-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DAp7WjYXQmSivFRjIDth3xmw/RZmbwhtOAOoMjnqvbD1qln+Mkf2jH7z3PeGAhhE oYJ6osNC9P8X2BFDkdaQAQ== 0000926274-99-000096.txt : 19990318 0000926274-99-000096.hdr.sgml : 19990318 ACCESSION NUMBER: 0000926274-99-000096 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990415 FILED AS OF DATE: 19990317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLD NATIONAL BANCORP /IN/ CENTRAL INDEX KEY: 0000707179 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 351539838 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 333-72117 FILM NUMBER: 99566552 BUSINESS ADDRESS: STREET 1: 420 MAIN ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124641434 MAIL ADDRESS: STREET 1: 420 MAIN STREET CITY: EVANSVILLE STATE: IN ZIP: 47708 FORMER COMPANY: FORMER CONFORMED NAME: OLD NATIONAL BANCORP DATE OF NAME CHANGE: 19920703 DEF 14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 OLD NATIONAL BANCORP - ------------------------------------------------------------------------------ (Name of Registrant as Specified In Its Charter) - ------------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11. (1) Title of each class of securities to which transaction applies: --------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: --------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): --------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: --------------------------------------------------------------------- (5) Total fee paid: --------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: --------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: --------------------------------------------------------------------- (3) Filing Party: --------------------------------------------------------------------- (4) Date Filed: --------------------------------------------------------------------- [OLD NATIONAL BANCORP LETTERHEAD] March 8, 1999 Dear Shareholder: This is an exciting year for Old National Bancorp. Your management team is working diligently to implement major changes to operate as "One Bank" by the new millennium. This year we will have more challenges, opportunities and issues than we have had in the Company's entire history. In your proxy statement you will find information concerning one of the recommended changes your board of directors recently approved: The Old National Bancorp 1999 Equity Incentive Plan ("Plan"). The proxy statement provides extensive details concerning the new Plan, but we felt it was important to highlight certain benefits of the Plan to shareholders so you could understand the business objectives of the Plan prior to voting. Our board is recommending that our shareholders approve the Plan for these key reasons: 1. ADDS FLEXIBILITY The Plan will cover virtually every possible equity-based compensation alternative available today. This means the Compensation Committee will be able to use many different types of equity compensation, including issuing shares under the existing Restricted Stock Plan, which was approved by shareholders in 1986. While it is our intent to only grant non-qualified stock options, the ability to use various types of equity compensation gives us added flexibility in recruiting and retaining executive talent in today's highly competitive marketplace. 2. REDUCES FINANCIAL IMPACT TO THE COMPANY Restricted stock awards currently used are charged to the earnings of the Company, while the new non-qualified stock options will not impact earnings. The Hay Group, an executive compensation consulting group retained by the Board's Compensation Committee, projects that using non-qualified stock options instead of restricted stock could increase earnings by approximately $.10 per share by the end of five (5) years. 3. ALIGNS THE COMPANY'S LONG TERM INCENTIVES WITH PREVALENT INDUSTRY PRACTICES Non-qualified stock options are the long term incentive plan of choice for 80% of public companies. Only 10 to 12% of companies use restricted stock as the sole form of equity compensation. 4. ALIGNS EXECUTIVE REWARDS WITH SHAREHOLDER REWARDS With non-qualified stock options, executives are only rewarded if our stock price rises. Financial rewards to executives occur only by increasing shareholder value. The proxy statement provides more detailed information concerning the Old National Bancorp 1999 Equity Incentive Plan. A copy of the full Plan can be obtained without cost by written request to our corporate secretary, Jeffrey L. Knight, at 420 Main Street, Evansville IN 47708, or by calling 1-800-718-0079. Thank you again for your continued trust in Old National's long term success. Sincerely, James A. Risinger Chairman and CEO OLD NATIONAL BANCORP NOTICE OF ANNUAL MEETING AND PROXY STATEMENT Annual Meeting of Shareholders April 15, 1999 OLD NATIONAL BANCORP 420 MAIN STREET EVANSVILLE, INDIANA 47708 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO OUR SHAREHOLDERS: Notice is hereby given that the Annual Meeting of Shareholders of OLD NATIONAL BANCORP (the "Company") will be held on Thursday, April 15, 1999 at 10:30 a.m., Evansville time, in Roberts Municipal Stadium, 2600 Division Street, Evansville, Indiana. The Annual Meeting will be held for the following purposes: 1. ELECTION OF DIRECTORS. Election of a Board of Directors consisting of fifteen Directors to serve for the ensuing year. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Ratification of the appointment of Arthur Andersen LLP, Indianapolis, Indiana, as independent public accountants of the Company and its affiliates for the fiscal year ending December 31, 1999. 3. APPROVAL OF THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN. 4. OTHER BUSINESS. Such other matters as may properly come before the meeting or any adjournments thereof. Shareholders of record at the close of business on February 8, 1999, are entitled to notice of and to vote at the Annual Meeting. By Order of the Board of Directors Jeffrey L. Knight Secretary March 8, 1999 IMPORTANT PLEASE MAIL YOUR PROXY PROMPTLY. IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. OLD NATIONAL BANCORP 420 MAIN STREET EVANSVILLE, INDIANA 47708 PROXY STATEMENT This Proxy Statement is furnished to the Shareholders of Old National Bancorp ("the Company") in connection with the solicitation by the Board of Directors of Proxies to be voted at the Annual Meeting of Shareholders of the Company to be held on Thursday, April 15, 1999 at 10:30 a.m., Evansville time, in Roberts Municipal Stadium, 2600 Division Street, Evansville, Indiana, and at any and all adjournments of such meeting. A Notice of Annual Meeting of Shareholders and form of Proxy accompany this Proxy Statement. Any Shareholder giving a Proxy has the right to revoke it in person at the meeting or by a written notice delivered to the Secretary of the Company, P.O. Box 718, Evansville, Indiana 47705-0718, at any time before such Proxy is exercised. All Proxies will be voted in accordance with the directions of the Shareholder giving such Proxy. To the extent no directions are given, Proxies will be voted "FOR" the election of the persons named as nominees in the Proxy Statement as Directors of the Company, "FOR" the ratification of the appointment of Arthur Andersen LLP, as independent public accountants of the Company and its affiliates for the fiscal year ending December 31, 1999, and "FOR" the adoption of the Old National Bancorp 1999 Equity Incentive Plan. With respect to such other matters that may properly come before the Annual Meeting, it is the intention of the persons named as Proxies to vote in accordance with their best judgment. The complete mailing address of the principal executive office of the Company is Old National Bancorp, P.O. Box 718, Evansville, Indiana 47705-0718. The approximate date on which this Proxy Statement and form of Proxy for the 1999 Annual Meeting of Shareholders are first being sent or given to Shareholders of the Company is March 8, 1999. VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS Only Shareholders of the Company of record at the close of business on February 8, 1999, will be eligible to vote at the Annual Meeting or at any adjournment thereof. The voting securities of the Company entitled to be voted at the Annual Meeting consist only of common stock, without par value, of which 30,701,394 shares were issued and outstanding on the record date of February 8, 1999. All references in this Proxy Statement to shares of common stock of the Company on the record date have been adjusted to include the shares of common stock issued on January 28, 1999, in connection with the Company's 5% stock dividend. The Company has no other class of stock that is outstanding. Each Shareholder of record on the record date will be entitled to one vote for each share of common stock registered in the Shareholder's name. As of February 8, 1999, to the knowledge of the Company, no person or firm other than the Company beneficially owned more than 5% of the common stock of the Company outstanding on that date. As of February 8, 1999, no individual director, nominee, or officer beneficially owned more than 5% of the common stock of the Company outstanding. 1 As of February 8, 1999, to the knowledge of the Company, only the Company beneficially owned more than 5% of the outstanding common stock of the Company. The Company owned 3,776,137 shares of common stock of the Company which constituted 12.30% of the outstanding common stock of the Company on that date. These shares are held in various fiduciary capacities through the Company's wholly-owned trust companies. Neither the Company, nor any of its subsidiaries or affiliates, has voting authority as to any of the shares of common stock of the Company beneficially owned by it, except as may be provided by law with respect to the shares held by the Employee Stock Ownership Plan. (See "Executive Compensation and Other Information-Employee Stock Ownership Plan" on pages 13 and 14 of this Proxy Statement.) Of the 2,015,171 shares as to which the Company, through its subsidiaries and affiliates, has investment authority, it has sole investment authority as to all of the shares. 2 ITEM 1. ELECTION OF DIRECTORS The first item to be acted upon at the Annual Meeting of Shareholders will be the election of fifteen Directors to the Board of Directors of the Company. Each of the persons elected will serve a term of office for one year or until the election and qualification of his or her successor. If any Director nominee named in this Proxy Statement shall become unable or decline to serve (an event which the Board of Directors does not anticipate), the persons named as Proxies will have discretionary authority to vote for a substitute nominee named by the Board of Directors, if the Board determines to fill such nominee's position. Unless authorization is withheld, the enclosed Proxy, when properly signed and returned, will be voted "FOR" the election as Directors of all of the nominees listed in this Proxy Statement. Pages three and four contain the following information regarding each Director nominee of the Company: name; principal occupation or business experience for the last five years (for principal occupation for the last five years of Directors who are also Executive Officers, see page five); age; the year in which the nominee first became a Director of the Company; the number of shares of common stock of the Company beneficially owned by the nominee as of February 8, 1999; and the percentage that the shares beneficially owned represent of the total outstanding shares of the Company as of February 8, 1999. The number of shares of common stock of the Company shown as being beneficially owned by each Director nominee includes those over which he or she has either sole or shared voting or investment power. [PHOTO] [PHOTO] [PHOTO] DAVID L. BARNING RICHARD J. BOND ALAN W. BRAUN o Investor o Chairman, Security o President, Industrial o Age 65 Bank & Trust Co. Contractors, Inc. o Director since 1982 (an Affiliate of (Construction) o 150,369 shares the Company) o Age 54 beneficially owned o Age 65 o Director since 1988 o Owns .50% of o Director since 1989 o 59,481 shares outstanding shares o 48,450 shares beneficially owned beneficially owned o Owns .19% of o Owns .16% of outstanding shares outstanding shares 3 [PHOTO] [PHOTO] [PHOTO] WAYNE A. DAVIDSON LARRY E. DUNIGAN DAVID E. ECKERLE o Retired o Chief Executive o President & CEO, o Age 67 Officer, Holiday Dubois County o Director since 1993 Management Company Bank (an Affiliate o 21,301 shares (Long Distance of the Company) beneficially owned Communication & o Age 55 o Owns .07% of Internet Services) o Director since 1993 outstanding shares o Age 56 o 54,711 shares o Director since 1982 beneficially owned o 142,938 shares o Owns .18% of beneficially owned outstanding shares o Owns .47% of outstanding shares [PHOTO] PHELPS L. LAMBERT o Managing Partner, Bush and Lambert (Investments) o Age 51 o Director since 1990 o 130,775 shares beneficially owned o Owns .43% of outstanding shares [PHOTO] [PHOTO] [PHOTO] RONALD B. LANKFORD LUCIEN H. MEIS LOUIS L. MERVIS o President & COO, o President, o President, Mervis Old National Bancorp Meis Ventures, Inc. Industries, Inc. o Age 65 (Financial Investments) (Steel Fabricating) o Director since 1994 o Age 64 o Age 64 o 12,132 shares o Director since 1985 o Director since 1996 beneficially owned o 50,915 shares o 698 shares o Owns .04% of beneficially owned beneficially owned * outstanding shares o Owns .17% of o Owns .002% of outstanding shares outstanding shares * The Mervis Charitable Remainder Trust owns 17,363 shares of common stock of the Company with respect to which Mr. Mervis disclaims beneficial ownership. [PHOTO] LAWRENCE D. PRYBIL o Senior Vice President, Daughters of Charity National Health System-East Central Region (Health Care) o Age 58 o Director since 1998 o 346 shares beneficially owned o Owns .001% of outstanding shares [PHOTO] [PHOTO] [PHOTO] JAMES A. RISINGER JOHN N. ROYSE MARJORIE Z. SOYUGENC o Chairman & CEO, o Retired Chairman o President & CEO Old National Bancorp; of Old National Welborn Baptist Chairman, Old Bancorp Hospital National Bank o Age 65 (Health Care) (an Affiliate of o Director since 1985 o Age 58 the Company) o 171,184 shares o Director since 1993 o Age 50 beneficially owned o 4,313 shares o Director since 1997 o Owns .56% of beneficially owned o 18,941 shares outstanding shares o Owns .01% of beneficially owned outstanding shares o Owns .06% of outstanding shares [PHOTO] CHARLES D. STORMS o President & CEO, Red Spot Paint & Varnish Co., Inc. (Manufacturer of Industrial Coatings) o Age 55 o Director since 1988 o 28,987 shares beneficially owned o Owns .09% of outstanding shares The 20 Directors and Executive Officers of the Company as a group beneficially own 927,255 shares or 3.02% of the total outstanding shares. 4 EXECUTIVE OFFICERS OF THE COMPANY The Executive Officers of the Company are listed in the table below. Each officer serves a term of office of one year or until the election and qualification of his successor. Name Age Office and Business Experience - ---- --- ------------------------------ James A. Risinger 50 Chairman of the Board and Chief Executive Officer of the Company since January 1, 1998, Executive Vice President and Director since 1997, and Senior Vice President from 1993 to 1997. Ronald B. Lankford 65 President and Chief Operating Officer of the Company since 1995, Director since 1994, and Executive Vice President from 1993 to 1994. William R. Britt 51 Senior Vice President of the Company since 1996 and Northern Regional Executive of the Company since 1995. Currently, Chairman, President and CEO of Merchants National Bank (Terre Haute). Chairman of Palmer American National Bank (Danville) since 1990 and President from 1990 to 1995. Thomas F. Clayton 53 Southern Regional Executive of the Company since 1997 and Senior Vice President since 1991. Daryl D. Moore 41 Senior Vice President and Chief Credit Officer of the Company since 1996 and Vice President and Chief Credit Officer from 1995 to 1996. Executive Vice President and Chief Credit Officer of Merchants National Bank (Terre Haute) from 1993 to 1995. John S. Poelker 56 Senior Vice President and Chief Financial Officer of the Company since 1998. Previously, Chief Financial Officer of American General Finance from 1996 to 1998, and Chairman and CEO of Fleet Finance from 1993 to 1996. Jeffrey L. Knight 39 Corporate Secretary of the Company since 1994 and General Counsel since 1993. COMMITTEES OF THE BOARD OF DIRECTORS The standing committees of the Board of Directors include an Executive Committee, an Audit Committee, a Compensation Committee, a Nominating Committee, and a Personnel Committee. 5 When the Board is not in session, the Executive Committee has all of the power and authority of the Board except with respect to amending the Articles of Incorporation or By-Laws of the Company; approving an agreement of merger or consolidation; recommending to the shareholders the sale, lease or exchange of all or substantially all of the Company's property and assets; recommending to the shareholders a dissolution of the Company or a revocation of such dissolution; declaring dividends; or authorizing the issuance or reacquisition of shares. The permanent members of the Executive Committee are James A. Risinger (Chairman), Richard J. Bond, Alan W. Braun, Larry E. Dunigan, Ronald B. Lankford (Vice Chairman), Lucien H. Meis and John N. Royse. Board members who are not permanent members of the Executive Committee rotate onto the Executive Committee a minimum of two times during the year. The Executive Committee held seven meetings during 1998. The principal duties of the Audit Committee are to nominate the Independent Public Accountants for appointment by the Board; to meet with the Independent Public Accountants to review and approve the scope of their audit engagement and the fees related to such work; to meet with the Company's financial management, internal audit management and Independent Public Accountants to review matters relating to internal accounting controls, the internal audit program, the Company's accounting practices and procedures and other matters relating to the financial condition of the Company and its affiliates; and to report to the Board periodically any conclusions or recommendations the Audit Committee may have with respect to such matters. The members of the Audit Committee are Larry E. Dunigan (Chairman), David L. Barning, Alan W. Braun and Phelps L. Lambert. The Audit Committee held five meetings during 1998. At the end of each meeting, the members of the Audit Committee have the opportunity to meet privately with the Company's Independent Public Accountants with no officers or other personnel of the Company present. The principal duties of the Compensation Committee are to review corporate organizational structures; to review key employee compensation policies, plans and programs; to monitor performance and establish compensation of officers of the Company and other key employees; to prepare recommendations and periodic reports to the Board concerning such matters; and to function as the Committee administering the Company's Short Term Incentive Plan, Restricted Stock Plan, Pension Restoration Plan and Deferred Compensation Plan. The current members of the Compensation Committee are Charles D. Storms (Chairman), Larry E. Dunigan, Thomas B. Florida, Lucien H. Meis, and Lawrence D. Prybil, none of whom is an officer or employee of the Company or any affiliate. The Compensation Committee met four times during 1998. The function of the Nominating Committee is to seek out, evaluate and recommend to the Board qualified nominees for election as Directors of the Company and to consider other matters pertaining to the size and composition of the Board. The members of the Nominating Committee are Charles D. Storms (Chairman), David L. Barning, Larry E. Dunigan, Thomas B. Florida, and Phelps L. Lambert. The Nominating Committee met one time in 1998. Each year the Nominating Committee makes a recommendation to the entire Board of Directors of nominees for election as Directors. The Nominating Committee will review suggestions from shareholders regarding nominees for election as Directors. All such suggestions from shareholders must be submitted in writing to the Nominating Committee at the Company's principal executive office not less than 120 days in advance of the date of 6 the annual or special meeting of shareholders at which Directors shall be elected. All written suggestions of shareholders must set forth (i) the name and address of the shareholder making the suggestion, (ii) the number and class of shares owned by such shareholder, (iii) the name, address and age of the suggested nominee for election as Director, (iv) the nominee's principal occupation during the five years preceding the date of suggestion, (v) all other information concerning the nominee as would be required to be included in the proxy statement used to solicit proxies for the election of the suggested nominee, and (vi) such other information as the Nominating Committee may reasonably request. A consent of the suggested nominee to serve as a Director of the Company, if elected, must also be included with the written suggestion. The function of the Personnel Committee is to review and approve changes in the Company's employee benefit programs, plans and policies relating to personnel issues. The members of the Personnel Committee are Alan W. Braun (Chairman), David L. Barning, Richard J. Bond, Ronald B. Lankford, James A. Risinger, Marjorie Z. Soyugenc and Charles D. Storms. The Personnel Committee met three times during 1998. MEETINGS OF THE BOARD OF DIRECTORS AND DIRECTOR FEES The Board of Directors of the Company held five meetings during the fiscal year ended December 31, 1998. All incumbent Directors attended 75% or more of the aggregate of 1998 meetings of the Board and of the Board Committees to which they were appointed. All Directors of the Company received an annual retainer of $5,000 for serving as Directors. Directors not otherwise employed by the Company also received $750 for each Board of Directors meeting attended and $500 for each Committee meeting attended. Directors serving as a Committee Chairman received an additional annual retainer of $1,500. