' rights in connection with the Affiliation.
See "PROPOSED AFFILIATION -- No Dissenters' on Appraisal Rights."
ONB shareholders would not have dissenters' rights for any future
merger or acquisition so long as ONB Common Stock is traded on
the NASDAQ National Market System.
LIQUIDATION RIGHTS
In the event of any liquidation or dissolution of ONB, the
holders of shares of ONB 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 ONB's
liabilities and any rights of creditors and holders of shares of
ONB preferred stock then outstanding. Similar liquidation rights
apply to shareholders of WCHI.
ASSESSMENT AND REDEMPTION
Under Indiana law, shares of ONB Common Stock and WCHI
Common Stock are not liable to further assessment. ONB may
redeem or acquire shares of ONB Common Stock with funds legally
available therefor, and shares so acquired constitute authorized
but unissued shares. ONB may not redeem or acquire shares of ONB
Common Stock if, after giving such redemption or acquisition
effect, ONB would not be able to pay its debts as they become due
in the usual course of business, or ONB's total assets would be
less than the sum of its total liabilities plus, unless ONB's
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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
ONB were to be dissolved at the time of the redemption or
acquisition. WCHI has similar redemption rights and limitations
under Indiana law.
In addition, ONB must give prior notice to the Federal
Reserve if the consideration to be paid by it for any redemption
or acquisition of its respective shares, when aggregated with the
consideration paid for all redemptions or acquisitions for the
preceding twelve (12) months, equals or exceeds 10% of its
consolidated net worth. This requirement does not, however,
apply to a bank holding company which is deemed to be "well-
capitalized" as defined pursuant to FDICIA (see "Regulatory
Considerations -- FDICIA") and which received a composite rating
of 1 or 2 at its most recent Federal Reserve examination and
which is not the subject of any unresolved supervisory issues.
This requirement does not currently apply to ONB.
ANTI-TAKEOVER PROVISIONS
The anti-takeover measures applicable to ONB and WCHI, as
described below, may have the effect of discouraging or rendering
it more difficult for a person or other entity to acquire control
of ONB or WCHI, respectively. These measures may have the effect
of discouraging certain tender offers for shares of ONB Common
Stock or WCHI Common Stock which might otherwise be made at
premium prices or certain other acquisition transactions which
might be viewed favorably by a significant number of
shareholders.
Indiana Law. Under the business combinations provision of
Indiana law, any 10% shareholder of an Indiana corporation, with
a class of voting shares registered under Section 12 of the
Exchange Act or which has specifically adopted this provision in
the corporation's articles of incorporation, is prohibited for a
period of five (5) years from completing a business combination
with the corporation unless, prior to the acquisition of such 10%
interest, the board of directors of the corporation approved
either the acquisition of such interest or the proposed business
combination. Further, the corporation and a 10% shareholder may
not consummate a business combination unless all provisions of
the articles of incorporation of the corporation are complied
with and a majority of disinterested shareholders approve the
transaction or all shareholders receive a price per share
determined in accordance with the business combinations provision
of Indiana law.
An Indiana corporation may elect to remove itself from the
protection provided by the Indiana business combinations
provision, but such an election remains ineffective for eighteen
(18) months and does not apply to a combination with a
shareholder who acquired a 10% ownership position prior to the
effective time of the election. ONB and WCHI are covered by the
business combinations provision of Indiana law, but this law will
not apply to the Affiliation since ONB is not a 10% shareholder
of WCHI.
In addition to the business combinations provision, Indiana
law also contains a "control share acquisition" provision which,
although different in structure from the business combinations
provision, may have a similar effect of discouraging or making
more difficult a hostile takeover of an Indiana corporation.
This provision also may have the effect of discouraging premium
bids for outstanding shares. Indiana law provides that, unless
otherwise provided in an Indiana corporation's articles of
incorporation or by-laws, certain acquisitions of shares of the
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corporation's common stock will be accorded voting rights only if
a majority of the disinterested shareholders approves a
resolution granting the potential acquiror the ability to vote
such shares. Upon disapproval of the resolution, the shares held
by the acquiror shall be redeemed by the corporation at the fair
value of the shares as determined by the control share
acquisition provision. The constitutional validity of the
control share acquisition provisions of Indiana law has in the
past been challenged and has been upheld by the United States
Supreme Court.
This provision does not apply to a plan of affiliation and
merger, if the corporation complies with the applicable merger
provisions and is a party to the agreement of merger or plan of
share exchange. ONB and WCHI are each subject to the control
share acquisition provision, but such provision will not apply to
the Affiliation because the statute excludes from its coverage
transactions such as the Affiliation.
ONB's Articles of Incorporation. In addition to the
protections provided by Indiana law, ONB's Articles of
Incorporation require the affirmative vote of the holders of at
least eighty percent (80%) of the issued and outstanding shares
of capital stock for any business combination which is not
recommended by the vote of two-thirds or more of the members of
the Board of Directors. For purposes of ONB's Articles of
Incorporation, "business combination" is defined to include: (1)
a merger or consolidation of ONB with or into any other
corporation, (2) any sale, lease, exchange or other disposition
of any material part of the assets of ONB, or (3) any liquidation
or dissolution of ONB or any material subsidiary of ONB.
Further, this provision cannot be altered, amended or repealed
without the affirmative vote of the holders of at least eighty
percent (80%) of the issued and outstanding shares of ONB Common
Stock entitled to vote thereon.
ONB's Articles of Incorporation also include provisions
requiring (1) the Board of Directors to consider non-financial
factors in the evaluation of business combinations and tender or
exchange offers, and (2) any person acquiring fifteen percent
(15%) of the then issued and outstanding stock of ONB to pay
equal consideration in connection with the acquisition of any
further shares. These provisions require an eighty percent (80%)
affirmative vote of the issued and outstanding shares of ONB
Common Stock entitled to vote thereon in order to be altered,
amended or repealed.
ONB's Shareholder Rights Plan. On January 25, 1990, the
Board of Directors of ONB declared a dividend of one (1) right
for each issued and outstanding share of ONB Common Stock
("Right"). See "COMPARISON OF COMMON STOCK -- Authorized But
Unissued Shares." The dividend was payable on March 15, 1990 to
holders of record of ONB Common Stock at the close of business on
March 1, 1990. Each Right entitles the registered holder, upon
the occurrence of certain events involving a change in control of
ONB, to purchase from ONB one-hundredth (1/100) of a share of ONB
Series A preferred stock at an initial Purchase Price of $60.00,
subject to adjustment. The terms and conditions of the Rights
are contained in a Rights Agreement between ONB and Old National
Bank in Evansville, as Rights Agent.
The foregoing information concerning ONB's Shareholder
Rights Plan does not purport to be complete. For additional
information, see The Rights Agreement, dated March 1, 1990,
between ONB and Old National Bank of Evansville, as Trustee,
which is specifically incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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WCHI's Articles of Incorporation.
Directors. Certain provisions in the Articles of
Incorporation and By-Laws of WCHI will impede changes in majority
control of the Board of Directors of WCHI. The Articles of
Incorporation provide that the Board of Directors of WCHI is
divided into three classes, with directors in each class elected
for three-year staggered terms. Therefore, it would take two
annual elections to replace a majority of WCHI's Board.
The Articles of Incorporation also provide that the size of
the Board of Directors shall range between five and fifteen
directors, with the exact number of directors to be fixed from
time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors
of WCHI.
The Articles of Incorporation provide that any vacancy
occurring in the Board of Directors, including a vacancy created
by an increase in the number of directors, shall be filled for
remainder of the unexpired term only by a majority vote of the
directors then in office. Finally, the By-Laws impose certain
notice and information requirements in connection with the
nomination by shareholders of candidates for election to the
Board of Directors or the proposal by shareholders of business to
be acted upon at an annual meeting of shareholders.
The Articles of Incorporation provide that a director or the
entire Board of Directors may be removed only for cause and only
by the affirmative vote of at least 80% of the shares eligible to
vote generally in the election of directors. Removal for "cause"
is limited to the grounds for termination in the OTS regulation
relating to employment contracts of federally-insured savings
associations.
Restrictions on Call of Special Meetings. The Articles of
Incorporation provide that a special meeting of shareholders may
be called only by the Chairman of the Board of WCHI or pursuant
to a resolution adopted by a majority of the total number of
directors of WCHI. Shareholders are not authorized to call a
special meeting.
No Cumulative Voting. The Articles of Incorporation provide
that there shall be no cumulative voting rights in the election
of directors.
Authorization of Preferred Stock. The Articles of
Incorporation authorize 2,000,000 shares of preferred stock,
without par value. WCHI is authorized to issue preferred stock
from time to time in one or more series subject to applicable
provisions of the law, and the Board of Directors is authorized
to fix the designations, powers, preferences and relative
participating, optional and other special rights of such shares,
including voting rights (if any and which could be as a separate
class) and conversion rights. In the event of a proposed merger,
tender offer or other attempt to gain control of WCHI not
approved by the Board of Directors, it might be possible for the
Board of Directors to authorize the issuance of a series of
preferred stock with rights and preferences that would impede the
completion of such a transaction. An effect of the possible
issuance of preferred stock, therefore, may be to deter a future
takeover attempt. The Board of Directors has no present plans or
understanding for the issuance of any preferred stock and does
not intend to issue any preferred stock except on terms which the
Board of Directors deems to be in the best interests of WCHI and
its shareholders.
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Evaluation of Offers. The Articles of Incorporation of WCHI
provide that the Board of Directors of WCHI, when determining to
take or refrain from taking corporate action on any matter,
including making or declining to make any recommendation to
WCHI's shareholders, may, in connection with the exercise of its
judgment in determining what is in the best interest of WCHI, its
subsidiaries and the shareholders of WCHI, give due consideration
to all relevant factors, including, without limitation, the
social and economic effects of acceptance of such offer on WCHI's
customers and WCHI's subsidiaries present and future account
holders, borrowers, employees and suppliers; the effect on the
communities in which WCHI and the Institution operate or are
located; and the effect on the ability of WCHI to fulfill the
objectives of a holding company and of WCHI's subsidiaries or
future financial institution subsidiaries to fulfill the
objectives of a stock savings association under applicable
statutes and regulations. The Articles of Incorporation of WCHI
also authorize the Board of Directors to take certain actions to
encourage a person to negotiate for a change of control of WCHI
or to oppose such a transaction deemed undesirable by the Board
of Directors including the adoption of so-called shareholder
rights plans. By having these standards and provisions in the
Articles of Incorporation of WCHI, the Board of Directors may be
in a stronger position to oppose such a transaction if the Board
concludes that the transaction would not be in the best interest
of WCHI, even if the price offered is significantly greater than
the then market price of any equity security of WCHI.
Procedures for Certain Business Combinations. The Articles
of Incorporation require that certain business combinations
between WCHI (or any majority-owned subsidiary thereof) and a 10%
or greater shareholder either be approved (i) by at least 80% of
the total number of outstanding voting shares of WCHI or (ii) by
a majority of certain directors unaffiliated with such 10% or
greater shareholder or involve consideration per share generally
equal to the higher of (A) the highest amount paid by such 10%
shareholder or its affiliates in acquiring any shares of the WCHI
Common Stock or (B) the "Fair Market Value" (generally, the
highest closing bid paid for the WCHI Common Stock during the
thirty days preceding the date of the announcement of the
proposed business combination or on the date the 10% or greater
shareholder became such, whichever is higher).
Amendments to Articles of Incorporation and By-Laws.
Amendments to the Articles of Incorporation must be approved by a
majority vote of WCHI's Board of Directors and also by a majority
of the outstanding shares of WCHI's voting shares; provided,
however, that approval by at least 80% of the outstanding voting
shares is required for certain provisions (i.e., provisions
relating to number, classification, and removal of directors;
amendment of the By-Laws; call of special shareholder meetings;
criteria for evaluating certain offers; certain business
combinations; and amendments to provisions relating to the
foregoing). The provisions concerning limitations on the
acquisition of shares may be amended only by an 80% vote of
WCHI's outstanding shares unless at least two-thirds of WCHI's
Continuing Directors (directors of WCHI on February 13, 1990, or
directors recommended for appointment or election by a majority
of such directors) approve such amendments in advance of their
submission to a vote of shareholders (in which case only a
majority vote of shareholders is required).
The By-Laws may be amended only by a majority vote of the
actual number of directors of WCHI.
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DIRECTOR LIABILITY
Under Indiana law, a director of ONB or WCHI will not be
liable to shareholders for any action taken as a director, or any
failure to take any action, unless (1) the director has breached
or failed to perform his duties as a director in good faith with
the care an ordinarily prudent person in a like position would
exercise under similar circumstances and in a manner the director
reasonably believes to be in the best interests of the
corporation and (2) such breach or failure to perform constitutes
willful misconduct or recklessness.
DIRECTOR NOMINATIONS
ONB's By-Laws require that all nominations for election as
directors of ONB shall be made by the Board of Directors of ONB
in accordance with the By-Laws. Under the By-Laws, the
Nominating Committee of the Board of Directors of ONB
("Nominating Committee") is required to submit to the entire
Board of Directors its recommendation of nominees for election as
directors of ONB 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 ONB, none of whom is an officer or employee of ONB. 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.
With respect to WCHI, nominations of persons for election to
the Board of Directors may be made at a meeting of shareholders
by or at the direction of the Board of Directors, by any
nominating committee or person appointed by the Board of
Directors or by any shareholder entitled to vote for the election
of directors at the meeting who complies with the notice
procedure set forth in WCHI's By-Laws.
OPINIONS
Certain legal matters in connection with the Agreement will
be passed upon for ONB by the law firm of Krieg DeVault Alexander
& Capehart, One Indiana Square, Suite 2800, Indianapolis, Indiana
46204, and for WCHI by the law firm of Barnes & Thornburg, 11
South Meridian Street, Suite 1313, Indianapolis, Indiana 46240.
EXPERTS
The consolidated financial statements of ONB and affiliates
incorporated by reference into this Proxy Statement have been
audited by Arthur Andersen LLP, independent public accountants,
as indicated in their report with respect thereto, and have been
so incorporated by reference into this Proxy Statement in
reliance upon the authority of said firm as experts in auditing
and accounting in giving said report.
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The consolidated financial statements of WCHI as of
December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, have been
incorporated by reference into this Proxy Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
Representatives of KPMG Peat Marwick LLP are not expected to
be at the Special Meeting.
OTHER MATTERS
The Special Meeting is called for the purposes set forth in
the Notice attached to this Proxy Statement. The Board of
Directors of WCHI knows of no other matters for action by
shareholders at the Special Meeting other than the matters
described in the Notice. However, the enclosed revocable 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 WCHI 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 recommendation of
the Board of Directors of WCHI.
-54-
APPENDIX A
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement"),
dated as of this 8th day of April, 1996, by and among OLD
NATIONAL BANCORP ("ONB"), ONB BANK ("ONB Bank"), WORKINGMENS
CAPITAL HOLDINGS, INC. ("Capital Holdings") and WORKINGMENS
FEDERAL SAVINGS BANK ("WFSB"),
W I T N E S S E T H:
WHEREAS, ONB is an Indiana corporation registered as a bank
holding company under the federal Bank Holding Company Act of
1956, as amended ("BHC Act"), with its principal office located
in Evansville, Vanderburgh County, Indiana; and
WHEREAS, ONB Bank is a federally chartered savings bank and
a wholly-owned subsidiary of ONB with its principal office
located in Bloomington, Monroe County, Indiana; and
WHEREAS, Capital Holdings is an Indiana corporation
registered as a savings and loan holding company under the Home
Owners' Loan Act, as amended ("HOLA"), with its principal office
located in Bloomington, Monroe County, Indiana; and
WHEREAS, WFSB is a federally chartered savings bank and a
wholly-owned subsidiary of Capital Holdings with its principal
office located in Bloomington, Monroe County, Indiana; and
WHEREAS, a majority of the Executive Committee of the Board
of Directors of ONB, a majority of the Board of Directors of
Capital Holdings and at least two-thirds (2/3) of the entire
Board of Directors of each of ONB Bank and WFSB have approved
this Agreement and have authorized its execution and delivery.
NOW, THEREFORE, in consideration of the foregoing premises,
the representations, warranties, covenants and mutual obligations
herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, ONB,
ONB Bank, Capital Holdings and WFSB hereby agree as follows:
SECTION 1
THE MERGERS
1.01. The Company Merger.
(a) General Description. Upon the terms and subject to the
conditions of this Agreement, immediately prior to the Thrift
Merger (as hereinafter defined), Capital Holdings shall be merged
into and under the Articles of Incorporation of ONB ("Company
Merger"). ONB shall survive the Company Merger ("Surviving
Corporation") and shall continue its corporate existence under
the laws of the State of Indiana and pursuant to the provisions
of and with the effect provided in the Indiana Business
Corporation Law, as amended.
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(b) Name, Offices and Management. The name of the
Surviving Corporation shall be "Old National Bancorp" Its
principal office shall be located at 420 Main Street, Evansville,
Indiana 47708. The Board of Directors of the Surviving
Corporation, until such time as their successors have been
elected and have qualified, shall consist of the Board of
Directors of ONB serving at the Effective Time (as hereinafter
defined). The officers of ONB serving at the Effective Time
shall be the officers of the Surviving Corporation until the
Board of Directors of the Surviving Corporation shall determine
otherwise.
(c) Capital Structure. The capital of the Surviving
Corporation shall not be less than the capital of ONB immediately
prior to the Effective Time. The issued and outstanding shares
of common stock of ONB immediately prior to the Effective Time
shall remain issued and outstanding following the Effective Time.
