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Exhibit 8.01
_______________, 2000
Board of Directors Board of Directors
Old National Bancorp Permanent Bancorp, Inc.
420 Main Street 101 SE Third Street
Evansville, Indiana 47708 Evansville, Indiana 47708
Ladies and Gentlemen:
The Boards of Directors of Old National Bancorp ("ONB") and Permanent
Bancorp, Inc. ("Permanent"), have requested our opinion as special tax counsel
as to certain federal income tax consequences of a reorganization involving ONB,
Permanent, Merger Corporation I ("Merger Corporation"), Old National Bank and
Permanent Bank ("Bank").
In summary, the proposed transaction consists of the merger of Bank
with and into Old National Bank ("Bank Merger") and, immediately thereafter, the
merger of Permanent with and into Merger Corporation ("Company Merger"). The
Bank Merger and the Company Merger are hereinafter collectively referred to as
the "Mergers". In consideration of the Mergers, Permanent shareholders will
receive shares of ONB common stock in exchange for their shares of Permanent
common stock.
FACTS
In connection with the Mergers, the following facts have been provided
to us, and we have relied upon them for purposes of this opinion:
A. ONB
ONB has its principal office at 420 Main Street, Evansville,
Vanderburgh County, Indiana 47708. ONB is a corporation duly incorporated and
existing under the laws of the State of Indiana and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended. As of April 27,
2000, ONB had 150,000,000 shares of voting, no par value, common stock
authorized, of which approximately 46,851,000 were issued and outstanding. ONB
common stock is traded in the over-the-counter market and stock prices are
reported on the NASDAQ National Market System.
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ONB also has 2,000,000 shares of preferred stock authorized. The
preferred stock has no stated dividend rate. No shares of Series A, no par
value, ONB preferred stock have been issued, and ONB presently has no intent and
no commitments to issue any of such shares. However, during the first fiscal
quarter of 1990, ONB declared and paid a dividend in the form of rights
("Rights") to purchase shares of its Series A preferred stock pursuant to a
Rights Agreement. One Right was issued for each outstanding share of ONB common
stock. Subsequent issuances of ONB common stock also included such Rights. Each
Right entitles the holder thereof, upon the occurrence of certain events
involving a change in control of ONB, to purchase from ONB 1/100 of a share of
the Series A preferred stock at an initial purchase price equal to $60.00,
subject to adjustment. Unless earlier exercised or redeemed, the Rights will
expire at the close of business on March 1, 2010. A Right is transferred
automatically with a transfer of each underlying share of ONB common stock, and
future issuances of ONB common stock will also include such Rights.
ONB maintains its accounting on a calendar year basis, and computes its
income under the accrual method of accounting. ONB is the parent corporation of
an affiliated group of subsidiaries consisting of four (4) operating banks, one
(1) securities brokerage company, one (1) insurance company, one (1) realty
company, four (4) Delaware business trusts and three (3) national trust
companies. ("ONB Group"). The ONB Group files a consolidated federal income tax
return and will continue to file consolidated federal income tax returns after
the effective time of the Merger.
Merger Corporation is an Indiana corporation and a wholly-owned
subsidiary of ONB.
Old National Bank is an Indiana state chartered bank and a wholly-owned
subsidiary of ONB.
B. Permanent
Permanent has its principal office at 101 SE Third Street, Evansville,
Indiana 47708. Permanent is a corporation duly incorporated and existing under
the laws of the State of Delaware and is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. As of December 20, 1999,
Permanent had 9,000,000 shares of voting, $0.01 par value, common stock
authorized, of which 4,103,095 shares were issued and outstanding, which number
of shares of Permanent common stock is subject to increase to a total of
4,467,239 shares pursuant to the exercise of options granted under the 1999
Omnibus Incentive Plan and the 1993 Stock Option and Incentive Plan to purchase
an aggregate of 364,144 shares of common stock of Permanent. The common stock of
Permanent is traded in the over-the-counter market and stock prices are reported
on the NASDAQ National Market System.
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As of the date hereof, the following persons or entities who
beneficially own five percent (5%) or more of Permanent's outstanding common
stock:
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME PERMANENT SHARES SHARES
---- ---------------- --------------
The Permanent Bancorp, Inc.
Employee Stock Ownership
Plan 333,270 8.12%
Rahmi Soyugenc 259,646 6.33%
Donald P. Weinzapfel 242,036 5.9%
Permanent also has 1,000,000 shares of preferred stock, $0.01 par value
authorized. No shares of Permanent preferred stock have been issued, and
Permanent presently has no interest and no commitments to issue any of such
shares.