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors is composed of five non-employee Directors who are not eligible to participate in any management compensation programs. The Committee is responsible for establishing all compensation for the Company's Executive Officers and for setting and administering the terms, policies and agreements related to other compensation components for the Company's Executive Officers. An independent compensation consulting firm, Hay Group, Inc., has been retained by the Company since 1982 to advise the Compensation Committee on all compensation matters. Compensation Principles The Committee believes the most effective executive compensation program is one which provides incentives to achieve both current and long-term strategic management goals of the Company, with the ultimate objective of enhancing shareholder value. In this regard, the Committee believes executive compensation should be comprised of cash and equity-based programs which reward performance not only as measured against the Company's specific annual and long-term goals, but also which recognize that the Company operates in 7 a competitive environment and that performance should be evaluated as compared to industry peers. With respect to equity-based compensation, an integral part of the Company's compensation program is the Restricted Stock Plan, which encourages the ownership and retention of the Company's common stock by key employees. This assures that employees have a meaningful stake in the Company, the ultimate value of which is dependent on the Company's continued long-term success, and that the interests of employees are thereby aligned with those of the shareholders. The Company's executive compensation program is structured to help the Company achieve its business objectives by: . setting levels of compensation designed to attract and retain superior executives in a highly competitive environment; . providing incentive compensation that varies directly with both Company financial performance and individual contribution to that performance; and . linking compensation to elements which affect short- and long-term stock performance. Salaries The Compensation Committee establishes the salaries of the Chairman and CEO and the President and COO. The base salaries of the Company's next three highest paid senior executive officers are determined by the Compensation Committee with recommendations from the Chairman and President. The same compensation principles are applied in setting the salaries of all employees, including the Chairman, to ensure that salaries are fairly and competitively established. Salary ranges are determined for each executive position based upon survey data which is obtained from the Company's peer group and from the Hay Group, Inc. The Company uses the Hay Job Evaluation System to establish salary grades and ranges for each position based on the knowledge and problem-solving ability required to satisfactorily fulfill the position's assigned duties and responsibilities, its accountability and the impact on the operations and profitability of the Company. The Company's peer group consists of reasonably comparable regional bank holding companies. Peer group data is used rather than the NASDAQ Combined Financial Index because the peer group companies resemble more closely the asset size and operations of the Company. The peer group data is also used to validate and affirm recommendations presented by the Hay Group. From survey data, salary ranges are established each year for the Chairman and CEO and all other executive positions within the organization. These ranges are designed so that the mid-point of the salary range is approximately the average base salary paid to comparable positions across a broad spectrum of comparable companies. Within these established ranges, actual base salary adjustments are made periodically in accordance with the guidelines of the Company's salary administration program and performance review system. In 1998, the base salaries for the Executive Officers as a group and the Chairman and CEO were within the average salary ranges paid to executives in comparable positions with Companies in the Company's peer group. Continuous outstanding performance over an extended period of time could result in a salary at the top end of the established range whereas undistinguished performance could result in compensation at the lower end of the range. 8 Short Term Incentive Plan The Company implemented a Short Term Incentive Plan (the "STIP") for certain key officers in 1996. The STIP provides for the payment of additional compensation in the form of cash incentive payments contingent upon the achievement of certain corporate goals and the participant's achievement of certain individual performance goals. In 1998, the Compensation Committee amended the Plan to provide for a seven-tiered incentive matrix based on specific corporate and shareholder-related performance goals relating to the Company's net income performance. Participants were assigned to one of the seven incentive matrices based upon their level of responsibility and expected level of contribution to the Company's achievement of its corporate goals. The incentive matrices used to determine the amount of awards, based upon the Company's and an individual participant's performances, range from 7.5% to 82.5% of a participant's base salary. The STIP incentive award opportunity for the Chairman and CEO ranges from 27.5% to 82.5% of base salary. Each fiscal year the Compensation Committee establishes threshold (minimum), target and maximum achievement levels under the STIP. If threshold performance is not achieved, there is no payment from the plan for that period, and if performance exceeds the threshold, actual incentive payments to participants will vary with the actual financial performance achieved compared to the Compensation Committee's goals. For 1998, the Company met the established net income target, resulting in a payout to participating officers at the "target" level under the STIP. (See Summary Compensation Table on page 11) Restricted Stock Awards Restricted stock awards are determined by the Compensation Committee. Awarded shares vest over a four year period. In 1998, a total of 46,500 shares of common stock of the Company were awarded under the Restricted Stock Plan, including 12,285 shares which were awarded to the five most highly compensated Executive Officers. Shares of restricted stock already held by the Executive Officers as a group and the Chairman and CEO were not considered by the Compensation Committee in its 1998 award determination. The amount of restricted stock earned by Executive Officers on an annual basis under the plan is based upon the Company's net income performance for the fiscal year compared to the target level established at the beginning of the fiscal year. In 1998, the net income goal established by the Compensation Committee was met, resulting in a payout to participating officers at the "target" level under the plan. (See Summary Compensation Table on page 11) Each participant is granted a restricted stock award opportunity based on the executive's position in the organization and scope of responsibilities. Each fiscal year the Compensation Committee establishes threshold (minimum), target and maximum performance levels under the Restricted Stock Plan. If threshold performance is not achieved, there is no payment from the plan for that period, and if performance falls below certain levels, unvested shares can be fully or partially forfeited. If performance exceeds the threshold level, actual awards to participants will vary with the actual performance achieved compared to the annual goals. Participants can earn up to 150% of their base award. In 1998, the Chairman and CEO earned 100% of the restricted stock available to be awarded to him since the Company met its net income target level established by the Compensation Committee. 9 Discussion of 1998 Compensation for the Chairman and CEO Annually, the Compensation Committee receives an analysis from the Company's Vice President, Director of Human Resources, on all aspects of the Chairman and CEO's remuneration, including base salary, incentive opportunity, and the relationship of total compensation to the comparative survey data. When appropriate, the Compensation Committee may direct the Vice President, Director of Human Resources, to compile additional compensation information and comparisons. The Committee considers several factors in establishing the Chairman and CEO's compensation package. These include the Company's overall performance as measured by total shareholder return, adherence to the Company's strategic plan, the development of sound management practices and the development of a management succession plan. These factors were considered by the Committee in evaluating an increase in the Chairman and CEO's base salary in 1998. Summary The Committee has determined that Old National Bancorp's Executive Compensation programs, plans and awards for 1998 are well within conventional standards of reasonableness and competitive necessity and are clearly within industry norms and practices. In establishing executive compensation programs in the future, the Compensation Committee will continue to focus on specific corporate goals designed to promote the overall financial success of the Company, such as earnings per share and affiliate performance, which are expected to improve the return on shareholders' equity. In 1998, the Compensation Committee consisted of the following Directors: Charles D. Storms, Chairman Larry E. Dunigan Thomas B. Florida Lucien H. Meis Lawrence D. Prybil 10 EXECUTIVE COMPENSATION AND OTHER INFORMATION Summary of Cash and Certain Other Compensation The following table shows, for the fiscal years ended December 31, 1998, 1997, and 1996, the cash compensation paid by the Company and its affiliates, as well as certain other compensation paid or accrued for those years, to the Chief Executive Officer and each of the next four most highly compensated Executive Officers of the Company in all capacities in which they served. SUMMARY COMPENSATION TABLE Long Term Annual Compensation Compensation - --------------------------------------------------------------- (a) (b) (c) (d) Name and Principal Restricted All Other Position Year Salary Bonus Stock Awards Compensation --------- ---- ------ ----- ------------ ------------ James A. Risinger 1998 $380,003 $217,802 $95,175 $34,200 Chairman and CEO 1997 215,911 50,804 53,894 20,908 1996 201,578 73,858 48,684 18,142 Ronald B. Lankford 1998 $344,205 $141,506 $79,684 $30,978 President and COO 1997 316,707 0 48,965 28,504 1996 269,874 93,107 44,080 24,289 John S. Poelker 1998 $220,000* $35,742 $26,598 $0 Senior Vice President 1997 0 0 0 0 & CFO 1996 0 0 0 0 Thomas F. Clayton 1998 $212,093 $98,593 $49,916 $18,540 Senior Vice President 1997 197,006 27,121 36,363 17,191 & Regional Executive 1996 172,568 57,133 34,583 14,991 William R. Britt 1998 $192,299 $79,534 $46,626 $17,235 Senior vice President 1997 171,998 31,033 32,085 15,480 & Regional Executive 1996 149,866 23,079 14,681 13,488 (a) Salary reflects base compensation and income recognized in the form of Director fees paid by the Company or its affiliate banks during the indicated calendar years. (b) These amounts represent bonuses payable pursuant to the Company's Short Term Incentive Plan (STIP) which is described on pages 9, 16 and 17 of this Proxy Statement. (c) Restricted Shares awarded each year are based on the achievement of net income goals and vest over a four year period. The shares itemized in this column (c) reflect the value of earned shares that have vested in 1998 that are no longer subject to forfeiture under the plan. The number and value of the total restricted stock awarded for vesting and still subject to partial forfeiture as of December 31, 1998 to the persons named are as follows: James A. Risinger 3,869 shares, $195,868; Ronald B. Lankford 2,843 shares, $143,927; Thomas F. Clayton 1,582 shares, $80,089; and John S. Poelker 1,575 shares, $79,734, and William R. Britt 2,049 shares, $103,731. Dividends are paid only on vested shares. See page 9 for a full discussion of the Restricted Stock Plan. (d) All other Compensation includes the following for Messrs. Risinger, Lankford, Britt, and Clayton for 1998: (i) Company contribution to the Employee Stock Ownership Plan of Old National Bancorp of $14,400, for each named executive; and (ii) Company contribution to the Supplemental Deferred Compensation Plan of $19,800, $16,578, $2,835, and $4,140, respectively. * John S. Poelker joined the Company on August 10, 1998. His salary is presented on an annualized basis such that if he had been with the Company an entire year, he would have been one of the four most highly compensated Executive Officers. 11 Retirement Plan The Old National Bancorp Employees' Retirement Plan (the "Retirement Plan") is a qualified, defined benefit, non-contributory pension plan covering substantially all employees of the Company and its subsidiaries and affiliates (collectively, "Affiliates") with one or more years of service with the Company or its Affiliates, and with credited service accruing from the date of employment, provided that the employee has not less than 1,000 hours of service (as defined in the plan) during such period. The Retirement Plan provides for the payment of monthly benefits in a fixed amount upon attainment of age 65. As a normal form of benefit, each eligible participant is entitled to receive a monthly pension for his or her life based on years of service and "average monthly compensation" (which excludes bonuses). In general, the formula for determining the amount of a participant's monthly pension is average monthly compensation multiplied by 1.45% for the first ten years of service, 1.65% for the next ten years of service, and 1.95% for the next fifteen years of service, less any amount related to Social Security earnings. In general, the amount of the reduction is .59% of average monthly compensation (up to a maximum of 125% of covered compensation) multiplied by all years of service up to 35 years of service. The standard retirement benefit for married participants is payable in the form of a joint and survivor annuity in an amount which is actuarially equivalent to the normal form of benefit. Instead of an annuity, participants may elect to receive a single sum cash settlement upon retirement in an amount which is actuarially equivalent to the participant's normal form of benefit. The amount of annual contribution attributable to specific individuals cannot be determined in a meaningful manner. The following table shows the estimated annual pensions payable to eligible employees upon retirement at age 65. The amounts shown do not reflect any reduction related to Social Security earnings or for the survivor benefit features of the Retirement Plan, the application of which would reduce the amount of pension payable. Pension Plan Table (1) Final Average Salary Years of Service - ----------------------------------------------------------------------------- 5 10 15 20 25 30 35 & Over -------------------------------------------------------------- $100,000 $7,250 $14,500 $22,750 $31,000 $40,750 $50,500 $60,250 150,000 10,875 21,750 34,125 46,500 61,125 75,750 90,375 200,000 14,500 29,000 45,500 62,000 81,500 101,000 120,500 250,000 18,125 36,250 56,875 77,500 101,875 126,250 150,625 300,000 21,750 43,500 68,250 93,000 122,250 151,500 180,750 350,000 25,375 50,750 79,625 108,500 142,625 176,750 210,875 400,000 29,000 58,000 91,000 124,000 163,000 202,000 241,000 450,000 32,625 65,250 102,375 139,500 183,375 227,250 271,125 500,000 36,250 72,500 113,750 155,000 203,750 252,500 301,250 550,000 39,875 79,750 125,125 170,500 224,125 277,750 331,375 600,000 43,500 87,000 136,500 186,000 244,500 303,000 361,500 (1) The law in effect at December 31, 1998 prohibited the distribution of benefits from the Retirement Plan in excess of $125,000 per year expressed as a straight life annuity. It also 12 prohibited compensation in excess of $160,000 to be used in the computation of the retirement benefit. Both amounts are indexed for inflation. 