(d) Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of ONB in existence at the Effective
Time shall be the Articles of Incorporation and By-Laws of the
ONB until such Articles of Incorporation and By-Laws shall be
amended as provided by applicable law.
(e) Effect of Company Merger. The effect of the Company
Merger upon consummation thereof shall be as set forth in Indiana
Code Section 23-1-40-6, as amended.
(f) Tax-Free Reorganization. ONB, ONB Bank, Capital
Holdings and WFSB intend for the Company Merger to qualify as a
reorganization within the meaning of Section 368 and related
sections of the Internal Revenue Code of 1986, as amended
("Code"), and agree to cooperate and to take such actions as may
be reasonably necessary to assure such result.
1.02. The Thrift Merger.
(a) General Description. Upon the terms and subject to the
conditions of this Agreement, immediately following the Company
Merger, WFSB shall be merged into and under the Charter of ONB
Bank ("Thrift Merger") (the Thrift Merger and the Company Merger
are hereinafter collectively referred to as the "Mergers"). ONB
Bank shall survive the Thrift Merger ("Surviving Bank") and shall
continue its corporate existence under the laws of the United
States of America and ONB Bank's Charter.
(b) Name, Offices and Management. The name of the
Surviving Bank shall be "Workingmens Bank" until such name may be
changed in accordance with applicable law. The Surviving Bank's
home office shall be located at 121 East Kirkwood Avenue,
Bloomington, Indiana 47404, which is the present home office of
WFSB. As of and following the Effective Time, the home office
and all branch offices of ONB Bank and the sole branch office of
WFSB shall become branch offices of the Surviving Bank.
The Board of Directors of the Surviving Bank, until such
time as their successors have been elected and have qualified,
shall consist of the members of the Boards of Directors of ONB
Bank and WFSB serving at the Effective Time, plus up to four (4)
additional directors (i) to be agreed upon by Capital Holdings
and ONB, if elected by Capital Holdings prior to the Effective
Time or (ii) to be agreed upon by the Surviving Bank and ONB, if
elected by ONB following the Effective Time. Each director of
WFSB serving at the Effective Time (other than the four (4)
additional directors elected pursuant to this Section 1.02(b))
will be elected by ONB as a director of the Surviving Bank until
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such director has reached the age of seventy (70) years, at which
time the director must retire from the Surviving Bank's Board of
Directors. Each director of WFSB serving at the Effective Time
who is over the age of seventy (70) years at the Effective Time
and the four (4) additional directors elected pursuant to this
Section 1.02(b) will be elected by ONB to serve as a director of
the Surviving Bank for a period of two (2) years following the
Effective Time. The four (4) additional directors elected by
Capital Holdings pursuant to this Section 1.02(b) shall not be
entitled to participate in or receive any payments or benefits
under the WFSB Deferred Compensation Plan (as hereinafter
defined), the WFSB Director Emeritus Program (as hereinafter
defined) or any health or hospitalization plan of WFSB. The
President and Chief Executive Officer of the Surviving Bank shall
be Mr. Richard R. Haynes, until the Board of Directors of the
Surviving Bank shall elect a successor to Mr. Haynes. The
Chairman of the Surviving Bank shall be Mr. Robert A. Shaffer,
until the Board of Directors of the Surviving Bank shall elect a
successor to Mr. Shaffer.
(c) Capital Structure. At the Effective Time, the capital
of the Surviving Bank shall not be less than the capital of ONB
Bank immediately prior to the Effective Time. At the Effective
Time, all issued and outstanding shares of capital stock of WFSB
shall be canceled and all issued and outstanding shares of
capital stock of ONB Bank shall be unchanged and shall remain
issued and outstanding. As of and following the Effective Time,
ONB shall continue to hold all of the issued and outstanding
shares of capital stock of ONB Bank, as the Surviving Bank in the
Thrift Merger.
(d) Charter and By-Laws. Except for appropriate amendments
to reflect the name of the Surviving Bank as "Workingmens Bank"
or such other name as may be agreed to prior to the Effective
Time by Capital Holdings and ONB, the Charter and By-Laws of ONB
Bank in existence at the Effective Time shall be the Charter and
By-Laws of the Surviving Bank, until such Charter and By-Laws
shall be further amended as provided by applicable law.
(e) Effect of Thrift Merger. At the Effective Time, title
to all assets, real estate and other property owned by WFSB and
ONB Bank shall vest in the Surviving Bank without reversion or
impairment. At the Effective Time, all liabilities and
obligations of WFSB and ONB Bank shall be assumed by the
Surviving Bank. Such liabilities shall include all of WFSB's
obligations with respect to the liquidation account that was
established at the time WFSB converted from mutual to stock form
of ownership.
(f) Tax-Free Reorganization. ONB, ONB Bank, Capital
Holdings and WFSB intend for the Thrift Merger to qualify as a
reorganization within the meaning of Section 368 and related
sections of the Code, and agree to cooperate and to take such
actions as may be reasonably necessary to assure such result.
SECTION 2
MANNER AND BASIS
OF EXCHANGE OF STOCK
2.01. Exchange Ratio. (a) Upon and by virtue of the
Company Merger becoming effective at the Effective Time, each
issued and outstanding share of Capital Holdings Common Stock (as
defined in Section 4.03(a) hereof) shall be converted into the
right to receive sixty-four one hundredths (0.64) of a share of
ONB common stock ("Exchange Ratio"), subject to adjustment, if
any, as set forth in Sections 2.01(c) and 2.03 hereof.
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(b) The "Average Price Per Share" of ONB common stock shall
be defined as the average of the per share closing prices of ONB
common stock as reported on the NASDAQ National Market System for
the first five (5) business days on which shares of ONB common
stock are traded within the ten (10) calendar days immediately
preceding the Effective Time.
(c) If the Average Price Per Share of ONB common stock is
less than $33.00, then the Exchange Ratio shall be adjusted such
that each share of Capital Holdings Common Stock shall be
converted into the right to receive such number of shares of ONB
common stock equal to the quotient arrived at by dividing (i)
$21.12 by (ii) the Average Price Per Share of ONB common stock,
subject to further adjustment, if any, pursuant to the provisions
of Section 2.03 hereof. If the Average Price Per Share of ONB
common stock is greater than $34.75, then the Exchange Ratio
shall be adjusted such that each issued and outstanding share of
Capital Holdings Common Stock shall be converted into the right
to receive such number of shares of ONB common stock equal to the
quotient arrived at by dividing (i) $22.24 by (ii) the Average
Price Per Share of ONB common stock, subject to further
adjustment, if any, pursuant to the provisions of Section 2.03
hereof. If the Average Price Per Share of ONB common stock is
not less than $33.00 or not greater than $34.75, then there shall
be no adjustment to the Exchange Ratio, other than as
contemplated by Section 2.03 hereof.
2.02. No Fractional Shares. Certificates for fractional
shares of ONB common stock shall not be issued for fractional
interests resulting from application of the Exchange Ratio. Each
shareholder of Capital Holdings 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 Price Per Share of ONB common
stock.
2.03. Recapitalization. If, between the date of this
Agreement and the Effective Time, ONB distributes or issues a
stock dividend with respect to its shares of common stock, or
combines, subdivides, reclassifies or splits up its issued and
outstanding shares of common stock, such that the number of
issued and outstanding shares of ONB common stock is increased or
decreased, then the Exchange Ratio shall be adjusted so that
Capital Holdings shareholders shall receive, in the aggregate,
such number of shares of ONB common stock representing the same
percentage of outstanding shares of ONB common stock at the
Effective Time as would have been represented by the number of
shares such shareholders would have received if any of the
foregoing actions had not occurred. If the Exchange Ratio is
adjusted pursuant to this Section 2.03, then all references to
the Average Price Per Share of ONB common stock in Section
2.01(c) hereof shall also be adjusted to give effect to the stock
dividend, stock split or other recapitalization causing the
Exchange Ratio to be adjusted.
2.04. Distribution of ONB Common Stock and Cash.
(a) Promptly following the Effective Time, ONB shall mail to each
Capital Holdings shareholder a letter of transmittal providing
instructions as to the transmittal to ONB of certificates
representing shares of Capital Holdings 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, ONB shall distribute
stock certificates representing shares of ONB common stock and
any cash payment, without interest, for fractional shares, if
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any, shall be made by ONB to each former shareholder of Capital
Holdings within ten (10) business days following delivery to ONB
of the shareholder's certificate(s) representing such
shareholder's shares of Capital Holdings Common Stock accompanied
by a properly completed and executed letter of transmittal, all
in form and substance reasonably satisfactory to ONB and Capital
Holdings.
(c) Following the Effective Time, stock certificates
representing Capital Holdings 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 Capital Holdings shareholder entitled to receive the same
until such shareholder has surrendered to ONB his or her
certificate or certificate(s) representing Capital Holdings
Common Stock in exchange for a certificate representing ONB
common stock. Upon surrender of the certificate(s) representing
shares of Capital Holdings Common Stock, there shall be paid in
cash to the record holder of the new certificate 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 Capital Holdings to establish the persons entitled to
receive shares of ONB common stock pursuant to this Agreement,
which books, in the absence of actual knowledge by ONB of any
adverse claim thereto, shall be conclusive with respect to the
ownership of shares of Capital Holdings Common Stock.
(e) With respect to any certificate for shares of Capital
Holdings Common Stock which has been lost, stolen or destroyed,
ONB shall be authorized to issue its common stock (or to pay cash
as to fractional shares) to the registered owner of such
certificate upon ONB's receipt of an agreement to indemnify ONB
against loss from such lost, stolen or destroyed certificate and
an affidavit of lost, stolen or destroyed stock certificate, both
in form and substance reasonably satisfactory to ONB, and upon
compliance by the Capital Holdings shareholder with all other
reasonable requirements of ONB in connection with lost, stolen or
destroyed stock certificates.
2.05. Subsequent Affiliation. 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
("Other Transaction"), then upon consummation of the Other
Transaction, the shareholders of Capital Holdings shall be
treated as though the Company Merger had been consummated prior
to an Other Transaction and shall be entitled to receive the same
per share consideration as will shareholders of ONB in the Other
Transaction. ONB shall take steps to include provisions in any
such agreement to the foregoing effect.
SECTION 3
DISSENTING SHAREHOLDERS
Shareholders of Capital Holdings are not entitled to
statutory dissenters' rights since Capital Holdings Common Stock
is listed on the NASDAQ National Market System. Capital Holdings
shall take no action which would result in the loss of such
listing on the NASDAQ National Market System prior to the
Effective Time.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF CAPITAL HOLDINGS
Capital Holdings hereby represents and warrants to ONB with
respect to itself, WFSB and Realty Investment Service Corporation
("RISC") as follows:
4.01. Organization and Authority. (a) Capital Holdings is
a corporation duly organized and validly existing under the laws
of the State of Indiana and is a savings and loan holding company
under the HOLA. Capital Holdings 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. Capital
Holdings has no direct subsidiaries and owns directly no voting
stock or equity securities of any corporation, partnership,
association or other entity, other than all of the issued and
outstanding common stock of WFSB. The Capital Holdings Common
Stock is the only class of Capital Holdings stock registered
pursuant to Section 12 the Securities Exchange Act of 1934, as
amended ("1934 Act").
(b) WFSB is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States of America. WFSB 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. Except for shares of
common stock of the Federal Home Loan Bank of Indianapolis and
except as provided in the Disclosure Schedule, WFSB has no
subsidiaries and owns no voting stock or equity securities of, or
any interest in, any corporation, partnership, association or
other entity. WFSB is subject to primary federal regulatory
supervision and examination by the Office of Thrift Supervision
("OTS").
(c) RISC is an Indiana corporation duly organized and
validly existing under the laws of the State of Indiana. RISC's
sole business is the marketing of tax-deferred annuities as agent
for WFSB's customers. RISC 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. WFSB
owns all of the issued and outstanding shares of capital stock of
RISC. RISC has no subsidiaries and owns no voting stock or
equity securities of or any interest in, any corporation,
partnership, association or other entity. WFSB and RISC are
sometimes hereinafter referred to collectively as the
"Subsidiaries."
4.02. Authorization. (a) Each of Capital Holdings and
WFSB 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 hereof. This Agreement and its execution and
delivery by Capital Holdings and WFSB have been duly authorized
and approved by the Board of Directors of Capital Holdings and
WFSB, respectively. The Agreement constitutes a valid and
binding obligation of Capital Holdings and WFSB 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.
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(b) Neither the execution of this Agreement nor
consummation of the Mergers (i) conflicts with or violates
Capital Holdings' Articles of Incorporation or By-Laws or WFSB's
Charter or By-Laws; (ii) conflicts with or violates any local,
state, federal or foreign law, statute, ordinance, rule or
regulation (provided that the approvals of or filings with
applicable government regulatory agencies or authorities required
for consummation of the Mergers are obtained) or any court or
administrative judgment, order, injunction, writ or decree;
(iii) conflicts with, results in a breach of or constitutes a
default under any note, bond, indenture, mortgage, deed of trust,
license, lease, contract, agreement, arrangement, commitment or
other instrument to which Capital Holdings or WFSB is a party or
by which WFSB or Capital Holdings is subject or bound and which
is material to Capital Holdings or WFSB, whether individually or
on a consolidated basis; (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 or
any other adverse interest, upon any right, property or asset of
Capital Holdings or WFSB; 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, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which Capital
Holdings or WFSB is bound or with respect to which Capital
Holdings or WFSB 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, thrift,
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 the
consummation of the Mergers by Capital Holding and WFSB,
respectively.
4.03. Capitalization. (a) The authorized capital stock
of Capital Holdings consists, and at the Effective Time will
consist, of (i) 5,000,000 shares of common stock, no par value
per share, 1,806,560 of which shares are validly issued and
outstanding, which number of issued and outstanding shares of
Capital Holdings Common Stock is subject to increase to a total
of 1,845,540 shares pursuant to the exercise of options
(collectively, the "Stock Options") granted under the Workingmens
Capital Holdings, Inc. Stock Option Plan ("Stock Option Plan") to
purchase an aggregate of 38,980 shares of Capital Holdings Common
Stock (the outstanding shares of common stock of Capital Holdings
are referred to in this Agreement as the "Capital Holdings Common
Stock"), and (ii) 2,000,000 shares of preferred stock, no par
value, none of which shares are issued or outstanding ("Preferred
Stock"). The shares of Capital Holdings Common Stock presently
issued and outstanding have been (and with respect to the shares
of common stock of Capital Holdings to be issued upon exercise of
the Stock Options shall be) duly and validly authorized by all
necessary corporate action of Capital Holdings, are (and with
respect to the shares of common stock of Capital Holdings to be
issued upon exercise of the Stock Options shall be) validly
issued, fully paid and nonassessable and have not been (and with
respect to the shares of common stock of Capital Holdings to be
issued upon exercise of the Stock Options shall not be) issued in
violation of any pre-emptive rights of any present or former
Capital Holdings shareholders. Capital Holdings 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, any shares of
Preferred Stock or any additional shares of Capital Holdings
Common Stock, except for 38,980 shares of Capital Holdings Common
Stock pursuant to the exercise of the Stock Options. As of
December 31, 1995, Capital Holdings had total shareholders
equity of $25,684,519, which consisted of common stock of
$8,066,208, retained earnings of $17,721,628, and net unrealized
depreciation on securities available for sale of $(103,309). A
description of the terms, relative rights, preferences and
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limitations of the Capital Holdings Common Stock and Preferred
Stock is contained in the Articles of Incorporation of Capital
Holdings, a copy of which is set forth in the Disclosure Schedule
pursuant to Section 4.04 hereof (for purposes of this Agreement,
"Disclosure Schedule" shall mean the schedules referencing the
applicable provisions of this Section 4 which are attached hereto
and made a part of this Agreement).
(b) The authorized capital stock of WFSB consists, and at
the Effective Time will consist, of 1,000 shares of common stock,
$.01 par value per share, all of which shares are validly
outstanding and issued to Capital Holdings (such issued and
outstanding shares of common stock are referred to in this
Agreement as the "WFSB Common Stock"), and 1,000,000 shares of
preferred stock, $1.00 par value per share, none of which shares
are issued or outstanding ("WFSB Preferred Stock"). Such issued
and outstanding shares of WFSB Common Stock have been duly and
validly authorized by all necessary corporate action of WFSB, are
validly issued, fully paid and non-assessable and have not been
issued in violation of any pre-emptive rights of any present or
former WFSB shareholders. All of the issued and outstanding
shares of WFSB Common Stock are owned by Capital Holdings 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. WFSB 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, any shares of WFSB
Preferred Stock or any additional shares of WFSB Common Stock.
As of December 31, 1995, WFSB had total assets of $213,254,491,
total liabilities of $189,008,200 and total capital of
$24,246,291, which capital consisted of common stock of $10,
capital surplus of $7,974,990, undivided profits of $16,374,600,
and unrealized depreciation on securities available for sale of
$(103,309).
(c) The authorized capital stock of RISC consists, and at
the Effective Time will consist, of 1,000 shares of common stock,
no par value per share, 210 of which shares are outstanding and
validly issued to WFSB (such issued and outstanding shares of
common stock are referred to in this Agreement as the "RISC
Common Stock"). The shares of RISC Common Stock have been duly
and validly authorized by all necessary corporate action of RISC,
are validly issued, fully paid and non-assessable and have not
been issued in violation of any pre-emptive rights of any present
or former RISC shareholders. All of the shares of RISC Common
Stock are owned by WFSB 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.