Permanent maintains its accounting on a calendar year basis, and
computes its income under the accrual method of accounting. Permanent is the
parent corporation for Bank, its only direct subsidiary. Bank's only direct
subsidiaries are Perma Service Corp. ("Perma Service") and Permavest, Inc.
("Permavest").
BUSINESS PURPOSES
The shareholders of ONB and the shareholders of Permanent desire to
reorganize their capital stock interests to accomplish the following business
objectives, among others:
1. To obtain greater financial and managerial strength for future
growth and to achieve economies of scale and other operational benefits.
2. To provide the shareholders of Permanent an interest in a more
widely-held enterprise with potentially more marketable stock.
3. To allow Old National Bank to compete more effectively with other
banking organizations and to enable Old National Bank to provide new and broader
services to Bank's former customers.
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PROPOSED TRANSACTIONS
As used herein, "Code" means the Internal Revenue Code of 1986, as
amended, and "Regulations" means the regulations promulgated thereunder by the
Secretary of the Treasury, all as in effect as of the date of this opinion.
To accomplish the objectives specified above, the Mergers, as
contemplated by an Agreement of Affiliation and Merger, dated December 20, 1999
("Agreement"), by and among ONB, Permanent, Merger Corporation, Old National
Bank and Bank, will consist of the following:
(i) Bank will merge with and into Old National Bank pursuant to the
National Bank Act. Old National Bank will acquire all of the
assets and assume all the liabilities of Bank, and Bank will
cease to exist. Each share of Bank capital stock will be
cancelled, and ONB will be allocated all of the capital stock of
Old National Bank. No new shares of ONB common stock or cash
will actually be issued to shareholders of Permanent in this
step. Permanent's shareholders will receive the consideration
described in subparagraph (ii) hereof, which consideration will
consist of ONB common stock, including the Rights described
herein. There will be no dissenters to the Bank Merger described
herein.
(ii) Immediately following and on the same day as the Bank Merger,
Permanent will merge with and into Merger Corporation pursuant
to the provisions of Indiana law. At the effective time of the
Company Merger, each issued and outstanding share of Permanent
common stock will be converted into the right to receive a
certain number of shares of ONB common stock calculated in
accordance with an exchange ratio set out in the Agreement,
subject to adjustment as provided for in the Agreement. No
fractional shares of ONB common stock will be issued with
respect to fractional share interests arising from the exchange
ratio specified above. Rather, any shareholder of Permanent
entitled to a fractional share interest of ONB common stock as a
result of the exchange ratio will receive cash in lieu thereof
in an amount equal to the fraction of the share times the
average of the per share closing prices of ONB common stock as
reported on NASDAQ National Market System for the ten (10)
business days on which shares of ONB common stock were traded
immediately preceding the effective time of the Mergers.
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ASSUMPTIONS
In connection with the Bank Merger, we have relied upon the following
assumptions for the purpose of issuing this opinion:
(a) The fair market value of the shares of ONB common stock deemed
received in the exchange by Bank shareholders will be
approximately equal to the fair market value of the Bank capital
stock deemed surrendered in the exchange.
(b) There is no plan or intention by shareholders of Bank to sell,
exchange or otherwise dispose of a number of shares of ONB
common stock deemed received in the Bank Merger which would
reduce Bank's shareholder's ownership of ONB common stock to a
number of shares having a value, as of the effective date of the
Bank Merger, of less than fifty percent (50%) of the value of
all of the formerly outstanding shares of capital stock of Bank
as of the same date. For purposes of this assumption, shares of
Bank capital stock and shares of ONB common stock held by the
Bank's shareholder and otherwise sold, redeemed, or disposed of
prior or subsequent to the Bank Merger will be considered in
making this assumption.
(c) Old National Bank will acquire at least ninety percent (90%) of
the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held
by Bank immediately prior to the Bank Merger. For purposes of
this assumption, Bank's assets used to pay its reorganization
expenses, and all redemptions and distributions (except for
regular and normal dividends) made by Bank immediately preceding
the transfer, will be included as assets of Bank held
immediately prior to the Bank Merger.
(d) Prior to the Bank Merger, ONB will be in control of Old National
Bank within the meaning of Section 368(c) of the Code.
(e) Following the Bank Merger, Old National Bank will not issue
additional shares of its capital stock that would result in ONB
losing control of Old National Bank within the meaning of
Section 368(c) of the Code.
(f) ONB has no plan or intention to reacquire any of its capital
stock deemed issued in the Bank Merger. ONB may, however,
acquire ONB common stock on a periodic basis through purchases
on an anonymous basis on the open market at open market prices.