1998 base salary figures for the Chairman and CEO and the next four most highly compensated Executive Officers of the Company are set forth in column (a) in the Summary Compensation Table on page 11. The credited years of service as of December 31, 1998, for each such Executive Officer are as follows: James A. Risinger - 20; Ronald B. Lankford - 42; William R. Britt - 6; Thomas F. Clayton - 11; and John S. Poelker - 0. For certain employees, in addition to the persons listed in the Summary Compensation Table, whose annual retirement income benefit under the Retirement Plan exceeds the limitations imposed by the Internal Revenue Code of 1986, as amended, and the regulations thereunder (including, among others, the limitation that annual benefits paid under qualified defined benefit pension plans may not exceed $125,000) such excess benefits will be paid from the Company's non-qualified, unfunded, non-contributory supplemental retirement plan. Employee Stock Ownership Plan Effective January 1, 1998, the Company amended and restated the Employees' Savings and Profit Sharing Plan of Old National Bancorp ("Prior Plan") as the Old National Bancorp Employee Stock Ownership Plan ("ESOP") which is an employee stock ownership plan and a stock bonus plan. As such, it is designed to be invested primarily in Common Stock. In connection therewith, the "rollover contribution," "salary reduction contributions," "investment," and "prior plan" accounts of all participants under the Prior Plan, and all allocations to the Prior Plan on account of the plan year ended December 31, 1997, were spun off to a new plan, the Old National Bancorp Employees' Savings Plan ("Savings Plan"). All such accounts were fully vested and nonforfeitable, both prior to and at the time of their spin off from the Prior Plan to the Savings Plan. All amounts allocated to participants' "matching" and "profit sharing" accounts under the Prior Plan through December 31, 1997 remained under the Prior Plan and became the "matching" and "regular" contributions accounts, respectively, under the ESOP. The purpose of the ESOP is to enable participating employees of the Company and its Affiliates to share in the growth and prosperity of the Company, to provide participating employees with an opportunity to accumulate capital for their future economic security, to furnish additional security to participating employees who become totally and permanently disabled and to acquire beneficial stock ownership interests in the Company. Generally, all regular employees of the Company and its Affiliates who have completed twelve months of continuous service (as defined) consisting of at least 1,000 hours of service may participate in the ESOP. Under the terms of the ESOP, the Company contributes common stock of the Company ("Common Stock") or cash which is invested primarily in Common Stock. The Company may make "regular" and "matching" contributions to the ESOP. No participant contributions are allowed under the ESOP. Regular contributions are allocated to each participant who has completed 1,000 hours of service (as defined) during the year and is actually employed by the Company, or any of its Affiliates, on the last day of such year. The allocation is made in the proportion that the participant's compensation (as defined) for the 13 year bears to the total compensation of all participants entitled to an allocation of the regular contribution for the year. The Board of Directors determines the amount of any regular contributions. Matching contributions are made in an amount necessary to match an amount of each eligible participant's eligible salary reduction contributions under the Savings Plan for a year determined under the following schedule based on the participant's years of service with the Company and its Affiliates: Matched Percentage Years of Service of Salary Reduction ---------------- ------------------- 0-4 50% 5-9 75% 10 or more 100% Up to 4% of a participant's salary reduction contributions are eligible for a matching contribution so long as the participant completes 1,000 hours of service in the year to which the matching contribution relates and is actually employed on the last day of such year. Participants are vested in their ESOP accounts on a graduated basis commencing with 20% after one year of "vesting service" (as defined) and reaching 100% after 5 years of service. Distributions to participants or their beneficiaries are made on termination of employment in a lump sum, periodic installments or a qualified joint and 50% survivor annuity. In general, distributions are made in the form of whole shares of Common Stock or cash, as elected by participants. After a participant has attained age 55 and completed 10 years of participation in the ESOP, he or she may elect to diversify his or her ESOP account by transferring to the Savings Plan up to 100% of the Common Stock allocated to the account. Any such transfer will be in cash at the fair market value of the shares of Common Stock to which the participant's diversification election relates. Participants have the right to direct the voting of the shares of Common Stock allocated to their accounts on all matters with respect to which the shares are entitled to vote. The ESOP's voting provisions require Old National Trust Company, the trustee of the ESOP and wholly-owned subsidiary of the Company, to vote the shares of Common Stock allocated to participants' accounts in accordance with the written instructions of the participants. These provisions also provide that, with respect to shares as to which no voting instructions have been received, and with respect to shares which have not yet been allocated to participants' accounts, the benefits committee under the ESOP will instruct the trustee to vote such shares in the same proportion that the allocated shares are voted by participant direction. However, applicable law requires the trustee to vote the shares in a manner which is consistent with its fiduciary obligations under the Employee Retirement Income Security Act ("ERISA"). Accordingly, if the trustee determines that, under the circumstances, voting instructions are inconsistent with the requirements of ERISA, the trustee will vote the shares in a manner which it determines to be consistent with ERISA. 14 Savings Plan The Savings Plan is a qualified salary reduction plan within the meaning of Section 401(k) of the Code. Under the Savings Plan, all regular employees of the Company and its Affiliates who have completed 12 consecutive months of continuous service (as defined) consisting of at least 1,000 hours of service may participate in the Savings Plan. An employee who has satisfied this eligibility requirement may participate in the Savings Plan by directing his or her employer to make before-tax salary reduction contributions to the Savings Plan. Contributions may be directed in any integral percentage between 1% and 15% of the employee's basic compensation (as defined) subject to an annual dollar limitation under the Code (currently $10,000). Before-tax salary reduction contributions are fully vested at all times and are invested by participants in one or more of the four investment funds made available by Old National Trust Company, the trustee of the Savings Plan. Benefits are distributed from the Savings Plan in the form of a single lump sum, periodic installments or a qualified joint and 50% survivor annuity. Restricted Stock Plan The Company also sponsors the Old National Bancorp Restricted Stock Plan. The purpose of the Restricted Stock Plan is to promote the long-term profitability and success of the Company by providing equity interests in the Company to officers and key employees of the Company and its Affiliates. The Restricted Stock Plan is administered by the Compensation Committee of the Board of Directors. Generally, the Restricted Stock Plan provides for the granting of shares of Common Stock ("Restricted Stock") to an officer or key employee, subjecting the shares to a vesting schedule and restricting the grantee's right to transfer the shares for a period of not less than 3 years nor more than 5 years. During such periods, the grantee has all of the rights of a shareholder; however, the Restricted Stock is subject to a substantial risk of forfeiture. A grantee will forfeit his or her interest in the Restricted Stock if he or she terminates employment before the shares become vested and transferable. However, if a grantee ceases to be an employee prior to the end of the restriction period as the result of death, disability (as defined) or retirement (as defined), the Compensation Committee may, if it deems appropriate, direct that the grantee receive a greater number of shares of Common Stock than he or she is vested in, not to exceed the number of shares of Restricted Stock initially granted. A total of 50,000 shares of Common Stock may be awarded under the Restricted Stock Plan, subject to adjustment for changes in the capitalization of the Company. All awards are subject to the award agreement entered into between the Company and the grantee; however agreements may differ among employees. Executive Deferred Compensation Supplemental Deferred Compensation Plan. Effective August 1, 1987, the Company adopted the Supplemental Deferred Compensation Plan for Select Executive Employees of Old National Bancorp and its Subsidiaries (the "Executive Plan"), in the form of an unfunded, non-qualified deferred compensation plan. The primary purpose of the Executive 15 Plan is to enable participating executives to supplement their salary reduction contributions to the Savings Plan and to receive allocations of matching contributions which they are otherwise unable to receive under the Savings Plan due to the limitations imposed thereon by the Code. A participant may contribute up to 25% of his or her compensation (as defined) to the Executive Plan during any year. In addition, participants may defer up to 100% of any short term incentive payments. The Company also makes matching contributions to the Executive Plan on account of participants' salary reduction contributions thereunder. The amount of the Company's matching contributions for a year are equal to the matching contributions which would have been made under the matching contribution formula contained in the Savings Plan, reduced by the amount of matching contributions actually allocated to the participant's Savings Plan accounts for the year. The Company may also make contributions to the Savings Plan in such amounts as are determined by the Board of Directors. Participants in the Executive Plan are limited to officers and key employees of the Company and its Affiliates who are designated by the Compensation Committee. Benefits under the Executive Plan are provided without regard to any limitation imposed by the Code on benefits payable under qualified plans (such as the Savings Plan) and represent unfunded, unsecured, general contracted obligations of the Company. The Compensation Committee of the Board of Directors is responsible for administrating the Executive Plan. Pension Restoration Plan. Effective December 1, 1995, the Company adopted the Old National Bancorp Pension Restoration Plan, in the form of a non-qualified, unfunded deferred compensation plan. The purpose of the Restoration Plan is to restore to affected participants the difference between the amount of their benefits under the Retirement Plan and the benefit they would have received under the Retirement Plan were it not for the limits thereon imposed by the Code. Thus, the Restoration Plan provides a participant with an actuarial equivalent benefit in an amount equal to the difference between the monthly amount payable under the Retirement Plan without regard to any limitations on benefits imposed by the Code less the amount of the single life annuity benefit actually payable under the Retirement Plan. Benefits under the Restoration Plan are subject to the same vesting schedule that applies to benefits accrued under the Retirement Plan. Participants in the Restoration Plan are limited to officers and key employees of the Company, and its Affiliates who are designated by the Compensation Committee. Benefits under the Restoration Plan are provided without regard to any limitation imposed by the Code on benefits payable under qualified plans (such as the Retirement Plan) and represent unfunded, unsecured, general contractual obligations of the Company. The Restoration Plan is administered by the Compensation Committee of the Board of Directors. Short Term Incentive Plan In 1996, the Company implemented the STIP which provides for additional compensation in the form of cash incentive payments which are contingent on the achievement of certain corporate and individual performance goals. Participation in the STIP is limited to officers and key employees of the Company and its Affiliates based upon salary grade level and performance ratings. The STIP is administered by the Compensation Committee of the Board of Directors. 16 The corporate and shareholder-related goals of the STIP are intended to challenge the Company's management to achieve higher performance levels given the facts and circumstances known to the Compensation Committee at the time the goals are established. At the beginning of each year, participants establish individual goals which are linked to the Company's business and strategic plans. The individual goals relate to the specific segments for which the participant has responsibility and are intended to challenge the participants to perform beyond expected levels of performance. Agreements with Certain Officers The Company has entered into severance agreements with Messrs. William R. Britt, Thomas F. Clayton, John S. Poelker, and James A. Risinger. Each executive is entitled to benefits under his severance agreement upon any termination of the executive's employment by the Company (except for, and as is more specifically described in each severance agreement, termination for cause, disability, voluntary retirement or death), or upon a termination of employment by the executive under certain circumstances specified in his severance agreement, during the one-year period following a change in control (as defined in the severance agreements) of the Company which occurs during the term of the severance agreement. In the event of a termination of employment, the executive will be entitled to receive a lump sum cash payment equal to the aggregate of: his then-effective base salary through the date of termination; all amounts due to the executive under the Company's accrued vacation program through the date of termination; and a certain amount under the Retirement Plan, as specified in his severance agreement. In addition, the Company must pay to the executive in a lump sum cash payment an amount equal to two times the average annual base salary paid to him by the Company in the three years preceding the date of termination. The severance agreements further require the Company to cause to be vested in each executive's name those awarded but unvested shares held in the executive's account in the Restricted Stock Plan, all amounts due the executive under the Company's Short Term Incentive Plan and to maintain in force for two years following the date of termination all employee welfare plans and programs in which the executive was entitled to participate immediately prior to such termination. The severance agreements provide for one year extensions by mutual agreement of the Company and the respective executives. With respect to Messrs. Britt, Clayton, Poelker and Risinger, each of their severance agreements was extended by the Board of Directors in 1998 through December 31, 2000. The Company has entered into an employment agreement with John S. Poelker according to which the Company has agreed to employ Mr. Poelker through August 10, 2000 as its Senior Vice President and Chief Financial Officer. Under the employment agreement, the Company is required to pay Mr. Poelker an annual base salary of $220,000 and to permit Mr. Poelker to participate in the Company's executive incentive compensation programs, employee benefit plans and key management perquisites. The employment agreement with Mr. Poelker will not duplicate any benefits provided to him under his severance agreement with the Company. 17 If the Company terminates Mr. Poelker's employment without cause, or if Mr. Poelker terminates his employment for cause, whether during the term or after the expiration of the employment agreement, then the Company must pay Mr. Poelker certain amounts (including the greater of his base salary for the remainder of the term of the employment agreement or his annual base salary) and cause all incentive compensation stock awards to become vested and nonforfeitable. If Mr. Poelker's employment is terminated by the Company for cause or by Mr. Poelker without cause, then the Company must pay him only his earned but unpaid compensation through the date of termination. If Mr. Poelker's employment is terminated because of his death or disability, then the Company must pay him his earned but unpaid compensation through the date of death or disability and will cause all incentive compensation stock awards to become vested and nonforfeitable. SHAREHOLDER RETURN PERFORMANCE COMPARISONS The Company is required to include in this Proxy Statement a line graph comparing cumulative five-year total shareholder returns for the Company's common stock to cumulative total returns of a broad-based equity market index and a published industry index. The following indexed graph compares the performance of the Company's common stock for the past five years to the Russell 2000 Index and the NASDAQ Combined Financial Index. [CHART APPEARS BELOW] TOTAL RETURN TO SHAREHOLDERS (ASSUMES $100 INVESTMENT ON 12/31/93)
- --------------------------------------------------------------------------------- Total Return Analysis 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 - --------------------------------------------------------------------------------- Old National Bancorp $100.00 $101.30 $103.77 $125.91 $165.84 $204.49 - --------------------------------------------------------------------------------- Russell 2000 $100.00 $96.82 $122.19 $140.23 $169.00 $165.22 - --------------------------------------------------------------------------------- Nasdaq Comb. Fin'l $100.00 $96.72 $139.00 $178.68 $280.45 $296.15 - ---------------------------------------------------------------------------------