RISC 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 RISC Common Stock. As of December 31, 1995,
RISC had total assets of $38,834, total liabilities of $84 and
total capital of $38,750, which capital consisted of common stock
of $21,000, capital surplus of $-0-, and undivided profits of
$17,750.
(d) Except for options to purchase 38,980 shares of Capital
Holdings Common Stock under the Stock Option Plan, there are no
options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to
any capital stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any
capital stock or debt securities of Capital Holdings by which
Capital Holdings is or may become bound. Capital Holdings does
not have any contractual or other obligation to repurchase,
redeem or otherwise acquire any of its issued and outstanding
shares of Capital Holdings Common Stock. Set forth in the
Disclosure Schedule is a true, accurate and complete (i) copy of
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an incentive stock option agreement and a non-qualified stock
option agreement that are identical in all material respects to
the presently outstanding stock option agreements (except as to
the number of shares subject to the option, the purchase price
per share and the duration of the option), (ii) copy of the Stock
Option Plan and (iii) a list of all optionees, including the
number of shares subject to each Stock Option.
(e) There are no options, warrants, commitments, calls,
puts, agreements, understandings, arrangements or subscription
rights relating to the capital stock, or any securities
convertible into or representing the right to purchase or
otherwise acquire the capital stock or any debt securities, of
the Subsidiaries by which either of the Subsidiaries are or may
become bound. The Subsidiaries do not have any contractual or
other obligation to repurchase, redeem or otherwise acquire any
of their respective outstanding shares of capital stock.
(f) Except as set forth in the Disclosure Schedule, Capital
Holdings has no knowledge of any person who beneficially owns 5%
or more of the issued and outstanding shares of Capital Holdings
Common Stock.
4.04. Organizational Documents. The Articles of
Incorporation and By-Laws of Capital Holdings and RISC and the
Charter and By-Laws of WFSB, representing true, accurate and
complete copies of such corporate documents of Capital Holdings,
RISC and WFSB, respectively, in effect as of the date of this
Agreement, have been delivered to ONB and are included in the
Disclosure Schedule.
4.05. Compliance with Law. (a) Except as provided in
the Disclosure Schedule, neither Capital Holdings nor either of
the Subsidiaries has engaged in any activity or has 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 is it in
violation of any order, injunction, judgment, writ or decree of
any court or government agency or body, the violation of which
could have a material adverse effect on the financial condition,
results of operations, business, assets or capital of Capital
Holdings and WFSB, whether individually or on a consolidated
basis, or RISC on a consolidated basis with Capital Holdings.
Capital Holdings and each of the Subsidiaries possess and hold
all licenses, franchises, permits, certificates and other
authorizations necessary for the continued conduct of their
respective businesses without interference or interruption, and
such licenses, franchises, permits, certificates and
authorizations held by Capital Holdings or the Subsidiaries are
transferable to Surviving Bank and Surviving Corporation, as
applicable, 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) All agreements, understandings and commitments with,
and all orders and directives of, all government regulatory
agencies or authorities with respect to the financial condition,
results of operations, business, assets or capital of Capital
Holdings or either of the Subsidiaries which presently are
binding upon or require action by, or at any time during the last
five (5) years have been binding upon or have required action by,
Capital Holdings or either of the Subsidiaries, including,
without limitation, all correspondence, communications and
commitments related thereto, are set forth in the Disclosure
Schedule. There are no uncured violations, or violations with
respect to which refunds or restitutions may be required, cited
in any examination report provided to Capital Holdings or either
of the Subsidiaries as a result of an examination by any
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regulatory agency or body or set forth in any accountant's,
auditor's or other report to Capital Holdings or either of the
Subsidiaries.
(c) All of the existing offices and branches of WFSB have
been legally authorized and established in accordance with all
applicable federal, state and local laws, statutes, regulations,
rules, ordinances, orders, restrictions and requirements. WFSB
does not have any approved but unopened offices or branches.
4.06. Accuracy of Statements Made and Materials Provided
to ONB. (a) No representation, warranty or other statement
made, or any information provided, by Capital Holdings or either
of the Subsidiaries in this Agreement or in the Disclosure
Schedule (and any update thereto) and no written report,
statement, list, materials or other written information which has
previously been or which shall be provided subsequent to the date
hereof by any executive officer of Capital Holdings or either of
the Subsidiaries or any of their agents to ONB or any of its
agents in connection with this Agreement, the Mergers, ONB's due
diligence investigation or confidential review of Capital
Holdings and the Subsidiaries or otherwise, including, without
limitation, any written information with respect to Capital
Holdings' and the Subsidiaries' business, capital, assets,
financial condition, results of operations, and directors and
officers for inclusion in the Registration Statement (as defined
in Section 7.02 hereof) and proxy statement-prospectus relating
to the Mergers, contains or shall contain (with respect to
information relating to the Registration Statement at the time it
is declared effective and with respect to information relating to
the proxy statement-prospectus at the time it is mailed to
Capital Holdings shareholders) any untrue or misleading statement
of material fact or omits or shall omit to state a material fact
necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not false or
misleading.
(b) All materials or information provided by Capital
Holdings or either of the Subsidiaries to ONB for use by ONB in
any filing with any state or federal bank or thrift regulatory
agency or authority shall not, at the time such filings are made,
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.
4.07. Litigation and Pending Proceedings. (a) Except as
set forth in the Disclosure Schedule, there are no claims,
actions, suits, proceedings, arbitrations, mediations or
investigations pending or, to the best knowledge of Capital
Holdings and the Subsidiaries after due inquiry, threatened in
any court or before any government agency or authority,
arbitration panel, mediator or otherwise (nor does Capital
Holdings or either of the Subsidiaries have any knowledge of a
basis for any claim, action, suit, proceeding, litigation,
arbitration, mediation or investigation) against, by or affecting
Capital Holdings or either of the Subsidiaries which could have a
material adverse effect on the financial condition, results of
operations, business, assets or capital of Capital Holdings or
either of the Subsidiaries, whether individually or on a
consolidated basis, or RISC on a consolidated basis with Capital
Holdings, or which would prevent the performance of this
Agreement, declare the same unlawful or cause the rescission
hereof.
(b) Neither Capital Holdings nor either of the 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
under governmental investigation with respect to any actual or
alleged violations of any law, statute, rule, regulation or
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ordinance, or (iii) the subject of any pending or, to the best
knowledge of Capital Holdings and the Subsidiaries, threatened
proceeding by any government regulatory agency or authority
having jurisdiction over their respective businesses, properties
or operations.
4.08. Financial Statements and Reports. Capital
Holdings has delivered to ONB copies of the following financial
statements and reports, including the notes thereto, of Capital
Holdings and the Subsidiaries (collectively, the "Capital
Holdings Financial Statements"):
(a) Consolidated statements of condition as of December 31,
1994 and 1995 and the related statements of earnings and
statements of changes in shareholders' equity of Capital Holdings
as of and for the fiscal years ended December 31, 1993, 1994 and
1995; and
(b) Consolidated statements of cash flows of Capital
Holdings for the fiscal years ended December 31, 1993, 1994 and
1995.
Except as provided in the Disclosure Schedule, the Capital
Holdings Financial Statements are true, accurate and complete in
all material respects and present fairly the consolidated
financial positions of Capital Holdings and WFSB as of and at the
dates shown and the consolidated results of operations for the
periods covered thereby. The Capital Holdings Financial
Statements described in clauses (a) and (b) above are audited
financial statements and have been prepared in conformance with
generally accepted accounting principles applied on a consistent
basis. The Capital Holdings 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 Capital Holdings Financial Statements false, misleading or
inaccurate in any material respect as of the respective dates
thereof.
4.09. Properties, Contracts, Employees and Other
Agreements. (a) Set forth in the Disclosure Schedule is a true,
accurate and complete copy and, when applicable, a list or
description of the following:
(i) A brief description and the location of all real
property owned by Capital Holdings and each of the
Subsidiaries and the principal buildings and
structures located thereon, together with a legal
description of such real property, and each lease
of real property to which Capital Holdings or
either of the Subsidiaries is a party (excluding
any exhibits thereto which are not material),
identifying the parties thereto, the annual rental
payable, the expiration date of the lease and a
brief description of the property covered;
(ii) All loan or credit agreements and promissory notes
relating to money borrowed by Capital Holdings and
the Subsidiaries, all land, conditional sales or
installment sales contracts or other title
retention agreements and all agreements for the
purchase of federal funds to which Capital
Holdings or either of the Subsidiaries is a
party;
(iii) All agreements, contracts, leases, licenses, lines
of credit, understandings, commitments or
obligations of Capital Holdings or either of the
Subsidiaries which individually or in the
aggregate:
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(A) involve payment or receipt by Capital Holdings or
either of the Subsidiaries (other than as
disbursements of loan proceeds to customers or
loan payments by customers) of more than $10,000
during any twelve (12) month period;
(B) involve payments based on profits of Capital
Holdings or either of the Subsidiaries;
(C) relate to the purchase of goods, products,
supplies or services in excess of $5,000;
(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
(iv) The name and current annual salary of each
director, officer and employee of Capital Holdings
or either of the Subsidiaries whose current annual
salary and bonus or incentive compensation from
Capital Holdings or either of the Subsidiaries is
in excess of $50,000, and the profit sharing and
other form of compensation (other than salary)
paid or payable by Capital Holdings or either of
the Subsidiaries to or for the benefit of each
such person for the calendar years ended December
31, 1994 and 1995.
(b) WFSB has, prior to the date of this Agreement, provided
or given access to ONB to the files and documentation of all of
its borrowers, or persons or entities that are or may become
obligated to WFSB under a letter of credit, line of credit, loan
transaction, loan agreement, promissory note or other commitment
of WFSB, in excess of $10,000 individually or in the aggregate,
whether in principal, interest or otherwise, and including all
guarantors of such indebtedness.
(c) To the best knowledge of Capital Holdings and the
Subsidiaries, 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. Capital Holdings and the
Subsidiaries are and, to their best knowledge, all other parties
thereto are in compliance with the provisions thereof, and
Capital Holdings and the Subsidiaries are not and, to their best
knowledge, no other party thereto is in default in the
performance, observance or fulfillment of any material
obligation, covenant or provision contained therein. None of the
foregoing requires the consent of any party to its assignment in
connection with the Mergers.
4.10. Absence of Undisclosed Liabilities. Except as set
forth in the Disclosure Schedule, except as provided in the
Capital Holdings Financial Statements, except for accounts
payable incurred and unfunded loan commitments made to customers
in the ordinary course of business, except for additional
borrowings from the Federal Home Loan Bank of Indianapolis
incurred in the ordinary course of business between the date
hereof and the Effective Time, neither Capital Holdings nor
either of the Subsidiaries has any obligation, agreement,
contract, commitment, liability, lease or license which exceeds
$5,000 individually or in the aggregate, or any obligation,
agreement, contract, commitment, liability, lease or license made
outside of the ordinary course of business.
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4.11. Title to Assets. (a) Capital Holdings or either
of the Subsidiaries, as the case may be, has good and marketable
title in fee simple absolute to all real property (including,
without limitation, all real property used as bank premises and
all other real estate owned) which is reflected in the Capital
Holdings Financial Statements as of December 31, 1995; good and
marketable title to all personal property reflected in the
Capital Holdings Financial Statements as of December 31, 1995,
other than personal property disposed of in the ordinary course
of business since December 31, 1995; good and marketable 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 Capital Holdings or either of the
Subsidiaries purports to own or which Capital Holdings or either
of the Subsidiaries uses in their respective businesses; and good
and marketable title to, or right to use by the terms of a valid
and enforceable lease or commitment all other property and assets
acquired and not disposed of or leased, as the case may be, since
December 31, 1995. All of such properties and assets owned by
Capital Holdings and the Subsidiaries are owned free and clear of
all land or conditional sales contracts, mortgages, encumbrances,
liens, pledges, restrictions, security interests, charges, claims
or rights of third parties of any nature except (i) as set forth
in the Disclosure Schedule; (ii) as specifically noted in
reasonable detail in the Capital Holdings Financial Statements;
(iii) statutory liens for taxes not yet delinquent or being
contested in good faith by appropriate proceedings; (iv) pledges
or liens required to be granted in connection with the acceptance
of government deposits or granted in connection with repurchase
or reverse repurchase agreements; and (v) easements,
encumbrances and liens of record, minor imperfections of title,
building or use restrictions, variations and other limitations
which are not substantial in amounts, do not materially detract
from the value or materially interfere with the present or
contemplated use of any of the properties subject thereto or
otherwise materially impair the use thereof for the purposes for
which they are held or used. All real property owned or leased
by Capital Holdings and the Subsidiaries is in material
compliance with all applicable zoning and land use laws.
(b) To the best of their knowledge, Capital Holdings and
each of the Subsidiaries has conducted its business in compliance
with all federal, state, county and municipal laws, statutes,
regulations, rules, ordinances, orders, directives, restrictions
and requirements relating to, without limitation, responsible
property transfer, underground storage tanks, petroleum products,
air pollutants, water pollutants, storm water or process waste
water or otherwise relating to the environment or toxic or
hazardous substances or to the manufacturing, recycling,
handling, processing, distribution, use, generation, treatment,
storage, disposal or transport of any hazardous or toxic
substances or petroleum products (including polychlorinated
biphenyls, whether contained or uncontained, and asbestos-
containing materials, whether friable or not), including, without
limitation, the Federal Solid Waste Disposal Act, the Hazardous
and Solid Waste Amendments, the Federal Clean Air Act, the
Federal Clean Water Act, the Occupational Health and Safety Act,
the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980 and the
Superfund Amendments and Reauthorization Act of 1986, all as
amended, and all 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 or at any time
thereafter in effect (collectively, "Environmental Laws"). There
are no pending or, to the best knowledge of Capital Holdings and
the Subsidiaries, threatened claims, actions or proceedings by
any local municipality, sewage district or other federal, state
or local governmental agency or authority against Capital
Holdings' or either of the Subsidiaries with respect to any of
the Environmental Laws and, to the best of Capital Holdings' and
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the Subsidiaries' knowledge, there is no basis or grounds for any
such claim, action or proceeding. No environmental clearances or
other governmental environmental approvals are required for the
conduct of Capital Holdings' or either of the Subsidiaries'
business or consummation of the Mergers. To the best of Capital
Holdings' and the Subsidiaries' knowledge, neither Capital
Holdings nor either of the Subsidiaries 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 used, stored,
deposited, treated, recycled or disposed of, which substances if
known to be present on, at or under such property would require
clean-up, removal or any other remedial action under any of the
Environmental Laws.
(c) Neither Capital Holdings nor either of the Subsidiaries
(i) is in default in any respect under any agreements pursuant to
which it leases real or personal property, (ii) has knowledge of
any default under such agreements by any party thereto and (iii)
has knowledge of any event which, with notice or lapse of time or
both, would constitute a default or a breach thereof.
4.12. Loans and Investments. (a) Except as set forth
in the Disclosure Schedule, WFSB has no loan in excess of $10,000
that has been classified by regulatory examiners or management of
WFSB as "Substandard," "Doubtful" or "Loss" or in excess of
$10,000 that has been identified by accountants or auditors
(internal or external) as having a significant risk of
uncollectability. The most recent loan watch list of WFSB and a
list of all loans in excess of $10,000 that WFSB has determined
to be ninety (90) days or more past due with respect to principal
or interest payments or has placed on nonaccrual status are set
forth in the Disclosure Schedule.
(b) All loans reflected in the Capital Holdings Financial
Statements as of December 31, 1995 and which have been made,
extended, renewed, restructured, approved, amended or acquired
since December 31, 1995 (i) have been made for good, valuable and
adequate consideration in the ordinary course of business;
(ii) to the best of WFSB's knowledge, 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; (iii) are
evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be;
and (iv) are secured, to the extent that WFSB has a security
interest in collateral or a mortgage securing such loans, by
perfected security interests or recorded mortgages naming WFSB as
the secured party or mortgagee.
(c) Except as set forth in the Disclosure Schedule, the
reserves, the allowance for possible loan and lease losses and
the carrying value for real estate owned which are shown on the
Capital Holdings Financial Statements are, in the opinion of
management of WFSB, adequate in all respects under the
requirements of generally accepted accounting principles applied
on a consistent basis to provide for possible losses on items for
which reserves were made, on loans and leases outstanding and
real estate owned as of the respective dates. To the best
knowledge of WFSB, the aggregate loan balances outstanding as of
December 31, 1995, in excess of the reserve for loan losses as of
such date, are collectible in accordance with their respective
terms.
(d) None of the investments reflected in the Capital
Holdings Financial Statements as of and for the year ended
December 31, 1995 and none of the investments made by Capital
Holdings or either of the Subsidiaries since December 31, 1995
are subject to any restriction, whether contractual or statutory,
which materially impairs the ability of Capital Holdings or
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either of the Subsidiaries to dispose freely of such investment
at any time. Neither Capital Holdings nor either of the
Subsidiaries is a party to any repurchase agreements with respect
to securities.
(e) Set forth in the Disclosure Schedule is a true,
accurate and complete list of all loans in which WFSB has any
participation interest or which have been made with or through
another financial institution on a recourse basis against WFSB.
(f) The aggregate amount of WFSB's indebtedness to the
Federal Home Loan Bank of Indianapolis does not, and will not at
the Effective Time, exceed $40 Million.