(g) ONB has no plan or intention to liquidate Old National Bank, to
merge Old
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National Bank with and into another corporation, to sell or
otherwise dispose of the capital stock of Old National Bank, or
to cause Old National Bank to sell or otherwise dispose of any
of the assets of Bank acquired in the Bank Merger, except for
dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code.
(h) The liabilities of Bank assumed by Old National Bank and the
liabilities to which the transferred assets of Bank are subject
were incurred by Bank in the ordinary course of its business.
(i) Following the Bank Merger, Old National Bank will continue the
historic business of Bank or use a significant portion of Bank's
business assets in a business.
(j) ONB, Old National Bank, Bank and the sole shareholder of Bank
will pay their respective expenses, if any, incurred in
connection with the Bank Merger.
(k) No intercorporate indebtedness exists between ONB and Bank or
between Old National Bank and Bank that was issued, acquired, or
will be settled at a discount.
(l) No two parties to the Bank Merger are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(m) Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the
Code.
(n) The fair market value of the assets of Bank transferred to Old
National Bank in the Bank Merger will equal or exceed the sum of
the liabilities assumed by Old National Bank in the Bank Merger,
plus the amount of liabilities, if any, to which the transferred
assets are subject.
(o) No capital stock of Old National Bank will be issued in the Bank
Merger.
(p) None of the compensation received by any shareholder-employee of
Bank in the Bank Merger (if any) will be separate consideration
for, or allocable to, any of its shares of Bank capital stock;
none of the shares of ONB common stock received by any
shareholder-employee of Bank will be separate consideration for,
or allocable to, any employment agreement; and the compensation
paid to any shareholder-employee of Bank (if any) will be for
services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar
services.
In connection with the Company Merger, we have relied upon the following
assumptions
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for the purpose of issuing this opinion:
(a) The fair market value of the shares of ONB common stock received
in the exchange by Permanent shareholders will be approximately
equal to the fair market value of the Permanent capital stock
surrendered in the exchange.
(b) There is no plan or intention by shareholders of Permanent to
sell, exchange or otherwise dispose of a number of shares of ONB
common stock deemed received in the Company Merger which would
reduce the Permanent shareholders' ownership of ONB common stock
to a number of shares having a value, as of the effective date
of the Company Merger, of less than fifty percent (50%) of the
value of all of the formerly outstanding shares of capital stock
of Permanent as of the same date. For purposes of this
assumption, shares of Permanent capital stock and shares of ONB
common stock held by the Permanent shareholders and otherwise
sold, redeemed, or disposed of prior or subsequent to the
Company Merger will be considered in making this assumption.
(c) Merger Corporation will acquire at least ninety percent (90%) of
the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held
by Permanent immediately prior to the Company Merger. For
purposes of this assumption, Permanent's assets used to pay its
reorganization expenses, and all redemptions and distributions
(except for regular and normal dividends) made by Permanent
immediately preceding the transfer, will be included as assets
of Permanent held immediately prior to the Company Merger.
(d) Prior to the Company Merger, ONB will be in control of Merger
Corporation within the meaning of Section 368(c) of the Code.
(e) Following the Company Merger, Merger Corporation will not issue
additional shares of its capital stock that would result in ONB
losing control of Merger Corporation within the meaning of
Section 368(c) of the Code.
(f) ONB has no plan or intention to reacquire any of its capital
stock issued in the Company Merger. ONB may, however, acquire
ONB common stock on a periodic basis through purchases on an
anonymous basis on the open market at open market prices.
(g) ONB has no plan or intention to liquidate Merger Corporation, to
merge Merger Corporation with and into another corporation, to
sell or otherwise dispose of the capital stock of Merger
Corporation, or to cause Merger Corporation to sell or otherwise
dispose of any of the assets of Permanent acquired in the
Company Merger, except for dispositions made in the ordinary
course of business or
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transfers described in Section 368(a)(2)(C) of the Code.
(h) The liabilities of Permanent assumed by Merger Corporation and
the liabilities to which the transferred assets of Permanent are
subject were incurred by Permanent in the ordinary course of its
business.
(i) Following the Company Merger, Merger Corporation will continue
the historic business of Permanent or use a significant portion
of Permanent's business assets in a business.
(j) ONB, Merger Corporation and Permanent will pay their respective
expenses, if any, incurred in connection with the Company
Merger.
(k) No intercorporate indebtedness exists between ONB and Permanent
or between Merger Corporation and Permanent that was issued,
acquired, or will be settled at a discount.
(l) No two parties to the Company Merger are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(m) Permanent is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of
the Code.
(n) The fair market value of the assets of Permanent transferred to
Merger Corporation in the Company Merger will equal or exceed
the sum of the liabilities assumed by Merger Corporation in the
Company Merger, plus the amount of liabilities, if any, to which
the transferred assets are subject.
