-----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, ModXNR6ekpQ9A5CFyjoKi1bneQcQuv0XF8edL/wv9bXSoSDgNRCBWLcecRJvkC5v 8nMqQtWJsbmpt2jmtvryTQ== 0000950137-04-009654.txt : 20041109 0000950137-04-009654.hdr.sgml : 20041109 20041109143324 ACCESSION NUMBER: 0000950137-04-009654 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041109 DATE AS OF CHANGE: 20041109 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15817 FILM NUMBER: 041128942 BUSINESS ADDRESS: STREET 1: ONE MAIN ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124641434 MAIL ADDRESS: STREET 1: ONE MAIN ST CITY: EVANSVILLE STATE: IN ZIP: 47708 FORMER COMPANY: FORMER CONFORMED NAME: O DATE OF NAME CHANGE: 19950822 10-Q 1 c89585e10vq.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________ COMMISSION FILE NUMBER 1-15817 ----------------------------------------------------- OLD NATIONAL BANCORP (Exact name of Registrant as specified in its charter) INDIANA 35-1539838 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE MAIN STREET 47708 EVANSVILLE, INDIANA (Zip Code) (Address of principal executive offices) ---------------- (812) 464-1294 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to the filing requirements for at least the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock. The Registrant has one class of common stock (no par value) with 65,845,000 shares outstanding at October 31, 2004. OLD NATIONAL BANCORP FORM 10-Q INDEX

2 OLD NATIONAL BANCORP CONSOLIDATED BALANCE SHEET

The accompanying notes to consolidated financial statements are an integral part of this statement. 3 OLD NATIONAL BANCORP CONSOLIDATED STATEMENT OF INCOME

The accompanying notes to consolidated financial statements are an integral part of this statement. 4 OLD NATIONAL BANCORP CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

The accompanying notes to consolidated financial statements are an integral part of this statement. 5 OLD NATIONAL BANCORP CONSOLIDATED STATEMENT OF CASH FLOWS

The accompanying notes to consolidated financial statements are an integral part of this statement. 6 OLD NATIONAL BANCORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates ("Old National") and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform with the 2004 presentation. Such reclassifications had no effect on net income. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of September 30, 2004 and 2003, and December 31, 2003, and the results of its operations for the three and nine months ended September 30, 2004 and 2003. Interim results do not necessarily represent annual results. NOTE 2 - IMPACT OF ACCOUNTING CHANGES In March 2004, the Emerging Issues Task Force ("EITF"), a unit of the Financial Accounting Standards Board ("FASB"), reached a consensus on EITF Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." This EITF Issue provides guidance on evaluating when securities losses should be deemed "other-than-temporary" and, consequently, written down through earnings. In November 2003, a consensus was reached on the section of this EITF Issue that mandates certain disclosures in annual financial statements for all investments in an unrealized loss position for which "other-than-temporary" impairments have not been recognized. The recognition and measurement guidance of this EITF Issue was effective for reporting periods beginning after June 15, 2004, and the disclosure requirements were effective for annual financial statements for fiscal years ending after December 15, 2003. Old National made the required disclosures in Note 3 to the consolidated financial statements of the 2003 annual report. On September 30, 2004, the FASB issued a Final FASB Staff Position that delayed the effective date for the measurement and recognition guidance included in this EITF Issue to enable the FASB to issue implementation guidance. Until such guidance is finalized, it is uncertain whether this EITF Issue will have a material impact on Old National. In December 2003, the Financial Accounting Standards Board revised Statement of Financial Accounting Standards ("SFAS") No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." This statement requires annual disclosures in addition to those in the original SFAS No. 132, which provides additional information regarding assets, obligations, cash flows and net periodic benefit costs of defined benefit pension plans. In addition, interim disclosure of the components of net periodic benefit costs is required. The revised SFAS No. 132 is effective for financial statements with fiscal years ending after December 15, 2003. Old National adopted this statement as of December 31, 2003, and has included all such required disclosures in Note 10. In December 2003, the FASB revised FASB Interpretation No. 46 ("FIN 46R"), "Consolidation of Variable Interest Entities," which was initially released in January 2003. FIN 46R provides guidance with respect to variable interest entities and when the assets, liabilities, noncontrolling interest and results of operations of a variable interest entity need to be included in a company's consolidated financial statements. FIN 46R was effective for companies with "special-purpose entities" as of December 31, 2003. Old National does not have special-purpose entities. However, under this new guidance, Old National was required to deconsolidate ONB Capital Trust I and ONB Capital Trust II as these trusts no longer meet the definition of a related subsidiary under the terms of FIN 46R. This change also resulted in the remaining debt being disclosed in "other borrowings" beginning with the period ending December 31, 2003, compared to the separate disclosure on the balance sheet prior to that date. The effect of this deconsolidation was an increase of $4.6 million to both assets and liabilities with no impact to the results of operations. The effective date for consolidation of all other entities was after March 15, 2004. Old National consolidated various low income housing partnerships on March 31, 2004, for which the impact on the results of operations and financial position was immaterial. 7 Old National applies Accounting Principles Board Opinion No. 25 and related Interpretations in accounting for stock-based compensation plans, under which no compensation cost has been recognized for any of the periods presented, except with respect to restricted stock plans as disclosed in the accompanying table. In accordance with SFAS No. 148, "Accounting for Stock-based Compensation - Transition and Disclosure" and SFAS No. 123, "Accounting for Stock-Based Compensation," Old National has presented in the following table net income and net income per share adjusted to proforma amounts had compensation costs for Old National's stock-based compensation plans been recorded based on fair values at grant dates. All per share data has been adjusted for stock dividends, including a 5% stock dividend distributed to shareholders on January 27, 2004.

NOTE 3 - NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during each period, adjusted to reflect all stock dividends. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. The following table reconciles basic and diluted net income per share for the three and nine months ended September 30.

NOTE 4 - INVESTMENT SECURITIES The market value and amortized cost of investment securities as of September 30 are set forth below:

NOTE 5 - LOANS HELD FOR SALE Residential loans held for sale are recorded at lower of cost or market value determined as of the balance sheet date. Interest rate risk on Old National's residential loans held for sale has been hedged using fair value hedge accounting in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. The loans' carrying bases reflects the effects of the SFAS No. 133 adjustments. At September 30, 2004 and 2003, Old National had residential loans held for sale of $22.1 million and $16.9 million, respectively. As of September 30, 2004 and 2003, ineffectiveness related to the hedge as calculated in accordance with SFAS No. 133 was immaterial. During the third quarter of 2004, Old National entered into an ongoing agency agreement with a third party for assistance with facilitation of periodic loan sales. At September 30, 2004, no loans were held for sale under this arrangement. During the second quarter of 2004, residential real estate loans held for investment of $405.6 million were reclassified to residential loans held for sale and sold for $404.4 million resulting in a write-down on loans transferred to held for sale of $1.2 million, which was recorded as a reduction to the allowance for loan losses. Also in connection with this transaction, mortgage servicing rights of $2.7 million were capitalized, and a net gain of $2.7 million was recognized. During the third quarter of 2003, nonaccrual residential real estate loans of $3.4 million and commercial loans of $48.2 million held for investment were reclassified to loans held for sale and sold for $2.2 million and $36.9 million, respectively. This resulted in write-downs on loans transferred to held for sale of $1.2 million and $11.3 million, respectively, which were recorded as reductions to the allowance for loan losses. Also, during the second quarter of 2003, nonaccrual residential real estate loans held for investment of $11.1 million were reclassified to residential loans held for sale and sold for $8.9 million resulting in a write-down on loans transferred to held for sale of $2.2 million, which was recorded as a reduction to the allowance for loans losses. 9 NOTE 6 - ALLOWANCE FOR LOAN LOSSES Activity in the allowance for loan losses was as follows:

During the third quarter of 2004, Old National reclassified $8.6 million of the allowance for loan losses related to unfunded loan commitments to other liabilities. Prior period amounts deemed to be material were reclassified for conformity of presentation and comparability of ratios related to the allowance for loan losses. The following is a summary of information pertaining to impaired loans at September 30:

A loan is considered impaired under SFAS No. 114, "Accounting by Creditors for Impairment of a Loan, an amendment of FASB Statement No. 5 and 15" when based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans do not include larger groups of smaller-balance homogeneous loans that are collectively evaluated for impairment, loans that are measured at fair value or at the lower of cost or fair value, leases or debt securities. For the nine months ended September 30, 2004, the average balance of impaired loans was $91.0 million for which no interest was recorded. For the nine months ended September 30, 2003, the average balance of impaired loans was $235.5 million for which no interest was recorded. No additional funds are committed to be advanced in connection with impaired loans. Loans deemed impaired are evaluated primarily using the fair value of the underlying collateral. During the third quarter of 2003, Old National revised its interpretation of impaired loans to strictly follow SFAS No. 114. Prior to this change, Old National's interpretation of impaired loans more conservatively included all problem credits with a potential collateral deficiency in the event of default and nonaccrual loans in larger groups of smaller-balance homogeneous loans. Had Old National applied the current interpretation in the prior year, average impaired loans at September 30, 2003, would have totaled $103.0 million rather than $235.5 million. NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS At September 30, 2004 and 2003, Old National had goodwill in the amount of $129.9 million and $129.5 million, respectively. During the quarter ended September 30, 2004, Old National performed its annual goodwill impairment testing resulting in no impairment. The change in the carrying amount of goodwill by segment for the nine months ended September 30, 2004, was as follows: 10

Old National continues to amortize definite-lived intangible assets over the estimated remaining life of each respective asset. At September 30, 2004, Old National had $36.7 million in unamortized intangible assets compared with $39.9 million in unamortized intangible assets at September 30, 2003. Indefinite-lived assets of $2.8 million were included in each year. The following table shows the gross carrying amounts and accumulated amortization for intangible assets as of September 30:

Total amortization expense associated with intangible assets for the three months ended September 30 was $0.8 million in 2004 and $0.7 million in 2003. Year-to-date amortization expense as of September 30, 2004 and 2003, was $2.4 million and $1.8 million, respectively. The following is the estimated amortization expense for the future years:

11 NOTE 8 - MORTGAGE SERVICING RIGHTS Mortgage servicing rights derived from loans sold with servicing retained were $16.6 million and $16.2 million at September 30, 2004 and 2003, respectively. Loans serviced for others are not included in the consolidated balance sheet of Old National. The unpaid principal balance of mortgage loans serviced for others at September 30 was $1.967 billion in 2004 and $1.706 billion in 2003. At September 30, 2004 and 2003, the fair value of capitalized mortgage servicing rights was $17.1 million and $14.8 million, respectively. Old National's key economic assumptions used in determining the fair value of mortgage servicing rights were a weighted average prepayment rate of 319 PSA and discount rates ranging from 9.0% to 10.50% at September 30, 2004, and a weighted average prepayment rate of 305 PSA and a discount rate of 8.5% at September 30, 2003. The following summarizes the activities related to mortgage servicing rights and the related valuation allowance at September 30:

NOTE 9 - FINANCING ACTIVITIES The following table summarizes Old National's other borrowings at September 30:

12 Contractual maturities of other borrowings at September 30, 2004, were as follows:

FEDERAL HOME LOAN BANK Federal Home Loan Bank advances had weighted-average rates of 5.30% and 5.39% at September 30, 2004 and 2003, respectively. These borrowings are secured by investment securities and residential real estate loans up to 150% of outstanding debt. SUBORDINATED BANK NOTES Subordinated bank notes qualify as Tier 2 Capital for regulatory purposes and are in accordance with the senior and subordinated global bank note program in which Old National Bank may issue and sell up to a maximum of $1 billion. Notes issued by Old National Bank under the global note program are not obligations of, or guaranteed by, Old National Bancorp. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S SUBORDINATED DEBENTURES ONB Capital Trust II issued $100 million in preferred securities in April 2002. The preferred securities have a liquidation amount of $25 per share with a cumulative annual distribution rate of 8.0% or $2.00 per share payable quarterly and maturing on April 15, 2032. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by ONB Capital Trust II. Old National guarantees the payment of distributions on the preferred securities issued by ONB Capital Trust II. ONB Capital Trust I issued $50 million in preferred securities in March 2000. The preferred securities have a liquidation amount of $25 per share with a cumulative annual distribution rate of 9.5% or $2.375 per share payable quarterly and maturing on March 15, 2030. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by ONB Capital Trust I. Old National guarantees the payment of distributions on the preferred securities issued by ONB Capital Trust I. Old National may redeem the junior subordinated debentures and thereby cause a redemption of the trust preferred securities in whole (or in part from time to time) on or after March 15, 2005 (for debentures owned by ONB Capital Trust I) and on or after April 12, 2007 (for debentures owned by ONB Capital Trust II), and in whole (but not in part) following the occurrence and continuance of certain adverse federal income tax or capital treatment events. These securities qualify as Tier 1 capital for regulatory purposes. In accordance with FIN 46R, the outstanding junior subordinated debentures related to these trust preferred securities were reclassified to "other borrowings" at December 31, 2003, from the separate disclosure on the balance sheet prior to that date. CAPITAL LEASE OBLIGATION On January 1, 2004, Old National entered into a long-term capital lease obligation for a new branch office building in Owensboro, Kentucky, which extends for 25 years with one renewal option for 10 years. The economic substance of this lease is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as an asset and the lease is recorded as a liability. The fair value of the capital lease obligation was estimated using a discounted cash flow analysis based on Old National's current incremental borrowings rate for similar types of borrowing arrangements. 13 At September 30, 2004, the future minimum lease payments under the capital lease were as follows:

NOTE 10 - EMPLOYEE BENEFIT PLANS RETIREMENT PLAN The following table sets forth the components of the net periodic benefit cost for Old National's noncontributory defined benefit retirement plan for the three and nine months ended September 30:

STOCK-BASED COMPENSATION Under the 1999 Equity Incentive Plan, Old National is authorized to grant up to 7.3 million shares of common stock. At September 30, 2004, 6.3 million shares were outstanding under the plan, including 6.0 million stock options and 0.3 million shares of restricted stock issued, not outstanding, as described below, and 1.0 million shares were available for issuance. Old National accounts for its stock-based compensation plans in accordance with APB Opinion 25 and related Interpretations, under which no compensation cost has been recognized, except with respect to restricted stock plans. See Note 2 for proforma net income and net income per share data. Stock Options On February 2, 2004, Old National granted 0.3 million stock options to key employees at an option price of $21.45, the closing price of Old National's stock on that date. The options vest 100% on December 31, 2004, and expire in ten years. On January 31, 2003, Old National granted 2.6 million stock options to key employees at an option price of $21.71, the closing price of Old National's stock on that date. The options vest 25% per year over a four-year period and expire in ten years. If certain financial targets are achieved, vesting is accelerated. At September 30, 2004, Old National had 6.0 million of stock options outstanding. Restricted Stock On July 22, 2004, Old National's Board of Directors approved a restricted stock award to certain key officers. The shares vest at the end of a thirty-two month period based on the achievement of certain targets. Shares are subject to certain restrictions and risk of forfeiture by the participants. At September 30, 2004, 0.3 million shares were issued, not outstanding at an estimated value of $6.5 million. 14 NOTE 11 - INCOME TAXES The following is a summary of the major items comprising the differences in taxes computed at the federal statutory rate and as recorded in the consolidated statement of income for the three and nine months ended September 30:

For the three months ended September 30, 2004, the effective tax rate was significantly higher than for the three months ended September 30, 2003. For the nine months ended September 30, 2004, the effective tax rate was significantly lower than for the nine months ended September 30, 2003. Tax-exempt income has remained relatively flat as illustrated above; however, the percentage of tax-exempt income to total income has fluctuated among the periods presented, resulting in the corresponding fluctuations in the effective rates. NOTE 12 - COMPREHENSIVE INCOME

NOTE 13 - COMMITMENTS AND CONTINGENCIES LITIGATION In the normal course of business, various legal actions and proceedings, which are being vigorously defended, are pending against Old National and its affiliates. Among these are several lawsuits relating to activities in 1995 of First National Bank & Trust Company, Carbondale, Illinois, ("First National"), which Old National acquired in 1999. These lawsuits are pending against Old National Bank, as successor to First National, and were filed by alleged third-party creditors of certain structured settlement trusts. The lawsuits filed by the third-party creditors allege actual damages totaling approximately $31 million, as well as unspecified punitive damages and other damages and attorneys' fees. In addition, certain of the corporate defendants in these lawsuits have filed lawsuits asserting contribution and indemnity against Old National Bank. The cases are pending in the City of St. Louis and St. Louis County in Missouri; St. Clair County, Madison County and Cook County in Illinois; and U.S. Federal District Court in southern Illinois. During the fourth quarter of 2003, Old National established a reserve of $10 million for settlement of certain of the lawsuits pending in the City of St. Louis and St. Louis County in Missouri and St. Clair County and Madison County in Illinois. As of September 30, 2004, Old National has paid $9.1 million of this reserve to settle a number 15 of lawsuits representing approximately $12 million in alleged damages. The approximate $0.9 million remaining in the reserve for litigation settlement is deemed at this time to be adequate to cover the remaining exposure of approximately $3.0 million. Old National has obtained a summary judgement in its favor at the trial court level on lawsuits representing $16 million of the estimated $31 million exposure. These cases were in Cook County, Illinois and are currently on appeal to the Court of Appeals in Illinois. It is not expected that future judgments or settlements in these matters will have a material impact on Old National's results of operations. CREDIT-RELATED FINANCIAL INSTRUMENTS In the normal course of business, Old National's banking affiliates have entered into various agreements to extend credit, including loan commitments of $1.374 billion, commercial letters of credit of $14.4 million and standby letters of credit of $109.8 million at September 30, 2004. At September 30, 2003, loan commitments were $1.409 billion, commercial letters of credit were $28.3 million and standby letters of credit were $79.5 million. These commitments are not reflected in the consolidated financial statements. At September 30, 2004, the balance of the allowance for unfunded loan commitments was $8.7 million. At September 30, 2004 and 2003, Old National had credit extensions of $72.8 million and $75.7 million, respectively, with various unaffiliated banks related to letter of credit commitments issued on behalf of Old National's customers. At September 30, 2004 and 2003, Old National provided collateral to the unaffiliated banks to secure credit extensions totaling $40.9 million and $38.7 million, respectively. Old National did not provide collateral for the remaining credit extensions. NOTE 14 - FINANCIAL GUARANTEES Old National holds instruments, in the normal course of business with customers, that are considered financial guarantees in accordance with FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." Standby letters of credit guarantees are issued in connection with agreements made by customers to counterparties. Standby letters of credit are contingent upon failure of the customer to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to customers and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. At September 30, 2004, the notional amount of standby letters of credit was $109.8 million, which represents the maximum amount of future funding requirements, and the carrying value was $0.4 million. Old National also enters into forward contracts for the future delivery of conforming residential real estate loans at a specified interest rate to reduce interest rate risk associated with loans held for sale. These forward contracts are considered derivative instruments accounted for under SFAS No. 133. See additional information in Note 16 to the consolidated financial statements of the 2003 annual report. NOTE 15 - SEGMENT INFORMATION Old National operates in three reportable segments: community banking, non-bank services and treasury. The community banking segment serves customers in both urban and rural markets providing a wide range of financial services including commercial, real estate and consumer loans; lease financing; checking, savings, time deposits and other depository accounts; cash management services; and debit cards and other electronically accessed banking services and Internet banking. The non-bank services segment combines the management and operations of trust, asset management, insurance, brokerage and investment and annuity sales. Treasury manages investments, wholesale funding, interest rate risk, liquidity and leverage for Old National. Additionally, treasury provides other miscellaneous capital markets products for its corporate banking customers. In order to measure performance for each segment, Old National allocates capital, corporate overhead and income tax provision to each segment. Capital and corporate overhead are allocated to each segment using various methodologies, which are subject to periodic changes by management. Income taxes are allocated using the effective tax rate. Tax-exempt income is primarily within the treasury segment, creating a tax benefit for this segment. Intersegment sales and transfers are not significant. 16 Old National uses a funds transfer pricing ("FTP") system to eliminate the effect of interest rate risk from the community banking and non-bank services segments net interest income. The FTP system is used to credit or charge each segment for the funds the segments create or use. The net FTP credit or charge is reflected in segment net interest income. The financial information for each operating segment is reported on the basis used internally by Old National's management to evaluate performance and is not necessarily comparable with similar information for any other financial institution. The following table summarizes financial information concerning segments for the three and nine months ended September 30:

17 PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXECUTIVE SUMMARY Net income for the three months ended September 30, 2004, increased compared to the three months ended September 30, 2003, primarily due to lower provisions for loan losses, a result of the improvement in Old National's credit quality performance. While expenses remained relatively steady, the improvement from lower provisions was somewhat offset by decreases in mortgage banking revenue and net interest income. Net income for the nine months ended September 30, 2004, decreased significantly compared to the nine months ended September 30, 2003, impacted primarily by nonrecurring charges related to "Ascend", decreased securities gains and reduced mortgage banking activity offset in part by reduced provisions for loan losses. Old National experienced a decrease in assets and liabilities at September 30, 2004, compared to September 30, 2003 and December 31, 2003, reflective of the disposition of residential real estate loans during the second quarter of 2004 and reductions in the commercial loan and investment portfolios. As a result, borrowed funds and deposits also reflect a reduction at September 30, 2004. Management uses various indicators such as return on assets, return on equity and asset quality ratios to evaluate the performance of the business. These are discussed throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations." FINANCIAL BASIS AND FORWARD-LOOKING STATEMENTS This discussion analyzes Old National's results of operations for the three and nine months ended September 30, 2004 and 2003, and financial condition as of September 30, 2004, compared to September 30, 2003 and December 31, 2003. This management's discussion and analysis contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as "expects," "intends," "believes," "anticipates," and "should," which are statements of belief as to the expected outcomes of future events. Internal and external factors that might cause a difference include, but are not limited to, market, economic, operational, liquidity, credit and interest rate risks associated with Old National's business, competition, government legislation and policies, ability of Old National to execute its business plan and implement the "Ascend" project initiatives, credit quality trends and the ability to generate loans, and other matters discussed in this management's discussion and analysis. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Actual results could materially differ from those presented. Old National undertakes no obligation to release revisions to these forward-looking statements or reflect events or conditions after the date on which the forward-looking statement is made or to reflect the occurrence of unanticipated events. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as disclosures found elsewhere in this report, are based upon Old National's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires Old National to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of the mortgage servicing rights and the valuation of goodwill and intangibles. Actual results could differ from those estimates. - - ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses inherent in the consolidated loan portfolio. Management's evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, assessments of the impact of current and anticipated economic conditions on the portfolio and historical loss experience. The allowance represents management's best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance in the near future. Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance. In either instance, unanticipated changes could have a significant impact on results of operations. 18 The allowance is increased through a provision charged to operating expense. Uncollectible loans are charged-off through the allowance. Recoveries of loans previously charged-off are added to the allowance. A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement. Old National's policy for recognizing income on impaired loans is to accrue interest unless a loan is placed on nonaccrual status. - - MORTGAGE SERVICING RIGHTS. Mortgage servicing rights are recognized as separate assets when loans are sold with servicing retained. The total price of loans sold is allocated between the loans sold and the mortgage servicing rights retained based on the relative fair values of each. The fair value of capitalized mortgage servicing rights is estimated by calculating the present value of estimated future net servicing income derived from related cash flows. Amortization of capitalized mortgage servicing rights is determined in proportion to and over the period of estimated net servicing income of the underlying financial assets. Impairment of mortgage servicing rights exists if the book value of the mortgage servicing rights exceeds its estimated fair value. In determining impairment, mortgage servicing rights are stratified by interest rates. Critical assumptions used in determining fair value include expected mortgage loan prepayment rates, discount rates and other economic factors, which are determined based on current market conditions. The expected rates of mortgage loan prepayments are the most significant factors driving the value of mortgage servicing rights. Increases in expected mortgage loan prepayments reduce estimated future net servicing cash flows because the life of the underlying loan is reduced. Fair values, using estimated mortgage loan prepayment rates, are derived from a third-party statistical model. Negative adjustments to the value, if any, are recognized through a valuation allowance by charges against mortgage servicing income. The use of a valuation allowance enables the recovery of this value as market conditions become more favorable. - - GOODWILL AND INTANGIBLES. For acquisitions, Old National is required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair values. These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques that may include estimates of attrition, inflation, asset growth rates or other relevant factors. In addition, the determination of the useful lives for which an intangible asset will be amortized is subjective. Under Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible Assets," goodwill and indefinite-lived assets recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill or the indefinite-lived intangible with subsequent reversal of the impairment loss being prohibited. The determination of fair values are based on internal valuations using management's assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors. Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying values of goodwill or intangibles and could result in impairment losses affecting the financials of the company as a whole and the individual lines of business in which the goodwill or intangibles reside. Management believes the accounting estimates related to the allowance for loan losses; the capitalization, amortization and valuation of mortgage servicing rights; and the valuation of goodwill and intangibles are "critical accounting estimates" because: (1) the estimates are highly susceptible to change from period to period because they require company management to make assumptions concerning, among other factors, the changes in the types and volumes of the portfolios, rates of future prepayments, valuation assumptions and anticipated economic conditions, and (2) the impact of recognizing an impairment or loan loss could have a material effect on Old National's assets reported on the balance sheet as well as net income. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the company's disclosure relating to it in this "Management's Discussion and Analysis". NON-GAAP FINANCIAL MEASURES In January 2003, the United States Securities and Exchange Commission ("SEC") issued Regulation G, "Conditions for Use of Non-GAAP Financial Measures." This "Management's Discussion and Analysis" may contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or 19 is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, Old National Bancorp has provided reconciliations, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure. See the "Earnings Summary" of this "Management's Discussion and Analysis" below for Non-GAAP financial measures. RESULTS OF OPERATIONS EARNINGS SUMMARY Old National reported net income of $18.2 million for the three months ended September 30, 2004, an increase of $6.4 million or 54.0% from the $11.8 million recorded for the three months ended September 30, 2003. For the nine months ended September 30, 2004, net income was $49.0 million, a reduction of 24.8% from the $65.1 million recorded for the nine months ended September 30, 2003. On a diluted per share basis, net income was $0.27 for the three months ended September 30, 2004, compared to $0.17 for the three months ended September 30, 2003. Diluted earnings per share were $0.73 for the nine months ended September 30, 2004, compared to $0.97 for the nine months ended September 30, 2003. Positive factors affecting the results of operations for the three months ended September 30, 2004, as compared to the three months ended September 30, 2003, included decreased provisions for loan losses and increased insurance premiums and commissions, and service charge income. These factors were offset by decreased net interest income and decreased mortgage origination activity. The sale of $405.6 million of residential real estate loans during the second quarter of 2004 and the reduction of the investment portfolio significantly contributed to the decrease in net interest income. In addition, the capitalization of interest related to the construction of the new Evansville main banking center and corporate headquarters was discontinued on August 11, 2004 when the building was placed in service, causing an increase in interest expense for the three months ended September 30, 2004, compared to September 30, 2003. See additional details of the new Evansville main banking center and corporate headquarters below. The decrease in the results of operations for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, was primarily attributable to the nonrecurring pre-tax charges relating to "Ascend" of $25.5 million, or $17.4 million after tax, that were recorded primarily during the second quarter of 2004. Other factors included decreased net interest income, decreased mortgage origination activity, reduced securities gains, and severance payments to three executive officers who left the company during the first quarter of 2004. Partially offsetting these items were reduced provisions for loan losses and increased trust and asset management fees, insurance premiums and commissions, investment product fees, and service charge income. For the three months ended September 30, 2004, Old National's return on average assets was 0.81% and return on average shareholders' equity was 10.58%, compared to 0.49% and 6.37%, respectively, for the three months ended September 30, 2003. Old National's return on average assets was 0.71% and return on average shareholders' equity was 9.20% for the nine months ended September 30, 2004, compared to 0.90% and 11.59% for the nine months ended September 30, 2003, respectively. Excluding the nonrecurring implementation charges related to "Ascend" of $17.4 million, after-tax, Old National's return on average assets and return on average shareholders' equity for the nine months ended September 30, 2004, was 0.96% and 12.48%, respectively, as reconciled in the following table and compared to the nine months ended September 30, 2003.