The comparison of shareholder returns (change in December year end stock price plus reinvested dividends) for each of the periods assumes that $100 was invested on December 31, 1993, in common stock of each of the Company, the Russell 2000 Index and the NASDAQ Combined Financial Index, with investment weighted on the basis of market capitalization. 18 TRANSACTIONS WITH MANAGEMENT AND OTHERS The Officers and Directors of the Company are at present, as in the past, customers of one or more of the Company's affiliate banks and have had and expect in the future to have similar transactions with the affiliate banks in the ordinary course of business. In addition, some of the Officers and Directors of the Company are at present, as in the past, officers, directors or principal shareholders of corporations which are customers of these affiliate banks and which have had and expect to have transactions with the affiliate banks in the ordinary course of business. All such transactions were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. During 1998, the Company paid approximately $853,450 for engineering, design and construction services to Industrial Contractors, Inc. in connection with its role as general contractor for renovations to the Old National Bank Tower and for work at other Old National Bank branch locations. Alan W. Braun, President of Industrial Contractors Inc., is a Director of the Company. ITEM 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors proposes the ratification by the Shareholders at the Annual Meeting of the appointment of Arthur Andersen LLP, Indianapolis, Indiana, certified public accountants, as independent public accountants for the Company and its Affiliates for the fiscal year ending December 31, 1999. Although ratification by the Shareholders of the Company's independent public accountants is not required, the Company deems it desirable to continue its established practice of submitting such selection to the Shareholders. Arthur Andersen LLP, has served as independent public accountants for the Company since 1982. In the event the appointment of Arthur Andersen LLP, is not ratified by the Shareholders, the Board of Directors will consider appointment of other independent public accountants for the fiscal year ending December 31, 1999. A representative of Arthur Andersen LLP, will be present at the Annual Meeting and will have the opportunity to make a statement or respond to any appropriate questions that Shareholders may have. ITEM 3. APPROVAL OF THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN On March 3, 1999, the Board of Directors adopted the Old National Bancorp 1999 Equity Incentive Plan ("Incentive Plan"), effective on the date the shareholders approve the Incentive Plan. In connection therewith, the Board of Directors reserved 3,800,000 shares of Common Stock for issuance under the Incentive Plan subject to adjustment as set forth in the Incentive Plan. The Incentive Plan permits a committee of the Board of Directors to grant (i) non-qualified stock options ("NSOs"), (ii) incentive stock options ("ISOs"), (iii) restricted stock ("Restricted Stock"), (iv) 3 types of stock appreciation rights ("SARs"), and (v) performance units ("Performance Units") and performance shares ("Performance Shares") to key employees of the Company and its Affiliates. 19 The Incentive Plan has been designed to satisfy the requirements of Section 162(m) of the Code, which generally denies a corporate-level income tax deduction for annual compensation to the extent it exceeds $1,000,000 which is paid to the chief executive officer and the four other most highly compensated officers of a public company ("Covered Employees"). Certain types of compensation, including "performance-based compensation" which meets the requirements of Section 162(m) of the Code, are generally excluded from this deduction limit. It is contemplated that awards made under the Incentive Plan to a Covered Employee will constitute "performance-based compensation" under Section 162(m). In an effort to ensure that ISOs granted under the Incentive Plan will qualify as "incentive stock options" under Section 422 of the Code and that the Incentive Plan complies with Section 162(m) of the Code, the Incentive Plan is being submitted to Shareholders for approval. However, while the Company believes that compensation payable pursuant to the Incentive Plan generally will be deductible for federal income tax purposes, payments made to Covered Employees under certain circumstances such as death, disability or a change in control of the Company that do not qualify as "performance based compensation" may be payable pursuant to the provisions of the Incentive Plan. Set forth below is a summary of certain important features of the Incentive Plan, which summary is qualified in its entirety by reference to the actual plan. Purpose. The purpose of the Incentive Plan is to promote the success of the Company and its Affiliates by providing incentives to their officers and key employees by aligning their interests, through ownership of Common Stock and through other incentives, with the interests of the Shareholders to provide an incentive for excellence in individual performance and to promote teamwork. The Incentive Plan is designed to provide flexibility to the Company and its Affiliates with regard to their ability to motivate, attract and retain the services of the officers and key employees who make significant contributions to the Company's success and to allow such employees to share in that success. Administration. The Incentive Plan will be administered by a committee of the Board of Directors ("Committee") which will be composed of not less than 3 directors, who, to the extent required by Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act"), qualify as "non-employee directors" and who, to the extent required by Section 162(m) of the Code, also qualify as "outside directors". Until changed by the Board of Directors, the Committee will be the Compensation Committee, as discussed on pages six and seven of this Proxy Statement. Among other things, the Committee will have the authority, subject to the terms of the Incentive Plan, to select officers and key employees to whom awards are granted, to determine the type of awards as well as the number of shares of Common Stock covered by each award and to determine the terms and conditions of awards. The Committee will also have the authority to construe and interpret the Incentive Plan, establish, amend or waive rules and regulations for its administration and amend the terms and conditions of any outstanding option, SAR or other award. All decisions made by the Committee will be final and binding. Eligibility. Participants will be officers and key employees of the Company or any Affiliate who, in the opinion of the Committee, make significant contributions to the growth, management, protection and success of the Company and its Affiliates. 20 Number of Shares. The Incentive Plan authorizes the issuance of 3,800,000 shares of Common Stock subject to adjustment as set forth in the Incentive Plan. During any consecutive 3 year period during the life of the Incentive Plan, no participant may be granted (i) options to acquire, (ii) SARs covering or (iii) shares of Restricted Stock in excess of 300,000 shares of Common Stock. Also, no participant can be granted any Performance Unit or Performance Share Award with respect to any performance period with an initial value of more than $750,000 or more than 300,000 shares of Common Stock. Finally, no participant can be granted ISOs with an aggregate fair market value of more than $100,000 that first become exercisable in any one calendar year. Subject to the foregoing limits, the shares of Common Stock available for issuance under the Incentive Plan can be divided among the various types of awards and among the participants as the Committee determines. Such shares are to be made available from authorized but unissued shares or shares reacquired by the Company in the open market. The number of shares subject to the Incentive Plan and subject to awards which are outstanding thereunder (except for mergers or other combinations in which the Company is the surviving entity) will be adjusted by the Committee to reflect stock dividends or splits, recapitalizations, reclassifications, mergers, consolidations, combinations or exchanges of shares and similar corporate capital structure changes. DESCRIPTION OF TYPES OF AWARDS Stock Options. Each option granted under the Incentive Plan must be evidenced by a written agreement which specifies the type of option, the number of shares of Common Stock covered, the exercise price, when and under what circumstances the option becomes exercisable, any restriction on transferability of shares received on the exercise, the duration of the option and such other terms and conditions as the Committee determines, within the limits prescribed by the Incentive Plan. The per share exercise price of all options will be determined by the Committee, but may not be less than 100% of the fair market value of the shares on the date of grant. No option can be exercised more than 10 years after its date of grant. Payment of the exercise price may be made with cash, with previously owned shares of Common Stock, by a loan to the participant from the Company, by the participant foregoing regular compensation in accordance with Committee rules or by a combination thereof. If a participant exercises an option and pays all or a portion of the exercise price in previously owned shares, a new option will automatically be issued to the participant to purchase additional shares in an amount equal to the number of previously owned shares surrendered to the Company in such payment. The new option will (i) have an exercise price equal to the per share fair market value of the Common Stock on the date the option is granted, (ii) first be exercisable 6 months from the date of grant of the new option, and (iii) expire on the same date as the original option. The principal difference between ISOs and NSOs is their tax treatment to the Company and optionees. See "Federal Income Tax Consequences" below. Stock Appreciation Rights. "Affiliated SARs," "Freestanding SARs," "Tandem SARs," or any combination thereof, may be granted under the Incentive Plan. An Affiliated SAR is an SAR that is granted in connection with a related option and is automatically deemed to be exercised at the same time the related option is exercised. A Freestanding SAR is an SAR that is granted independently of any stock option. Freestanding SARs are exercisable at such 21 time as the Committee determines. A Tandem SAR is an SAR that is granted in tandem with a stock option. A Tandem SAR may be exercised for all or part of the shares subject to the related option upon the surrender of the right to exercise the equivalent portion of the related option. The exercise price of each Freestanding SAR must be not less than 100% of the fair market value of a share of Common Stock on the date of grant and the exercise price of a Tandem or Affiliated SAR must be equal to the exercise price of the option to which such SAR relates. A holder of an SAR is entitled on exercise to receive a number of shares of Common Stock, cash or a combination thereof, as determined by the Committee, which is equal in value on the exercise date to the amount by which the fair market value of one share of Common Stock on the exercise date exceeds the exercise price multiplied by the number of shares with respect to which the SAR is exercised. Restricted Stock. The Incentive Plan also authorizes the Committee to grant shares of Restricted Stock to a participant with such periods and terms of restriction and performance goals as the Committee determines. In the case of a Covered Employee, the Committee may condition the vesting or lapse of periods of restriction on the attainment of one or more performance goals established by the Committee within the time period prescribed by Section 162(m) of the Code. With respect to Covered Employees, the performance goal applicable to the grant of Restricted Stock is the Company's Return on Equity. This performance goal is intended to be an objective performance goal which satisfies the requirements for "performance-based compensation" under Section 162(m)(4)(C) of the Code. Each grant of Restricted Stock will be evidenced by a restricted stock agreement that specifies the period of restriction, the number of shares of Restricted Stock granted and such other provisions as the Committee determines. Generally, all rights with respect to the Restricted Stock will be exercisable only during the participant's lifetime and only by the participant. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered. During the period of restriction, participants holding Restricted Stock may exercise full voting rights with respect to the shares; in addition, all cash dividends paid with respect to the shares will be reinvested in additional shares of Restricted Stock. Dividends paid in stock of the same class as the Restricted Stock will be restricted to the same extent as the Restricted Stock to which the dividend relates. Upon the lapse of the applicable period of restriction, the shares of Restricted Stock will become transferable. Performance Units and Performance Shares. The Incentive Plan also authorizes the Committee to grant Performance Units and Performance Shares which may be earned if specified performance goals set by the Committee are achieved over the period of time specified by the Committee (a "Performance Period"). At the conclusion of a particular Performance Period, the Committee will determine the extent to which the performance goals have been met. Depending on the Company's performance in relation to the performance goals, a Participant may earn less than the number of Performance Shares or Performance Units initially awarded. In addition, to the extent the value of a Performance Share or Performance Unit is related to a share of Common Stock, the value of any payout will be dependent on the changing value of the share. Payments may be made in shares of Common Stock, cash or a combination thereof, as determined by the Committee. For purposes of qualifying grants of Performance Units and Performance Shares as 22 "performance-based compensation" under Section 162(m) of the Code, the applicable performance goal will be the Company's Return on Equity. This performance goal is intended to be an objective performance goal which satisfies the requirements for "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code. Change in Control. Upon a change in control of the Company (as defined), all awards will become immediately vested and/or exercisable, and all restrictions and performance goals will be removed and will remain as such for the remaining life of the awards. Limits on Transferability and Exercisability. No award may be sold, transferred, assigned, pledged or hypothecated, other than by will or the laws of descent and distribution. All rights to an award will be exercisable during the participant's lifetime only by the participant. Options and SARs will be exercisable at such times as the Committee determines and specifies in the applicable award agreement. However, in the discretion of the Committee, NSOs may be transferred to "immediate family members" (as defined). For the transfer to be effective, the transferee, participant and the Company must enter into a written agreement which makes the transferred NSOs subject to all applicable provisions of the Incentive Plan and the award agreement between the participant and the Company. Amendment and Discontinuance. The Incentive Plan may be amended, altered or discontinued by the Board of Directors. Except as specifically provided in the Incentive Plan, without the written consent of the participant, no amendment, alteration or discontinuance may be made which would adversely affect any outstanding award. However, the Committee may modify or adjust an award if necessary to (i) avoid a material charge or expense to the Company or an Affiliate, (ii) cause the Incentive Plan to comply with applicable law, or (iii) permit the Company or an Affiliate to claim a tax deduction. Likewise, if any right, award or award agreement would cause a transaction engaged in by the Company to be ineligible for a "pooling of interest" accounting treatment, the Committee may adjust, amend or modify the right, award or award agreement without the participant's consent, to enable the Company to treat such transaction as a "pooling of interest." However, the Board of Directors cannot adopt any supplement, amendment or alteration to the Incentive Plan or an award agreement, without the approval of the shareholders, which would (i) increase the number of shares of Common Stock subject to the Incentive Plan or (ii) increase the maximum number of options, SARs, shares of Restricted Stock, Performance Units or Performance Shares the Company may award to an individual participant, except as described under "Number of Shares," above. FEDERAL INCOME TAX CONSEQUENCES The following constitutes a brief summary of the federal income tax rules relevant to options, SARs, Restricted Stock, Performance Units and Performance Shares granted under the Incentive Plan. The laws which govern the tax aspects of awards under the Incentive Plan are highly technical and are subject to change. NSOs and SARs. On the grant of an NSO (with or without a Tandem or Affiliated SAR), the participant will not recognize any taxable income. On the exercise of such an NSO or SAR, the excess of the fair market value of the shares of Common Stock acquired on the exercise of the NSO over the purchase price (the "spread"), or the consideration paid to the participant upon the exercise of the SAR, will constitute compensation which is 23 taxable to the participant as ordinary income. In determining the amount of the spread or the amount of compensation paid to the participant, the fair market value of the Common Stock on the date of exercise is used, except that in the case of a participant who is subject to the 6 month short-swing profit recovery provisions of Section 16(b) of the Exchange Act (generally executive officers), the fair market value will generally be determined at the expiration of the 6 month period, unless such participant elects to be taxed based on the fair market value at the date of exercise. Any such election (a "Section 83(b) election") must be made and filed with the Internal Revenue Service within 30 days after the election in accordance with the Income Tax Regulations under Section 83(b) of the Code. The Company, in computing its federal income tax liability, will generally be entitled to a deduction in an amount equal to the compensation income recognized by the participant in the Company's taxable year in which the amount is included as income to the participant. ISOs. A participant will not recognize taxable income on the grant or exercise of an ISO. However, the spread at the time of exercise will constitute a tax preference item in determining whether the participant is liable for the alternative minimum tax. Such alternative minimum tax may be payable even though the participant receives no cash upon the exercise of his or her ISO with which to pay such tax. Upon the sale of shares acquired pursuant to the exercise of an ISO after the later of (i) two years from the date of grant of the ISO, or (ii) one year after the date of exercise (the "ISO Holding Period"), the participant will recognize capital gain or loss, as the case may be, measured by the difference between the net sales proceeds received on the sale and the exercise price. The Company is not entitled to any tax deduction by reason of the grant or exercise of an ISO, or by reason of a disposition of stock received upon exercise of an ISO if the ISO Holding Period is satisfied. Different rules apply if the participant disposes of the shares before the expiration of the ISO Holding Period. Option grants for shares which are exercisable for the first time by a participant during any calendar year, which have a fair market value in excess of $100,000, are treated as NSOs, and will be subject to the same tax treatment as is applicable to NSOs, as discussed above. Restricted Stock. A participant who receives an award of Restricted Stock may make a Section 83(b) election to have the award taxed as compensation income at the date of receipt, with the result that any future appreciation (or depreciation) in the value of the shares granted will be taxed as capital gain (or loss) on the later sale of the shares. However, if the participant does not make a Section 83(b) election, the grant will be taxed as compensation income at the full fair market value on the date that the restrictions imposed on the shares lapse. Any dividends paid on Restricted Stock are compensation income to the participant. The Company is generally entitled to a tax deduction for any compensation income taxed to the participant, subject to the provisions of Section 162(m) of the Code. Performance Units and Performance Shares. A participant who receives an award of Performance Shares or Performance Units may also make a Section 83(b) election to have the award taxed as compensation income at the date of receipt with the same result as described above under "Restricted Stock". If the participant does not make the Section 83(b) election, he or she will not recognize taxable income thereon until the units or shares vest and the participant receives stock and/or cash distributed in payment of the award. At that time, the participant must recognize income which is taxed as compensation in an amount equal to the fair market value of the shares delivered and/or the amount of cash paid. At that time, the Company generally will be allowed a corresponding tax deduction equal to the compensation taxable to the participant, subject to the provisions of Section 162(m) of the Code. 24 INCENTIVE PLAN BENEFITS It cannot be determined at this time what benefits or amounts, if any, will be received by or allocated to any persons or group of persons under the Incentive Plan if the plan is adopted by the shareholders. Such determinations are subject to the discretion of the Committee. VOTE REQUIRED The affirmative vote of a majority of the votes entitled to be cast by the holders of the Common Stock present or represented at the Annual Meeting and entitled to vote thereon is required to approve the Incentive Plan. Such vote will also satisfy the shareholder approval requirements of Sections 162(m) and 422 of the Code with respect to performance based compensation and the grant of ISOs, respectively. Proxies received by the Company and not revoked prior to or at the Annual Meeting will, unless otherwise specifically indicated, be voted "FOR" this proposal and the adoption of the Incentive Plan. THE BOARD OF DIRECTORS HAS APPROVED AND ADOPTED THE INCENTIVE PLAN AND RECOMMENDS A VOTE FOR ADOPTION OF THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN. SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING Proposals submitted by Shareholders to be presented at the 2000 Annual Meeting must be received by the Company at its principal executive office no later than November 9, 1999, to be considered for inclusion in the Proxy Statement and form of Proxy relating to that meeting. Any such proposals should be sent to the attention of the Corporate Secretary of the Company, P. O. Box 718, Evansville, Indiana 47705-0718. VOTE REQUIRED The nominees for election as Directors of the Company named in this Proxy Statement will be elected by a plurality of the votes cast. Action on the other items or matters to be presented at the Annual Meeting will be approved if the votes cast in favor of the action exceed the votes cast opposing the action. Abstentions or broker non-votes will not be voted for or against any items or other matters presented at the meeting. Abstentions will be counted for purposes of determining the presence of a quorum at the Annual Meeting, but broker non-votes will not be counted for quorum purposes if the broker has failed to vote as to all matters. 