4.13. Anti-takeover Provisions. Neither Capital
Holdings nor either of the Subsidiaries has a shareholder rights
plan or any other plan, program, agreement or arrangement
involving, restricting, prohibiting or discouraging a change in
control, merger or other combination of Capital Holdings or
either of the Subsidiaries or which may be considered an anti-
takeover mechanism, except for provisions in the Articles of
Incorporation and By-laws of Capital Holdings and in the Stock
Option Plan.
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"), whether written or oral, sponsored or otherwise
maintained by Capital Holdings or WFSB; in which Capital Holdings
or either of the Subsidiaries participates as a participating
employer; to which Capital Holdings or either of the Subsidiaries
contributes; with respect to which Capital Holdings or either of
the Subsidiaries acts as administrator, trustee or fiduciary,
whether written or oral; and including any such plans which have
been terminated, merged into another plan, frozen or discontinued
(collectively, the "Capital Holdings Plans"): (i) all such
Capital Holdings Plans have, on a continuous basis since their
adoption, been maintained in compliance in all materials respects
with the requirements prescribed by all applicable statutes,
orders and governmental rules or regulations, including, without
limitation, ERISA, the Code, and the Department of Labor
("Department") and the Treasury Regulations promulgated
thereunder; (ii) all Capital Holdings Plans intended to
constitute tax-qualified plans under the Code have complied, in
form and in operation, since their adoption, or, with respect to
form, have been amended to comply, in all material respects, with
all applicable requirements of the Code and the Treasury
Regulations promulgated thereunder, and favorable determination
letters with respect to the Tax Reform Act of 1986 have been
timely received from the Internal Revenue Service ("Service")
with respect to each such Capital Holdings Plan stating that
each, in its current form (or at the time of its disposition if
it has been terminated, merged, frozen or discontinued), is
qualified under and satisfies all applicable provisions of the
Code and Treasury Regulations; (iii) no Capital Holdings Plan (or
its related trust) holds any Capital Holdings Common Stock or any
stock of a related or affiliated person or entity, except as
provided in the Disclosure Schedule; (iv) neither Capital
Holdings nor either of the Subsidiaries has liability to the
Department or the Service with respect to any Capital Holdings
Plan; (v) neither Capital Holdings nor either of the Subsidiaries
has engaged in any transaction that may subject Capital Holdings,
either of the Subsidiaries or any Capital Holdings Plan to a
civil penalty imposed by Section 502 of ERISA; (vi) 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
Capital Holdings Plan; (vii) each Capital Holdings Plan subject
to ERISA or intended to be qualified under Section 401(a) of the
Code has been and, if applicable, is being operated in accordance
with the applicable provisions of ERISA and the Code and the
Department and Treasury Regulations promulgated thereunder;
(viii) to the best of Capital Holdings' and the Subsidiaries'
knowledge, no participant or beneficiary or non-participating
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employee has been denied any benefit due or to become due under
any Capital Holdings Plan or has been misled as to his or her
rights under any Capital Holdings Plan; (ix) all obligations
required to be performed by Capital Holdings or either of the
Subsidiaries under any provision of a Capital Holdings Plan have
been performed by it and it is not in default under or in
violation of any provision of a Capital Holdings Plan; (x) no
event has occurred which would constitute grounds for an
enforcement action by any party under Part 5 of Title I of ERISA
under any Capital Holdings Plan; (xi) there are no actions,
suits, proceedings or claims pending (other than routine claims
for benefits) or, to the best knowledge of Capital Holdings and
either of the Subsidiaries, threatened against Capital Holdings,
either of the Subsidiaries, any Capital Holdings Plan or the
assets of any Capital Holdings Plan; and (xii) with respect to
any Capital Holdings Plan sponsored, participated in or
contributed to by Capital Holdings or either of the Subsidiaries
or with respect to which Capital Holdings or either of the
Subsidiaries is responsible for complying with the reporting and
disclosure requirements of ERISA or the Code, there has been no
violation of the reporting and disclosure requirements imposed
either under ERISA or the Code for which a penalty has been or
may be imposed.
(b) With regard to any Capital Holdings Plan intended to be
a tax-qualified plan under Section 401(a) of the Code, to the
best knowledge of Capital Holdings and the Subsidiaries, no
director, officer, employee or agent of Capital Holdings or
either of the 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, the Service could revoke or deny that plan's
qualification under the Code or the exemption under
Section 501(a) of the Code for any trust or annuity contract
related to such Plan.
(c) Capital Holdings and the Subsidiaries have provided to
ONB in the Disclosure Schedule true, accurate and complete copies
or summaries and, in the case of any plan or program which has
not been reduced to writing, a complete summary, of all of the
following: (i) pension, retirement, profit-sharing, savings,
stock purchase, stock bonus, stock ownership, stock option and
stock appreciation or depreciation right plans and agreements and
all amendments thereto (except that, with respect to the stock
option agreements between Capital Holdings and certain employees
and directors of Capital Holdings and the Subsidiaries with
respect to the Stock Options, only a true, accurate and complete
copy of an incentive stock option agreement and a non-qualified
stock option agreement that are identical in all material
respects to the remaining outstanding stock option agreements
have been included in the Disclosure Schedule and with respect to
Capital Holdings' and the Subsidiaries' health insurance plan,
only a summary thereof has been included in the Disclosure
Schedule); (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 and programs; (iv) all group insurance and
health contracts, policies or plans; and (v) all other incentive,
welfare or employee benefit plans, understandings, arrangements
or agreements, maintained or sponsored, participated in, or
contributed to by Capital Holdings or either of the Subsidiaries
for their current or former directors, officers or employees.
Except as otherwise provided in the Disclosure Schedule, all of
the foregoing have been, since their inception, drafted,
implemented, administered and, where applicable, amended or
terminated in accordance with their terms and with applicable
law.
(d) No current or former director, officer or employee of
Capital Holdings or either of the Subsidiaries is entitled to any
benefit under any welfare benefit plans (as defined in
Section 3(1) of ERISA) after termination of employment with
Capital Holdings or either of the Subsidiaries, except that such
individuals may be entitled to continue their group health care
A-16
coverage pursuant to Section 4980B of the Code if they pay the
cost of such coverage pursuant to the applicable requirements of
the Code with respect thereto.
(e) With respect to any group health plan (as defined in
Section 607(1) of ERISA) sponsored or maintained by Capital
Holdings or either of the Subsidiaries, in which Capital Holdings
or either of the Subsidiaries participates as a participating
employer or to which Capital Holdings or either of the
Subsidiaries contributes, to the best knowledge of Capital
Holdings and either of the Subsidiaries, no director, officer,
employee or agent of Capital Holdings or either of the
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 upon Capital Holdings or either of the
Subsidiaries under Section 4980B(a) of the Code. 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
material respects by Capital Holdings and the Subsidiaries.
(f) Except as otherwise provided in the Disclosure
Schedule, there are no collective bargaining, employment,
management, consulting, deferred compensation, reimbursement,
indemnity, retirement, early retirement, severance or similar
plans or agreements, commitments or understandings, or any
employee welfare, benefit or retirement plan or agreement,
binding upon Capital Holdings or either of the Subsidiaries and
no such agreement, commitment, understanding or plan is 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. Except as otherwise
provided in the Disclosure Schedule with respect to the director
emeritus program of WFSB ("WFSB Director Emeritus Program"), all
accrued obligations and liabilities of Capital Holdings, the
Subsidiaries and the Capital Holdings Plans, whether arising by
operation of law, by contract or by past custom, for payments to
trusts or other funds, to any government agency or authority or
to any present or former director, officer, employee or agent of
Capital Holdings or either of the Subsidiaries (or his heirs,
legatees or legal representatives) have been and are being paid
to the extent required by applicable law or by the plan, trust,
contract or past custom or practice, and adequate actuarial
accruals and reserves for such payments have been and are being
made by Capital Holdings and the Subsidiaries in accordance with
generally accepted accounting principles and applicable law
applied on a consistent basis and actuarial methods with respect
to the following: (a) withholding taxes, unemployment
compensation or social security benefits; (b) all pension,
profit-sharing, savings, stock purchase, stock bonus, stock
ownership, stock option and stock appreciation rights plans and
agreements; (c) all employment, deferred compensation (whether
funded or unfunded), salary continuation, consulting, retirement,
early retirement, severance, reimbursement or bonus plans or
agreements; (d) all executive and other incentive compensation
plans, programs or agreements; (e) all group insurance and health
contracts and policies; and (f) all other incentive, welfare,
retirement or employee benefit plans or agreements maintained,
sponsored, participated in, or contributed to by Capital Holdings
or either of the Subsidiaries for their current or former
directors, officers, employees and agents, including, without
limitation, all liabilities and obligations to the Capital
Holdings Plans. All obligations and liabilities of Capital
Holdings and the Subsidiaries, whether arising by operation of
law, by contract or by past custom or practice, for all other
forms of compensation which are or may be payable to their
current or former directors, officers, employees or agents have
been and are being paid to the extent required by applicable law
or by the plan or contract, and adequate actuarial accruals and
reserves for payment therefor have been and are being made by
Capital Holdings and the Subsidiaries in accordance with
generally accepted accounting and actuarial principles applied on
a consistent basis. Except as otherwise provided in the
A-17
Disclosure Schedule with respect to the WFSB Director Emeritus
Program, all accruals and reserves referred to in this Section
4.15 are correctly and accurately reflected and accounted for in
all material respects in the Capital Holdings Financial
Statements and the books, statements and records of Capital
Holdings and the Subsidiaries.
4.16. Taxes, Returns and Reports. Capital Holdings and
the Subsidiaries have (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
material respects; (b) paid all taxes, assessments and other
governmental charges due or claimed to be due upon each of them
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). Except for taxes not yet due and
payable, the reserve for taxes in the Capital Holdings Financial
Statements as of December 31, 1995 is adequate to cover all of
Capital Holdings' and the Subsidiaries' tax liabilities
(including, without limitation, income taxes and franchise fees)
that may become payable in future periods with respect to any
transactions consummated prior to December 31, 1995. Neither
Capital Holdings nor either of the Subsidiaries has, or will
have, any liability for taxes of any nature for or with respect
to the operation of their respective businesses, including the
business of any subsidiary, or ownership of their assets,
including the assets of any subsidiary, from the date hereof up
to and including the Effective Time, except to the extent set
forth in the Subsequent Capital Holdings Financial Statements (as
hereinafter defined). Neither Capital Holdings nor either of the
Subsidiaries is currently under audit by any state or federal
taxing authority. Except as set forth in the Disclosure
Schedule, no federal, state or local tax returns of Capital
Holdings or either of the Subsidiaries have been audited by any
taxing authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of WFSB are
insured by the Federal Deposit Insurance Corporation in
accordance with the Federal Deposit Insurance Corporation Act, as
amended, and WFSB has 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, 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 Capital Holdings or
either of the Subsidiaries on the date hereof or with respect to
which Capital Holdings or either of the Subsidiaries pays any
premiums. Each such policy is in full force and effect, 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
Capital Holdings and the Subsidiaries are in all material
respects complete and correct and accurately reflect the basis
for the respective financial condition, results of operations,
business, assets and capital of Capital Holdings and the
Subsidiaries set forth in the Capital Holdings Financial
Statements.
4.20. Broker's, Finder's or Other Fees. Except for the
reasonable fees of Capital Holdings' and the Subsidiaries'
attorneys, accountants and investment bankers and the printing
and mailing costs relating to the proxy statement pertaining to
the Mergers, all of which will be paid by Capital Holdings prior
to the Effective Time, no agent, broker or other person acting on
behalf of Capital Holdings or either of the Subsidiaries or
acting under any authority of Capital Holdings or either of the
Subsidiaries is or shall be entitled to any commission, broker's
A-18
or finder's fee or any other form of compensation or payment from
any of the parties hereto relating to this Agreement or the
Mergers. A copy of Capital Holdings' agreement with its
investment banker relative to its fees in connection with the
Mergers is set forth in the Disclosure Schedule.
4.21. Interim Events. Except as otherwise permitted
hereunder, since December 31, 1995, neither Capital Holdings nor
either of the Subsidiaries has:
(a) Suffered any changes having a material adverse effect
on its financial condition, results of operations, assets,
capital or business, except as disclosed in the Disclosure
Schedule;
(b) Suffered any material damage, destruction or loss to
any of its properties not fully- covered by insurance;
(c) Declared, distributed or paid any dividend or other
distribution to its shareholders, except for payment of dividends
as permitted by Section 6.03(a)(iii) hereof and except for 38,980
shares of Capital Holdings Common Stock issued pursuant to the
exercise of the Stock Options;
(d) Repurchased, redeemed or otherwise acquired shares of
its capital stock, issued any shares of its capital stock or
stock appreciation rights or sold or agreed to issue or sell
(except for 38,980 shares of Capital Holdings Common Stock issued
pursuant to the exercise of the Stock Options) any shares of its
capital stock or any right or option to purchase or acquire any
such stock or any security convertible into such stock or taken
any action to reclassify, recapitalize or split up its stock;
(e) Granted or agreed to grant any increase in benefits
payable or to become payable under any pension, retirement,
profit-sharing, savings, bonus, deferred compensation, stock or
option plan or agreement; any employee welfare or benefit plan or
arrangement; or any other agreement, commitment or
understanding, to present or former employees, officers or
directors of Capital Holdings or either of the Subsidiaries,
except as provided in the Disclosure Schedule;
(f) Except as provided in the Disclosure Schedule,
increased the salary, compensation or fees of any director,
officer or employee, except for normal increases in the ordinary
course of business and in accordance with past practices, entered
into any employment contract, indemnity agreement or any other
agreement or understanding with any officer or employee or
installed any employee benefit plan;
(g) Leased, sold or otherwise disposed of any of its assets
except in the ordinary course of business or as provided in the
Disclosure Schedule or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of
business;
(h) Merged, consolidated or sold shares of capital stock of
WFSB; except for the Mergers, agreed or committed to merge,
consolidate, combine or affiliate with or into any third party;
agreed or committed to sell the substantial assets or any shares
of capital stock of Capital Holdings or either of the
Subsidiaries; or except pursuant to foreclosure actions and
mortgages, liens or security interests securing loans, acquired
or agreed to acquire any securities, equity interest, assets or
business of any third party;
A-19
(i) Incurred, assumed or guaranteed any obligation or
liability (fixed or contingent) other than obligations and
liabilities incurred in the ordinary course of business
(including borrowings in the ordinary course of business from the
Federal Home Loan Bank of Indianapolis);
(j) Mortgaged, pledged or subjected to a lien, security
interest, option or other encumbrance any of its assets, except
for tax and other liens which arise by operation of law and with
respect to which payment is not past due and except for pledges
or liens: (i) required to be granted in connection with
acceptance by WFSB of government deposits; or (ii) granted in
connection with repurchase or reverse repurchase agreements; or
(iii) otherwise incurred in the ordinary course of the conduct of
its business;
(k) Canceled, released or compromised any loan, debt,
obligation, claim or receivable other than in the ordinary course
of business;
(l) Entered into any transaction, contract or commitment
other than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing
or lending of monies, funds or securities, other than in the
ordinary course of its lending business; or
(n) Conducted its business in any manner other than
substantially as it was being conducted on December 31, 1995,
except as otherwise provided in the Disclosure Schedule.
4.22. Regulatory Filings. Capital Holdings and the
Subsidiaries have filed and will continue to file in a timely
manner all filings and reports with all federal and state
regulatory agencies and authorities as required by applicable
law. All such filings with federal and state regulatory agencies
were true, accurate and complete in all respects as of the dates
of the filings and have been prepared in conformity with
generally accepted regulatory accounting principles applied on a
consistent basis, and no such filing contained 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. Contracts. Neither Capital Holdings nor either of
the Subsidiaries is in default under or in breach of or, to the
best knowledge of Capital Holdings and the Subsidiaries, alleged
to be in default under or in breach of, any loan or credit
agreement, security agreement, bond, indenture, mortgage,
license, contract, lease, commitment or any other instrument or
obligation, which breach or default could have a material adverse
effect on the financial condition, results of operation,
business, assets or capital of Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings.
4.24. No Third Party Options. Except as provided in the
Disclosure Schedule with respect to the options to purchase
38,980 shares of Capital Holdings Common Stock under the Stock
Option Plan, there are no agreements, options, commitments or
rights with, of or to any third party to acquire any shares of
capital stock or assets of Capital Holdings or either of the
Subsidiaries which are binding upon Capital Holdings or either of
the Subsidiaries.
4.25. Disclosure Schedule and Documents. All written
data, documents, materials and information referred to in this
Agreement and delivered by Capital Holdings or either of the
Subsidiaries pursuant to or in connection with the Disclosure
A-20
Schedule are true, accurate and complete in all material respects
as of the date hereof and, with respect to such items delivered
subsequent to the date hereof or with any update to the
Disclosure Schedule, will be true, accurate and complete in all
material respects on the date of delivery thereof.
4.26. Indemnification Agreements. (a) Neither Capital
Holdings nor either of the Subsidiaries is a party to any
indemnification, indemnity or reimbursement agreement, contract,
commitment or understanding to indemnify any present or former
director, officer, employee, shareholder or agent against
liability or hold the same harmless from liability, other than as
expressly provided in the Employment Agreements, the engagement
letter between Capital Holdings and its financial advisor,
Trident Financial Corporation ("Trident"), the Articles of
Incorporation or By-Laws of Capital Holdings or RISC or the
Charter or By-Laws of WFSB.