20 In 2001, the Board of Directors approved construction of a new Evansville main banking center and corporate headquarters to be constructed prior to expiration of the operating leases on the buildings then occupied. Prior to this decision, the Board of Directors evaluated renewal options for the leases on the then-occupied buildings including capital investments that would be required for improvements to the leased facilities. It was determined that the costs associated with continuing the leases and making the required capital investments would be relatively comparable to constructing a new building. The new Evansville main banking center and corporate headquarters was placed into service on August 11, 2004. The total project cost is approximately $73.6 million including building components of $58.4 million, furniture, fixtures and equipment of $7.2 million, land of $4.9 million and capitalized interest of $3.1 million. NET INTEREST INCOME Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources and interest rate fluctuations. Net interest income and net interest margin in the following discussion is presented on a fully taxable equivalent basis, which adjusts tax-exempt or nontaxable interest income to an amount that would be comparable to interest subject to income taxes. Net income is unaffected by these taxable equivalent adjustments as an offsetting increase of the same amount is made in the income tax section. Net interest income included taxable equivalent adjustments of $6.0 million and $6.2 million for the three months ended September 30, 2004 and 2003, respectively. Taxable equivalent adjustments for the nine months ended September 30, 2004 and 2003, were $18.1 million and $18.9 million, respectively. Taxable equivalent net interest income was $67.0 million and $209.4 million for the three and nine months ended September 30, 2004, respectively, compared to $73.6 million and $224.6 million reported for the three and nine months ended September 30, 2003, respectively. The reduction in net interest income reflects a smaller portfolio of average earning assets when compared to the three and nine months ended September 30, 2003. Average earning assets were $8.117 billion for the three months ended September 30, 2004, compared to $8.880 billion for the three months ended September 30, 2003, a decrease of 8.6% or $763.0 million. Average earning assets were $8.338 billion for the nine months ended September 30, 2004, compared to $8.872 billion for the nine months ended September 30, 2003, a decrease of 6.0% or $534.0 million. The decrease in interest rates during 2003 and early 2004 had a significant impact on the volume, mix and yield of earning assets. Driven by lower rates, many of the company's residential real estate loans were refinanced in 2003. Because new loan production was sold into the secondary loan market, residential real estate loans declined in 2003 and 2004. Additionally, the sale of $405.6 million of residential real estate loans at the end of the second quarter of 2004 significantly impacted earning assets for the three and nine months ended September 30, 2004, compared to the three and nine months ended September 30, 2003. Commercial and commercial real estate loans declined during 2003 and during the first nine months of 2004, a result of continued weak loan demand in Old National's markets and more stringent loan underwriting standards. In a continuation of a strategy begun during 2003, the company continued to reduce its investment portfolio assets because of the narrow spreads available on those assets in the current rate environment. The net interest margin was relatively unchanged at 3.30% and 3.35% for the three and nine months ended September 30, 2004, respectively, compared to 3.32% and 3.38% for the three and nine months ended September 30, 2003, respectively. PROVISION FOR LOAN LOSSES The provision for loan losses was $7.4 million and $22.4 million for the three and nine months ended September 30, 2004, respectively, compared to $27.5 million and $59.0 million for the three and nine months ended September 30, 2003, respectively. The lower provisions in 2004 are the result of improvements in credit quality as well as the continued reduction in classified loans. Refer to the "Allowance for Loan Losses and Asset Quality" section of this "Management's Discussion and Analysis" for further discussion of non-performing loans, charge-offs and additional items impacting the provision. NONINTEREST INCOME Noninterest income for the three months ended September 30, 2004, was $42.1 million, a decrease of $3.7 million, or 8.0% from the $45.8 million reported for the three months ended September 30, 2003. For the nine months ended September 30, 2004, noninterest income amounted to $138.8 million, a decrease of $12.8 million or 8.4% over the $151.6 million reported for the nine months ended September 30, 2003. Total fee and service charge income, excluding gains on sales of securities, was $41.8 million and $136.5 million for the three and nine months ended 21 September 30, 2004, respectively compared to $45.7 million and $128.1 million for the three and nine months ended September 30, 2003, respectively. Primarily as a result of insurance agency acquisitions beginning in the second quarter of 2003, insurance premiums and commissions, increased to $11.7 million and $40.5 million for the three and nine months ended September 30, 2004, compared to $10.1 million and $27.4 million for the three and nine months ended September 30, 2003, a 15.9% and 48.1% increase, respectively. Income related to service charges on deposit accounts increased to $12.6 million and $35.8 million for the three and nine months ended September 30, 2004, compared to $11.5 million and $33.8 million for the three and nine months ended September 30, 2003, a 10.0% and 5.7% increase, respectively. The generation of increased revenue was attributable to growth in transaction accounts as well as an increased sales and marketing focus on this element of revenue. Mortgage banking revenue decreased to $0.2 million for the three months ended September 30, 2004, compared to $8.0 million for the three months ended September 30, 2003, a $7.8 million decrease. For the nine months ended September 30, 2004, mortgage banking revenue was $7.1 million compared to $17.3 million for the nine months ended September 30, 2003, a $10.2 million or 59.2% decrease. These decreases were primarily attributable to the reduction in mortgage origination activity during 2004. Residential real estate loan originations for the three months ended September 30, 2004, were $137.0 million compared to $407.6 for the three months ended September 30, 2003. Residential real estate loan originations for the nine months ended September 30, 2004, were $0.470 billion compared to $1.132 billion for the nine months ended September 30, 2003. For the nine months ended September 30, 2004, net recoveries to the mortgage servicing rights valuation allowance of $0.8 million and a net gain of $2.7 million from the sale of $405.6 million of residential real estate loans in the second quarter of 2004, partially offset reductions in income attributable to decreased mortgage origination activity. Net securities gains increased by $0.2 million and decreased by $21.2 million for the three and nine months ended September 30, 2004 and 2003, respectively. The gains in 2003 were part of a continuing strategy to address the impact of interest rate and yield curve shifts on the investment portfolio. NONINTEREST EXPENSE Noninterest expense for the three months ended September 30, 2004, totaled $75.4 million, relatively unchanged compared to $75.5 million for the three months ended September 30, 2003. For the nine months ended September 30, 2004, noninterest expense was $254.6 million, an increase of $35.0 million or 15.9% over the $219.6 million recorded for the nine months ended September 30, 2003. Salaries and benefits, the largest component of noninterest expense, remained stable for the three months ended September 30, 2004, compared to the three months ended September 30, 2003, and totaled $146.1 million for the nine months ended September 30, 2004, compared to $129.2 million for the nine months ended September 30, 2003, an increase of $16.9 million or 13.1%. The increase for the nine months ended September 30, 2004, is primarily attributable to nonrecurring expenses related to "Ascend", including severance costs for employees whose positions have been or will be eliminated and expenses related to broad-based incentive programs for employees participating in the "Ascend" project. Other factors significantly affecting the increase in salaries and employee benefits for the nine months ended September 30, 2004, included $2.9 million in severance expense related to three senior executives, including the chief executive officer, who left the company during the first quarter of 2004 and additional salaries and benefit expenses attributable to acquisitions of insurance agencies that occurred after the first quarter of 2003. Professional fees totaled $3.2 million for the three months ended September 30, 2004, compared to $2.0 million for the three months ended September 30, 2003, an increase of $1.2 million or 62.8%. The increase related primarily to fees paid in connection with complying with Section 404 of the Sarbanes-Oxley Act and upgrading internal systems and controls. For the nine months ended September 30, 2004, professional fees were $23.3 million compared to $6.8 million for the nine months ended September 30, 2003, an increase of $16.5 million. Consulting fees paid to EHS Partners during 2004 in connection with "Ascend" accounted for the majority of these increases for the nine months ended September 30, 2004. 22 All other components of noninterest expense totaled $28.9 million for the three months ended September 30, 2004, compared to the $30.1 million for the three months ended September 30, 2003. For the nine months ended September 30, 2004 and 2003, all other components of noninterest expense totaled $85.2 million and $83.6 million, respectively. The increase for the nine months ended September 30, 2004 was attributable to write-downs of surplus real estate of $1.0 million in connection with "Ascend". Also affecting the increase for the nine months ended September 30, 2004, was increased occupancy expense partially related to the new Evansville main banking center and corporate headquarters and increased processing expense partially offset by decreases in several other noninterest expense accounts. See additional details of the new Evansville main banking center and corporate headquarters in the "Results of Operations" section of this "Management's Discussion and Analysis." PROVISION FOR INCOME TAXES Old National records a provision for income taxes currently payable and for income taxes payable in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to Old National's financial statement income and the federal statutory tax rate is caused by interest on tax-exempt securities and loans. The provision for income tax expense, as a percentage of pre-tax income, was 10.5% for the three months ended September 30, 2004, compared to the income tax benefit of 14.9% for the three months ended September 30, 2003. The provision for income tax expense, as a percentage of pre-tax income, was 7.8% for the nine months ended September 30, 2004, compared to 17.3% for the nine months ended September 30, 2003. While tax-exempt income has remained relatively flat, the percentage of tax-exempt income to total income has fluctuated among the periods presented, resulting in the corresponding fluctuations in the effective tax rates. FINANCIAL CONDITION OVERVIEW For the three and nine months ended September 30, 2004, Old National continued balance sheet strategies initiated in the second half of 2003 to mitigate its sensitivity to rising interest rates, including continued reductions in the investment and residential real estate loan portfolios as well as reductions in certificates of deposit and borrowed funds. Old National's assets at September 30, 2004, were $8.982 billion, a 5.7% decrease compared to September 30, 2003, and a 5.4% decrease compared to December 31, 2003. Investments and loans decreased $174.0 million and $504.6 million, respectively, since September 30, 2003, and decreased $61.3 million and $488.4 million, respectively, since December 31, 2003. Total liabilities declined $533.4 million compared to September 30, 2003, and $378.4 million since December 31, 2003. Total shareholders' equity decreased $9.4 million from September 30, 2003, and decreased $3.1 million compared to December 31, 2003 EARNING ASSETS Old National's earning assets are comprised of loans and loans held for sale, investment securities and money market investments. Earning assets were $8.123 billion at September 30, 2004, a decrease of 7.0% from September 30, 2003, and a decrease of 6.2% since December 31, 2003. The reduction in earning assets is due to a continuation of balance sheet strategies initiated by management during the second half of 2003. Old National reduced its investment portfolio in light of fewer attractive investment opportunities and the company's desire to reduce its sensitivity to rising interest rates. Total loans at September 30, 2004, including residential loans held for sale, decreased $499.5 million compared to September 30, 2003, and $482.7 million compared to December 31, 2003. This decrease can be attributed primarily to the sale of $405.6 million in residential real estate loans during the second quarter of 2004 as well as to continued weakness in commercial lending. These decreases are partially offset by the growth in consumer loans. Money market investments at September 30, 2004, increased by $66.1 million from September 30, 2003, and $148.6 million from December 31, 2003, which is attributable to the investment of a portion of the proceeds from the sale of residential real estate loans during the second quarter of 2004. INVESTMENT SECURITIES The majority of Old National's investment securities are classified as available-for-sale, which gives management the flexibility to sell the securities prior to maturity, if needed, based on fluctuating interest rates or changes in the company's funding requirements. Emerging Issues Task Force ("EITF") Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," may potentially impact the treatment of investments in an unrealized loss position. Until final guidance is issued by the Financial Accounting Standards Board ("FASB"), it is uncertain whether this EITF Issue will have a material impact on Old National. 23 At September 30, 2004, the investment securities portfolio was $2.856 billion compared to $3.030 billion at September 30, 2003, a decrease of $174.0 million or 5.7%. Investment securities decreased $61.3 million at September 30, 2004, compared to December 31, 2003, a decrease of 2.8%. Despite these decreases, investment securities as a percentage of earning assets remained relatively flat at 35.2% at September 30, 2004, 34.7% at September 30, 2003, and 34.2% at December 31, 2003. During the first half of 2003, Old National increased the investment portfolio as a short-term alternative source of earning assets to offset declining residential real estate and minimal commercial and consumer loan growth. During the second half of 2003 and continuing into 2004, Old National decreased the size of the investment portfolio and used the cash flows generated by the declining investment portfolio to reduce borrowed funds. Stronger economic activity and stronger commercial loan demand would likely result in increased investments in loans and a reduction in the investment securities portfolio. The investment securities available-for-sale portfolio had net unrealized gains of $25.8 million at September 30, 2004, compared to net unrealized gains of $14.0 million at September 30, 2003, and $23.7 million at December 31, 2003. These unrealized gains are impacted by interest rate conditions. The investment portfolio had an effective duration of 3.66 years at September 30, 2004, compared to 4.24 years at September 30, 2003, and 4.31 years at December 31, 2003. The average yield on investment securities, on a taxable equivalent basis, was 4.49% for the three months ended September 30, 2004, compared to 4.71% for the three months ended September 30, 2003, and 4.70% for the three months ended December 31, 2003. Average yields on investment securities, on a taxable equivalent basis, were 4.55%, 4.95% and 4.98% for the nine months ended September 30, 2004 and 2003, and for the year ended December 31, 2003, respectively. The decrease from December 31, 2003 to September 30, 2004, was due to maturities or sales of higher coupon bonds coupled with the purchase of shorter duration lower yielding bonds as part of the company's strategy to reduce the maturity of the portfolio. RESIDENTIAL LOANS HELD FOR SALE Residential loans held for sale were $22.1 million at September 30, 2004, compared to $16.9 million at September 30, 2003, and $16.3 million at December 31, 2003. Residential loans held for sale are loans that are closed, but not yet sold on the secondary market. The amount of residential loans held for sale on the balance sheet varies depending on the timing of movement of originations and loan sales to the secondary market. During the three and nine months ended September 30, 2004, residential real estate loan origination activity was down as compared to the three and nine months ended September 30, 2003, primarily due to a reduced level of loan refinancing. COMMERCIAL AND CONSUMER LOANS Commercial and consumer loans are the largest classification within the earning assets of Old National representing 55.7% of earning assets at September 30, 2004, an increase from 53.3% at September 30, 2003, and 54.4% at December 31, 2003. At September 30, 2004, commercial and commercial real estate loans were $3.300 billion, a decrease of $216.9 million since September 30, 2003, and a decrease of $167.0 million since December 31, 2003. During the third quarter of 2003, Old National sold $48.2 million of non-performing commercial loans. Weak loan demand in Old National's markets impacted commercial loan growth in 2003 and continues into 2004. At September 30, 2004, consumer loans, including automobile loans, personal and home equity loans and lines of credit, and student loans, increased to $1.227 billion, an increase of $92.4 million or 8.1% compared to $1.135 billion at September 30, 2003, and an increase of $63.9 million or 7.3% compared to $1.163 billion at December 31, 2003. This growth was primarily the result of enhancements to marketing and customer contact programs. RESIDENTIAL REAL ESTATE LOANS Residential real estate loans, primarily 1-4 family properties, have decreased in significance to the loan portfolio over the past five years due to higher levels of loan sales into the secondary market, primarily to Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. Old National sells the majority of residential real estate loans it originates as a strategy to better manage interest rate risk and liquidity. These loans are generally sold with loan servicing retained in order to maintain customer relationships and generate noninterest income and fees. By using this strategy, Old National is generally able to recognize an immediate gain in noninterest income versus a small net interest income spread over a longer period of time. Old National sells the majority of the residential real estate loans without recourse, currently having less than 1% of loans sold with recourse. 24 At September 30, 2004, residential real estate loans were $554.1 million, a decrease of $380.1 million or 40.7% from September 30, 2003, and $385.3 million or 54.7% from December 31, 2003. The sale of $405.6 million of residential real estate loans during the three months ended June 30, 2004, was the most significant contributor to this decrease. In comparison, Old National's residential real estate loan portfolio was also affected by the sales of $14.5 million of delinquent loans in the second and third quarters of 2003. These sales were to improve credit quality and reduce the level of non-performing loans and are not a part of Old National's ongoing strategy. ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY ADMINISTRATION Old National monitors the quality of its loan portfolio on an ongoing basis and uses a combination of detailed credit assessments by relationship managers and credit officers, historic loss trends, and economic and business environment factors in determining its allowance for loan losses. Old National records provisions for loan losses based on current loans outstanding, grade changes, mix of loans and expected losses. A detailed loan loss evaluation on an individual loan basis for the company's highest risk loans is performed quarterly. Each month, problem loan reports are prepared and reviewed, which include borrowers that show indications of being unable to meet debt obligations in the normal course of business, and loans which have other characteristics deemed by bank management to warrant special attention or have been criticized by regulators in the examination process. Classified loans include non-performing loans, loans past due 90 days or more and other loans deemed to have well-defined weaknesses while criticized loans, also known as special mention loans, are loans that are deemed to have potential weaknesses that deserve management's close attention and require specific quarterly reviews by the bank. Assets determined by the various evaluation processes to be under-performing receive special attention by Old National management. Under-performing assets consist of: 1) nonaccrual loans where the ultimate collectibility of interest or principal is uncertain; 2) loans renegotiated in some manner, primarily to provide for a reduction or deferral of interest or principal payments because the borrower's financial condition deteriorated; 3) loans with principal or interest past due ninety (90) days or more; and 4) foreclosed properties. A loan is generally placed on nonaccrual status when principal or interest become 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectibility of principal or interest. When loans are classified as nonaccrual, interest accrued during the year is reversed against earnings; interest accrued in the prior year, if any, is charged to the allowance for loan losses. Cash received while a loan is classified as nonaccrual is recorded to principal. Old National analyzes on a semi-annual basis the composition of the loan portfolio to determine if there is any concentration of loans in any single industry exceeding 10% of its portfolio, and has determined that no such concentration exists as of September 30, 2004, as measured by Old National. In addition, Old National has no exposure to foreign borrowers or lesser-developed countries. ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY At September 30, 2004, the allowance for loan losses was $96.3 million, an increase of $3.7 million compared to $92.7 million at September 30, 2003, and an increase of $1.1 million compared to $95.2 million at December 31, 2003. As a percentage of total loans, including loans held for sale, the allowance increased to 1.89% at September 30, 2004, from 1.65% at September 30, 2003, and 1.70% from December 31, 2003. The improvement in coverage of total loans at September 30, 2004, is a result of increased provisions during 2003 followed by reductions in total loans during 2004, primarily the sale of $405.6 million of residential real estate loans during the three months ended June 30, 2004. In keeping with evolving industry practice, during the three months ended September 30, 2004, $8.6 million of the allowance for loan losses account, which represented the amount attributable to the allowance for unfunded loan commitments, was reclassified into a liability account on the balance sheet. The allowance for unfunded loan commitments has been reclassified for quarterly periods beginning September 30, 2003, for consistency in presentation. The balance of the allowance for unfunded loan commitments was insignificant for reclassification prior to September 30, 2003. See Note 6 to the consolidated financial statements for additional details. For the three months ended September 30, 2004, the provision for loan losses amounted to $7.4 million, a decrease of $20.1 million from the three months ended September 30, 2003. The provision for the nine months ended 25 September 30, 2004, amounted to $22.4 million compared to $59.0 million for the nine months ended September 30, 2003. The reduced provisions are reflective of a decline in under-performing assets and total criticized and classified loans since September 30, 2003 and December 31, 2003, as further discussed below. Net charge-offs for the three months ended September 30, 2004, totaled $6.1 million compared to $26.1 million for the three months ended September 30, 2003, which included $12.5 million in write-downs on residential real estate loans and commercial loans sold. Net charge-offs for the nine months ended September 30, 2004, including $1.2 million of write-downs on the residential real estate loans sold, totaled $22.1 million compared to $47.3 million for the nine months ended September 30, 2003, which included $14.7 million in write-downs on residential real estate and commercial loans sold. Net charge-offs to average loans were 0.48% and 0.54% on an annualized basis for the three and nine months ended September 30, 2004, respectively, as compared to 1.85% and 1.11% for the three and nine months ended September 30, 2003. Under-performing assets totaled $116.6 million at September 30, 2004, a decrease of $14.8 million from September 30, 2003, and slightly lower than the $118.5 million at December 31, 2003. As a percent of total loans and foreclosed properties, under-performing assets at September 30, 2004, were 2.28%, a reduction from the September 30, 2003 ratio of 2.34% and an increase from the December 31, 2003 ratio of 2.12%. Nonaccrual loans decreased to $106.0 million at September 30, 2004, compared to $110.2 million at September 30, 2003, and increased slightly from $104.6 million at December 31, 2003. Changes to separate the loan production functions from the underwriting functions, significant strengthening of the commercial underwriting processes and the elevation of the Credit Policy Committee to a board level committee have all served to continue the emphasis on improving credit quality over the past year. Management believes that it has appropriately identified and reserved for loan losses related to nonaccrual loans at September 30, 2004. Approximately $41.3 million of commercial nonaccrual loans less than thirty days delinquent were contractually performing at September 30, 2004. Management will continue its efforts to reduce the level of non-performing loans and is currently considering additional sales of troubled and non-performing loans, which could result in additional write-downs to the allowance for loan losses. The total portfolio of loans identified by Old National as problem credits continues to decline. Total classified and criticized loans were $473.3 million at September 30, 2004, a decrease of $134.8 million from September 30, 2003, and $86.3 million from December 31, 2003. Management believes it has taken a prudent approach to the evaluation of under-performing credits and the loan portfolio in general, both in acknowledging the portfolio's general condition and in establishing the allowance for loan losses. Old National has been affected by weakness in the economy of its markets, which has resulted in minimal growth of commercial loans and tighter credit underwriting standards. Management expects that trends in nonaccrual loans will be influenced by the degree to which the economy strengthens. The longer the significant softness in manufacturing continues, the more stress it puts on Old National's borrowers, increasing the potential for additional nonaccrual loans. 26 The table below shows the various components of under-performing assets:

(1) Items referring to loans are net of unearned income and include residential loans held for sale. (2) Non-performing loans include nonaccrual and renegotiated loans. PREMISES AND EQUIPMENT Premises and equipment was $212.2 million at September 30, 2004, an increase of $43.4 million or 25.7% since September 30, 2003, and an increase of $30.8 million or 22.7% since December 31, 2003. The increase is primarily due to the construction of Old National's Evansville main banking center and corporate headquarters, which began in April 2002, and has an estimated total project cost of $73.6 million. The building was placed in service on August 11, 2004. GOODWILL AND OTHER INTANGIBLES Goodwill was $129.9 million at September 30, 2004, an increase of $0.5 million since September 30, 2003 and an increase of $0.7 million since December 31, 2003. The increase is attributable to adjustments to purchase prices for previous acquisitions in the non-bank segment of the company offset by the removal of goodwill related to the sales of the Greencastle, Indiana insurance operations during the third quarter of 2004 and the Fort Wayne, Indiana trust operations during the fourth quarter of 2003. Other intangible assets related to customer business relationships decreased to $39.5 million at September 30, 2004, from $42.7 million at September 30, 2003, and $41.9 million at December 31, 2003, primarily due to amortization. Old National performs impairment testing of goodwill and other intangibles on an annual basis. As of September 30, 2004 and 2003, there was no impairment. FUNDING Total funding, comprised of deposits and wholesale borrowings, was $8.152 billion at September 30, 2004, a decrease of 6.1% from $8.685 billion at September 30, 2003, and a decrease of 5.9% from $8.532 billion at December 31, 2003. Total deposits were $6.408 billion, including $3.702 billion in transaction accounts and $2.706 billion in time deposits at September 30, 2004. Total deposits increased 0.2% or $11.1 million compared to September 30, 2003, and decreased 1.7% or $85.0 million compared to December 31, 2003. Transaction accounts increased 10.9% or $363.1 million compared to September 30, 2003, and 8.3% or $217.0 million compared to December 31, 2003. Time deposits decreased 11.5% or $352.0 million compared to September 30, 2003, and 13.4% or $301.9 million compared to December 31, 2003. Old National experienced growth in demand deposits and other low cost transaction accounts offset by a reduction in time accounts when comparing these time periods due to the lower rate environment and customer preference for transaction accounts. The reduction in time accounts from September 30, 2004, compared to September 30, 2003 and December 31, 2003, was also due to the maturity of a group of higher interest rate certificates of deposits during the first quarter of 2004. Old National uses wholesale funding to augment deposit funding and to help maintain its desired interest rate risk position. At September 30, 2004, wholesale borrowings, including short-term borrowings and other borrowings, decreased 23.8% and 19.3% from September 30, 2003 and December 31, 2003, respectively. Wholesale funding was increased during the first half of 2003 to finance investment portfolio growth, offset a reduction in certificates 27 of deposits, and take advantage of favorable interest rates. During the second half of 2003 and continuing into 2004, wholesale borrowings decreased as the investment portfolio growth slowed. Wholesale borrowings as a percentage of total funding was 21.4% at September 30, 2004, compared to 26.3% at September 30, 2003, and 23.9% at December 31, 2003. The lower level of earning assets, primarily due to a residential real estate loan sale of $405.6 million during second quarter of 2004, reduced the company's reliance on wholesale funding. Refer to the "Liquidity Management" section of this "Management's Discussion and Analysis" regarding information pertaining to a shelf registration filed during the third quarter of 2004. CAPITAL RESOURCES AND REGULATORY GUIDELINES Shareholders' equity totaled $712.3 million at September 30, 2004, a reduction of 1.3% or $9.4 million from September 30, 2003, and a decrease of $3.1 million or 0.6% compared to December 31, 2003. The primary contributors to the decline in shareholders' equity at September 30, 2004, compared to September 30, 2003, were decreased net income for the year ended December 31, 2003, compared to the year ended December 31, 2002, as well as for the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003, and the absence of stock issuances for acquisitions during the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003. These factors were offset by changes in the components of comprehensive income during the nine months ended September 30, 2004, compared to the nine months ended September 30, 2003. As reflected in the Consolidated Statement of Changes in Shareholders' Equity, Old National paid cash dividends of $0.19 and $0.57 per share for the three and nine months ended September 30, 2004, respectively, decreasing equity by $37.8 million, compared to cash dividends of $0.18 and $0.54 per share for the three and nine months ended September 30, 2003, respectively, (restated for the 5% stock dividend distributed on January 27, 2004), which decreased equity by $36.3 million. Old National purchased shares of its stock in the open market under an ongoing repurchase program, reducing shareholders' equity by $26.2 million during the nine months ended September 30, 2004, and $33.0 million during the nine months ended September 30, 2003. Shares issued for stock options, restricted stock and stock purchase plans increased shareholders' equity by $12.1 million during the nine months ended September 30, 2004, compared to $6.5 million during the nine months ended September 30, 2003. Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. Old National's consolidated capital position remains well above regulatory guidelines as evidenced by the following comparisons of key industry ratios.