25 ANNUAL REPORT UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER WHO DOES NOT OTHERWISE RECEIVE A COPY OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1998. ADDRESS ALL REQUESTS TO: RONALD W. SEIB VICE PRESIDENT AND CONTROLLER OLD NATIONAL BANCORP P. O. BOX 718 EVANSVILLE, INDIANA 47705-0718 OTHER MATTERS The Board of Directors of the Company does not know of any matters for action by Shareholders at the 1999 Annual Meeting other than the matters described in the accompanying Notice of Annual Meeting of Shareholders. However, the enclosed Proxy will confer upon the named Proxies discretionary authority with respect to matters which are not known to the Board of Directors at the time of the printing hereof and which may properly come before the Annual Meeting. It is the intention of the persons named as Proxies to vote pursuant to the Proxy with respect to such matters in accordance with their best judgment. The cost of soliciting Proxies in the accompanying form will be borne by the Company. In addition to solicitations by mail, Proxies may be solicited personally by Directors and Officers of the Company and its subsidiaries, by telephone or in person, but such persons will not be specially compensated for their services. No solicitations will be made by specially engaged employees of the Company or other paid solicitors. It is important that Proxies be returned promptly. Whether or not you expect to attend the Annual Meeting in person, Shareholders are requested to complete, sign and return their Proxies in order that a quorum for the meeting may be assured. Return may be made in the enclosed envelope, to which no postage need be affixed. By Order of the Board of Directors Jeffrey L. Knight Secretary 26 EX-99 2 OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN SECTION 1 PURPOSE AND DURATION 1.1. ESTABLISHMENT OF THE PLAN. Old National Bancorp, an Indiana corporation, hereby establishes an equity-based incentive compensation plan to be known as the Old National Bancorp 1999 Equity Incentive Plan, set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Units and Performance Shares. This Plan and the grant of Awards hereunder are expressly conditioned upon the Plan's approval by the shareholders of the Company to the extent required. The Plan is adopted effective as of April 15, 1999, which is the date that the shareholders of the Company approved the Plan, as specified in Section 10.2. 1.2. PURPOSES OF THE PLAN. The purposes of this Plan are to further the growth and financial success of the Company and its Affiliates by aligning the interests of the Participants, through the ownership of Shares and through other incentives, with the interests of the Company's shareholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company's success and to allow Participants to share in the success of the Company. SECTION 2 DEFINITIONS For purposes of this Plan, the following words and phrases shall have the following meanings unless a different meaning is plainly required by the context: 2.1. "1934 ACT" means the Securities Exchange Act of 1934, as amended. Reference to a specific Section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such Section or regulation. 2.2. "AFFILIATE" means any corporation or any other entity (including, but not limited to, partnerships, limited liability companies, joint ventures and Subsidiaries) controlling, controlled by or under common control with the Company. 1 2.3. "AFFILIATED SAR" means an SAR that is granted in connection with a related Option, and that automatically will be deemed to be exercised at the same time that the related Option is exercised. 2.4. "AWARD" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance Units or Performance Shares. 2.5. "AWARD AGREEMENT" means the written agreement which sets forth the terms and provisions applicable to each Award granted under this Plan. 2.6. "BENEFICIARY" means the person or persons designated by a Participant to receive the benefits under this Plan, if any, which become payable as a result of the Participant's death. 2.7. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the Company serving at the time that this Plan is approved by the shareholders of the Company or thereafter. 2.8. "CASHLESS EXERCISE" means, if there is a public market for the Shares, the payment of the Exercise Price of Options, (a) through a "same day sale" commitment from the Participant and an NASD Dealer whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased in order to pay the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such stock to forward the Exercise Price directly to the Company, or (b) through a "margin" commitment from the Participant and an NASD Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company. 2.9. "CAUSE" means, for purposes of determining whether and when a Participant has incurred a Termination of Service for Cause, any act or failure to act which permits the Company to terminate the written agreement or arrangement between the Participant and the Company or an Affiliate for "cause" as defined in such agreement or arrangement or, in the event there is no such agreement or arrangement or the agreement or arrangement does not define the term "cause," then "Cause" for purposes of this Plan shall mean any act or failure to act deemed to constitute "cause" under the Company's established and applied practices, policies, or guidelines applicable to the Participant. 2.10. "CHANGE IN CONTROL" shall have the meaning assigned to such term in Section 12.2. 2.11. "CODE" means the Internal Revenue Code of 1986, as amended. Reference to a specific Section of the Code or regulation thereunder shall include such Section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future law, legislation, or regulation amending, supplementing, or superseding such Section or regulation. 2 2.12. "COMMITTEE" means the Compensation Committee of the Board, or such other committee appointed by the Board pursuant to Section 3.1 to administer this Plan, serving on the date that this Plan is approved by the shareholders of the Company or thereafter. 2.13. "COMPANY" means Old National Bancorp, an Indiana corporation, and any successor thereto. With respect to the definition of Performance Goals, the Committee, in its sole discretion, may determine that "Company" means Old National Bancorp and its Subsidiaries on a consolidated basis. 2.14. "COVERED EMPLOYEE" means an Employee who is a covered employee as defined in Section 162(m)(3) of the Code. 2.15. "DIRECTOR" means any individual who is a member of the Board of Directors of the Company. 2.16. "DISABILITY" means a mental or physical illness that entitles the Participant to receive benefits under the long-term disability plan of the Company or an Affiliate. Notwithstanding the foregoing, a Disability shall not qualify under this Plan if it is the result, as determined by the Committee in its sole discretion, of (a) an intentionally self-inflicted injury or an intentionally self-induced sickness, or (b) an injury or disease contracted, suffered, or incurred while participating in a criminal offense. The determination of a Disability for purposes of this Plan shall not be construed to be an admission of a disability for any other purpose. 2.17. "EFFECTIVE DATE" means April 15, 1999, which is the date that the shareholders of the Company approved the Plan. 2.18. "EMPLOYEE" means all officers and key employees of the Company or an Affiliate, whether such officers or key employees are so employed on the date that this Plan is approved by the shareholders of the Company or become employed subsequent to such approval. 2.19. "EXERCISE PRICE" means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option. 2.20. "FAIR MARKET VALUE" means the per share closing price for the Shares, as reported by the Nasdaq Stock Market or by such other exchange or market on which the Shares are then listed or regularly traded, determined as of the day on which the applicable Award is granted to a Participant. 2.21. "FISCAL YEAR" means the annual accounting period of the Company. 2.22. "FREESTANDING SAR" means an SAR that is granted independently of any Option. 2.23. "GRANT DATE" means, with respect to any Award granted under this Plan, the date 3 on which the Award was granted by the Committee, regardless if the Award Agreement to which the Award relates is executed subsequent to such date. 2.24. "INCENTIVE STOCK OPTION" means an Option granted under this Plan to purchase Shares which is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code. 2.25. "NASD DEALER" means a broker-dealer who is a member of the National Association of Securities Dealers, Inc. 2.26. "NONQUALIFIED STOCK OPTION" means an Option granted under this Plan to purchase Shares which is not an Incentive Stock Option. 2.27. "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option. 2.28. "OPTION PERIOD" means the period during which an Option shall be exercisable in accordance with the applicable Award Agreement and Section 6. 2.29. "PARTICIPANT" means an Employee to whom an Award has been granted. 2.30. "PERFORMANCE GOALS" means, except as otherwise provided in Sections 8.4.2 and 9.3.2, the goals determined by the Committee in its sole discretion to be applicable to a Participant with respect to an Award. As determined by the Committee in its sole discretion, the Performance Goals applicable to each Award granted under the Plan to a Participant who is not a Covered Employee, shall provide for targeted level or levels of financial achievement with respect to one (1) or more of the following business criteria: (a) return on assets, (b) income before interest and taxes, (c) net income, (d) total shareholder return, (e) return on equity, and (f) Affiliate or division operating income. The Performance Goals may differ from Participant to Participant and from Award to Award. In the case of a Participant who is a Covered Employee, as described in the preceding sentence, the sole Performance Goal shall be based on the return on equity of the Company on a consolidated basis for a calendar year calculated in accordance with generally accepted accounting principles consistently applied. 2.31. "PERFORMANCE PERIOD" means the period of time during which Performance Goals must be achieved with respect to an Award, as determined by the Committee in its sole discretion. 2.32. "PERFORMANCE SHARE" means an Award granted to a Participant pursuant to Section 9. 2.33. "PERFORMANCE UNIT" means an Award granted to a Participant pursuant to Section 9. 2.34. "PERIOD OF RESTRICTION" means the period during which the transfer of Shares of 4 Restricted Stock are subject to restrictions and, therefore, the Shares are subject to a substantial risk of forfeiture. As provided in Section 8, such restrictions may be based on the passage of time, the achievement of specific target levels of performance (in the case of "performance-based compensation" under Section 162(m) of the Code), or the occurrence of such other events as may be determined by the Committee in its sole discretion. 2.35. "PLAN" means the Old National Bancorp 1999 Equity Incentive Plan, as set forth in this instrument and as hereafter amended from time to time. 2.36. "RESTRICTED STOCK" means an Award granted to a Participant pursuant to Section 8. 2.37. "RETIREMENT" means the date on which a Participant satisfies the conditions for early retirement under the Old National Bancorp Employees' Retirement Plan then in effect. 2.38. "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, and any future rule or regulation amending, supplementing, or superseding such rule. 2.39. "SECTION 16 PERSON" means a person subject to potential liability under Section 16(b) of the 1934 Act with respect to transactions which involve equity securities of the Company. 2.40. "SHARES" means the whole shares of issued and outstanding regular voting common stock, no par value, of the Company, whether presently or hereafter issued and outstanding, and any other stock or securities resulting from adjustment thereof as provided in Section 4.5, or the stock of any successor to the Company which is so designated for the purposes of the Plan. 2.41. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in connection or tandem with a related Option, that is designated as an "SAR" pursuant to Section 7. 2.42. "SUBSIDIARY" means any corporation (including, without limitation, any bank, savings association or financial institution or any financial services company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A Subsidiary includes any Subsidiary of the Company as of the Effective Date and each corporation that becomes a Subsidiary of the Company after the Effective Date. 2.43. "TANDEM SAR" means an SAR that is granted in tandem with a related Option, the exercise of which shall require forfeiture of the right to exercise such Option and to purchase an equal number of Shares under the related Option; and, when a Share is purchased pursuant to the exercise of such Option, the SAR shall be forfeited to the same extent. 5 2.44. "TERMINATION OF SERVICE" means the occurrence of any act or event or any failure to act whether pursuant to an employment agreement or otherwise that actually or effectively causes or results in a Participant ceasing, for whatever reason, to be an Employee of the Company or an Affiliate, including, but not limited to, death, Disability, Retirement, termination by the Company or an Affiliate of the Participant's employment with the Company or an Affiliate (whether with or without Cause), and voluntary resignation or termination by the Participant of his or her employment with the Company or an Affiliate. A Termination of Service also shall occur with respect to an Employee who is employed by an Affiliate if the Affiliate shall cease to be an Affiliate of the Company and the Participant shall not immediately thereafter become an Employee of the Company or another Affiliate. For purposes of this Plan, transfers or changes of employment of a Participant between the Company and an Affiliate (or between Affiliates) shall not be deemed a Termination of Service. SECTION 3 ADMINISTRATION 3.1. THE COMMITTEE. This Plan shall be administered by the Committee. The decision or action of a majority of the actual number of members of the Committee shall constitute the decision or action of the Committee. The Committee shall consist of not less than three (3) Directors. The members of the Committee shall be appointed from time to time by, and shall serve at the pleasure of, the Board of Directors. It is intended that the Committee be comprised solely of Directors who both are (a) "non-employee directors" under Rule 16b-3, and (b) "outside directors" as described in Section 162(m)(3)(C)(ii) of the Code. Failure of the Committee to be so comprised shall not result in the cancellation, termination, expiration, or lapse of any Award. 3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Articles of Incorporation or By-Laws of the Company, and subject to the provisions of this Plan, the Committee shall have full power and discretion to select Employees who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with this Plan; construe and interpret this Plan, all Award Agreements and any other agreements or instruments entered into under this Plan; establish, amend, or waive rules and regulations for the Plan's administration; and amend the terms and conditions of any outstanding Award and applicable Award Agreement to the extent such terms and conditions are within the discretion of the Committee as provided in this Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. Each Award shall be evidenced by a written Award Agreement between the Company and the Participant and shall contain such terms and conditions established by the Committee consistent with the provisions of this Plan. Any notice or document required to be given to or filed with the Committee will be properly given or filed if hand delivered (and a delivery receipt is received) or mailed by certified mail, return receipt requested, postage paid, to the Committee at 420 Main Street, Evansville, Indiana 47708. 6 3.3. DELEGATION BY THE COMMITTEE. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under this Plan to one or more Directors or officers of the Company; provided, however, that the Committee may not delegate its authority and powers (a) with respect to grants to Section 16 Persons, or (b) in any way which would jeopardize this Plan's qualification under Section 162(m) of the Code or Rule 16b-3. 