(o) No capital stock of Merger Corporation will be issued in the
Company Merger.
(p) None of the compensation received by any shareholder-employee of
Permanent in the Company Merger (if any) will be separate
consideration for, or allocable to, any of its shares of
Permanent capital stock; none of the shares of ONB common stock
received by any shareholder-employee of Permanent will be
separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any shareholder-employee
of Permanent (if any) will be for services actually rendered and
will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
OPINION
Based solely on the facts, assumptions and other information set forth
above, and so long
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as such facts, assumptions and other information are true and correct on
the date of the consummation of the Bank Merger, it is our opinion with
respect to the Bank Merger that:
(1) Provided that the merger of Bank with and into Old National Bank
qualifies as a statutory merger under applicable law, and
following the Bank Merger, Old National Bank will hold
substantially all of its assets and the assets of Bank, and in
the Bank Merger, the shareholder of Bank will constructively
exchange an amount of stock constituting control of Bank (within
the meaning of Section 368(c) of the Code) solely for ONB voting
common stock, the proposed merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Code. The reorganization will not be
disqualified by reason of the fact that voting stock of ONB is
being used in the merger. For purposes of this opinion,
"substantially all" means at least ninety percent (90%) of the
fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets of Bank. ONB,
Old National Bank, and Bank will each be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code.
(2) No gain or loss will be recognized by Bank on the transfer of
substantially all of its assets to Old National Bank and the
assumption by Old National Bank of the liabilities of Bank
(Sections 361(a) and 357(a) of the Code).
(3) No gain or loss will be recognized by ONB or Old National Bank
on the receipt by Old National Bank of substantially all of the
assets of Bank in constructive exchange for ONB common stock and
the assumption by Old National Bank of Bank's liabilities (Rev.
Rul. 57-278, 1957-1 C.B. 124).
(4) No gain or loss will be recognized by the shareholder of Bank
upon the deemed exchange of Bank common stock solely for ONB
common stock (Section 354(a)(1) of the Code).
Based solely on the facts, assumptions and other information set forth
above, and so long as such facts, assumptions and other information are true and
correct on the date of consummation of the Company Merger, it is our opinion
that:
(1) Provided that the merger of Permanent with and into Merger
Corporation qualifies as a statutory merger under applicable
law, and following the Company Merger, Merger Corporation will
hold substantially all of its assets and the assets of
Permanent, and in the Company Merger, the shareholders of
Permanent will exchange an amount of stock constituting control
of Permanent (within the meaning of Section 368(c) of the Code)
solely for ONB voting common stock, the proposed merger will
constitute a reorganization within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Code. The
reorganization will not
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be disqualified by reason of the fact that voting stock of ONB
is being used in the merger. For purposes of this opinion,
"substantially all" means at least ninety percent (90%) of the
fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets of Permanent.
ONB, Merger Corporation, and Bank will each be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code.
(2) No gain or loss will be recognized by Permanent on the transfer
of substantially all of its assets to Merger Corporation and the
assumption by Merger Corporation of the liabilities of Permanent
(Sections 361(a) and 357(a) of the Code).
(3) No gain or loss will be recognized by ONB or Merger Corporation
on the receipt by Merger Corporation of substantially all of the
assets of Permanent in constructive exchange for ONB common
stock and the assumption by Merger Corporation of Permanent's
liabilities (Rev. Rul. 57-278, 1957-1 C.B. 124).
(4) No gain or loss will be recognized by the shareholders of
Permanent upon the exchange of Permanent common stock solely for
ONB common stock (Section 354(a)(1) of the Code).
The opinions expressed herein represent our conclusions as to the
application of existing federal income tax law to the facts as presented to us
relating to the Bank Merger and Company Merger, and we give no assurance that
changes in such law or any interpretation thereof will not affect the opinions
expressed by us. Moreover, there can be no assurance that this opinion will not
be challenged by the Internal Revenue Service or that a court considering the
issues will not hold contrary to such opinion. We express no opinion on the
treatment of the transactions under the income tax laws of any state or other
taxing jurisdiction. We assume no obligation to advise you of any changes
concerning the above, whether or not deemed material, which may hereafter come
or be brought to our attention.
This opinion is addressed to you and is solely for your use in
connection with the transactions described herein. We assume no professional
responsibility to any other person or entity whatsoever, including, without
limitation, any shareholder of either ONB or Permanent. Accordingly, the opinion
expressed herein is not to be utilized or quoted by, or delivered or disclosed
to, in whole or in part, any other person, corporation, entity or governmental
authority without, in each instance, our prior written consent.
Very truly yours,
KRIEG DEVAULT ALEXANDER &
CAPEHART, LLP