On October 28, 2004, the Board of Directors adopted a resolution authorizing management to file an S-3 Registration statement with the Securities and Exchange Commission for the purpose of amending the Old National Bancorp Stock Purchase and Dividend Reinvestment Plan. The plan has two main purposes. First, the plan allows investors and shareholders a convenient, low-cost way to buy shares and reinvest cash dividends in additional shares of Old National common stock. Secondly, the plan gives Old National the ability to raise capital by selling newly issued shares of common stock. A key feature is the ability for Old National to sell newly issued shares at a discount from the market price. Common stock totaling 3.5 million shares can be issued under this plan. Old National anticipates filing the S-3 during November 2004. 28 ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK MARKET RISK MANAGEMENT Inherent in Old National's balance sheet is market risk, defined as the sensitivity of income, fair market values and capital to changes in interest rates, foreign currency exchange rates, commodity prices and other relevant market rates or prices. The primary market risk to which Old National has exposure is interest rate risk. Interest rate risk arises because assets and liabilities may reprice, mature or prepay at different times or based upon different market instruments as market interest rates change. Changes in the slope of the yield curve and the pace of interest rate changes may also impact net interest income and the fair value of the balance sheet. Old National manages interest rate risk within an overall asset and liability management framework that includes attention to credit risk, liquidity risk and capitalization. A principal objective of asset/liability management is to manage the sensitivity of net interest income to changing interest rates. Asset and liability management activity is governed by a policy reviewed and approved annually by the Board of Directors. The Board of Directors has delegated the administration of this policy to the Funds Management Committee, a committee of the Board of Directors, and the Balance Sheet Management Committee, a committee comprised of senior company management. The Funds Management Committee meets quarterly and oversees adherence to policy and recommends policy changes to the Board. The Balance Sheet Management Committee meets monthly and provides guidance to Treasury and other operating units of the company regarding the execution of asset and liability management strategies. Old National uses two modeling techniques to quantify the impact of changing interest rates on the company, Net Interest Income at Risk and Economic Value of Equity. Net Interest Income at Risk is used by management and the Board of Directors to evaluate the impact of changing rates over a two-year horizon. Economic Value of Equity is used to evaluate long-term interest rate risk. These models simulate the likely behavior of the company's net interest income and the likely change in the company's market value due to changes in interest rates under various possible interest rate scenarios. Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates impact the company's net interest income and value, Old National recognizes that model outputs are not guarantees of actual results. For this reason, Old National models many different combinations of interest rates and balance sheet assumptions to best understand its overall sensitivity to market interest rate changes. Old National's Board of Directors, through its Funds Management Committee, monitors the company's interest rate risk. The Funds Management Committee establishes policy guidelines for the allowable change in cumulative net interest income over a two-year period and the change in Economic Value of Equity in an up or down 200 basis point instantaneous parallel change to the yield curve (+/- 200 basis point yield curve shock). The current guideline for Net Interest Income at Risk is +/- 5% of net interest income over a two-year period in a 200 basis point shock to the yield curve. The current guideline for the allowable fluctuation in Economic Value of Equity is +/- 12% in a 200 basis point shock to the yield curve. In addition to the output of the model in up and down 200 basis points shocks to the yield curve, Old National has provided the output of its rate risk model in up and down 50 and 100 basis point yield curve shocks to provide a better understanding of Old National's sensitivity to market interest rate changes. At September 30, 2004, modeling indicated that Old National was at its policy limit of Net Interest Income at Risk in an up 200 basis points yield curve shock. Estimated Change in Economic Value of Equity, however, in an up 200 basis points yield curve shock is -4.63%, well within the policy limit of -12%. Estimated Change in Economic Value of Equity in a down 200 basis point yield curve shock is - 14.42%, outside of the company's policy guideline of - 12%. The Funds Management Committee has deemed this an acceptable risk given the company's outlook for rising interest rates. The following table shows Old National's market risk in various interest rate scenarios. 29 INTEREST RATE RISK /STATIC BALANCE SHEET MODEL

The most significant change in the company's rate risk profile is reflected in the decrease in the company's Estimated Change in Economic Value of Equity resulting from an up 200 basis points yield curve shock. Economic Value of Equity at risk changed from -9.69% in September 2003 to -4.63% in September 2004. The company reduced its long term exposure to rising interest rates by reducing the effective duration of the investment portfolio to 3.66 years at September 30, 2004, compared to 4.24 years at September 30, 2003, by selling $ 405.6 million residential mortgages in June 2004, and by executing $365.0 million in forward-starting interest rate swaps that become effective in 6 to 21 months. Old National will pay a fixed rate and receive a floating rate on these derivatives beginning on future dates. These derivatives will serve to fix the interest rates of future debt issuance. The fixed interest rates range from 2.75% to 4.69% and have maturities of 2 to 3 years after the swaps become effective. Old National uses derivatives, primarily interest rate swaps, to manage interest rate risk in the ordinary course of business. The company's derivatives had a market value of -$2.3 million at September 30, 2004 compared to a market value of $17.7 million at September 30, 2003. The decline in market value is due both to the increase in interest rates during the year and the fact that Old National terminated certain receive fixed rate swaps. As explained above, Old National added forward-starting pay fixed rate swaps in 2004. All of these transactions served to better position the company's balance sheet for rising rates. See Note 16 to the consolidated financial statements of the 2003 annual report for further discussion of derivative financial instruments. LIQUIDITY MANAGEMENT The Funds Management Committee of the Board of Directors and the Balance Sheet Management Committee establish liquidity risk guidelines and monitor liquidity risk. The objective of liquidity management is to ensure Old National has the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. The company maintains strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, properly manage capital markets' funding sources and to address unexpected liquidity requirements. Old National's ability to raise funding at competitive prices is influenced by rating agencies' views of the company's credit quality, liquidity, capital and earnings. The senior debt ratings of Old National Bancorp and Old National Bank at September 30, 2004, are shown in the following table. 30 SENIOR DEBT RATINGS

All three ratings agencies have issued a stable outlook in conjunction with their ratings as of September 30, 2004. As of September 30, 2004, Old National Bank had the capacity to borrow $831.7 million from the Federal Reserve Bank's discount window. Old National Bank is also a member of the Federal Home Loan Bank ("FHLB") of Indianapolis, which provides a source of funding through FHLB advances. Old National maintains relationships in capital markets with brokers and dealers to issue certificates of deposits and short-term and medium-term bank notes as well. In addition, at September 30, 2004, Old National had $685 million available for issuance under a $1 billion global bank note program for senior and subordinated debt. Old National Bancorp, the parent company, has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows and funds used for acquisitions. Old National Bancorp obtains funding to meet its obligations from dividends and management fees collected from its subsidiaries and the issuance of debt securities. At September 30, 2004, the parent company's other borrowings outstanding was $265.0 million, compared with $111.6 million at September 30, 2003. This increase in other borrowings was driven by the reclassification of guaranteed preferred beneficial interests in subordinated debentures as described in Note 9 to the consolidated financial statements. Old National Bancorp, the parent company, has no debt scheduled to mature in the next 12-months. Federal banking laws regulate the amount of dividends that may be paid by banking subsidiaries without prior approval. For further information regarding dividend restrictions, see Note 19 to the consolidated financial statements of the 2003 annual report. On August 19, 2004, Old National Bancorp filed a Form S-3 for a $750 million global shelf registration with the Securities and Exchange Commission. The shelf, once effective, will permit the issuance of a variety of securities including debt, common and preferred stock, depositary shares, units and warrants of Old National Bancorp. The proceeds of any issuance will be added to the general funds of the Company and may be used for debt reduction or debt refinancing, including the refinancing of our outstanding capital securities, investments in or advances to subsidiaries, repurchase of shares of our common stock or other securities, and other general corporate purposes. 31 ITEM 4. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures. Old National's principal executive officer and principal financial officer have concluded that Old National's disclosure controls and procedures (as defined in Exchange Act Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this Form 10-Q, are effective at the reasonable assurance level as discussed below to ensure that information required to be disclosed by Old National in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to Old National's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Limitations on the Effectiveness of Controls. Management, including the principal executive officer and principal financial officer, does not expect that Old National's disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 32 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (c) ISSUER PURCHASES OF EQUITY SECURITIES