3.4. DECISIONS BINDING. All determinations and decisions made by the Committee, the Board and any delegate of the Committee pursuant to Section 3.3 shall be final, conclusive, and binding on all persons, including the Company and Participants. No such determinations shall be subject to de novo review if challenged in court. SECTION 4 SHARES SUBJECT TO THIS PLAN 4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 4.5, the maximum number of Shares cumulatively available for issuance under this Plan pursuant to: (a) the exercise of Options, (b) the grant of Affiliated, Freestanding and Tandem SARs, (c) the grant of Shares of Restricted Stock, and (d) the payment of Performance Units and Performance Shares, shall not exceed Three Million Eight Hundred Thousand (3,800,000) Shares of the Company less the total number of Shares previously issued under this Plan, and less the total number of Shares then subject to outstanding Options or other Awards; provided, however, that in calculating the number of Shares available for issuance under this Plan, no more than One Hundred Thousand (100,000) Shares shall be cumulatively available for the grant of Incentive Stock Options under this Plan. Shares issued under this Plan may be either authorized but unissued Shares, treasury Shares or reacquired Shares (including Shares purchased in the open market), or any combination thereof, as the Committee may from time to time determine in its sole discretion. Shares covered by an Award that are forfeited or that remain unpurchased or undistributed upon termination or expiration of any such Award may be made the subject of further Awards to the same or other Participants. If the exercise price of any Option is satisfied by tendering Shares (by either actual delivery or attestation), only the number of Shares actually issued, net of the Shares tendered, shall be deemed issued for purposes of determining the number of Shares available for grants under this Plan. 4.2. RELEASE OF SHARES. Subject to the limitations set forth in this Plan, the Committee shall have full authority to determine the number of Shares available for Awards, and in its sole discretion may include (without limitation) as available for distribution any Shares that have ceased to be subject to an Award; any Shares subject to an Award that have been previously forfeited; any Shares under an Award that otherwise terminates without the issuance of Shares being made to a Participant; any Shares that are received by the Company in connection with the exercise of an Award, including the satisfaction of any tax liability or tax withholding obligation; or any Shares repurchased by the Company in the open market or otherwise, having an aggregate 7 repurchase price no greater than the amount of cash proceeds received by the Company from the exercise of Options granted under this Plan. Any Shares that are available immediately prior to the termination of the Plan, or any Shares returned to the Company for any reason subsequent to the termination of the Plan, may be transferred to a successor plan. 4.3. RESTRICTIONS ON SHARES. Shares issued upon exercise of an Award shall be subject to the terms and conditions specified herein and to such other terms, conditions, and restrictions as the Committee in its sole discretion may determine or provide in the Award Agreement. The Company shall not be required to issue or deliver any certificates for Shares, cash, or other property prior to (a) the listing of such Shares on any stock exchange (or other public market) on which the Shares may then be listed (or regularly traded), and (b) the completion of any registration or qualification of such shares under federal, state, local, or other law, or any ruling or regulation of any government body which the Committee determines to be necessary or advisable. The Company may cause any certificate for any Shares to be delivered hereunder to be properly marked with a legend or other notation reflecting the limitations on transfer of such Shares as provided in this Plan or as the Committee may otherwise require. Participants, or any other persons entitled to benefits under the Plan, must furnish to the Committee such documents, evidence, data, or other information as the Committee considers necessary or desirable for the purpose of administering this Plan. The benefits under this Plan for each Participant, and each other person who is entitled to benefits hereunder, are to be provided on the condition that he furnish full, true, and complete data, evidence, or other information, and that he will promptly sign any document reasonably related to the administration of this Plan requested by the Committee. No fractional Shares shall be issued under this Plan; rather, fractional shares shall be aggregated and then rounded to the next lower whole Share. 4.4. SHAREHOLDER RIGHTS. Except with respect to Restricted Stock as provided in Section 8, no person shall have any rights of a shareholder (including, but not limited to, voting and dividend rights) as to Shares subject to an Award until, after proper exercise or vesting of the Award or other action as may be required by the Committee in its sole discretion, such Shares shall have been recorded on the Company's official shareholder records (or the records of its transfer agents or registrars) as having been issued and transferred to the Participant. Upon exercise of the Award or any portion thereof, the Company will have a reasonable period in which to issue and transfer the Shares to the Participant, and the Participant will not be treated as a shareholder for any purpose whatsoever prior to such issuance and transfer. No payment or adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Shares are recorded as issued and transferred in the Company's official shareholder records (or the records of its transfer agents or registrars), except as provided herein or in an Award Agreement. 4.5. CHANGES IN STOCK. 4.5.1. SUBSTITUTION OF STOCK AND ASSUMPTION OF PLAN. In the event of any change in the Shares by virtue of any stock dividends, stock splits, recapitalizations, or reclassifications or any acquisition, merger, consolidation, share exchange, tender offer, 8 or other combination involving the Company that does not constitute a Change in Control, or in the event that other stock shall be substituted for the Shares as the result of any merger, consolidation, share exchange, or reorganization or any similar transaction which constitutes a Change in Control of the Company, the Committee shall correspondingly adjust (a) the number, kind, and class of Shares which may be delivered under this Plan, (b) the number, kind, class, and price of Shares subject to outstanding Awards (except for mergers or other combinations in which the Company is the surviving entity), and (c) the numerical limits of Sections 4.1, 6.1, 7.1, 8.1 and 9.1, all in such manner as the Committee in its sole discretion shall determine to be advisable or appropriate to prevent the dilution or diminution of such Awards; provided, however, in no event shall the One Hundred Thousand Dollars ($100,000) limit on ISOs contained in Section 6.1 be affected by an adjustment under this Section 4.5.1. The Committee's determination in this respect shall be final and conclusive. 4.5.2. CONVERSION OF SHARES. In the event of a Change in Control of the Company pursuant to which another person or entity acquires control of the Company (such other person or entity being the "Successor"), the kind of shares of stock which shall be subject to this Plan and to each outstanding Award shall, automatically by virtue of such Change in Control, be converted into and replaced by securities of the Successor having full voting, dividend, distribution, preference, and liquidation rights, and the number of shares subject to an Award, the calculation of an Award's value, and the purchase price per share upon exercise of the Award shall be correspondingly adjusted so that, by virtue of such Change in Control of the Company, each Participant shall (a) in the case of Options, have the right to purchase (i) that number of shares of stock of the Successor which have a Fair Market Value, as of the date of such Change in Control of the Company, equal to the Fair Market Value, as of the date of such Change in Control of the Company, of the Shares of the Company theretofore subject to each Option, and (ii) for a purchase price per share which, when multiplied by the number of shares of stock of the Successor subject to each Option, shall equal the aggregate exercise price at which the Participant could have acquired all of the Shares of the Company previously optioned to the Participant, and (b) in the case of Awards other than Options, Performance Shares, and Performance Units, have the right to receive that number of shares of stock of the Successor which have a Fair Market Value, as of the date of such Change in Control of the Company, equal to the Fair Market Value, as of the date of the Change in Control of the Company, of the Shares of the Company to which each Award relates. The Committee, in its sole discretion, shall determine the method by which Awards of Performance Shares and Performance Units shall be adjusted due to a Change in Control of the Company. 9 SECTION 5 ELIGIBILITY 5.1. ELIGIBILITY. Except as herein provided, the individuals who shall be eligible to participate in the Plan and be granted Awards shall be those individuals who are Employees of the Company or any Affiliate. The Committee may, from time to time and in its sole discretion, select Employees to be granted Awards and shall determine the terms and conditions with respect thereto. In making any such selection and in determining the form of the Award, the Committee may give consideration to the functions and responsibilities of the Employee's contributions to the Company or its Affiliates, the value of the Employee's services (past, present, and future) to the Company or its Affiliates, and such other factors deemed relevant by the Committee in its sole discretion. Committee members shall not be eligible to participate in this Plan while serving as Committee members. An Employee will become a Participant in this Plan as of the date specified by the Committee. A Participant can be removed as an active Participant by the Committee effective as of any date. 5.2. NO CONTRACT OF EMPLOYMENT. Neither the Plan nor any Award Agreement executed under this Plan shall constitute a contract of employment between a Participant and the Company or an Affiliate, and participation in the Plan shall not give a Participant the right to be rehired by or retained in the employment of the Company or an Affiliate. SECTION 6 STOCK OPTIONS 6.1. GRANT OF OPTIONS. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Options to any Employees in such amounts as the Committee, in its sole discretion, may determine. The Committee may grant Incentive Stock Options, Nonqualified Stock Options, or any combination thereof. Subject to the terms and provisions of this Plan, the Committee, in its sole discretion, shall determine the number of Shares subject to each Option; provided, however, that during any three (3) consecutive Fiscal Year period, no Participant shall be granted Options to acquire more than Three Hundred Thousand (300,000) Shares. Furthermore, no Participant may be granted Incentive Stock Options under this Plan which would result in Shares with an aggregate Fair Market Value (measured on the Grant Date(s)) of more than One Hundred Thousand Dollars ($100,000) first becoming exercisable in any one calendar year. 6.2. OPTION AWARD AGREEMENT. Each Option shall be evidenced by an Option Award Agreement that shall specify the Exercise Price, the number of Shares to which the Option pertains, the Option Period, any conditions to exercise of the Option, and such other terms and conditions as the Committee, in its sole discretion, shall determine. The Option Award Agreement also shall specify whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option. All grants of Options intended to constitute Incentive Stock 10 Options shall be made in accordance, and all Award Agreements pursuant to which Incentive Stock Options are granted shall comply, with the requirements of Section 422 of the Code. 6.3. EXERCISE PRICE. Subject to the provisions of this Section 6.3, the Exercise Price for each Option shall be determined by the Committee in its sole discretion. 6.3.1. NONQUALIFIED STOCK OPTIONS. In the case of a Nonqualified Stock Option, the Exercise Price per Share shall be determined by the Committee; provided, however, in no event shall the Exercise Price be less than the one hundred percent (100%) of Fair Market Value of the Shares to which the Nonqualified Stock Option relates determined as of the Grant Date. 6.3.2. INCENTIVE STOCK OPTIONS. In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of the Shares to which the Incentive Stock Option relates determined as of the Grant Date; provided, however, that if, on the Grant Date, the Participant (together with persons whose stock ownership is attributed to the Participant pursuant to Section 424(d) of the Code) owns securities possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shares to which the Incentive Stock Option relates determined as of the Grant Date. 6.3.3. SUBSTITUTE OPTIONS. Notwithstanding the provisions of Sections 6.3.1 and 6.3.2, in the event that the Company or an Affiliate consummates a transaction described in Section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), individuals who become Employees on account of such transaction may be granted Options in substitution for options granted by such former employer or recipient of services. If such substitute Options are granted, the Committee, in its sole discretion and consistent with Section 424(a) of the Code, may determine that such substitute Options shall have an exercise price less than one hundred (100%) of the Fair Market Value of the Shares to which the Options relates determined as of the Grant Dates. In carrying out the provisions of this Section 6.3.3, the Committee shall apply the principles contained in Section 4.5. 6.4. DURATION OF OPTIONS. Subject to the terms and provisions of Sections 10 and 12, the Option Period with respect to each Option shall commence and expire at such times as the Committee shall provide in the Award Agreement, provided that: (a) Incentive and Nonqualified Stock Options shall not be exercisable later than the tenth anniversary of their respective Grant Dates; (b) Incentive Stock Options granted to an Employee who possesses more than ten percent (10%) of the total combined voting power of all classes of 11 Shares of the Company, taking into account the attribution rules of Section 422(d) of the Code, shall not be exercisable later than the fifth anniversary of their Grant Date(s); and (c) Subject to the limits of this Section 6, the Committee may, in its sole discretion, after an Option is granted, extend the maximum term of the Option. 6.5. EXERCISABILITY OF OPTIONS. Subject to the provisions of Section 12 and this Section 6, all Options granted under this Plan shall be exercisable at such times, under such terms, and subject to such restrictions and conditions as the Committee shall determine in its sole discretion and specify in the Award Agreements to which such Options relate. After an Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the Option. 6.6. METHOD OF EXERCISE. Subject to the provisions of this Section 6 and the applicable Award Agreement, a Participant may exercise an Option, in whole or in part, at any time during the Option Period to which the Option relates by giving written notice to the Company of exercise on a form provided by the Committee (if available). Such notice shall specify the number of Shares subject to the Option to be purchased and shall be accompanied by payment in full of the total Exercise Price by cash or check or such other form of payment as the Company may accept. If permitted by the Committee or the applicable the Award Agreement, payment in full or in part may also be made by: (a) Delivering Shares already owned by the Participant for more than six (6) months and having a total Fair Market Value on the date of such delivery equal to the total Exercise Price; (b) The execution and delivery of a promissory note or other evidence of indebtedness (and any security agreement thereunder required by the Committee) satisfactory to the Committee and permitted in accordance with Section 6.7; (c) The authorization of the Company to retain Shares which would otherwise be issuable upon exercise of the Option having a total Fair Market Value on the date of delivery equal to the total Exercise Price; (d) The delivery of cash by a broker-dealer as a Cashless Exercise; (e) The certification of ownership of Shares owned by the Participant to the satisfaction of the Committee for later delivery to the Company as specified by the Committee; or (f) Any combination of the foregoing. 12 If payment of the Exercise Price of an Option is made in whole or in part in the form of Restricted Stock, a number of the Shares to be received upon such exercise equal to the number of shares of Restricted Stock used for payment of the Exercise Price shall be subject to the same forfeiture restrictions or deferral limitations to which such Restricted Stock was subject, unless otherwise determined by the Committee in its sole discretion. No Shares shall be issued until full payment therefor has been made. Subject to any forfeiture restrictions or deferral limitations that may apply if an Option is exercised using Restricted Stock, a Participant shall have all of the rights of a shareholder of the Company holding the class of Shares subject to such Option (including, if applicable, the right to vote the shares and the right to receive dividends) when the Participant has given written notice of exercise, has paid the total Exercise Price, and such Shares have been recorded on the Company's official shareholder records (or the records of its transfer agents or registrars) as having been issued and transferred to the Participant. 6.7. COMPANY LOAN OR GUARANTEE. Upon the exercise of any Option and subject to the Award Agreement, the Company may, in its sole discretion, at the request of a Participant: (a) Lend to the Participant, with or without recourse, an amount equal to such portion of the Exercise Price as the Company may determine; or (b) Guarantee a loan obtained by the Participant from a third-party for the purpose of paying the Exercise Price. 6.8. RELOAD PROVISION. In the event a Participant exercises an Option and pays all or a portion of the Exercise Price in Shares, in the manner permitted by Section 6.6, such Participant may (either pursuant to terms of the Award Agreement or pursuant to the sole discretion of the Committee at the time the Option is exercised) be issued a new Option to purchase additional Shares equal to the number of Shares surrendered to the Company in such payment. Such new Option shall (a) have an Exercise Price equal to the Fair Market Value per Share on the Grant Date of the new Option, (b) first be exercisable six (6) months from the Grant Date of the new Option, and (c) expire on the same date as the original Option so exercised by payment of the Exercise Price in Shares. 6.9. RESTRICTIONS ON SHARE TRANSFERABILITY. In addition to the restrictions imposed by Section 14.8, the Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option as it may deem advisable or appropriate in its sole discretion, including, but not limited to, restrictions related to applicable Federal and state securities laws and the requirements of any national securities exchange or market on which Shares are then listed or regularly traded. 6.10. TERMINATION BY REASON OF DEATH, DISABILITY, OR RETIREMENT. Unless otherwise provided in the Award Agreement or determined by the Committee in its sole discretion, if a 13 Participant incurs a Termination of Service due to death, Disability, or Retirement, any unexpired and unexercised Options held by such Participant shall thereafter be fully exercisable until the expiration of the Option Period. 