(b) No claims have been made against or filed with Capital
Holdings or either of the Subsidiaries nor has, to the best
knowledge of Capital Holdings and the Subsidiaries after due
inquiry, any claims been threatened against Capital Holdings or
either of the Subsidiaries, for indemnification against liability
or for reimbursement of any costs or expenses incurred in
connection with any legal or regulatory proceeding by any present
or former director, officer, shareholder, employee or agent of
either Capital Holdings or either of the Subsidiaries.
4.27. Representations and Warranties at the Effective
Time. All representations and warranties of Capital Holdings
contained herein shall be true, accurate and complete in all
material respects on and as of the Effective Time as though made
or given at such time, except as otherwise expressly contemplated
by this Agreement.
4.28. Nonsurvival of Representations and Warranties.
The representations and warranties of Capital Holdings contained
in this Agreement shall expire at the Effective Time, and
thereafter Capital Holdings and the Subsidiaries and all
directors, officers and employees thereof shall have no further
liability with respect thereto. Nothing in the foregoing shall
result in the termination of any of the covenants provided for in
this Agreement that shall survive by their terms the Effective
Time.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF ONB
ONB represents and warrants to Capital Holdings and WFSB
with respect to itself and ONB Bank as follows:
5.01. Organization and Authority. (a) ONB is a
corporation duly organized and validly existing under the laws of
the State of Indiana, is a registered bank holding company under
the BHC Act, and has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and
leased and to conduct its business in the manner and by the means
utilized as of the date hereof. ONB's common stock is registered
pursuant to Section 12, and ONB is subject to the reporting
requirements, of the 1934 Act.
(b) ONB Bank is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States of America and has full power and authority (corporate and
otherwise) to own and lease its properties as presently owned and
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leased and to conduct its business in the manner and by the means
utilized as of the date hereof. ONB owns all of the issued and
outstanding shares of capital stock of ONB Bank.
5.02. Authorization. (a) Each of ONB and ONB Bank and
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 hereof. This Agreement and its execution and
delivery by ONB and ONB Bank have been duly authorized and
approved by the Board of Directors of ONB Bank and by the
Executive Committee of ONB, and will have been approved by the
Board of Directors of ONB prior to April 30, 1996. This
Agreement constitutes a valid and binding obligation of ONB and
ONB Bank 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) Neither the execution of this Agreement nor
consummation of the Mergers (i) conflicts with or violates ONB's
Articles of Incorporation or By-Laws or ONB Bank's Charter or By-
Laws; (ii) conflicts with or violates any local, state, federal
or foreign law, statute, ordinance, rule or regulation (provided
that the approvals of or filings with applicable government
regulatory agencies or authorities required for consummation of
the Mergers are obtained) or any court or administrative
judgment, order, injunction, writ or decree; (iii) conflicts
with, results in a breach of or constitutes a default under any
note, bond, indenture, mortgage, deed of trust, license,
contract, lease, agreement, arrangement, commitment or other
instrument to which ONB or ONB Bank is a party or by which ONB or
ONB Bank is subject or bound and which is material to ONB on a
consolidated basis; (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 or
any other adverse interest, upon any right, property or asset of
ONB or ONB Bank; 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, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which ONB or ONB
Bank is bound or with respect to which ONB or ONB Bank 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 BHC Act and applicable federal and state
banking, thrift, 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 by ONB and ONB Bank of the Mergers.
5.03. Capitalization. (a) The authorized capital stock
of ONB as of the date of this Agreement consists of
(i) 30,000,000 shares of common stock (subject to the last
sentence of this Section), no par value per share, of which
approximately 24,835,361 shares were issued and outstanding as of
February 29, 1996, 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 shareholder rights plan.
Such issued and outstanding shares of ONB common 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 shareholders. All of the issued and
outstanding shares of common stock of ONB's subsidiaries are
A-22
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, other
than pursuant to the indentures governing its outstanding
subordinated debentures and medium term notes. 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. On
a consolidated basis as of December 31, 1995, ONB had total
shareholders' equity of approximately $428.1 million, which
consisted of common stock of $25.0 million, capital surplus of
$245.4 million, retained earnings of $147.4 million and $10.3
million of net unrealized gain on available for-sale securities.
The Board of Directors of ONB has approved an amendment to ONB's
Articles of Incorporation increasing the number of authorized
shares of common stock to 50,000,000, and such amendment will be
voted upon by shareholders at ONB's 1996 annual meeting of
shareholders to be held on April 18, 1996.
(b) 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, there are no
options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to
any shares of ONB common stock, or any securities convertible
into or representing the right to purchase or otherwise acquire
any common stock or debt securities of ONB, by which ONB is or
may become bound. ONB does not have any contractual or other
obligation to repurchase, redeem or otherwise acquire any of its
issued and outstanding shares of common stock.
(c) ONB has no knowledge of any person 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 effect as of the date of this
Agreement have been delivered to Capital Holdings 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 or has 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, the violation of which could have a
material adverse effect on the financial condition, results of
operations, business, assets or capitalization of ONB and its
subsidiaries on a consolidated basis. Each of ONB and its
subsidiaries possesses and holds all licenses, franchises,
permits, certificates and other authorizations necessary for the
continued conduct of its business without interference or
interruption.
5.06. Regulatory Filings. ONB has filed and will
continue to file in a timely manner all required filings and
reports with the Securities and Exchange Commission ("SEC"),
including, but not limited to, all reports on Form 8, 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
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and state regulatory agencies were true, accurate and complete in
all material respects as of the dates of the filings and no such
filings contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements, at the time and in the light of the circumstances
under which they were made, not false or misleading.
5.07. Litigation and Pending Proceedings. (a) There are
no claims, actions, suits, proceedings, investigations,
arbitrations or mediations pending or, to the best knowledge of
ONB after due inquiry, threatened in any court or before any
government agency or authority, arbitration panel or otherwise
(nor does ONB have any knowledge of a basis for any claim,
action, suit, proceeding, litigation, investigation, arbitration
or mediation) against, by or affecting ONB or its subsidiaries
which could have a material adverse effect on the financial
condition, results of operations, business, assets or
capitalization of ONB and its subsidiaries on a consolidated
basis, or 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
having a material adverse effect on its business, assets,
capitalization, financial condition or results of operations on a
consolidated basis, (ii) presently charged with or under
governmental investigation with respect to any actual or alleged
violations of any law, statute, rule, regulation or ordinance, or
(iii) the subject of any pending or, to the best knowledge of
ONB, threatened proceeding by any government regulatory agency or
authority having jurisdiction over its business, properties or
operations.
5.08. Financial Statements and Reports. (a) ONB has
delivered to Capital Holdings copies of the following financial
statements and reports of ONB and its subsidiaries (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,
1993, 1994 and 1995; and
(ii) Consolidated statements of cash flows of ONB for
the years ended December 31, 1993, 1994 and 1995.
(b) The ONB Financial Statements are true, accurate and
complete in all material respects and present fairly the
consolidated financial positions 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 (a)(i) and (ii) above 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 the ONB Financial Statements
false, misleading or inaccurate in any material respect.
5.09. Shares to be Issued in the Company Merger. The
shares of ONB common stock which Capital Holdings shareholders
will be entitled to receive upon consummation of the Company
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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. The approval by ONB's
shareholders of the Mergers is not required.
5.11. Interim Events. Since December 31, 1995, ONB has
not entered into any agreement or contract or incurred any
obligation, commitment or liability which will have a material
adverse effect on the financial condition, results of operations,
business, assets or capitalization of ONB and its subsidiaries on
a consolidated basis.
5.12. Environmental Matters. To the best of ONB's
knowledge, each of ONB's subsidiaries has conducted its business
in compliance with the Environmental Laws. There are no pending
or, to the best knowledge of ONB, threatened claims, actions or
proceedings by any sewage district or other federal, state or
local governmental agency or authority against any of ONB's
subsidiaries with respect to any of the Environmental Laws and,
to the best of ONB's knowledge, there is no basis or grounds for
any such claim, action or proceeding. No environmental
clearances or other governmental approvals are required for the
conduct of business by any of ONB's subsidiaries or the
consummation of the Mergers. To the best of ONB's knowledge, ONB
is not 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 used, stored, deposited, treated, recycled or disposed of,
which substances if known to be present on, at or under such
property would require clean-up, removal or any other remedial
action under any of the Environmental Laws.
5.13. Regulatory Approvals. To the best knowledge of
ONB, there currently are no circumstances that would reasonably
be expected to cause the denial or undue delay of any of the
regulatory approvals required for consummation of the Mergers.
5.14. Representations and Warranties at the Effective
Date. All representations and warranties of ONB contained herein
shall be true, accurate and complete in all material respects on
and as of the Effective Time as though made or given at such
time.
5.15. Nonsurvival of Representations and Warranties.
The representations and warranties of ONB contained in this
Agreement shall expire at the Effective Time and, thereafter, ONB
and ONB Bank and all directors, officers and employees of ONB and
ONB Bank shall have no further liability with respect thereto.
Nothing in the foregoing shall result in the termination of any
covenants provided for herein that shall survive by their terms
the Effective Time.
SECTION 6
COVENANTS OF CAPITAL HOLDINGS
Capital Holdings covenants and agrees with ONB, and
covenants and agrees with ONB to cause the Subsidiaries to act,
as follows:
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6.01. Shareholder Approval. (a) Subject to Section
6.06(b) hereof, Capital Holdings shall submit this Agreement to
its shareholders for approval at a meeting to be called and held
in accordance with applicable law and the Articles of
Incorporation and By-Laws of Capital Holdings at a date
reasonably in advance of the Effective Time. Subject to Section
6.06(b) hereof, the Board of Directors of Capital Holdings shall
recommend to Capital Holdings' shareholders that such
shareholders approve this Agreement and the Company Merger and
shall solicit proxies voting in favor of this Agreement from such
shareholders.
(b) Subject to Section 6.06(b) hereof, WFSB shall submit
this Agreement to Capital Holdings, 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
WFSB at a date reasonably in advance of the Effective Time. The
Board of Directors of WFSB shall recommend approval of this
Agreement and the Thrift Merger to Capital Holdings, as the sole
shareholder of WFSB, and Capital Holdings, as the sole
shareholder of WFSB, shall approve this Agreement and the Thrift
Merger.
6.02. Other Approvals and Actions. (a) Capital Holdings
and WFSB shall proceed expeditiously, cooperate fully and use
their best efforts to assist ONB in procuring upon reasonable
terms and conditions all consents, authorizations, approvals,
registrations and certificates, in completing all filings and
applications and in satisfying all other requirements prescribed
by law which are necessary for consummation of the Mergers on the
terms and conditions provided in this Agreement at the earliest
possible reasonable date.
(b) Capital Holdings and WFSB shall take all necessary
steps to (i) amend, within forty-five (45) days of the date of
this Agreement, the Stock Option Plan to terminate, effective on
or before the date hereof, any grants thereunder of additional
options to acquire shares of Capital Holdings Common Stock and
(ii) assist ONB in the disposition of the WFSB Retirement Plan
(as hereinafter defined), the WFSB Thrift Plan (as hereinafter
defined), the WFSB Director Emeritus Program, the WFSB Deferred
Compensation Plan (as hereinafter defined) and the Joinder
Agreements (as hereinafter defined) in accordance with Section
7.03 hereof. Capital Holdings shall pay all costs and expenses
associated with the disposition of such plans, to the extent
incurred prior to the Effective Time.
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 Capital
Holdings nor either of the Subsidiaries 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);
(ii) authorize a class of stock or issue, or authorize
the issuance of, securities or options other than
or in addition to the issued and outstanding
shares of Capital Holdings Common Stock, WFSB
Common Stock or RISC Common Stock as set forth in
Section 4.03 hereof and other than the presently
outstanding options to purchase an aggregate of
38,980 shares of Capital Holdings Common Stock;
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(iii) distribute or pay any dividends on its shares
of common stock, or make any other
distribution to its shareholders, except that
Capital Holdings may pay to its shareholders
its normal and customary quarterly cash
dividend in an amount not to exceed ten cents
($0.10) per share of Capital Holdings Common
Stock for each such dividend until the
Effective Time and except that WFSB may pay
cash dividends to Capital Holdings in the
ordinary course of business in accordance
with past practices for payment of reasonable
and necessary business and operating expenses
of Capital Holdings; provided, however, that
no dividend may be paid to Capital Holdings'
shareholders during the quarterly period in
which the Company Merger is consummated if,
during such period, Capital Holdings'
shareholders will become entitled to receive
dividends on their shares of ONB common stock
received pursuant to this Agreement;
(iv) redeem any of its outstanding shares of common
stock;
(v) merge, combine or consolidate or effect a share
exchange with or sell its assets or any of its
securities to any other person, corporation or
entity or enter into any similar transaction not
in the ordinary course of business;
(vi) purchase any assets or securities or assume any
liabilities of any bank or savings and loan
holding company, bank, savings association,
corporation or other entity, except in the
ordinary course of business;
(vii) except in the ordinary course of business in
accordance with sound banking practices (and,
with respect to loan transactions or
commitments, letters of credit and deposit
accounts, only on terms and conditions which
are not materially more favorable than those
available to the borrower or customer from
competitive sources in transactions in the
ordinary course of business) make any loan
commitment, payment or disbursement, accept
any deposit, enter into any lease, contract,
agreement understanding or arrangement, or
engage in any other transaction;
(viii) except for the acquisition or disposition in
the ordinary course of business of other real
estate owned, acquire or dispose of any
property or asset constituting a capital
investment in excess of $5,000 individually
or $10,000 in the aggregate;
(ix) except for the pledge of securities to secure
public funds deposits or except for additional
borrowings in the ordinary course of business from
the Federal Home Loan Bank of Indianapolis,
subject any of its properties or assets to a
mortgage, lien, claim, charge, option,
restriction, security interest or encumbrance;
(x) promote to a new position or increase the rate of
compensation (except for promotions and compensation
increases in the ordinary course of business and in
accordance with past practices and established employment
policies), or enter into any agreement to promote to a new
position or increase the rate of compensation, of any
director, officer or employee of Capital Holdings
or either of the Subsidiaries;
A-27
(xi) execute, create, institute, modify, amend or terminate
(except with respect to any amendments to the Capital
Holdings Plans required by law, rule or regulation and
except with respect to the termination of the WFSB Director
Emeritus Program, WFSB Retirement Fund and WFSB Thrift Plan
as described in Section 6.02(b) hereof and as contemplated
by Sections 7.03 and 6.12 hereof and the amendment of the
WFSB Deferred Compensation Plan and the Joinder Agreements
thereto as contemplated by Section 6.02 and 7.03 hereof)
any pension, retirement, savings, stock purchase, stock
bonus, stock ownership, stock option, stock appreciation or
depreciation right 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 or benefit plan, agreement or
understanding for current or former directors, officers or
employees of Capital Holdings or either of the
Subsidiaries; 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 as provided in the Disclosure
Schedule;
(xii) make any communication, disclosure or filing
concerning the amendments to or disposition
of the Capital Holdings Plans as provided in
Section 7.03 hereof to any employee of
Capitol Holdings or either of the
Subsidiaries or any third party, including
any regulatory authority;
(xiii) 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 Capital Holdings or either of
the Subsidiaries;
(xiv) hire or employ any new or additional
employees of Capital Holdings or either of
the Subsidiaries, except those which are
reasonably necessary for the proper operation
of Capital Holdings' or either of the
Subsidiaries' business;
(xv) amend, modify or restate Capital Holdings' and RISC's
Articles of Incorporation or By-Laws and WFSB's Charter or
By-Laws from those in effect on the date of this Agreement
and as delivered to ONB hereunder;
(xvi) give, dispose of, sell, convey or transfer;
assign, hypothecate, pledge or encumber; or
grant a security interest in or option or
right to acquire any shares of capital stock
of either Capital Holdings, WFSB or RISC or
substantially all of the assets of either
Capital Holdings, WFSB or RISC, or enter into
any agreement or commitment relative to the
foregoing;
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(xvii) fail to continue to make additions to in
accordance with past practices and to
otherwise maintain in all respects WFSB'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) issue, or authorize the issuance of, any
securities convertible into or exchangeable
for Capital Holdings Common Stock, WFSB
Common Stock or RISC Common Stock;
(xx) except for accounts payable and similar liabilities and
obligations incurred in the ordinary course of business,
for the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected in the Capital
Holdings Financial Statements or the Subsequent Capital
Holdings Financial Statements and for additional borrowings
in the ordinary course of business from the Federal Home
Loan Bank of Indianapolis, borrow any money or incur any
indebtedness, including, without limitation, through the
issuance of debentures, or incur any liability or
obligation (whether absolute, accrued, contingent or
otherwise), in an aggregate amount exceeding $5,000, other
than legal, accounting, and investment banker fees and
proxy printing and mailing costs relating to the Mergers or
the operation of Capital Holdings' and WFSB's business;
(xxi) open, close, move or, in any material
respect, expand, renovate, alter or change
any of its offices or branches;
(xxii) pay or commit to pay any management or
consulting or other similar type of fees,
except for the fees paid to Capital Holdings'
investment banker which shall not exceed in
the aggregate the amount of fees set forth in
the agreement between Capital Holdings and
Trident set forth in the Disclosure Schedule;
(xxiii) enter into any contract, agreement, lease,
commitment, understanding, arrangement or
transaction or incur any liability or
obligation (other than as contemplated by
Section 6.03(a)(vii) hereof) requiring
payments by Capital Holdings, WFSB or either
of the Subsidiaries which exceed $5,000,
whether individually or in the aggregate, or
that is not in the ordinary course of
business; or
(xxiv) except for the election by Capital Holdings
of four (4) persons to WFSB's Board of
Directors pursuant to Section 1.02(b) hereof,
elect or appoint any director or officer of
Capital Holdings or either of the
Subsidiaries in addition to or other than
those persons who were directors or officers
of Capital Holdings or either of the
Subsidiaries on March 27, 1996.