NOTE: Old National announced on December 4, 2003, that the board of directors approved the continuation of the company's stock repurchase program up to 5% of the company's outstanding stock for 2004. ITEM 3. DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5. OTHER INFORMATION (a) On September 7, 2004, Old National entered into a Severance Agreement and a Change of Control Agreement with its President and Chief Executive Officer, Robert G. Jones. The Severance Agreement is filed as an exhibit to this Form 10-Q, and the Change of Control Agreement is incorporated by reference as an exhibit to this Form 10-Q. ITEM 6. EXHIBITS The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are as follows: Exhibit Number 3(i) Articles of Incorporation of Old National (incorporated by reference to Exhibit 3(i) of Old National's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002). 3(ii) By-Laws of Old National, amended and restated effective April 22, 2004 (incorporated by reference to Exhibit 3(ii) of Old National's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004). 4 Instruments defining rights of security holders, including indentures Form of Indenture between Old National and Bank One Trust Company, NA, as trustee (incorporated by reference to Exhibit 4.1 to Old National's Registration Statement on Form S-3, Registration No. 333-87573, 33 filed with the Securities and Exchange Commission on September 22, 1999). 10 Material contracts (a) Severance Agreement, between Old National and Robert G. Jones, is filed herewith.* (b) Form of Severance Agreement for Thomas F. Clayton, Michael R. Hinton, Daryl D. Moore and John S. Poelker, as amended (incorporated by reference to Exhibit 10(a) of Old National's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).* (c) Severance Agreement, between Old National and James A. Risinger (incorporated by reference to Exhibit 10( c) of Old National's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).* (d) Form of Change of Control Agreement for Thomas F. Clayton, Michael R. Hinton, Daryl D. Moore John S. Poelker, and Robert G. Jones, as amended (incorporated by reference to Exhibit 10(b) of Old National's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).* (e) Old National Bancorp 1999 Equity Incentive Plan (incorporated by reference to Old National's Form S-8 filed on July 20, 2001).* (f) First Amendment to the Old National Bancorp 1999 Equity Incentive Plan, is filed herewith.* (g) Form of "Performance-Based" Restricted Stock Award Agreement between Old National and Robert G. Jones, Thomas F. Clayton, Michael R. Hinton, Daryl Moore, and John S. Poelker, is filed herewith.* (h) Form of Executive Stock Option Award Agreement between Old National and Robert G. Jones, Thomas F. Clayton, Michael R. Hinton, Daryl Moore, and John S. Poelker, is filed herewith.* (i) Construction Manager Contract, dated as of May 30, 2002, between Old National Bancorp and Industrial Contractors, Inc. (incorporated by reference to Old National's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002). (j) Owner-Contractor Agreement, dated as of October 11, 2002, between Old National Bancorp and Industrial Contractors, Inc. (incorporated by reference to Old National's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002). (k) Summary of Old National Bancorp's Outside Director Compensation Program (incorporated by reference to Old National's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).* 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -------------- * Management contract or compensatory plan or arrangement 34 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OLD NATIONAL BANCORP -------------------- (Registrant) By: /s/ John S. Poelker -------------------------------- John S. Poelker Executive Vice President and Chief Financial Officer Duly Authorized Officer and Principal Financial Officer Date: November 9, 2004 35 EX-10.(A) 2 c89585exv10wxay.txt SEVERANCE AGREEMENT EXHIBIT 10(a) SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement") is made and entered into by and between OLD NATIONAL BANCORP (including all subsidiaries and affiliates) (the "Company") and ROBERT G. JONES (the "Executive"). WHEREAS, the Company desires to assure continuity of its management, to enable its executives to devote their full attention to management responsibilities and to help the Board of Directors assess options and advise as to the best interest of the Company and its shareholders without being influenced by the uncertainties of their own situations, and to demonstrate to executives the interests of the Company in their well-being and fair treatment in the event of a termination without cause by the Company; and WHEREAS, to that end, the Company desires to assure the Executive that he will receive certain benefits in the case of the Executive's termination without cause by the Company. NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Company agree as follows: 1. Term. The term of this Agreement shall begin on the date hereof and shall continue until terminated (the "Term"). This Agreement shall automatically terminate without notice or payments hereunder if the Executive shall resign, retire, become permanently and totally disabled, or die, or the Company experiences a "Change of Control" as defined in the Change of Control Agreement between the Executive and the Company. Under no circumstance will the Executive be entitled to benefits under this Agreement and the Change of Control Agreement. Additionally, this Agreement shall terminate without further notice or payments hereunder if the Company terminates the Executive for Cause (as defined in to Section 3(a)(i) hereof). 2. Termination of Employment; Resignation of Officer and Director Positions. The Executive shall be relieved of any responsibilities with the Company, and his employment relationship with the Company will cease and terminate effective upon the Termination Date. The Executive resigns any and all officer, director and other positions with the Company and its affiliates effective upon the Termination Date. 3. Severance Benefit. (a) Subject to the receipt of the Release contemplated by Section 9 hereof and the expiration of any applicable waiting periods, the Company shall provide the Executive with the benefits set forth in this Section 3 upon any termination of the Executive's employment by the Company which occurs during the Term for any reason except the following: (i) Termination for Cause "Cause" shall be defined as (A) action by the Executive involving willful misconduct or gross negligence materially injurious to the Company, (B) the requirement or direction of a federal or state regulatory agency having jurisdiction over the Company, (C) conviction of the Executive of the commission of any criminal offense involving dishonesty or breach of trust, or (D) any intentional breach by the Executive of a material term, condition or covenant of this Agreement; (ii) Disability of the Executive, as determined under the policies and procedures of the Company as in effect from time to time. Termination pursuant to this Section 3(a)(ii) shall not affect any rights which the Executive may have under any disability policy or program of the Company; (iii) Voluntary retirement of the Executive in accordance with policies and procedures of the Company in effect from time to time; (iv) Resignation or termination of employment by the Executive for a reason other than set forth in Section 3(b) hereof; (v) In connection with or following a Change of Control; provided that the Executive will receive benefits under a change of control agreement or other similar agreement or plan; or (vi) Death of the Executive. (b) Subject to receipt of the Release contemplated by Section 9 hereof and the expiration of any applicable waiting periods, the Company shall also provide the Executive with the benefits set forth in this Section 3 if during the Term the Executive terminates this Agreement after the happening of one or more of the following events: (i) Without the express written consent of the Executive, the assignment of the Executive to any duties materially inconsistent with his positions, duties, responsibilities, or status with the Company as of the date hereof or a substantial reduction of his duties or responsibilities, or any removal of the Executive from, or any failure to reelect the Executive to, any positions held by the Executive as of the date hereof; (ii) A reduction by the Company in the compensation or benefits of the Executive in effect as of the date hereof, or any failure to include the Executive to other similarly situated employees in any incentive, bonus or benefit plans as may be offered by the Company from time to time; or (iii) A requirement that without the consent of the Executive, the Executive be based anywhere other than within fifty (50) miles from his personal residence, except for required travel pertaining to the Company's business in accordance with the Company's management practices in effect from time to time. 2 (c) Lump Sum Payment. Following receipt by the Company of the Release contemplated by Section 9 hereof and the expiration of any applicable waiting periods, the Company shall pay to the Executive a lump sum single payment, in cash or cash equivalent funds, equal to the Executive's Week of Pay multiplied by one hundred four (104). "Week of Pay" means Compensation divided by fifty-two (52). "Compensation" means, as of the date of the notice of termination, the Executive's annual base salary then in effect, plus the targeted cash incentive that the Executive would have been eligible to receive in the year in which the Termination Date occurs. "Years of Service" means the number of years of Service. A partial year will be rounded up to the next year. Payment of accrued vacation at termination does not extend the Executive Employee's Years of Service. Any lump sum payment hereunder is in addition to monies already owed the Executive by the Company and is in consideration for the covenants set forth in this Agreement and the Release hereunder. Any earned but unpaid portion of the Executive's base salary, at his then-effective annual rate, through the Termination Date plus any amounts due to the Executive under the accrued vacation program of the Company due to him through the Termination Date shall be paid to the Executive in the next payroll check regardless of whether the Executive delivers the Release. (d) Other Employee Benefits. Any benefits (other than severance) payable to the Executive due to the termination of his employment shall be paid to the Executive in accordance with the benefit payment provisions of the applicable employee benefit plan. (e) Country Club and/or Private Club Membership. If the Executive has a Club membership, of which monthly dues are normally paid by the Company, the Company's responsibility for monthly club dues will cease at the end of the month in which the Termination Date occurs. Individual Membership(s) held in the Executive's name shall continue to be held as a private membership in the Executive's name. Corporate Memberships may be assigned or transferred to the Executive, if allowed by the club, at the sole discretion of the Company. If the Company and the Executive agree to transfer a Corporate Membership to the Executive, the Executive agrees to pay any and all transfer fees incurred as a result of the transfer. (f) Notice of Termination. Any termination of the Executive's employment for the reasons set forth in Section 3(a) (except for reason of the Executive's death) or by the Executive for the reasons set forth in Section 3(b) shall be communicated by written "Notice of Termination" to the other party, delivered in a manner provided in Section 12(f) hereof. Any "Notice of Termination" given by the Executive pursuant to Section 3(b), or given by the Company in connection with a termination as to which the Company believes it is not obligated to provide the Executive with the benefits set forth in this Section 3, shall indicate the specific provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. "Termination Date" for the purposes of this Agreement shall mean the date on which such "Notice of Termination" is given by the Executive or the date set forth as the Termination Date in a Notice of Termination given by the Company. 4. Non-Solicitation. The Executive agrees that during the Term and for a period of two (2) years following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly individually or jointly, (i) solicit in any manner, seek to 3 obtain or service, or accept the business of any party which is a customer of the Company as of the date of the Agreement, for banking, trust, insurance and investment services of the type handled by the Company, (ii) solicit in any manner, seek to obtain or service, or accept the business of any party which was a prospective customer of the Company for banking, trust, insurance and investment services of the type handled by the Company, (iii) request or advise any customers or suppliers of the Company to terminate, reduce, limit or change their business or relationship with the Company, or (iv) induce, request or attempt to influence any employee of the Company to terminate his or her employment with the Company. For purposes of this Agreement, the term "customer" shall mean a person or entity who is a customer of the Company at the time of the Executive's termination of employment or with whom the Executive had direct contact on behalf of the Company at any time during the period of the Executive's employment with the Company. The term "prospective customer" shall mean a person or entity who was the direct target of sales or marketing activity by the Executive or whom the Executive knew was a target of the Company during the one (1) year period preceding the Executive's termination of employment or, in the event the Executive has been employed by the Company less than one (1) year at the Executive's termination of employment, during the period of the Executive's employment with the Company. 5. Covenant Not to Compete or be Employed by Competitors. The Executive hereby understands and acknowledges that, by virtue of his position with the Company, he obtained advantageous familiarity and personal contacts with the Company's customers, wherever located, and the business, operations and affairs of the Company. Accordingly, during the term of this Agreement and for a period of two (2) years following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly: (i) as owner, officer, director, stockholder, investor, proprietor, organizer, or otherwise, engage in the same trade or business as the Company, or in a trade or business competitive with that of the Company; provided, however that the Executive is not restricted from owning more than five percent (5%) of the outstanding securities of any class of any entity that are listed on a national securities exchange or trade in the over-the-counter market; or (ii) as employee, agent, representative, consultant, independent contractor, or otherwise, perform services for or render assistance to or use or permit the Executive's name to be used in connection with any other business, partnership, proprietorship, firm, or competitive entity, organization, or corporation, which services or assistance are related to, or competitive with, the same trade, business, products, or services as those of the Company; or (iii) offer to provide employment (whether such employment is with the Executive or any other business or enterprise), either on a full-time or part-time or consulting basis, to any person who then currently is, or who within one (1) year prior to such offer or provision of employment has been, an employee of the Company. The restrictions contained in this paragraph upon the activities of the Executive shall be limited to the following geographic areas: 4 (i) a fifty (50) mile radius from the following cities: Evansville, Terre Haute, Indianapolis and Muncie in the State of Indiana; Louisville and Owensboro in the State of Kentucky; Danville and Carbondale in the State of Illinois; St. Louis in the State of Missouri; and Clarksville in the State of Tennessee; and (ii) all counties in which the Company has customers or has solicited prospective customers during the one (1) year period prior to the Termination Date. As of the date hereof, the Company engages in the business of banking, trust, insurance and investment services. 6. Confidential Information. (a) The Executive agrees (i) that all Confidential Information is confidential and is the property of the Company, (ii) not to disclose or give possession of any Confidential Information to any person except authorized representatives of the Company, (iii) not to directly or indirectly use any Confidential Information (A) to compete against the Company, or (B) for the Executive's own benefit or for the benefit of any person other than the Company, and (iv) to promptly return to the Company following the termination of the Executive's employment, at the Company's main office, all Confidential Information and other property of the Company, including but not limited to, computers, computer disks, electronic data without regard to the means of storage, credit cards, identification cards, badges, keys, and any other physical or personal property belonging to the Company, and any copies, duplicates, reproductions or excerpts of any of the foregoing, even if down loaded or copied to the Executive's personal computer, personal data assistant or other mechanism used for storing information. This Section 6 shall not preclude the Executive from disclosure or use of information known generally in the public domain other than through a breach of this Agreement or from disclosure required by law or court order. (b) The Executive understands, acknowledges and agrees that, during the course of his employment with the Company, he gained and will continue to gain, as a key employee of the Company, substantial information regarding and competitive knowledge of and familiarity with Confidential Information of the Company and that if the Confidential Information were disclosed or the Executive engaged in competition against the Company, the Company would suffer irreparable damage and injury. The Confidential Information derives substantial economic value, among other reasons, from not being known or readily ascertainable by proper means by others who could obtain economic value from its disclosure. The Executive acknowledges and agrees that the Company uses reasonable means to maintain the secrecy of the Confidential Information. (c) For purposes of this Agreement, the term "Confidential Information" means any and all (a) materials, records, data, documents, writings and information (whether printed, computerized, on disk or otherwise) relating or referring in any manner to the business, operations, affairs, policies, strategies, techniques, products, product developments or customers of the Company which are not generally known or available to the business, trade or industry of the Company or individuals who work therein or which are not otherwise in the public domain, in either case not through a breach of this Agreement, and (b) trade secrets of the Company (as defined in Indiana Code 24-2-3-2, as amended, or any successor statute). 5 7. Remedies. The Executive agrees that the Company will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any breach by the Executive of any provision of the Restrictive Covenants (as defined below in Section 8 hereof). Accordingly, in the event of a breach or of a threatened or attempted breach by the Executive of the Restrictive Covenants, in addition to all other remedies to which the Company is entitled under law, in equity, or otherwise, the Company shall be entitled to seek injunctive relief and no bond or other security shall be required in that connection. The Executive acknowledges and agrees that in the event of termination of this Agreement for any reason whatsoever, the Executive can obtain other engagements or employment of a kind and nature similar to that performed for the Company and that the issuance of an injunction to enforce the provisions of the Restrictive Covenants will not prevent the Executive from earning a livelihood. The Restrictive Covenants are essential terms and conditions to the Company entering into this Agreement, and shall be construed as independent of any other provision in this Agreement, or any other agreement between the Executive and the Company. The existence of any claim or cause of action the Executive has against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the Restrictive Covenants. 8. Periods of Noncompliance and Reasonableness of Periods. The restrictions and covenants contained in Sections 4 and 5 hereof (the "Restrictive Covenants") shall be deemed not to run during all periods of noncompliance, the intention of the parties hereto being to have such restrictions and covenants apply for the full periods specified in Sections 4 and 5 hereof following the termination of the Executive's employment with the Company. The Company and the Executive acknowledge and agree that the restrictions and covenants contained in Sections 4 and 5 hereof are reasonable in view of the nature of the business in which the Company is engaged and the Executive's advantageous knowledge of and familiarity with the business, operations, affairs and customers of the Company. Notwithstanding anything contained herein to the contrary, if the scope of any restriction or covenant contained in Sections 4 and 5 hereof is found by a court of competent jurisdiction to be too broad to permit enforcement of such restriction or covenant to its full extent, then such restriction or covenant shall be enforced to the maximum extent permitted by law. 9. Release. (a) For and in consideration of the foregoing covenants and promises made by the Company, and the performance of such covenants and promises, the sufficiency of which is hereby acknowledged, the Executive agrees to release the Company prior to the receipt of any benefits under Section 3 hereof by the Executive. Such release to be substantially in the form attached hereto as EXHIBIT A. (b) Unless required by law, the Executive agrees that the fact and the terms of this Agreement shall be strictly confidential and that the Executive shall not divulge, directly or indirectly, explicitly or implicitly, the fact or terms of this Agreement to any person other than the Executive's spouse, attorney(s) and tax advisor(s) or as otherwise required by law. The Executive further agrees that for purposes of this Section 9, the Executive's spouse, attorney(s) and tax advisor(s) are the Executive's agents and that a breach of these terms of confidentiality by them, or any of them, shall constitute a breach by the Executive. 6 (c) The "Company and its agents," as used in this Agreement, means the Company, its subsidiaries, affiliated, or related corporations or associations, their predecessors, successors and assigns, and the directors, officers, managers, supervisors, employees, representatives, servants, agents and attorneys of the entities above described, and all persons acting, through, under or in concert with any of them. 10. No Reliance. The Executive represents and acknowledges that in executing this Agreement, he does not rely and has not relied upon any representation or statement by the Company and its agents, other than the statements which are contained within this Agreement. 11. No Admissions. This Agreement shall not in any way be construed as an admission by the Company and its agents of any acts of discrimination or other improper conduct whatsoever against the Executive or any other person, and the Company specifically disclaims any liability to or discrimination against the Executive or any other person on the part of itself, its employees or its agents. 12. Miscellaneous. (a) Further Assurances. Each of the parties hereto shall do, execute, acknowledge, and deliver or cause to be done, executed, acknowledged, and delivered at any time and from time to time upon the request of any other parties hereto, all such further acts, documents, and instruments as may be reasonably required to effect any of the transactions contemplated by this Agreement. (b) Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither party hereto may assign this Agreement without the prior written consent of the other party. Notwithstanding the foregoing, this Agreement may be assigned, without the prior consent of the Executive to a successor of the Company (and the Executive hereby consents to the assignment of the Restrictive Covenants under this Agreement to a purchaser of all or substantially all of the assets of the Company or a transferee, by merger or otherwise, of all or substantially all of the businesses and assets of the Company) and, upon the Executive's death, this Agreement shall inure to the benefit of and be enforceable by the Executive's executors, administrators, representatives, heirs, distributees, devisees, and legatees and all amounts payable hereunder shall be paid to such persons or the estate of the Executive. (c) Waiver; Amendment. No provision or obligation of this Agreement may be waived or discharged unless such waiver or discharge is agreed to in writing and signed by the Company and the Executive. The waiver by any party hereto of a breach of or noncompliance with any provision of this Agreement shall not operate or be construed as a continuing waiver or a waiver of any other or subsequent breach or noncompliance hereunder. Except as expressly provided otherwise herein, this Agreement may be amended, modified, or supplemented only by a written agreement executed by the Company and the Executive. (d) Headings. The headings in this Agreement have been inserted solely for ease of reference and shall not be considered in the interpretation, construction, or enforcement of this Agreement. 