6.11. OTHER TERMINATION. Unless otherwise provided in the Award Agreement or determined by the Committee in its sole discretion, if a Participant incurs a Termination of Service that is involuntary on the part of the Participant (but is not due to death or Disability or is not with Cause) or is voluntary on the part of the Participant (but is not due to Retirement), any Options held by such Participant shall thereupon terminate, except that such Options, to the extent then exercisable at the time of such Termination of Service, may be exercised until the expiration of the shorter of the following two (2) periods: (a) the thirty (30) consecutive day period commencing on the date of such Termination of Service, or (b) the date on which the Option Period expires. If a Participant incurs a Termination of Service which is with Cause, all of his Options shall terminate immediately as of the date of such Termination of Service. 6.12. SPECIAL PROVISION FOR INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of this Plan to the contrary, an Incentive Stock Option shall not be exercisable (a) more than three (3) months after the Participant's Termination of Service for any reason other than Disability, or (b) more than one (1) year after the Participant's Termination of Service by reason of Disability. SECTION 7 STOCK APPRECIATION RIGHTS 7.1. GRANT OF SARS. Subject to the terms and conditions of this Plan, the Committee, at any time and from time to time, may grant SARs to any Employees in such amounts as the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof. 7.1.1. NUMBER OF SHARES. Subject to the limitations of Section 4, the Committee shall have complete discretion to determine the number of SARs granted to any Participant provided that during any three (3) consecutive Fiscal Year period, no Participant shall be granted SARs covering more than Three Hundred Thousand (300,000) Shares. 7.1.2. EXERCISE PRICE AND OTHER TERMS. The Committee, subject to the provisions of this Plan, shall have complete discretion to determine the terms and conditions of SARs granted under this Plan; provided, however, that the Exercise Price of a Freestanding SAR shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date and the Exercise Price of Tandem or Affiliated SARs shall be equal to the Exercise Price of the Option to which such SAR relates. 14 7.2. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares with respect to which its related Option is then exercisable. With respect to a Tandem SAR granted in connection with an Incentive Stock Option the following requirements shall apply: (a) the Tandem SAR shall expire not later than the date on which the underlying Incentive Stock Option expires; (b) the value of the payout with respect to the Tandem SAR shall be no more than one hundred percent (100%) of the difference between the Exercise Price of the underlying Incentive Stock Option and one hundred percent (100%) of the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR shall be exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option to which the Tandem SAR relates exceeds the Exercise Price of such Incentive Stock Option. 7.3. EXERCISE OF AFFILIATED SARS. An Affiliated SAR shall be deemed to be exercised upon the exercise of the Option to which the Affiliated SAR relates. Such deemed exercise of an Affiliated SAR shall not reduce the number of Shares subject to the related Option. 7.4. EXERCISE OF FREESTANDING SARS. Freestanding SARs shall be exercisable on such terms and conditions as the Committee, in its sole discretion, shall specify in the applicable Award Agreement. 7.5. SAR AWARD AGREEMENT. Each SAR shall be evidenced by an Award Agreement that specifies the exercise price, the expiration date of the SAR, the number of SARs, any conditions on the exercise of the SAR, and such other terms and conditions as the Committee, in its sole discretion, shall determine. The Award Agreement shall also specify whether the SAR is an Affiliated SAR, Freestanding SAR, Tandem SAR, or a combination thereof. 7.6. EXPIRATION OF SARS. Each SAR granted under this Plan shall expire upon the date determined by the Committee, in its sole discretion, as set forth in the applicable Award Agreement. Notwithstanding the foregoing, the terms and provisions of Section 6.4 also shall apply to Affiliated and Tandem SARs. 7.7. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (a) The positive difference between the Fair Market Value of a Share on the date of exercise and the exercise price; by (b) The number of Shares with respect to which the SAR is exercised. At the sole discretion of the Committee, such payment may be in cash, in Shares which have a Fair Market Value equal to the cash payment calculated under Section 7.7, or in a combination 15 of cash and Shares. 7.8. TERMINATION OF SAR. An Affiliated or Tandem SAR shall terminate at such time as the Option to which such SAR relates terminates. A Freestanding SAR shall terminate at the time provided in the applicable Award Agreement. SECTION 8 RESTRICTED STOCK 8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to any Employees in such amounts as the Committee, in its sole discretion, shall determine. Subject to the limitations of Section 4, the Committee, in its sole discretion, shall determine the number of Shares of Restricted Stock to be granted to each Participant; provided, however, that during any three (3) consecutive Fiscal Year period, no Participant shall be granted more than Three Hundred Thousand (300,000) Shares of Restricted Stock. 8.2. RESTRICTED STOCK AWARD AGREEMENT. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Committee, in its sole discretion, shall determine. Unless the Committee in its sole discretion determines otherwise, Shares of Restricted Stock shall be held by the Company, and shall not be delivered to any Participant, until the end of the applicable Period of Restriction. 8.3. TRANSFERABILITY. Except as provided in Section 6.6, Section 14.8, and this Section 8, Shares of Restricted Stock may not be sold, transferred, assigned, margined, encumbered, gifted, bequeathed, alienated, hypothecated, pledged or otherwise disposed of, whether by operation of law, whether voluntarily or involuntarily or otherwise, until the end of the applicable Period of Restriction. 8.4. OTHER RESTRICTIONS. The Committee, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate in accordance with this Section 8. 8.4.1. GENERAL RESTRICTIONS. The Committee may impose restrictions on Restricted Stock based upon any of the following criteria: (a) the achievement of specific Company-wide, Affiliate-based, Subsidiary-based, divisional, individual Participant, or other Performance Goals, (b) applicable Federal or state securities laws, or (c) any other basis determined by the Committee in its sole discretion. 8.4.2. SECTION 162(M) PERFORMANCE RESTRICTIONS. Notwithstanding any other provision of this Section 8.4.2 to the contrary, for purposes of qualifying grants of 16 Restricted Stock as "performance-based compensation" under Section 162(m) of the Code, the Committee shall establish restrictions based upon the achievement of Performance Goals. The specific targets under the Performance Goals that must be satisfied for the Period of Restriction to lapse or terminate shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock to qualify as "performance-based compensation" under Section 162(m) of the Code. The business criteria for Performance Goals under this Section 8.4.2 shall be the return on equity of the Company on a consolidated basis for a calendar year calculated in accordance with generally accepted accounting principles consistently applied. In granting Restricted Stock that is intended to qualify under Section 162(m), the Committee shall follow any procedures determined by it in its sole discretion from time to time to be necessary, advisable, or appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code. 8.4.3. LEGEND ON CERTIFICATES. The Committee, in its sole discretion, may require the placement of a legend on certificates representing Shares of Restricted Stock to give appropriate notice of such restrictions. For example, the Committee may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend: "THE SALE, PLEDGE, OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER UNDER FEDERAL AND STATE SECURITIES LAWS AND UNDER THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN, AS SET FORTH IN AN AWARD AGREEMENT EXECUTED THEREUNDER. A COPY OF SUCH PLAN AND SUCH AWARD AGREEMENT MAY BE OBTAINED FROM THE CORPORATE SECRETARY OF OLD NATIONAL BANCORP." 8.5. REMOVAL OF RESTRICTIONS. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under this Plan shall be released to a Participant as soon as practicable after the end of the applicable Period of Restriction. Except in the case of grants of Restricted Stock to Covered Employees which are intended to qualify as "performance-based compensation" under Section 162(m) of the Code (the vesting of which cannot be accelerated except as provided in Section 12.1 or 14.2), the Committee, in its sole discretion, may accelerate the time at which any restrictions shall lapse or remove any restrictions. After the end of the applicable Period of Restriction, the Participant shall be entitled to have any restrictive legend or legends placed on the Shares under Section 8.4.3 removed from his or her Share certificate. 8.6. VOTING RIGHTS. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the applicable Award Agreement provides otherwise. 17 8.7. DIVIDEND RIGHTS. Unless otherwise determined by the Committee and subject to this Plan, the distribution of cash dividends on Shares of Restricted Stock shall be automatically reinvested, by a constructive purchase by the Company in the name and on behalf of the Participant, in additional Shares of Restricted Stock. The number of Shares to be constructively purchased by the Company shall be based upon the Fair Market Value of the Shares determined on the date on which the applicable cash dividend is paid. Dividends on Shares that are the subject of a Restricted Stock Award Agreement and which are paid in the form of Shares shall be paid in the form of additional Shares of Restricted Stock of the same class as the Shares on which such dividend was paid. All Shares of Restricted Stock which are attributable to cash and stock dividends shall be subject to all of the provisions of this Section 8, including, for example, the terms and conditions of the Award Agreement which applies to the Shares to which the dividends relate. 8.8. RETURN OF RESTRICTED STOCK TO COMPANY. On the date set forth in the applicable Award Agreement, the Restricted Stock for which restrictions have not lapsed by the last day of the Period of Restriction shall revert to the Company and thereafter shall be available for the grant of new Awards under this Plan. 8.9. TERMINATION OF SERVICE. Unless otherwise provided in an Award Agreement or determined by the Committee in its sole discretion, in the event of a Participant's Termination of Service due to death, Disability or Retirement during the Period of Restriction, the restrictions on his Shares of Restricted Stock shall lapse and the Participant (or his or her Beneficiary) shall, on the date of such Termination of Service, be fully vested in the Restricted Stock. Unless otherwise provided in an Award Agreement or this Plan, in the event of a Participant's Termination of Service for any reason during the Period of Restriction other than a Termination of Service due to death, Disability or Retirement, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and thereafter shall be available for the grant of new Awards under this Plan; provided, however, that the Committee shall have the sole discretion to waive, in whole or in part, any or all remaining restrictions with respect to any or all of such Participant's Shares of Restricted Stock. Notwithstanding any other provision of this Section 8 to the contrary, in the case of grants of Restricted Stock to Covered Employees that the Committee intends to qualify as "performance-based compensation" under Section 162(m) of the Code (the vesting of which cannot be accelerated, except as provided in Section 12.1 or 14.2), no shares of Restricted Stock shall become vested unless the applicable Performance Goals have first been met; provided, further, that the Committee shall not waive any restrictions with respect to such Restricted Stock. If the vesting of shares of Restricted Stock is accelerated after the applicable Performance Goals have been met, the amount of Restricted Stock distributed shall be discounted by the Committee to reasonably reflect the time value of money in connection with such early vesting. 18 SECTION 9 PERFORMANCE UNITS AND PERFORMANCE SHARES 9.1. GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Units and Performance Shares to any Employees in such amounts as the Committee, in its sole discretion, shall determine. Subject to the limitations of Section 4, the Committee shall have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant; provided, however, that during any three (3) consecutive Fiscal Year period, (a) no Participant shall receive Performance Units having an initial value greater than Seven Hundred Fifty Thousand Dollars ($750,000), and (b) no Participant shall receive more than Three Hundred Thousand (300,000) Performance Shares. 9.2. VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an initial value that is established by the Committee on or before the Grant Date. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. 9.3. PERFORMANCE OBJECTIVES AND OTHER TERMS. The Committee shall set performance objectives in its sole discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares, or both, that will be paid to the Participant. Each Award of Performance Units or Performance Shares shall be evidenced by an Award Agreement that shall specify the number of Performance Units or Performance Shares, the Performance Period, the performance objectives, and such other terms and conditions as the Committee, in its sole discretion, shall determine. 9.3.1. GENERAL PERFORMANCE OBJECTIVES. The Committee may set performance objectives based upon (a) the achievement of Company-wide, Affiliate-based, Subsidiary-based, divisional, individual Participant, or other Performance Goals, (b) applicable Federal or state securities laws, or (c) any other basis determined by the Committee in its sole discretion. 9.3.2. SECTION 162(M) PERFORMANCE OBJECTIVES. Notwithstanding any other provision of this Section 9.3.2 to the contrary, for purposes of qualifying grants of Performance Units or Performance Shares to Covered Employees as "performance-based compensation" under Section 162(m) of the Code, the Committee shall establish the specific targets under the Performance Goals applicable to Performance Units or Performance Shares. Such targets under the Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Performance Units or Performance Shares, as the case may be, to qualify as "performance-based compensation" under Section 162(m) of the Code. The business criteria for Performance Goals under this Section 9.3.2 shall be the return on equity of the Company on a consolidated basis for a calendar year calculated in accordance with generally accepted accounting principles consistently applied. In granting Performance Units or Performance Shares to Covered 19 Employees which are intended to qualify under Section 162(m) the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate in its sole discretion to ensure qualification of the Performance Units or Performance Shares, as the case may be, under Section 162(m) of the Code. 9.4. EARNING OF PERFORMANCE UNITS/SHARES. After the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive those Performance Units or Performance Shares, as the case may be, earned by the Participant over the Performance Period, to be determined as a function of the extent to which the applicable Performance Goals have been achieved. Except in the case of Performance Goals applicable to Performance Units or Performance Shares granted to Covered Employees which are intended to qualify as "performance-based compensation" under Section 162(m) of the Code (which cannot be reduced or waived except as provided in Section 12.1 or 14.2), after the grant of a Performance Unit or Performance Share, the Committee, in its sole discretion, may reduce or waive any Performance Goals or related business criteria applicable to such Performance Unit or Performance Share. 9.5. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of earned Performance Units or Performance Shares shall be made as soon as practicable after the end of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units or Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares, as the case may be, determined as of the last day of the applicable Performance Period), or a combination thereof. 9.6. CANCELLATION OF PERFORMANCE UNITS/SHARES. On the date set forth in the applicable Award Agreement, all Performance Units or Performance Shares which have not been earned or vested shall be forfeited and thereafter shall be available for the grant of new Awards under this Plan. 9.7. TERMINATION OF SERVICE. Unless otherwise provided in an Award Agreement or determined by the Committee in its sole discretion, in the event of a Participant's Termination of Service due to death, Disability or Retirement during a Performance Period, the Participant (or his or her Beneficiary) shall receive the Performance Units or Performance Shares which relate to such Performance Period. Unless otherwise provided in an Award Agreement or determined by the Committee in its sole discretion, in the event of a Participant's Termination of Service for any other reason, all Performance Units or Performance Share shall be forfeited and thereafter shall be available for the grant of new Awards under this Plan. Distribution of earned Performance Units or Performance Shares may be made at the same time payments are made to Participants who did not incur a Termination of Service during the applicable Performance Period. Notwithstanding any other provision of this Section 9 to the contrary, in the case of awards of Performance Units or Performance Shares to Covered Employees that the Committee intends to qualify as "performance-based compensation" under Section 162(m) of the Code (the vesting of which cannot be accelerated except as provided in Section 12.1 or 14.2), no 20 Performance Units or Performance Shares shall become vested until the applicable Performance Goals have been met. SECTION 10 AMENDMENT, TERMINATION, AND DURATION 10.1. AMENDMENT, SUSPENSION, OR TERMINATION. The Board may supplement, amend, alter, or discontinue the Plan in its sole discretion at any time and from time to time, but no supplement, amendment, alteration, or discontinuation shall be made which would impair the rights of a Participant under an Award theretofore granted without the Participant's consent, except that any supplement, amendment, alteration, or discontinuation may be made to (a) avoid a material charge or expense to the Company or an Affiliate, (b) cause this Plan to comply with applicable law, or (c) permit the Company or an Affiliate to claim a tax deduction under applicable law. In addition, subject to the provisions of this Section 10.1, the Board of Directors, in its sole discretion at any time and from time to time, may supplement, amend, alter, or discontinue this Plan without the approval of the Company's shareholders (a) to the extent such approval is not required by applicable law or the terms of a written agreement, and (b) so long as any such amendment or alteration does not increase the number of Shares subject to this Plan (other than pursuant to Section 4.5) or increase the maximum number of Options, SARs, Shares of Restricted Stock, Performance Units or Performance Shares that the Committee may award to an individual Participant under this Plan. The Committee may supplement, amend, alter, or discontinue the terms of any Award theretofore granted, prospectively or retroactively, on the same conditions and limitations (and exceptions to limitations) as apply to the Board under the foregoing provisions of this Section 10.1, and further subject to any approval or limitations the Board may impose. Notwithstanding any provision of this Plan to the contrary, if any right, Award or Award Agreement under this Plan would cause a transaction of or acquisition by the Company to be ineligible for "pooling of interest" accounting treatment that would, but for such right hereunder, otherwise be eligible for such accounting treatment, the Committee may amend, modify, or adjust the right, the Award, or the Award Agreement of a Participant (without the prior consent, approval, or authorization of the Participant) so that pooling of interest accounting treatment shall be available with respect to such transaction or acquisition even if any such amendment, modification, or adjustment would be detrimental to or impair the rights of a Participant under this Plan. 10.2. DURATION OF THIS PLAN AND SHAREHOLDER APPROVAL. This Plan shall become effective on the Effective Date, and subject to Section 10.1 (regarding the Board's right to supplement, amend, alter, or discontinue this Plan), shall remain in effect thereafter; provided, however, that no Incentive Stock Option shall be exercised and no other Award shall be exercised or otherwise paid hereunder until this Plan has been approved by the holders of at least a majority of the outstanding Shares at a meeting at which approval of this Plan is considered; and provided further, however, that no Incentive Stock Option may be granted under this Plan after the tenth anniversary of the Effective Date. 21 SECTION 11 TAX WITHHOLDING 11.1. WITHHOLDING REQUIREMENTS. Prior to the delivery of any Shares or cash pursuant to the payment or exercise of an Award, the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all Federal, state, and local income and employment taxes required to be withheld with respect to the payment or exercise of such Award. 