A-29
(b) Capital Holdings and each of the Subsidiaries shall
maintain, or cause to be maintained, in full force and effect,
insurance on its assets, properties and operations, fidelity
coverage and directors' and officers' liability insurance on its
directors, officers and employees in such amounts and with regard
to such liabilities and hazards as are currently insured by
Capital Holdings 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, Capital Holdings and
each of the Subsidiaries shall (a) carry on its business
diligently, substantially in the manner as is presently being
conducted and in the ordinary course of business; (b) use its
best efforts to preserve its business organization intact, keep
available the services of the present officers and employees and
preserve its present relationships with customers and persons
having business dealings with it; (c) maintain all of the
properties and assets that it 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 its 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 it and to the
conduct of its business; and (e) not do or fail to do anything
which will cause a material breach of, or material default in,
any contract, agreement, commitment, obligation, understanding,
arrangement, lease or license to which it is a party or by which
it is or may be subject or bound.
6.05. Restrictions Regarding Affiliates. Capital
Holdings shall, on 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 Capital Holdings for purposes of Rule 145
under the 1933 Act. Capital Holdings shall use its best efforts
to cause each director, executive officer and other person who
may be deemed to be such an affiliate of Capital Holdings to
deliver to ONB on or prior to the date which is the earlier of
forty-five (45) days following the date of this Agreement or the
Effective Time, a written agreement, substantially in the form as
attached hereto as Exhibit A, substantially 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 Capital Holdings 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 Capital Holdings 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.
6.06. Other Negotiations. (a) Subject to Section
6.06(b) hereof, 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),
Capital Holdings and each of the Subsidiaries shall not, nor
shall it permit or authorize its directors, officers, employees,
agents or representatives to, directly or indirectly, initiate,
solicit, encourage or engage in discussions or negotiations with,
or provide information to, any corporation, association,
partnership, person or other entity or group concerning any
merger, consolidation, share exchange, combination, affiliation,
purchase or sale of substantial assets, sale of shares of common
A-30
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 Capital Holdings or either of the Subsidiaries or to
which Capital Holdings or either of the Subsidiaries may become a
party (all such transactions are hereinafter referred to as
"Acquisition Transactions"). Capital Holdings and the
Subsidiaries shall promptly communicate to ONB the terms of any
proposal or offer which either of them may receive with respect
to an Acquisition Transaction and any request by or indication of
interest on the part of any third party with respect to the
initiation of any Acquisition Transaction or discussions with
respect thereto.
(b) On and after the date of this Agreement and until the
Effective Time or until this Agreement is terminated as herein
provided, Capital Holdings may engage, and may permit and
authorize its directors, officers, employees, agents or
representatives to engage in discussions or negotiations with or
provide information to any corporation, association, partnership,
person or other entity or group concerning an unsolicited offer
by such third party with respect to an Acquisition Transaction
only with the prior written approval of ONB, which approval shall
be provided to Capital Holdings promptly upon receipt by ONB of a
letter from Capital Holdings signed by at least a majority of its
Board of Directors then in office indicating that Capital
Holdings has received an unsolicited offer regarding an
Acquisition Transaction which the Board of Directors of Capital
Holdings (i) considers, in the exercise of its fiduciary duties
as a Board, to be superior (in more than an insubstantial manner
and taking into account all relevant factors) to the then current
offer of ONB pursuant to this Agreement and (ii) concludes, after
consultation with its counsel, that its fiduciary duties as a
Board require it to consider and, in light of such duties, take
such other actions with respect to such unsolicited offer as may
be necessary or appropriate; and such approval may, in all other
instances, be provided to Capital Holdings when and if ONB shall,
in its sole discretion, determine. This Section 6.06 shall not
authorize Capital Holdings or either of the Subsidiaries or any
of their directors, officers, employees, agents or
representatives to initiate any discussions or negotiations
relative to an Acquisition Transaction with a third party.
6.07. Press Releases. Except as required by law,
neither Capital Holdings nor either of the Subsidiaries shall
issue any press releases or make any other public announcements
or disclosures relating to the Mergers without the prior consent
of ONB, which consent shall not be unreasonably withheld.
6.08. Disclosure Schedule Update. Capital Holdings
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
agreements, documents, 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 Capital Holdings or WFSB contained herein
materially incorrect, untrue or misleading.
6.09. Information, Access Thereto, Confidentiality. ONB
and its respective representatives and agents shall, at all times
during normal business hours prior to the Effective Time, have
full and continuing access to the properties, facilities,
operations, books and records of Capital Holdings 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 Capital Holdings and the Subsidiaries and of their
A-31
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 unnecessarily with the
normal operations of Capital Holdings or either of the
Subsidiaries; and provided further, that if ONB elects to conduct
or have conducted on its behalf an environmental review, study,
survey or assessment to verify the representations and warranties
given by Capital Holdings and the Subsidiaries with respect to
the environmental matters specified in Section 4.11(b) hereof,
such environmental review, study, survey or assessment shall be
completed and all reports and findings related thereto shall be
disclosed to Capital Holdings and the Subsidiaries within sixty
(60) days of the date thereof. Upon request, Capital Holdings
and the Subsidiaries shall furnish ONB or its representatives or
agents, their attorneys' responses to external auditors requests
for information, management letters received from its external
auditors and such financial, loan and operating data and other
information reasonably requested by ONB which has been or is
developed by Capital Holdings or either of the Subsidiaries or
their auditors, accountants or attorneys (provided with respect
to attorneys, such disclosure would not result in the waiver by
Capital Holdings or either of the Subsidiaries of any cl-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 Capital Holdings or either of 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 auditors or accountants. No investigation by ONB (whether
conducted before or after the date hereof) shall affect the
representations and warranties made by Capital Holdings or either
of the Subsidiaries herein or the information contained in any
document provided hereunder, and ONB shall be entitled to rely on
such representations, warranties and documents notwithstanding
any such investigation. Any confidential information or trade
secrets received by ONB or its representatives or agents in the
course of such examination shall be treated confidentially, and
any correspondence, memoranda, records, copies, documents and
electronic or other media of any kind containing such
confidential information or trade secrets or both shall be
destroyed by ONB or, at Capital Holdings' request, returned to
Capital Holdings 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 Capital Holdings Financial Statements.
As soon as available after the date of this Agreement, Capital
Holdings shall deliver to ONB the monthly unaudited consolidated
balance sheets and profit and loss statements of Capital Holdings
prepared for its internal use, Capital Holdings' Forms 10-Q for
each quarterly period and Form 10-K for each fiscal year
completed prior to the Effective Time and all other financial
reports or statements, including the notes thereto, submitted to
regulatory authorities after the date hereof, to the extent
permitted by law (collectively, "Subsequent Capital Holdings
Financial Statements"). The Subsequent Capital Holdings
Financial Statements shall be prepared on a basis consistent with
past accounting practices and generally accepted accounting
principles applied on a consistent basis and shall present fairly
the financial condition and results of operations as of the dates
and for the periods presented. The Subsequent Capital Holdings
Financial Statements 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 material respect.
6.11. Employee Benefits. Neither the terms of Section
7.03 hereof (except as otherwise expressly provided therein) nor
the provision of any employee benefits by ONB or any of its
subsidiaries to employees of Capital Holdings and the
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Subsidiaries 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 Capital Holdings and the Subsidiaries or (ii) except
as expressly provided in this Agreement, 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; provided, however,
that any such change, amendment or termination applies to a broad
class of similarly situated employees and not only to former
employees of Capital Holdings or either of the Subsidiaries.
6.12. Employment Agreement. Prior to the Effective
Time, WFSB shall cause the employment agreements between WFSB and
Richard R. Haynes, Joseph A. Walker, Jerry L. Hays and R. William
Richardson, Jr. (each in the form set forth in the Disclosure
Schedule) (collectively referred to herein as the "Employment
Agreements") to be amended such that the requirement that each
participate in a stock option plan shall be deleted, that each
will receive employee benefits in accordance with ONB's employee
benefit plans and, with respect to Mr. Haynes' Employment
Agreement, that he shall serve as Chairman of the Board of the
Surviving Bank from and after the Effective Time until his
successor is selected. Other than the foregoing amendments, the
Employment Agreements shall not be amended or modified in any
respect, and none of the respective terms of the Employment
Agreements shall be extended.
6.13. Certain Actions. Neither Capital Holdings nor
either of the Subsidiaries shall intentionally or knowingly take,
cause to be taken or fail to take any action which will cause or
result in a misrepresentation or a breach of a covenant or
warranty of this Agreement that will give ONB the right to
terminate this Agreement pursuant to Section 9.01(b) hereof.
6.14. Restructure. Capital Holdings and WFSB
understand, acknowledge and agree that ONB, in its sole
discretion, may change the structure of the transactions
contemplated by this Agreement; provided, however, that any such
change in structure shall not change the Exchange Ratio or tax-
free nature of the transactions contemplated by this Agreement
and that the covenants of ONB set forth in Section 7 hereof will
be honored and assumed by any new resulting bank to the extent
not honored or assumed by ONB. Capital Holdings and WFSB shall
execute and deliver such amendments, agreements and instruments
and take such further actions as ONB may reasonably request in
connection with any such restructure of the transactions
contemplated by this Agreement.
SECTION 7
COVENANTS OF ONB
ONB covenants and agrees with Capital Holdings, and
covenants and agrees with Capital Holdings to cause ONB Bank to
act, as follows:
7.01. Approvals. (a) ONB shall have primary
responsibility for the preparation, filing and cost of all
holding company, bank and savings association regulatory
applications required for consummation of the Mergers. ONB shall
file all such applications as soon as practicable after the
execution of this Agreement; provided, however, that ONB shall
use its best efforts to file all applications and other filings
with the appropriate banking regulators within forty-five (45)
days of the date of this Agreement. ONB shall provide to Capital
Holdings' counsel copies of all applications filed and copies of
all material written communications with all state and federal
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bank regulatory agencies relating to such applications. ONB
shall proceed expeditiously, cooperate fully and use its best
efforts to procure, upon terms and conditions reasonably
acceptable to ONB, all consents, authorizations, approvals,
registrations and certificates, to complete all filings and
applications and to satisfy all other requirements prescribed by
law which are necessary for consummation of the Mergers on the
terms and conditions provided in this Agreement at the earliest
possible reasonable date.
(b) So long as this Agreement is submitted to Capital
Holdings' shareholders for a vote thereon, ONB Bank shall submit
this Agreement to ONB, 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 ONB Bank, and the
Board of Directors of ONB Bank shall recommend to its sole
shareholder that such shareholder approve this Agreement and the
Thrift Merger.
(c) So long as the actions contemplated by Section 7.01(b)
hereof have occurred, ONB shall vote all of its shares of capital
stock of ONB Bank in favor of approval of this Agreement and the
Thrift Merger.
7.02. SEC Registration. 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 Capital
Holdings, prepared for use in connection with the meeting of
shareholders of Capital Holdings 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
Capital Holdings and its counsel with a copy of the Registration
Statement and each such other filing and provide an opportunity for
them to comment thereon prior to filing.
7.03. Employee and Director Benefit Plans. (a) General.
ONB will make available to the employees of WFSB who continue
as employees of any subsidiary of ONB after the Effective Time
substantially the same employee benefits on substantially the
same terms and conditions that ONB may offer to similarly
situated employees of its banking subsidiaries from time to
time. Until such time as the employees of WFSB become covered
by the ONB welfare benefit plans, employees of WFSB shall
remain covered by the welfare benefit plans of Capital
Holdings, subject to the terms of such plans.
(b) Eligibility and Vesting. Years of service, as defined in
the applicable ONB employee welfare or pension benefit plan, of
an employee of WFSB prior to the Effective Time shall be
credited, effective as of the date on which such employee
becomes covered by a particular ONB employee welfare or pension
benefit plan, to each such employee eligible for coverage under
Section 7.03(a) hereof for purposes of (i) eligibility under
ONB's employee welfare benefit plans; and (ii) eligibility and
vesting, but not for purposes of benefit accrual or
contributions, under the ONB Employees' Retirement Plan ("ONB
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Pension Plan") and under the ONB Employees' Savings and Profit
Sharing Plan ("ONB Profit Sharing Plan"); provided, however,
that the employees of WFSB shall become covered by ONB's
welfare benefit plans at such time(s) as shall be determined by
ONB in its sole discretion, subject to Section 7.03(a) hereof.
Those officers and employees of WFSB who otherwise meet the
eligibility requirements of the ONB Profit Sharing Plan, based
upon their age and years of service for WFSB, shall become
participants thereunder on the January 1st which coincides with
or next follows the effective date of the disposition of the
WFSB Thrift Plan as described in Section 7.03(e) hereof. Those
employees of WFSB who otherwise meet the eligibility
requirements of the ONB Pension Plan, based upon their age and
years of service for WFSB, shall become participants thereunder
on January 1st which coincides with or next follows the
effective date of the disposition of the WFSB Retirement Plan
as described in Section 7.03(d) hereof. Those officers and
employees of WFSB who do not meet the eligibility requirements
of the ONB Pension Plan or the ONB Profit Sharing Plan on such
date(s) shall become participants thereunder on the first plan
entry date under the ONB Pension Plan or the ONB Profit Sharing
Plan, as the case may be, which coincides with or next follows
the date on which such eligibility requirements are satisfied.
(c) Pre-Existing Conditions. No full-time employee of WFSB
and none of the dependents of any such employee serving as of
the Effective Time shall be subject to any pre-existing
condition exclusions under any of ONB's welfare benefit plans
if such employee or dependent was covered by the corresponding
Capital Holdings welfare benefit plan for more than two hundred
seventy (270) consecutive days immediately preceding the
Effective Time.
(d) Financial Institutions Retirement Fund. The accrual of
participants' benefits under WFSB's Financial Institutions
Retirement Fund ("WFSB Retirement Plan") shall be frozen
effective as of December 31st of the year in which the
Effective Time occurs, and all accrued benefits of participants
in the WFSB Retirement Plan shall thereupon become fully
vested. To the extent permitted by the WFSB Retirement Plan
and applicable law, the accrued benefit of each participant in
the WFSB Retirement Plan shall be held and remain under the
WFSB Retirement Plan and shall be payable at the time(s) and in
the forms provided for under that plan. ONB shall be
responsible for the withdrawal of WFSB from the WFSB Retirement
Plan and for making any required or appropriate application to
the Service for a determination letter to the effect that such
withdrawal does not adversely affect the tax-qualified status
of such plan and for providing any notices to the Pension
Benefit Guaranty Corporation or other governmental entity
regarding the withdrawal. WFSB shall make contributions to the
WFSB Retirement Plan through the date of such withdrawal only
to the extent required to maintain the plan's tax-qualified
status and avoid any federal income taxes or penalties
attributable to the plan's funding status.
(e) Financial Institutions Thrift Plan. All contributions to
WFSB's Financial Institutions Thrift Plan ("WFSB Thrift Plan")
shall be discontinued as of December 31st of the year in which
the Effective Time occurs, and the account balances of all
participants in the WFSB Thrift Plan shall thereupon become
fully vested. To the extent permitted by the WFSB Thrift Plan
and applicable law, the account balance of each participant in
the WFSB Thrift Plan shall be held and remain under the WFSB
Thrift Plan and shall be payable at the time(s) and in the
forms provided for under that plan. ONB shall be responsible
for the withdrawal of WFSB from the WFSB Thrift Plan and for
making any required or appropriate application to the Service
for a determination letter to the effect that the withdrawal
does not adversely affect the tax-qualified status of such
plan. WFSB shall make annual contributions to the WFSB Thrift
Plan through its date of termination at the same rate it made
contributions to such plan for the fiscal year ended December
31, 1995.
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(f) Deferred Compensation Plan and Directors' Fees. ONB
agrees to cause the Surviving Bank to assume all obligations of
WFSB under the Director Deferred Compensation Master Agreement
("WFSB Deferred Compensation Plan") and to keep such plan in
effect without any amendment which would decrease the
percentage of the directors fees that each director presently
defers pursuant to such plan for two (2) years following the
Effective Time. During such two (2) year period, ONB also
agrees to cause the Surviving Bank to increase the amount
deferred under the WFSB Deferred Compensation Plan for each
director of WFSB (other than the four (4) new directors of WFSB
elected pursuant to Section 1.02(b) hereof) serving as a
director of the Surviving Bank by $500 per month over the
amounts deferred each month by each director. Provided,
however, during such two (2) year period, in no event shall the
aggregate directors fees and additional deferrals under the
WFSB Deferred Compensation Plan for any director exceed on that
date $1,000 per month. The WFSB Deferred Compensation Plan
shall be terminated effective two (2) years following the
Effective Time. Within forty-five (45) days of the date of
this Agreement, WFSB agrees to amend (effective as of the
Effective Time) the WFSB Deferred Compensation Plan to provide
for its automatic termination (without the need for any further
action by WFSB) and the termination of all the Director
Deferred Compensation Joinder Agreements thereunder ("Joinder
Agreements") on the date which is two (2) years following the
Effective Time. The provisions of such amendments and the
transactions contemplated thereby, including the distribution
of participants' benefits under the WFSB Deferred Compensation
Plan, shall contain such terms and conditions acceptable to ONB
and WFSB, including, but not limited to, the requirement that
each director who has executed a Joinder Agreement also shall
have executed and delivered an appropriate amendment, within
forty-five (45) days of the date of this Agreement, but
effective as of the Effective Time, to provide for the
automatic termination (without the need for any further action
by each director) of his Joinder Agreement on the date which is
two (2) years following the Effective Time; provided, however,
that the benefit under each Joinder Agreement will begin to be
paid not later than the time specified therein. ONB and WFSB
agree to cooperate in making any amendments to the WFSB
Deferred Compensation Plan required to effectuate the foregoing
provisions of this Section 7.03(f).