7 (e) Severability. All provisions of this Agreement are severable from one another, and the unenforceability or invalidity of any provision of this Agreement shall not affect the validity or enforceability of the remaining provisions of this Agreement; provided, however, that should any judicial body interpreting this Agreement deem any provision to be unreasonably broad in time, territory, scope, or otherwise, the parties intend for the judicial body, to the greatest extent possible, to reduce the breadth of the provision to the maximum legally allowable parameters rather than deeming such provision totally unenforceable or invalid. (f) Notice. Any notice, request, instruction, or other document to be given hereunder to any party shall be in writing and delivered by hand, telegram, facsimile transmission, registered or certified United States mail, return receipt requested, or other form of receipted delivery, with all expenses of delivery prepaid, as follows: If to the Executive: If to the Company: Robert G. Jones Old National Bancorp 3114 Tamarack Court #908 Post Office Box 718 Evansville, IN 47715 Evansville, Indiana 47705 ATTENTION: General Counsel (g) No Counterparts. This Agreement may not be executed in counterparts. (h) Governing Law; Jurisdiction; Venue; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without reference to the choice of law principles or rules thereof. The parties hereto irrevocably consent to the jurisdiction and venue of the state court for the State of Indiana located in Evansville, Indiana, or the Federal District Court for the Southern District of Indiana, Evansville Division, located in Vanderburgh County, Indiana, and agree that all actions, proceedings, litigation, disputes, or claims relating to or arising out of this Agreement shall be brought and tried only in such courts. EACH OF THE PARTIES WAIVES ANY RIGHTS THAT IT MAY HAVE TO BRING A CAUSE OF ACTION IN ANY COURT OR IN ANY PROCEEDING INVOLVING A JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW. (i) Entire Agreement. This Agreement constitutes the entire and sole agreement between the Company and the Executive with respect to the termination of the Executive's employment and there are no other agreements or understanding either written or oral with respect thereto, except that the Change in Control Agreement dated September 7, 2004, by and between the Executive and the Company shall continue in full force and effect, until otherwise terminated in accordance with its terms. (j) Construction. The rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Whenever in this Agreement a singular word is used, it also shall include the plural wherever required by the context and vice-versa. All reference to the masculine, feminine, or neuter genders shall include any other gender, as the context requires. 8 (k) Attorneys' Fees. The prevailing party shall be entitled to reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements) in connection with any legal action to interpret or enforce any provision of this Agreement or for any breach of this Agreement. (l) Review and Consultation. The Company and the Executive hereby acknowledge and agree that each (i) has read this Agreement in its entirety prior to executing it, (ii) understands the provisions and effects of this Agreement, (iii) has consulted with such attorneys, accountants, and financial and other advisors as it or he has deemed appropriate in connection with their respective execution of this Agreement, and (iv) has executed this Agreement voluntarily. THE EXECUTIVE HEREBY UNDERSTANDS, ACKNOWLEDGES, AND AGREES THAT THIS AGREEMENT HAS BEEN PREPARED BY COUNSEL TO THE COMPANY AND THAT HE HAS NOT RECEIVED ANY ADVICE, COUNSEL, OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM THE COMPANY OR ITS COUNSEL. (m) Taxes. All federal, state, local, and other taxes (including, without limitation, interest, fines, and penalties) imposed upon the Executive under applicable law by virtue of or relating to the transactions and the payments to the Executive contemplated by this Agreement and any of plans shall be paid by the Executive. ROBERT G. JONES BY: /s/ Robert G. Jones 9/7/04 --------------------- ------ EXECUTIVE'S SIGNATURE DATE OLD NATIONAL BANCORP BY: /s/ Larry E. Dunigan 9/8/04 --------------------- ------ DATE Larry E. Dunigan Chairman 9 EXHIBIT A NOTICE VARIOUS LOCAL, STATE, AND FEDERAL LAWS PROHIBIT EMPLOYMENT DISCRIMINATION BASED ON AGE, SEX, RACE, COLOR, NATIONAL ORIGIN, RELIGION, HANDICAP, OR VETERAN STATUS. THESE LAWS ARE ENFORCED THROUGH THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC), THE U.S. DEPARTMENT OF LABOR, THE INDIANA CIVIL RIGHTS COMMISSION, AND/OR ANY OTHER SIMILAR STATE ENTITY, AGENCY OR COMMISSION. IF YOU FEEL THAT YOUR DECISION TO ENTER INTO THE ATTACHED RELEASE OF ALL CLAIMS WAS COERCED OR IS DISCRIMINATORY, YOU ARE ENCOURAGED TO SPEAK WITH ALLEN MOUNTS (812-464-1411) OR OTHER APPROPRIATE OLD NATIONAL BANCORP OFFICIALS. YOU SHOULD ALSO DISCUSS THE LANGUAGE OF THIS RELEASE OF ALL CLAIMS WITH A LAWYER OF YOUR OWN CHOOSING. IN ANY EVENT, YOU SHOULD THOROUGHLY REVIEW AND UNDERSTAND THE EFFECT OF THIS RELEASE OF ALL CLAIMS BEFORE ACTING ON IT; THEREFORE, PLEASE TAKE THIS RELEASE OF ALL CLAIMS HOME AND REVIEW IT. YOU MAY TAKE UP TO TWENTY-ONE (21) DAYS BEFORE SIGNING THIS RELEASE OF ALL CLAIMS. 10 EXHIBIT A RELEASE OF ALL CLAIMS FOR VALUABLE CONSIDERATION, including the payment to the Executive of certain severance benefits, the Executive hereby makes this Release in favor of Old National Bancorp (including all subsidiaries and affiliates) (the "Company") and its agents as set forth herein. 1. The Executive releases, waives and discharges the Company and its agents (as defined below) from all rights and claims arising out of the Executive's employment relationship with the Company that are known or might be known on the date of the execution of this Release including but not limited to, discrimination claims based on age, race, sex, religion, national origin, disability, veterans status or any other claim of employment discrimination including claims arising under The Civil Rights Act of 1866, 42 U.S.C. Section 1981; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Age Discrimination in Employment Act of 1967; the Federal Rehabilitation Act of 1973; the Older Workers' Benefits Protection Act; the Employee Retirement Income Security Act of 1974; the Indiana Civil Rights Act, the Indiana Wage Payment and Wage Claims Acts, any Federal or State wage and hour laws and all other similar Federal or State statutes; and any and all tort or contract claims, including, but not limited to, breach of contract, breach of good faith and fair dealing, infliction of emotional distress, or wrongful termination or discharge. 2. The Executive further acknowledges that the Company has advised the Executive to consult with an attorney of the Executive's own choosing and that he has had ample time and adequate opportunity to thoroughly discuss all aspects of this Release with legal counsel prior to executing this Release. 3. The Executive agrees that the Executive is signing this Release of his own free will and is not signing under duress. 4. In the event the Executive is forty (40) years of age or older, the Executive acknowledges that the Executive has been given a period of twenty-one (21) days to review and consider a draft of this Release in substantially the form of the copy now being executed, and has carefully considered the terms of this Release. The Executive understands that the Executive may use as much or all of the twenty-one (21) day period as the Executive wishes prior to signing, and the Executive has done so. 11 5. In the event the Executive is forty (40) years of age or older, the Executive has been advised and understands that the Executive may revoke this Release within seven (7) days after acceptance. ANY REVOCATION MUST BE IN WRITING AND HAND-DELIVERED TO: Old National Bancorp Attn: General Counsel 420 Main Street Evansville, Indiana 47708 NO LATER THAN BY CLOSE OF BUSINESS ON THE SEVENTH (7TH) DAY FOLLOWING THE DATE OF EXECUTION OF THIS RELEASE. 6. The "Company and its agents," as used in this Release, means the Company, its subsidiaries, affiliated, or related corporations or associations, their predecessors, successors and assigns, and the directors, officers, managers, supervisors, employees, representatives, servants, agents and attorneys of the entities above described, and all persons acting, through, under or in concert with any of them. 7. The Executive agrees to speak well of and refrain from voicing any criticism of the Company and its agents. The Company agrees to refrain from providing any information to third parties other than confirming dates of employment and job title, unless the Executive gives the Company written authorization to release other information or as otherwise required by law. With respect to the Company, this restriction pertains only to official communications made by the Company's directors and/or officers and not to unauthorized communications by the Company's employees or agent. This restriction will not bar the Company from disclosing the Release as a defense or bar to any claim made by the Executive in derogation of this Release. PLEASE READ CAREFULLY BEFORE SIGNING. THIS RELEASE CONTAINS A RELEASE AND DISCHARGE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE COMPANY AND ITS AGENTS EXCEPT THOSE RELATING TO THE ENFORCEMENT OF THIS RELEASE OR THOSE ARISING AFTER THE EFFECTIVE DATE OF THIS RELEASE. 12 EX-10.(F) 3 c89585exv10wxfy.txt 1ST AMENDMENT TO 1999 EQUITY INCENTIVE PLAN EXHIBIT 10(f) FIRST AMENDMENT TO THE OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN THIS FIRST AMENDMENT to the Old National Bancorp 1999 Equity Incentive Plan (the "Plan") is hereby adopted by Old National Bancorp (the "Company") this 22nd day of July, 2004; W I T N E S S E T H: WHEREAS, the Company adopted the Plan for the purposes set forth therein; and WHEREAS, the Plan currently provides for grants of Restricted Stock based on achievement of "Performance Goals" but does not provide for imposition of a vesting schedule based on completion of years of service; and WHEREAS, the definition of "Change in Control" in the Plan includes the ". .. . approval, adoption, agreement to recommend, or acceptance . . ." by the Company's Board of Directors (the "Board") of any of the various transactions listed in the definition of Change in Control; and WHEREAS, the Plan does not provide for outright grants of stock to employees in recognition of services rendered to the Company; and WHEREAS, the Board has determined, in its best judgment, that the Plan should be amended to (i) allow the Compensation Committee to impose a vesting schedule on Restricted Stock grants; (ii) eliminate Board actions with respect to the various transactions described in the definition of Change in Control; and (iii) provide for outright grants of stock to employees in recognition of services rendered to the Company; and WHEREAS, pursuant to Section 10.1 of the Plan, the Company has reserved the right to amend the Plan with respect to certain matters, by action of the Board; and WHEREAS, counsel to the Company has prepared the First Amendment to the Plan for the purposes stated above; and WHEREAS, the Board has approved and adopted this First Amendment; NOW, THEREFORE, pursuant to the authority reserved to the Company under Section 10.1 of the Plan, the Plan is hereby amended, effective as of January 1, 2004, in the following particulars: 1. By amending Section 2.4 to read as follows: "2.4. "AWARD" means, individually or collectively, a grant under this Plan of Shares, Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance Units or Performance Shares." 2. By amending Section 8.2 to read as follows: "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 and the number of Shares granted. The Committee may also set Performance Goals in its sole discretion which, depending on the extent to which they are met, will determine the number of Shares that will be released to the Participant after the end of the Period of Restriction." 3. By amending Section 8.4.1 to read as follows: "8.4.1. GENERAL RESTRICTIONS. The Committee may impose restrictions on Restricted Stock based upon any one or more of the following criteria: (a) the achievement of specific Company-wide, Affiliate-based, Subsidiary-based, divisional, individual Participant, or other Performance Goals, (b) vesting based on years of service with the Company and any of its Subsidiaries, (c) applicable Federal or state securities laws, or (d) any other basis determined by the Committee in its sole discretion." 4. By amending Section 8.5 to read as follows: "8.5 REMOVAL OF RESTRICTIONS, FORFEITURE AND RELEASE OF ADDITIONAL SHARES. Except as otherwise provided in this Section 8, as soon as practicable after the applicable Period of Restriction lapses, Shares of Restricted Stock covered by an Award Agreement shall be subject to release to the Participant. The number of Shares to be released shall be determined as a function of the extent to which the applicable Performance Goals have been achieved. To the extent (a) the Shares are not earned, they shall be forfeited; or (b) required by the Award Agreement, additional Shares shall be issued. Except in the case of Awards of Restricted Stock to Covered Employees which are intended to qualify as `performance-based compensation' under Section 162(m) of the Code (the vesting and/or earning 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." 2 5. By adding a new Section 9.8 to read as follows: "9.8. OUTRIGHT AWARD OF SHARES. Notwithstanding the other provisions of this Section 9, the Committee may make an outright Award of Shares to any Employee in such amount as the Committee, in its sole discretion, may determine. Such grant may be evidenced by a Share Award Agreement or such other document as the Committee, in its sole discretion, determines to be appropriate; provided, however, the Shares shall be freely transferable and the Committee shall not impose Performance Goals, a Period of Restriction or any other conditions, restrictions or risks of forfeiture on the Award. Awards of Shares pursuant to this Section 9.8 shall be subject to the withholding requirements of Section 11." 6. By amending Section 12.2(e) to read as follows: "(e) 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; or" 7. By amending Section 14.8 to read as follows: "14.8. NONTRANSFERABILITY OF AWARDS. Except as provided in Sections 9.8, 14.8.1 and 14.8.2, no Award 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 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." All other terms and conditions of the Plan remain unchanged and are in full force and effect. 3 IN WITNESS WHEREOF, Old National Bancorp, by its officers thereunder duly authorized, has executed this First Amendment to the Old National Bancorp 1999 Equity Incentive Plan as of the day and year first above written, but effective as of January 1, 2004. OLD NATIONAL BANCORP By: /s/ Allen R. Mounts ----------------------- Allen R. Mounts, Senior Vice President ATTEST: By: /s/ Jeffrey L. Knight ------------------------- Secretary 4 EX-10.(G) 4 c89585exv10wxgy.txt FORM OF "PERFORMANCE-BASED" RESTRICTED STOCK AWARD AGREEMENT EXHIBIT 10(g) OLD NATIONAL BANCORP 1999 EQUITY INCENTIVE PLAN "PERFORMANCE-BASED" RESTRICTED STOCK AWARD AGREEMENT THIS AWARD AGREEMENT (the "Agreement"), made and executed as of the ____ day of _________, 2004, between Old National Bancorp, an Indiana corporation (the "Company"), and _____________________________, an officer or employee of the Company or one of its Affiliates (the "Participant"). WITNESSETH: WHEREAS, the Company has adopted the Old National Bancorp 1999 Equity Incentive Plan (the "Plan") to further the growth and financial success of the Company and its Affiliates by aligning the interests of 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; and WHEREAS, it is the view of the Company that this goal can be achieved by granting Restricted Stock to eligible officers and other key employees; and WHEREAS, the Participant has been designated by the Compensation Committee as an individual to whom Restricted Stock should be granted as determined from the duties performed, the initiative and industry of the Participant, and his or her potential contribution to the future development, growth and prosperity of the Company; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Participant agree as follows: 1. AWARD OF RESTRICTED STOCK. The Company hereby awards to the Participant _______________________ (__________) Shares of performance-based Restricted Stock (hereinafter, the "Restricted Stock"), subject to the terms and conditions of this Agreement and the provisions of the Plan. All provisions of the Plan, including defined terms, are incorporated herein and expressly made a part of this Agreement by reference. The Participant hereby acknowledges that he or she has received a copy of the Plan. 2. PERFORMANCE GOALS. Except as otherwise provided in Sections 4 and 5 of this Agreement, the Restricted Stock will be treated as earned to the extent the Performance Goals specified in EXHIBIT A are satisfied. To the extent the Performance Goals are not satisfied (with the result that either no Shares or less than all Shares of Restricted Stock have been earned), then the unearned Shares will be forfeited, effective as of the last day of the Performance Period, regardless of whether the Period of Restriction has otherwise lapsed under Section 3 of this Agreement. 3. PERIOD OF RESTRICTION. The Period of Restriction shall begin on the Grant Date and lapse, except as otherwise provided in Sections 2, 4 and 5 of this Agreement, on March 31, 2007. 4. CHANGE IN CONTROL. Notwithstanding any other provision of this Agreement, any Shares of Restricted Stock which have not been earned or are subject to the Period of Restriction, shall be treated as fully earned and the Period of Restriction shall lapse upon a Change in Control of the Company as provided in Section 12.1 of the Plan. 5. TERMINATION OF SERVICE. Notwithstanding any other provision of this Agreement, in the event of the Participant's Termination of Service due to death, Disability or Retirement, the following shall apply: (a) If the Participant's Termination of Service is due to death, the (i) Period of Restriction shall lapse, and (ii) the Shares shall be treated as earned, at the "Target" level specified in EXHIBIT A, effective as of the date of death. (b) If the Participant's Termination of Service is due to Disability or Retirement, (i) he shall continue to be treated as a Participant, (ii) the Period of Restriction shall lapse at the time specified in Section 3 of this Agreement, and (iii) the Shares shall be treated as earned to the extent the applicable Performance Goals are satisfied; provided, however, that if the Participant dies prior to the end of the Period of Restriction, then the provisions of subsection (a) of this Section 5 shall apply. Unless otherwise determined by the Committee in its sole discretion, in the event of the Participant's Termination of Service for any other reason, any Shares of Restricted Stock which have not been earned and/or with respect to which the Period of Restriction has not lapsed, shall be forfeited effective as of the date of the Participant's Termination of Service. 6. DIVIDENDS ON RESTRICTED STOCK. During the Period of Restriction, the Participant shall be entitled to receive any cash dividends paid with respect to the Shares of Restricted Stock, regardless of whether such Shares have been earned or the Period of Restriction has not lapsed. All stock dividends paid with respect to Shares of Restricted Stock shall be (a) added to the Restricted Stock, and (b) subject to all of the terms and conditions of this Agreement and the Plan. 7. VOTING RIGHTS. During the Period of Restriction, the Participant may exercise all voting rights with respect to the Shares of Restricted Stock as if he or she is the owner thereof. 8. PARTICIPANT'S REPRESENTATIONS. The Participant represents to the Company that: (a) The terms and arrangements relating to the grant of Restricted Stock and the offer thereof have been arrived at or made through direct communication with the Company or person acting in its behalf and the Participant; 2 (b) The Participant has received a balance sheet and income statement of the Company and as an officer or key employee of the Company: (i) is thoroughly familiar with the Company's business affairs and financial condition and (ii) has been provided with or has access to such information (and has such knowledge and experience in financial and business matters that the Participant is capable of utilizing such information) as is necessary to evaluate the risks, and make an informed investment decision with respect to, the grant of Restricted Stock; and (c) The Restricted Stock is being acquired in good faith for investment purposes and not with a view to, or for sale in connection with, any distribution thereof. 9. INCOME AND EMPLOYMENT TAX WITHHOLDING. All required federal, state, city and local income and employment taxes which arise on the satisfaction of the Performance Goals and the lapse of the Period of Restriction shall be satisfied through the (a) withholding of the Shares required to be issued under Section 11, or (b) tendering by the Participant of Shares which are owned by the Participant, as described in Section 6.6(a) of the Plan. The Fair Market Value of the Shares to be withheld or tendered shall be equal to the dollar amount of the Company's aggregate withholding tax obligations, calculated as of the day prior to the day on which the Period of Restriction ends. 10. NONTRANSFERABILITY. Until the end of the Period of Restriction, the Restricted Stock cannot be (i) 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; or (ii) subject to execution, attachment or similar process. Any attempted or purported transfer of Restricted Stock in contravention of this Section 10 or the Plan shall be null and void ab initio and of no force or effect whatsoever. 11. ISSUANCE OF SHARES. At or within a reasonable period of time following execution of this Agreement, the Company will issue, in book entry form, the Shares representing the Restricted Stock. As soon as administratively practicable following the date on which the Shares of Restricted Stock are earned and the Period of Restriction lapses, the Company will issue to the Participant or his Beneficiary the number of Shares of Restricted Stock specified in EXHIBIT A, less any withholdings required by Section 9 of this Agreement. In the event of the Participant's death before the Shares are issued, such stock certificate will be issued to the Participant's Beneficiary or estate in accordance with Section 14.7 of the Plan. Notwithstanding the foregoing provisions of this Section 11, the Company will not be required to issue or deliver any certificates for Shares prior to (i) completing any registration or other qualification of the Shares, which the Company deems necessary or advisable under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body; and (ii) obtaining any approval or other clearance from any federal or state governmental agency or body, which the Company 3 determines to be necessary or advisable. The Company has no obligation to obtain the fulfillment of the conditions specified in the preceding sentence. As a further condition to the issuance of certificates for Shares, the Company may require the making of any representation or warranty which the Company deems necessary or advisable under any applicable law or regulation. 12. MITIGATION OF EXCISE TAX. Except to the extent otherwise provided in a written agreement between the Company and the Participant, the Restricted Stock issued hereunder is subject to reduction by the Committee for the reasons specified in Section 14.10 of the Plan. 13. INDEMNITY. The Participant hereby agrees to indemnify and hold harmless the Company and its Affiliates (and their respective directors, officers and employees), and the Committee, from and against any and all losses, claims, damages, liabilities and expenses based upon or arising out of the incorrectness or alleged incorrectness of any representation made by the Participant to the Company or any failure on the part of the Participant to perform any agreements contained herein. The Participant hereby further agrees to release and hold harmless the Company and its Affiliates (and their respective directors, officers and employees) from and against any tax liability, including without limitation, interest and penalties, incurred by the Participant in connection with his or her participation in the Plan. 14. FINANCIAL INFORMATION. The Company hereby undertakes to deliver to the Participant, at such time as they become available and so long as the Period of Restriction has not lapsed and the Restricted Stock has not been forfeited, a balance sheet and income statement of the Company with respect to any fiscal year of the Company ending on or after the date of this Agreement. 15. CHANGES IN SHARES. In the event of any change in the Shares, as described in Section 4.5 of the Plan, the Committee will make appropriate adjustment or substitution in the Shares of Restricted Stock, all as provided in the Plan. The Committee's determination in this respect will be final and binding upon all parties. 16. EFFECT OF HEADINGS. The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation. 17. CONTROLLING LAWS. Except to the extent superseded by the laws of the United States, the laws of the State of Indiana, without reference to the choice of law principles thereof, shall be controlling in all matters relating to this Agreement. 18. COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument. IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and the Participant, have caused this Restricted Stock Award Agreement to be executed as of the day and year first above written. 4 PARTICIPANT - ------------------------------ ------------------------------ Signature Printed Name OLD NATIONAL BANCORP By:___________________________________ Allen R. Mounts Senior Vice President Director of Human Resources 5 EXHIBIT A GRANT DATE: SHARES OF RESTRICTED STOCK AWARDED: See Section 1 of the Agreement PERFORMANCE PERIOD: January 1, 2004 through December 31, 2006 OVERVIEW To continue its objective of focusing the executive officers on creation of stockholder value, Old National Bancorp's Compensation Committee has approved a 3-year Performance Based Restricted Stock award to executive officers, which could be earned on December 31, 2006 based on the collective results of three performance factors measured against a comparator "Peer" group. The three performance factors are: 1. Relative Total Shareholder Return (TSR) 2. Earnings Per Share (EPS) Growth 3. Book Value Per Share (BVPS) Growth DEFINITION OF PERFORMANCE FACTORS Relative Total Shareholder Return (TSR): Relative TSR represents Common Stock price appreciation plus dividends paid based on the 12 month average stock price for the period ending December 31, 2003 ("Calculation Period") compared to the 12 month average stock price for the period ending December 31, 2006 ("Calculation Period"), for Old National and the Peer Group. An index will be created to show the value of a $100 investment over the performance period. The 12 month average stock price will be determined by averaging the closing stock price of each calendar month during the "Calculation Periods", including adjustments for cash and stock dividends. Earnings Per Share (EPS) Growth: EPS Growth represents the compound annual rate of change from December 31, 2003 through December 31, 2006 for the Peer Group compared to the Old National's Earnings Per Share (EPS) Growth from $1.40 EPS (Average EPS for 2002 and 2003) through December 31, 2006. Book Value Per Share (BVPS) Growth: BVPS growth represents the compound annual rate of increase from December 31, 2003 through December 31, 2006. PERFORMANCE WEIGHTS "Performance Weight" equals the relative importance of each performance measure in evaluating performance relative to the peer group and determining the number of Performance Based Restricted Shares earned. The following weight has been assigned to each performance factor: 6