11.2. WITHHOLDING ARRANGEMENTS. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part, by (a) electing to have the Company withhold otherwise deliverable Shares (except in the case of exercises of Incentive Stock Options), or (b) delivering to the Company Shares then owned by the Participant having a Fair Market Value equal to the amount required to be withheld; provided, however, that any shares delivered to the Company shall satisfy the ownership requirements specified in Section 6.6(a). The amount of the withholding requirement shall be deemed to include any amount that the Committee agrees may be withheld at the time any such election is made, not to exceed, in the case of income tax withholding, the amount determined by using the maximum federal, state, or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of income tax to be withheld is determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the taxes are required to be withheld. SECTION 12 CHANGE IN CONTROL 12.1. CHANGE IN CONTROL. Notwithstanding any other provision of this Plan to the contrary, in the event of a Change in Control of the Company, all Awards granted under this Plan that then are outstanding and that either are not then exercisable or are subject to any restrictions or Performance Goals shall, unless otherwise provided for in the Award Agreements applicable thereto, become immediately exercisable, and all restrictions and Performance Goals shall be removed, as of the first date that the Change in Control has been deemed to have occurred, and shall remain removed for the remaining life of the Award as provided herein and within the provisions of the related Award Agreements. 12.2. DEFINITION. For purposes of Section 12.1, a "Change in Control" of the Company shall be deemed to have occurred if the conditions or events set forth in any one or more of the following subsections shall occur: (a) Any merger, consolidation, share exchange, or other combination or reorganization involving the Company, irrespective of which party is the surviving entity, excluding any merger, consolidation, share exchange, or 22 other combination involving the Company solely in connection with the acquisition by the Company of any Subsidiary; (b) Any sale, lease, exchange transfer, or other disposition of all or any substantial part of the assets of the Company; (c) Any acquisition or agreement to acquire by any person or entity (other than an employee pension benefit plan sponsored by the Company), directly or indirectly, beneficial ownership of twenty-five percent (25%) or more of the outstanding voting stock of the Company; (d) During any period of two consecutive years during the term of this Plan, individuals who at the Effective Date constitute the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election of each Director at the beginning of such Director's term has been approved by Directors representing at least two-thirds of the Directors then in office who were Directors on the Effective Date; (e) A majority of the Board or a majority of the shareholders of the Company approve, adopt, agree to recommend, or accept any agreement, contract, offer, or other arrangement providing for any of the transactions described above; (f) The consummation of any series of transactions which result in any of the transactions described above; or (g) Any other set of circumstances which the Board determines, in its sole discretion, to constitute a Change in Control of the Company. SECTION 13 LEGAL CONSTRUCTION 13.1. GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural. 13.2. SEVERABILITY. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. 13.3. REQUIREMENTS OF LAW. The grant of Awards and the issuance of Shares under this Plan shall be subject to all applicable statutes, laws, rules, and regulations and to such 23 approvals and requirements as may be required from time to time by any governmental authorities or any securities exchange or market on which the Shares are then listed or traded. 13.4. GOVERNING LAW. Except to the extent preempted by the Federal laws of the United States of America, this Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Indiana without giving effect to any choice or conflict of law provisions, principles or rules (whether of the State of Indiana or any other jurisdiction) that would cause the application of any laws of any jurisdiction other than the State of Indiana. 13.5. HEADINGS. The descriptive headings and sections of this Plan are provided herein for convenience of reference only and shall not serve as a basis for interpretation or construction of this Plan. 13.6. MISTAKE OF FACT. Any mistake of fact or misstatement of facts shall be corrected when it becomes known by a proper adjustment to an Award or Award Agreement. 13.7. EVIDENCE. Evidence required of anyone under the Plan may be by certificate, affidavit, document, or other information which the person relying thereon considers pertinent and reliable, and signed, made, or presented by the proper party or parties. SECTION 14 MISCELLANEOUS 14.1. DEFERRALS. The Committee, in its sole discretion, may permit a Participant to elect to defer receipt of all or any percentage of the cash or Shares that would otherwise be due to such Participant under an Award so long as (a) such deferral election is made by the Participant in the Award Agreement which provides for the payment of cash or the delivery of Shares, and (b) the Award evidenced by such Award Agreement is based upon services to be rendered by the Participant as an Employee after the Grant Date. The Award Agreement shall specify the whole percentage (or dollar amount or Fair Market Value) of the cash or Shares to be deferred and the date or event on or with respect to which any amount deferred thereunder shall be distributed. In no event shall any amount deferred under this Section 14.1 become distributable later than the earlier of the following two (2) events: the date of the Participant's death or the date on which the Participant attains age sixty-five (65). Any such deferral election shall be subject to such additional rules and procedures as may be determined by the Committee in its sole discretion. All cash amounts deferred under this Section 14.1 shall be distributed solely in the form of a single lump sum payment as soon as reasonably practicable following the date on which the amount deferred becomes distributable. In the case of all amounts deferred under this Section 14.1 which are intended to qualify as "performance-based compensation" under Section 162(m) of the Code, any amount paid in excess of the amount deferred shall be based on a reasonable rate of interest or a "predetermined actual investment" as described in the Treasury Regulations promulgated under Section 162(m) of the Code. 24 14.2. NO EFFECT ON EMPLOYMENT OR SERVICE. Neither this Plan nor the grant of any Awards or the execution of any Award Agreement shall confer upon any Participant any right to continued employment by the Company or shall interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without Cause. Employment with the Company and its Affiliates is on an at-will basis only, unless otherwise provided by a written employment or severance agreement, if any, between the Participant and the Company or an Affiliate, as the case may be. If there is any conflict between the provisions of this Plan and an employment or severance agreement between a Participant and the Company, the provisions of such employment or severance agreement shall control, including, but not limited to, the vesting and nonforfeiture of any Awards. 14.3. NO COMPANY OBLIGATION. Unless required by applicable law, the Company, an Affiliate, the Board of Directors, and the Committee shall not have any duty or obligation to affirmatively disclose material information to a record or beneficial holder of Shares or an Award, and such holder shall have no right to be advised of any material information regarding the Company or any Affiliate at any time prior to, upon, or in connection with the receipt, exercise, or distribution of an Award. In addition, the Company, an Affiliate, the Board of Directors, the Committee, and any attorneys, accountants, advisors, or agents for any of the foregoing shall not provide any advice, counsel, or recommendation to any Participant with respect to, without limitation, any Award, any exercise of an Option, or any tax consequences relating to an Award. 14.4. PARTICIPATION. No Employee shall have the right to be selected to receive an Award under this Plan or, having been selected, to be selected to receive a future Award. Participation in the Plan will not give any Participant any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of this Plan. 14.5. LIABILITY AND INDEMNIFICATION. No member of the Board, the Committee, or any officer or employee of the Company or any Affiliate shall be personally liable for any action, failure to act, decision, or determination made in good faith in connection with this Plan. By participating in this Plan, each Participant agrees to release and hold harmless the Company and its Affiliates (and their respective directors, officers, and employees) and the Committee from and against any tax liability, including, but not limited to, interest and penalties, incurred by the Participant in connection with his receipt of Awards under this Plan and the deferral, payment, and exercise thereof. Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense (including, but not limited to, attorneys' fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan or any Award Agreement, and (b) any and all amounts paid by him or her in settlement thereof, with the Company's prior written approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her; provided, however, that he or she shall give the Company an 25 opportunity, at the Company's expense, to handle and defend such claim, action, suit, or proceeding before he or she undertakes to handle and defend the same on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or By-Laws, by contract, as a matter of law or otherwise, or under any power that the Company may have to indemnify them or hold them harmless. 14.6. SUCCESSORS. All obligations of the Company under this Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether or not the existence of such successor is the result of a Change in Control of the Company. The Company shall not, and shall not permit its Affiliates to, recommend, facilitate, or agree or consent to a transaction or series of transactions which would result in a Change in Control of the Company unless and until the person or persons or entity or entities acquiring control of the Company as a result of such Change in Control agree(s) to be bound by the terms of this Plan insofar as it pertains to Awards theretofore granted and agrees to assume and perform the obligations of the Company and its Successor (as defined in subsection 4.5.2) hereunder. 14.7. BENEFICIARY DESIGNATIONS. Any Participant may designate, on such forms as may be provided by the Committee for such purpose, a Beneficiary to whom any vested but unpaid Award shall be paid in the event of the Participant's death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate and, subject to the terms of this Plan and of the applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or executor of the Participant's estate. 14.8. NONTRANSFERABILITY OF AWARDS. Except as provided in Sections 14.8.1 and 14.8.2, no Award under this Plan can be sold, transferred, assigned, margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged, or otherwise disposed of, whether by operation of law, whether voluntarily or involuntarily or otherwise, other than by will or by the laws of descent and distribution. In addition, no Award under this Plan shall be subject to execution, attachment, or similar process. Any attempted or purported transfer of an Award in contravention of this Plan or an Award Agreement shall be null and void ab initio and of no force or effect whatsoever. All rights with respect to an Award granted to a Participant shall be exercisable during his or her lifetime only by the Participant. 14.8.1. LIMITED TRANSFERS OF NONQUALIFIED STOCK OPTIONS. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the transfer of Nonqualified Stock Options by a Participant to: (a) the Participant's spouse, any children or lineal descendants of the Participant or the Participant's spouse, or the spouse(s) of any such children or lineal descendants ("Immediate Family Members"), (b) a trust or trusts for the exclusive benefit of Immediate Family Members, or (c) a partnership or limited liability company in which the Participant and/or the Immediate 26 Family Members are the only equity owners, (collectively, "Eligible Transferees"); provided, however, that, in the event the Committee permits the transferability of Nonqualified Stock Options granted to the Participant, the Committee may subsequently, in its sole discretion, amend, modify, revoke, or restrict, without the prior consent, authorization, or agreement of the Eligible Transferee, the ability of the Participant to transfer Nonqualified Stock Options that have not been already transferred to an Eligible Transferee. An Option that is transferred to an Immediate Family Member shall not be transferable by such Immediate Family Member, except for any transfer by such Immediate Family Member's will or by the laws of descent and distribution upon the death of such Immediate Family Member. Incentive Stock Options granted under this Plan shall not be transferable pursuant to this Section 14.8. 14.8.2. EXERCISE BY ELIGIBLE TRANSFEREES. In the event that the Committee, in its sole discretion, permits the transfer of Nonqualified Stock Options by a Participant to an Eligible Transferee under Section 14.8.1, the Options transferred to the Eligible Transferee must be exercised by such Eligible Transferee and, in the event of the death of such Eligible Transferee, by such Eligible Transferee's executor or administrator only in the same manner, to the same extent, and under the same circumstances (including, but not limited to, the time period within which the Options must be exercised) as the Participant could have exercised such Options. The Participant, or in the event of his or her death, the Participant's estate, shall remain liable for all federal, state, local, and other taxes applicable upon the exercise of a Nonqualified Stock Option by an Eligible Transferee. 14.9. NO RIGHTS AS SHAREHOLDER. Except to the limited extent provided in Sections 8.6 and 8.7, no Participant (or any Beneficiary) shall have any of the rights or privileges of a shareholder of the Company with respect to any Shares issuable pursuant to an Award (or the exercise thereof), unless and until certificates representing such Shares shall have been recorded on the Company's official shareholder records (or the records of its transfer agents or registrars) as having been issued and transferred to the Participant (or his or her Beneficiary). 14.10. MITIGATION OF EXCISE TAX. Subject to any other agreement providing for the Company's indemnification of the tax liability described herein, if any payment or right accruing to a Participant under this Plan (without the application of this Section 14.10), either alone or together with other payments or rights accruing to the Participant from the Company or an Affiliate ("Total Payments"), would constitute a "parachute payment", as defined in Section 280G of the Code and regulations thereunder, such payment or right shall be reduced to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under this Plan being subject to an excise tax under Section 4999 of the Code or being disallowed as a deduction under Section 280G of the Code. The determination of whether any reduction in the rights or payments under this Plan is to apply shall be made by the Committee in good faith after consultation with the Participant, and such determination shall be conclusive and binding on the Participant. The Participant shall cooperate in good faith with the Committee in making such determination and providing the necessary information for this purpose. 27 14.11. FUNDING. Benefits payable under this Plan to any person will be paid by the Company from its general assets. Shares to be distributed hereunder shall be issued directly by the Company from its authorized but unissued Shares or acquired by the Company on the open market, or a combination thereof. Neither the Company nor any of its Affiliates shall be required to segregate on their books or otherwise establish any funding procedure for any amount to be used for the payment of benefits under this Plan. The Company or any of its Affiliates may, however, in their sole discretion, set funds aside in investments to meet any anticipated obligations under this Plan. Any such action or set-aside shall not be deemed to create a trust of any kind between the Company or any of its Affiliates and any Participant or other person entitled to benefits under the Plan or to constitute the funding of any Plan benefits. Consequently, any person entitled to a payment under the Plan will have no rights greater than the rights of any other unsecured general creditor of the Company or its Affiliates. 14.12. USE OF PROCEEDS. The proceeds received by the Company from the sale of Shares pursuant to this Plan will be used for general corporate purposes. OLD NATIONAL BANCORP DATED: By: ----------------------- ---------------------------- [Name and Title] ATTEST: By: -------------------------- [Name and Title] 28 -----END PRIVACY-ENHANCED MESSAGE-----