(g) Director Emeritus Program. Effective as of the Effective
Time, the WFSB Director Emeritus Program shall be terminated;
provided, however, that within ten (10) calendar days after the
termination of such program, ONB shall make, or shall cause the
Surviving Bank to make, a lump sum cash payment to each
director of WFSB who had satisfied the eligibility requirements
for benefits under such program as of the Effective Time, and
to Richard R. Haynes, equal to the present value of the
benefits payable under such program as of the Effective Time.
For this purpose, present value shall be calculated based upon
an interest rate equal to the applicable federal rate as
defined in Section 1274(d) of the Code, compounded
semi-annually, as of the Effective Time, to such benefits.
7.04. Authorization of ONB Common Stock. The Board of
Directors of ONB shall, prior to the Effective Time, authorize
the issuance of the required number of shares of ONB common
stock to be issued pursuant to this Agreement and take all
other necessary corporate action to consummate the Mergers
contemplated hereby.
7.05. Press Releases. Except as required by law, ONB shall
not issue any press releases or make any other public
announcements or disclosures relating primarily to Capital
Holdings or either of the Subsidiaries with respect to the
Mergers without the prior consent of Capital Holdings, which
consent shall not be unreasonably withheld.
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7.06. Information, Access Thereto, Confidentiality.
Capital Holdings and its representatives and agents shall, at
all times during normal business hours prior to the Effective
Time, have full and continuing access to the facilities,
operations, books, records and properties of ONB. Capital
Holdings and its 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 ONB and of its financial and legal condition as Capital
Holdings shall deem reasonable necessary or advisable to
familiarize itself with such books, records, properties and
other matters; provided, however, that such access or
investigation shall not interfere unnecessarily with the normal
operations of ONB. Upon request, ONB will furnish to Capital
Holdings or its representatives or agents, such financial and
operating data and other information reasonably requested by
Capital Holdings which has been or is developed by ONB or its
auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by
ONB of any claim of attorney-client privilege), and will permit
Capital Holdings and its representatives or agents to discuss
such information directly with any individual or firm
performing auditing or accounting functions for ONB so long as
a representative or agent of ONB participates in such
discussions. No investigation by Capital Holdings (whether
conducted before or after the date hereof) shall affect the
representations and warranties made by ONB or the information
contained in any document provided herein, and Capital Holdings
shall be entitled to rely on such representations, warranties
and documents notwithstanding any such investigation. Any
confidential information or trade secrets received by Capital
Holdings or its respective employees or agents in the course of
such examination 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 Capital Holdings or, at ONB's request, returned to
ONB in the event this Agreement is terminated as provided in
Section 9 hereof. This Section 7.06 shall not require the
disclosure of any information to Capital Holdings which would
be prohibited by law.
7.07. Employment Agreement. Following the Effective Time,
ONB agrees to cause the Surviving Bank to assume all
obligations under the Employment Agreements, as amended
pursuant to Section 6.12 hereof, and to guarantee the Surviving
Bank's obligations thereunder, except as may be otherwise
required by any government regulatory agency.
7.08. Directors. Following the Effective Time, ONB agrees
to cause to be elected as directors of the Surviving Bank those
persons who are serving as directors of WFSB as of the
Effective Time (other than the four (4) additional directors of
WFSB elected pursuant to Section 1.02(b) hereof) until such
director has reached the age of seventy (70) years, at which
time the director must retire from the Surviving Bank's Board.
Each director of WFSB who is over the age of seventy (70) years
at the Effective Time and the four (4) additional directors of
WFSB elected pursuant to Section 1.02(b) hereof will be elected
to serve as a director of the Surviving Bank for a period of
two (2) years following the Effective Time. Thereafter, ONB
shall have no obligation to elect any particular person as a
director of the Surviving Bank.
7.09. Indemnification and Insurance. (a) Indemnification.
From and after the Effective Time, ONB will cause the Surviving
Corporation and the Surviving Bank to assume and honor any
obligations as provided for and permitted by applicable federal
and state law which Capital Holdings or WFSB had immediately
prior to the Effective Time with respect to the indemnification
of each person who is on the date hereof, or has been at any
time prior to the date hereof or who becomes prior to the
Effective Time, a director or officer of Capital Holdings or
WFSB or was serving at the request of Capital Holdings or WFSB
as a director or officer of any domestic or foreign
A-37
corporation, joint venture, trust, employee benefit plan or
other enterprise (collectively, the "Indemnitees") arising out
of Capital Holdings' Articles of Incorporation or By-Laws or
WFSB's Charter or By-Laws in effect at the Effective Time
against any and all losses in connection with or arising out of
any claim which is based upon, arises out of or in any way
relates to any actual or alleged act or omission occurring at
or prior to the Effective Time in the Indemnitee's capacity as
a director or officer (whether elected or appointed), of
Capital Holdings or WFSB. Indemnification of employees,
officers and directors of Capital Holdings and WFSB for actions
or omissions following the Effective Time will be provided to
the same extent it is provided from time to time to other
persons working in similar capacities for ONB or its
subsidiaries following the Effective Time.
(b) Insurance. For a period of one (1) year after the
Effective Time, ONB shall use all reasonable efforts to cause
to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by Capital
Holdings and WFSB (provided that ONB may substitute therefor
policies of at least the same coverage and amounts containing
terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or
events which occurred before the Effective Time. Following the
Effective Time, ONB will provide any WFSB employees or
directors who become officers or directors of ONB or any of its
subsidiaries with the same directors' and officers' liability
insurance coverage that ONB provides to other similarly
situated directors and officers of ONB and its bank
subsidiaries.
7.10. Tax-Free Reorganization. ONB and ONB Bank shall take
no actions on or following the Effective Time which would cause
the Mergers to lose their status as reorganizations described
in Section 368 of the Code.
7.11. Stock Options.
(i) At the Effective Time, the obligations of Capital
Holdings with respect to each outstanding option to
purchase shares of Capital Holdings Common Stock (a
"Stock Option") which was properly granted pursuant
to a stock option agreement executed in accordance
with the Stock Option Plan shall be assumed by ONB as
hereinafter provided. In connection therewith, each
Stock Option shall be deemed to constitute an option
to acquire, on the same terms and conditions as were
applicable under such Stock Option at the Effective
Time, that number of shares of ONB common stock,
rounded to the nearest whole share, as the holder of
such Stock Option would have been entitled to receive
pursuant to the Company Merger had such holder
exercised such option in full immediately prior to
the Effective Time and, immediately thereafter,
exchanged such shares solely for ONB common stock
based upon the Exchange Ratio at a price per share
equal to (A) the aggregate exercise price for Capital
Holdings Common Stock otherwise purchasable pursuant
to such Stock Option divided by (B) the number of
shares of ONB common stock, rounded to the nearest
whole share, deemed purchasable pursuant to such
Stock Option. In no event shall ONB be required to
issue fractional shares of ONB common stock.
(ii) 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
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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 7.11 after giving effect to the Company
Merger and the assumption by ONB as set forth above).
Provided, however, to the extent necessary to
effectuate the provisions of this Section 7.11, ONB
may deliver new or amended 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 7.11 and as a result of the grant and
exercise of such Stock Options.
(iii) As soon as practicable after the Effective Time,
ONB shall file with the SEC a registration
statement on an appropriate form with respect to
the shares of ONB common stock subject to such
options and shall use its best efforts to
maintain the effectiveness of such registration
statement or registration statements (and
maintain the current status of the prospectus or
prospectuses with respect thereto) for so long
as such options remain outstanding.
7.12. Board Approval. ONB shall present this Agreement to
its Board of Directors for approval at the Board's April, 1996
meeting.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
8.01. ONB. The obligation of ONB and ONB Bank to
consummate the Mergers is subject to the satisfaction and
fulfillment of each of the following conditions on or prior to
the Effective Time, unless waived in writing by ONB:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of Capital Holdings and WFSB
contained in this Agreement shall be true, accurate and correct
in all material respects 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
Capital Holdings and WFSB 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
Capital Holdings and WFSB at the Closing (as hereinafter
defined) the items and documents, in form and content
reasonably satisfactory to ONB, set forth in Section 11.02(b)
hereof.
(d) Registration Statement Effective. ONB shall have
registered its shares of common stock to be issued to
shareholders of Capital Holdings 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
A-39
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. The Board of Governors of the
Federal Reserve System ("Federal Reserve") and the OTS shall
have authorized and approved or not objected to the Mergers on
terms and conditions reasonably satisfactory to ONB. In
addition, all appropriate orders, consents, approvals and
clearances from all other regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are
required by law for consummation of the Mergers shall have been
obtained on terms and conditions reasonably satisfactory to
ONB.
(f) Shareholder Approvals. The shareholders of Capital
Holdings and the sole shareholder of ONB Bank and WFSB shall
have approved and adopted this Agreement as required by
applicable law and their respective Charters or Articles of
Incorporation.
(g) Officers' Certificate. Capital Holdings shall have
delivered to ONB a certificate signed by its Chairman or
President and its Secretary, dated as of the Effective Time,
certifying that (i) all the representations and warranties of
Capital Holdings are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the
covenants of Capital Holdings have been complied with from the
date of this Agreement through and as of the Effective Time;
and (iii) Capital Holdings has satisfied and fully complied
with all conditions necessary to make this Agreement effective
as to it.
(h) Tax Matters. Legal counsel to ONB shall have rendered an
opinion to ONB and Capital Holdings, in form and content
reasonably satisfactory to the parties hereto, to the effect
that the Mergers will constitute tax-free reorganizations under
the Code (as described in Sections 1.01(f) and 1.02(e) hereof)
to each party hereto and to the shareholders of Capital
Holdings, except with respect to cash received by WFSB's
shareholders for fractional shares resulting from application
of the Exchange Ratio.
(i) Affiliate Agreements. ONB shall have received (i) from
Capital Holdings a list identifying each affiliate of Capital
Holdings in accordance with Section 6.05 hereof dated as of the
Effective Time and (ii) from each affiliate of Capital Holdings
the agreements dated as of the Effective Time contemplated by
Section 6.05 hereof.
(j) Fairness Opinion. Trident shall have issued its written
fairness opinion stating that the terms of the Company Merger
are fair to the shareholders of Capital Holdings from a
financial point of view. Such written fairness opinion shall
(i) be in form and substance reasonably satisfactory to ONB and
Capital Holdings; (ii) be dated as of a date not later than the
mailing date of the proxy statement-prospectus relating to the
Mergers to be mailed to Capital Holdings' shareholders; (iii)
be included as an exhibit to the proxy statement-prospectus;
and (iv) be updated and confirmed by Trident as of the
Effective Time.
8.02. Capital Holdings. The obligations of Capital
Holdings and WFSB to consummate the Mergers is subject to the
satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in
writing by Capital Holdings:
(a) Representations and Warranties at Effective Time. Each of
the representations and warranties of ONB contained in this
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Agreement shall be true, accurate and correct in all material
respects on and as of the Effective Time as though such
representations and warranties had been made or given at and as
of the Effective Time.
(b) Covenants. Each of the covenants and agreements of ONB
shall have been fulfilled or complied with from the date of
this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. Capital Holdings shall have
received from ONB at the Closing the items and documents, in
form and content reasonably satisfactory to Capital Holdings,
listed in Section 11.02(a) hereof.
(d) Registration Statement Effective. ONB shall have
registered its shares of common stock to be issued to
shareholders of Capital Holdings in accordance with this
Agreement with the SEC pursuant to the 1933 Act, and all state
securities and Blue Sky approvals, authorizations and
exemptions required to offer and sell such shares shall have
been received by ONB. The Registration Statement with respect
thereto shall have been declared effective by the SEC and no
stop order shall have been issued or threatened.
(e) Regulatory Approvals. The Federal Reserve and the OTS
shall have authorized and approved or not objected to the
Mergers. In addition, all appropriate orders, consents,
approvals and clearances from all other regulatory agencies and
governmental authorities whose orders, consents, approvals or
clearances are required by law for consummation of the Mergers
shall have been obtained.
(f) Shareholder Approvals. The shareholders of Capital
Holdings and the sole shareholder ONB Bank and WFSB shall have
approved and adopted this Agreement as required by applicable
law and their respective Charters or Articles of Incorporation.
(g) Officers' Certificate. ONB shall have delivered to
Capital Holdings a certificate signed by its Chairman or
President and its Secretary, dated as of the Effective Time,
certifying that (i) all the representations and warranties of
ONB are true, accurate and correct in all material respects on
and as of the Effective Time; (ii) all the covenants of ONB
have been complied with from the date of this Agreement through
and as of the Effective Time; and (iii) ONB has satisfied and
fully complied with all conditions necessary to make this
Agreement effective as to it.
(h) Tax Matters. Legal counsel to ONB shall have rendered an
opinion to ONB and Capital Holdings, in form and content
satisfactory to the parties hereto, to the effect that the
Mergers will constitute tax-free reorganizations under the Code
(as described in Sections 1.01(f) and 1.02(e) hereof) to each
party hereto and to the shareholders of Capital Holdings,
except with respect to cash received by Capital Holdings'
shareholders for fractional shares resulting from application
of the Exchange Ratio.
(i) Fairness Opinion. Trident shall have issued its written
fairness opinion stating that the terms of the Company Merger
are fair to the shareholders of Capital Holdings from a
financial point of view. Such written fairness opinion shall
(i) be in form and substance reasonably satisfactory to ONB and
Capital Holdings; (ii) be dated as of a date not later than the
mailing date of the proxy statement-prospectus relating to the
Mergers to be mailed to Capital Holdings' shareholders; (iii)
be included as an exhibit to the proxy statement-prospectus;
and (iv) be updated and confirmed by Trident as of the
Effective Time.
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SECTION 9
TERMINATION OF MERGER
9.01. Manner of Termination. This Agreement and the
Mergers may be terminated at any time prior to the Effective
Time by written notice delivered by ONB to Capital Holdings, or
by Capital Holdings to ONB, as follows:
(a) By ONB or Capital Holdings, if:
(i) the Mergers contemplated by this Agreement have not
been consummated by March 31, 1997; or
(ii) the respective Boards of Directors of ONB and Capital
Holdings mutually agree to terminate this Agreement.
(b) By ONB, if:
(i) ONB's independent auditors determine that either of
the Mergers will not qualify for pooling-of-interest
accounting treatment for ONB; or
(ii) any item, event or information set forth in any
supplement, amendment or update to the Disclosure
Schedule has had or would be expected to have, in the
reasonable discretion of ONB, a material adverse
effect on the business, prospects, assets,
capitalization, financial condition or results of
operations of Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings; or
(iii) there has been a misrepresentation or a breach of any
warranty by or on the part of Capital Holdings in its
representations and warranties set forth in this Agreement
which has had or would be expected to have, in the
reasonable discretion of ONB, a material adverse effect on
the business, prospects, assets, capitalization, financial
condition or results of operations of Capital Holdings or
WFSB, whether individually or on a consolidated basis, or
RISC on a consolidated basis with Capital Holdings;
provided, however, that in the event of any inaccuracy in
the representations and warranties contained in Section 4.03
hereof relative to the number of issued and outstanding
shares of Capital Holdings Common Stock, WFSB Common Stock,
or RISC Common Stock, ONB shall have the absolute right to
terminate this Agreement without regard to the materiality
of any such inaccuracy; or
(iv) there has been a breach of or failure to comply with
any covenant set forth in this Agreement by or on the
part of Capital Holdings or WFSB; or
(v) ONB shall reasonably determine that either of the
Mergers have become inadvisable or impracticable by
reason of commencement or threat of any claim,
litigation or proceeding against ONB, Capital
Holdings, WFSB, RISC or any subsidiary of ONB, or any
director or officer of any of such entities (A)
relating to this Agreement or the Mergers or (B)
which is likely to have a material adverse effect on
A-42
either of the business, prospects, assets,
capitalization, financial condition or results of
operations of Capital Holdings or WFSB, whether
individually or on a consolidated basis, or RISC on a
consolidated basis with Capital Holdings, or of ONB
on a consolidated basis; or
(vi) except as provided in the Disclosure Schedule (but
not including any updates or supplements thereto),
there has been a material adverse change in the
business, prospects, assets, capitalization,
financial condition or results of operations of
Capital Holdings or WFSB, whether individually or on
a consolidated basis, or RISC on a consolidated basis
with Capital Holdings, at the Effective Time as
compared to that in existence as of December 31,
1995; or
(vii) all Joinder Agreements under the WFSB Deferred Compensation
have not been properly and validly amended as provided in
Section 7.03(f) hereof within forty-five (45) days of the
date of this Agreement.
(c) By Capital Holdings, if:
(i) there has been a misrepresentation or a breach of any
warranty by or on the part of ONB in its
representations and warranties set forth in this
Agreement which has had or would be expected to have,
in the reasonable discretion of Capital Holdings, a
material adverse effect on the business, assets,
capitalization, financial condition or results of
operation of ONB on a consolidated basis; or
(ii) there has been a breach of or failure to comply with
any covenant set forth in this Agreement by or on the
part of ONB; or
(iii) there has been a material adverse change in the financial
condition, results of operations, business, assets or
capitalization of ONB on a consolidated basis at the
Effective Time as compared to that in existence on December
31, 1995.
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, ONB Bank, Capital
Holdings, WFSB and their respective directors, officers,
employees, agents and shareholders, except as provided in
compliance with the confidentiality provisions of this
Agreement set forth in Section 6.09 and Section 7.06 hereof and
the payment of expenses set forth in Section 12.09 hereof.
SECTION 10
EFFECTIVE TIME OF THE MERGERS
Upon the terms and subject to the conditions specified in this
Agreement, the Company Merger shall become effective at the
time specified in the Articles of Merger of Capital Holdings
A-43
with and into ONB as filed with the Indiana Secretary of State
("Effective Time") and the Thrift Merger shall become effective
at the time specified in the Articles of Combination of WFSB
with and into ONB Bank as filed with the OTS. The Effective
Time shall occur not later than the last business day of the
month following (a) the fulfillment of all conditions precedent
to the Mergers set forth in Section 8 hereof, and (b) the
expiration of all waiting periods in connection with the bank
or thrift regulatory applications filed for the approval of the
Mergers.
SECTION 11
CLOSING
11.01. Closing Date and Place. So long as all conditions
precedent set forth in Section 8 have been satisfied and
fulfilled, the closing of the Mergers ("Closing") shall take
place on the Effective Time at a location to be reasonably
determined by ONB.
11.02. Deliveries. (a) At the Closing, ONB shall deliver to
Capital Holdings the following:
(i) an opinion of its counsel dated as of the Effective
Time and substantially in the form set forth in
Exhibit B attached hereto;
(ii) the officers' certificate contemplated by Section
8.02(g) hereof;
(iii) copies of all approvals by government regulatory
agencies necessary to consummate the Mergers;
(iv) copies of the resolutions of the Board of Directors
of ONB and ONB Bank of ONB, as the sole shareholder
of ONB Bank, certified by the President or Secretary
of ONB and ONB Bank, respectively, relative to the
approval of this Agreement and the Mergers; and
(v) such other documents as Capital Holdings or its legal
counsel may reasonably request.
(b) At the Closing, Capital Holdings shall deliver to ONB the
following:
(i) an opinion of its counsel dated as of the Effective
Time and substantially in the form set forth in
Exhibit C attached hereto;
(ii) the officers' certificate contemplated by Section
8.01(g) hereof;
(iii) a list of Capital Holdings' shareholders as of
the Effective Time certified by the President
and Secretary of Capital Holdings;
(iv) copies of the resolutions adopted by the Board of
Directors and shareholders of Capital Holdings and
WFSB, certified by the Chairman or President and
Secretary of each, relative to the approval of this
Agreement and the Mergers;
A-44
(v) the list of affiliates of Capital Holdings and the
affiliate agreements as set forth in Section 8.01(i)
hereof; and
(vi) such other documents as ONB or its legal counsel may
reasonably request.
SECTION 12
MISCELLANEOUS
12.01. Effective Agreement. This Agreement shall be binding
upon and inure to the benefit of the respective parties hereto
and their respective successors and assigns; provided, however,
that this Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto.
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 this Agreement, including,
but not limited to, Sections 1.02(b), 7.03, 7.07, 7.08 and 7.09
hereof.
12.02. Waiver; Amendment. (a) ONB or Capital Holdings 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; (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 parties of any of the
covenants or agreements to be performed by it or them under
this Agreement; or (iv) waive the satisfaction or fulfillment
of any condition, the nonsatisfaction or nonfulfillment of
which is a condition to the right of the party so waiving to
consummate the Mergers. The waiver by any party hereto of a
breach of or noncompliance with any provision of this Agreement
shall not operate or be construed as a continuing waiver or a
waiver of any other or subsequent breach or noncompliance
hereunder.
(b) This Agreement may be amended, modified or supplemented
only by a written agreement executed by the parties hereto and,
if such amendment, modification or supplement occurs after the
approval of the Agreement by the shareholders of Capital
Holdings, only in a manner that will not materially and
adversely affect the rights of Capital Holdings' shareholders
hereunder without obtaining their approval thereof.
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 prepaid as
follows:
A-45
If to ONB or ONB Bank: with a copy to (which shall not
constitute notice):
Old National Bancorp Krieg DeVault Alexander & Capehart
ATTN: Jeffrey L. Knight, ATTN: Nicholas J. Chulos, Esq.
General Counsel and Corporate Secretary One Indiana Square, Suite 2800
420 Main Street Indianapolis, Indiana 46204-2017
P.O. Box 718 Telephone: (317) 238-6224
Evansville, Indiana 47705 Telecopier: (317) 636-1507
Telephone: (812) 464-1363
Telecopier: (812) 464-1567
If to Capital Holdings: with a copy to (which shall not
constitute notice):
Workingmens Capital Holdings, Inc. Barnes & Thornburg
ATTN: Richard R. Haynes, President ATTN: Claudia V. Swhier, Esq.
121 East Kirkwood Avenue 1313 Merchants Bank Building
P. O. Box 2689 11 South Meridian Street
Bloomington, Indiana 47408 Indianapolis, Indiana 46204
Telephone: (812) 332-9465 Telephone: (317) 638-1313
Telecopier: (812) 323-4246 Telecopier: (317) 231-7452
or such substituted address or person as any of them given to the
other in writing. All such notices, requests or other
communications shall be effective: (a) if delivered by hand,
when delivered; (b) if mailed in the manner provided herein,
five (5) business days after deposit with the United States
Postal Service; (c) if delivered by overnight express delivery
service, on the next business day after deposit with such
service; and (d) if by telecopier, on the next business day if
also confirmed by mail in the manner provided herein.
12.04. Headings. The headings in this Agreement have been
inserted solely for ease of reference and should not be
considered in the interpretation or construction of this
Agreement.
12.05. Severability. In case any one or more of the
provisions contained herein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.
12.06. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but
such counterparts shall together constitute one and the same
instrument.
12.07. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Indiana and applicable federal laws.
12.08. Entire Agreement. Except for certain provisions
regarding the treatment of employees of WFSB contained in a
letter dated April 8, 1996, from ONB to Capital Holdings, this
Agreement supersedes all other prior or contemporaneous
understandings, commitments, representations, negotiations or
A-46
agreements, whether oral or written, among the parties hereto
and thereto relating to the Mergers and the matters
contemplated herein and therein and constitute the entire
agreements between the parties hereto and thereto relating to
the subject matter hereof and thereof. 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. The parties hereto shall each pay their
respective expenses incidental to the Mergers.
12.10 Certain References. Whenever in this Agreement a
singular word is used, it also shall include the plural
wherever required by the context and vice-versa. Except
expressly stated otherwise, all references in this Agreement to
periods of days shall be construed to refer to calendar, not
business, days. The term "business day" shall mean any day
except Saturday and Sunday when Old National Bank in
Evansville, the lead bank of ONB, is open for the transaction
of business.
12.11 Disclosure Schedule. The Disclosure Schedule
attached hereto is intended to be and hereby is specifically
made a part of this Agreement, and the information contained in
the Disclosure Schedule shall be deemed to be representations
and warranties of Capital Holdings.
* * * *
A-47
IN WITNESS WHEREOF, ONB, ONB Bank, Capital Holdings and WFSB
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 and delivered by their duly authorized
officers.
OLD NATIONAL BANCORP
By: /s/ John N. Royse
------------------------
John N. Royse, President
ATTEST:
By: /s/ Jeffrey L. Knight
-----------------------------
Jeffrey L. Knight, Secretary
WORKINGMENS CAPITAL HOLDINGS, INC.
By: /s/ Richard R. Haynes
----------------------------
Richard R. Haynes, President
ATTEST:
By: /s/ Jerry L. Hayes
------------------------
Jerry L. Hays, Secretary
WORKINGMENS FEDERAL SAVINGS BANK
By: /s/ Richard R. Haynes
----------------------------
Richard R. Haynes, President
and Chief Executive Officer
ATTEST:
By: /s/ Jerry L. Hayes
------------------------
Jerry L. Hays, Secretary
ONB BANK
By: /s/ Dan L. Doan
-------------------------
Dan L. Doan, Chairman and
President
ATTEST:
By: /s/ Jeffrey L. Knight
--------------------------------------
Jeffrey L. Knight, Assistant Secretary
A-48
APPENDIX B
[Form of Opinion]
_________________, 1996
Board of Directors
Workingmens Capital Holdings, Inc.
121 East Kirkwood Avenue
Bloomington, Indiana 47402
Gentlemen:
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of shares of common
stock (the "Workingmens Common Stock"), of Workingmens Capital
Holdings, Inc. ("Workingmens") of the consideration to be
received by such stockholders in the proposed merger (the
"Proposed Merger") of Workingmens with Old National Bancorp
("Old National"), pursuant to the Agreement of Affiliation and
Merger dated April 8, 1996 (the "Agreement").
As more specifically set forth in the Agreement, and
subject to a number of conditions and procedures described in
the Agreement, in the Proposed Merger each of the issued and
outstanding shares of Workingmens Common Stock shall be
converted into 0.64 shares of Old National Common Stock (the
"Exchange Ratio"). All unexercised options for the right to
purchase shares of Workingmens Common Stock shall be converted
into options for the right to purchase shares of Old National
Common Stock using the Exchange Ratio as applicable to the
holders of Workingmens Common Stock.
Trident Financial Corporation ("Trident") is a financial
consulting and investment banking firm experienced in the
valuation of business enterprises with considerable experience
in the valuation of thrift institutions. Since 1975, Trident
has valued in excess of 400 thrift institutions in connection
with mutual-to-stock conversions, mergers and acquisitions, as
well as other transactions. Trident is not affiliated with
Workingmens or Old National.
In connection with rendering our opinion, we have reviewed
and analyzed, among other things, the following: (i) the
Agreement; (ii) certain publicly available information
concerning Workingmens, including the audited financial
statements of Workingmens for each of the years in the three
year period ended December 31, 1995 and unaudited financial
statements for the three months ended March 31, 1996; (iii)
certain publicly available information concerning Old National,
including the audited financial statements of Old National for
each of the years in the three year period ended December 31,
1995 and unaudited financial statements for the three months
ended March 31, 1996; (iv) certain other internal information,
primarily financial in nature, concerning the business and
operations of Workingmens and Old National furnished to us by
Workingmens and Old National for purposes of our analysis; (v)
information with respect to the trading market for Workingmens
Common Stock; (vi) information with respect to the trading
market for Old National Common Stock; (vii) certain publicly
available information with respect to other companies that we
believe to be comparable to Workingmens and Old National and
the trading markets for such other companies' securities; and
B-1
Board of Directors
__________________ , 1996
Page 2
(viii) certain publicly available information concerning the
nature and terms of other transactions that we believe relevant
to our inquiry. We have also met with certain officers and
employees of Workingmens and Old National to discuss the
foregoing as well as other matters we believe relevant to our
inquiry.
In our review and analysis and in arriving at our opinion,
we have assumed and relied upon the accuracy and completeness
of all of the financial and other information provided to us or
publicly available. We have not attempted independently to
verify any such information. We have not conducted a physical
inspection of the properties or facilities of Workingmens or
Old National, nor have we made or obtained any independent
evaluations or appraisals of any of such properties or
facilities. We did not specifically evaluate Workingmens' or
Old National's loan portfolio or the adequacy of Workingmens'
or Old National's reserves for possible loan losses.
In conducting our analysis and arriving at our opinion as
expressed herein, we have considered such financial and other
factors as we have deemed appropriate under the circumstances
including, among others, the following: (i) the historical and
current financial condition and results of operations of
Workingmens and Old National, including interest income,
interest expense, net interest income, net interest margin,
interest sensitivity, non-interest expenses, earnings,
dividends, book value, return on assets, return on equity,
capitalization, the amount and type of non-performing assets
and the reserve for loan losses; (ii) the business prospects of
Workingmens and Old National; (iii) the economies in
Workingmens' and Old National's market areas; (iv) the
historical and current market for Workingmens Common Stock and
Old National Common Stock and for the equity securities of
certain other companies that we believe to be comparable to
Workingmens and Old National; and (v) the nature and terms of
certain other acquisition transactions that we believe to be
relevant. We have also taken into account our assessment of
general economic, market, financial and regulatory conditions
and trends, as well as our knowledge of the thrift industry,
our experience in connection with similar transactions, and our
knowledge of securities valuation generally. Our opinion
necessarily is based upon conditions as they exist and can be
evaluated on the date hereof. Our opinion is, in any event,
limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of Workingmens
Common Stock in the Proposed Merger and does not address
Workingmens' underlying business decision to effect the
Proposed Merger.
Based upon and subject to the foregoing, we are of the
opinion that the consideration to be received by the holders of
Workingmens Common Stock in the Proposed Merger is fair, as of
the date hereof, from a financial point of view, to such
holders.
Very truly yours,
TRIDENT FINANCIAL CORPORATION
B-2
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
3(ii) By-Laws of the Registrant (incorporated by
reference to Registrant's Registration Statement on
Form S-4, File No. 33-80670, dated June 23, 1994)
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)
5 Opinion of Krieg DeVault Alexander & Capehart re: legality
8 Opinion of Krieg DeVault Alexander & Capehart re: certain
federal income tax matters
10.01 Material Contracts (incorporated by reference to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and to the
Distribution Agreement set forth in Exhibit 1 of
the Registrant's Registration Statement on Form S-
3, File No. 33-55222, dated December 2, 1992)
II-1
10.02 Supplemental Deferred Compensation Plan for Select
Executive Employees of Old National Bancorp and
Subsidiaries, as amended and restated effective as
of July 1, 1994
10.03 Old National Bancorp Pension Restoration Plan,
effective December 1, 1995
10.04 Old National Bancorp Employees' Retirement Plan,
amended and restated May 1, 1996
10.05 Old National Bancorp Executive Short Term Incentive
Plan, effective January 1, 1996
10.06 Severance Agreements
(a) William R. Britt
(b) James A. Risinger
10.07 Old National Bancorp Employees' Savings and Profit
Sharing Plan
(a) First Amendment, effective January 1, 1995
(b) Second Amendment, effective January 1, 1996
13(ii)(a) WCHI's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
13(ii)(b) WCHI's Annual Report to Shareholders for the fiscal
year ended December 31, 1995
21 Subsidiaries of the Registrant
23.01 Consent of Krieg DeVault Alexander & Capehart
(included in Opinion of Krieg DeVault Alexander &
Capehart re: legality at Exhibit 5)
23.02 Consent of Arthur Andersen LLP
23.03 Consent of KPMG Peat Marwick LLP
23.04 Consent of Trident Financial Corporation
24 Powers of Attorney
99 Form of Proxy
(b) Financial Data Schedules: not applicable
(c) Opinion of Trident Financial Corporation (included as
Appendix B to Prospectus)
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant
II-2
to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(b) (1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
registered hereunder through the use of a prospectus which is a
part of this registration statement, by any person or party who
is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable
registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information
called for by the other Items of the applicable form.
(2) The undersigned registrant hereby undertakes that
every prospectus (i) that is filed pursuant to paragraph (b)(1)
immediately preceding or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act, and is used in
connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond
to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11 or 13 of
this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective time
of the registration statement through the date of responding to
the request.
(e) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Evansville, State of
Indiana, on July 25, 1996.
OLD NATIONAL BANCORP
By: /s/ RONALD B. LANKFORD
-----------------------------
Ronald B. Lankford, President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities indicated below as of
July 25, 1996.
Name Title
---- -----
/s/ JOHN N. ROYSE Chairman of the Board,
------------------------------ Director and Chief
John N. Royse Executive Officer (Chief
Executive Officer)
/s/ STEVE H. PARKER Senior Vice President
------------------------------ (Chief Financial
Steve H. Parker Officer and Principal
Accounting Officer)
DAVID L. BARNING* Director
------------------------------
David L. Barning
RICHARD J. BOND* Director
------------------------------
Richard J. Bond
ALAN W. BRAUN* Director
------------------------------
Alan W. Braun
JOHN J. DAUS, JR.* Director
------------------------------
John J. Daus, Jr.
WAYNE A. DAVIDSON* Director
------------------------------
Wayne A. Davidson
LARRY E. DUNIGAN* Director
------------------------------
Larry E. Dunigan
DAVID E. ECKERLE* Director
------------------------------
David E. Eckerle
II-4
THOMAS B. FLORIDA* Director
------------------------------
Thomas B. Florida
PHELPS L. LAMBERT* Director
------------------------------
Phelps L. Lambert
RONALD B. LANKFORD* President and Director
------------------------------
Ronald B. Lankford
LUCIEN H. MEIS* Director
------------------------------
Lucien H. Meis
LOUIS L. MERVIS* Director
------------------------------
Louis L. Mervis
DAN W. MITCHELL* Director
------------------------------
Dan W. Mitchell
MARJORIE Z. SOYUGENC* Director
------------------------------
Marjorie Z. Soyugenc
CHARLES D. STORMS* Director
------------------------------
Charles D. Storms
*By: /s/ JEFFREY L. KNIGHT
------------------------------
Attorney-in-Fact
Printed Name: Jeffrey L. Knight
II-5