PEER GROUP The Peer Group for the 2004 Awards will include the following 30 banks. For subsequent Award cycles, the Committee will reevaluate the makeup of the Peer Group.

Peer Group members may be removed in the event of a merger or acquisition. 7 CALCULATION OF PERFORMANCE For each Performance Factor, the performance for Old National and the peer banks will be determined and then ranked. Old National's rank will then be multiplied times the Performance Weight for each Performance Factor, resulting in Old National's Weighted Average Performance Rank. The Weighted Average Performance Rank will be used to determine Old National's Relative Percentile Ranking. The table below shows the percent of the Shares Awarded (Section 1 of Agreement) that may be earned at various percentile rankings:

If Old National's percentile ranking is between the points shown above, the payout will be interpolated. TIMING FOR AWARD DETERMINATION Once performance for Old National and the Peer Group is known, and the corresponding percentile ranking is calculated, one of the following scenarios will occur: - If Old National's percentile ranking is below the 35th percentile, all Restricted Stock awarded (Section 1) will be forfeited. - If Old National's percentile ranking is between the 35th percentile and the 50th percentile, restrictions will lapse on 25% to 100% of the Restricted Stock per the above schedule noted in the "Calculation of Performance" section. - If performance is above the 50th percentile, then all restrictions will lapse on the Restricted Stock, and an additional unrestricted grant will be issued for the appropriate number of shares. Final determination of the results including action related to one of the above scenarios will occur on or before March 31, 2007. 8 EX-10.(H) 5 c89585exv10wxhy.txt FORM OF EXECUTIVE STOCK OPTION AWARD AGREEMENT EXHIBIT 10(h) OLD NATIONAL BANCORP EQUITY INCENTIVE PLAN EXECUTIVE STOCK OPTION AWARD AGREEMENT (Date) THIS AWARD AGREEMENT, made and executed as of the ___ day of ________, 2004, between Old National Bancorp, an Indiana corporation (the "Company"), and _____________________________, an officer or employee of the Company or one of its Affiliates (the "Participant"); WITNESSETH: WHEREAS, the Company has adopted the Old National Bancorp 1999 Equity Incentive Plan (the "Plan"), to further the growth and financial success of the Company and its Affiliates by aligning the interests of Participants, through the ownership of Shares, 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; and WHEREAS, it is the view of the Company that this goal may be achieved by granting stock options to eligible officers and other key employees; and WHEREAS, the Participant has been designated by the Committee as an individual to whom stock options should be granted under the Plan as determined from the duties performed, the initiative and industry of the Participant, the extraordinary nature of his/her service, and his/her potential contribution to the future development, growth and prosperity of the Company; WHEREAS, as a condition of this Stock Option Award Agreement, the Participant and the Company have entered into a Confidentiality and Non-Solicitation Agreement which contains certain restrictions on the Participant. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Participant agree as follows: 1. Grant of Option. (a) Aggregate Number of Shares. Subject to the provisions of Sections 5 and 7 of this agreement, the Company hereby grants to the Participant the right and option ("Option") to purchase all or any part of an aggregate of (_______) Shares subject to the terms and conditions of this agreement and the provisions of the Plan. All provisions of the Plan, including defined terms, are incorporated and are expressly made a part of this agreement by reference. The Participant hereby acknowledges that he/she has received a copy of the Plan. (b) Designation of Character of Options. Pursuant to the authority of the Committee to determine the character of the options granted of the total options granted under subsection (a), (_________) shares shall be nonqualified stock options ("NSO's"). 2. Option Price. (a) Exercise Price. The per share Exercise Price for the Shares represented by the Option granted under Section 1 shall be $____ (which is the per share Fair Market Value on the date the Option is granted). (b) Issuance of Certificates. Certificates evidencing the Shares purchased under the Option will not be delivered to the Participant until full payment has been made for them and the Participant shall have none of the rights of a shareholder with respect to such Shares until those Shares are 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. The Company will not be required to issue or deliver any certificates for Shares purchased upon exercise of the Option prior to (i) completing any registration or other qualification of the Shares, which the Company deems necessary or advisable under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body; and (ii) obtaining any approval or other clearance from any federal or state governmental agency or body, which the Company determines to be necessary or advisable. The Company has no obligation to obtain the fulfillment of the conditions specified in the preceding sentence. 3. Income and Employment Tax Withholding. (a) Participant's Sole Responsibility. The Participant will be solely responsible for paying to the Company all required federal, state, city and local taxes applicable to his/her (i) exercise of an NSO, and (ii) disposition of Shares acquired pursuant to the exercise of an ISO is a disqualifying disposition as described in Section 422(a)(1) of the Code. The Participant agrees to notify the Company within ten (10) days of making such a disqualifying disposition. (b) Payment by Withholding Shares. Notwithstanding the provisions of subsection (a), with respect to Shares to be issued pursuant to the exercise of an NSO, the Committee, in its discretion and subject to such rules as it may adopt, may permit the Participant to elect to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the exercise of the NSO by having the Company withhold otherwise deliverable Shares or accept delivery from the Participant of Shares then owned by the Participant which have a Fair Market Value, determined as of the date of the delivery of such Shares, equal to the amount of the minimum withholding tax to be satisfied by that retention or delivery. 4. Nontransferability. The Option cannot be assigned or transferred by the Optionee except by will or by the laws of descent and distribution. The Option cannot be pledged or hypothecated in any way, nor can it be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge or other disposition of the Option in violation of this provision or the levy of execution, attachment or similar process upon the Option will be null and void and without effect and will cause the Option to be terminated. Notwithstanding the foregoing, and as more fully outlined in the Plan, the Participant may transfer NSO's 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 Immediate Family Members are the only equity owners (collectively, "Eligible Transferees"). 5. Exercise of Option. (a) Maximum Term and Vesting. The Option may not be exercised after the expiration of ten (10) years from the date of this agreement, subject to earlier termination as provided in the Plan or this agreement. Subject to the provisions of this Section 5 and Section 7, one hundred percent (100%) of the Option Shares shall vest and be exercisable by the Participant on (Date). 2 Notwithstanding the foregoing, the Option Shares shall also become fully vested and be exercisable upon the Participant's death, Disability or Retirement. In addition, the Option Shares shall vest and be exercisable upon a Change in Control of the Company. (b) Limitations on Exercise. Except as otherwise provided in Section 4, the Option may be exercised during the lifetime of the Participant only by the Participant or his/her guardian or attorney-in-fact in the event the Participant incurs a Disability. In the case of the Participant's death, the Option may be exercised by the Participant's personal representative. (c) Legal Requirements. Notwithstanding any other provision of this agreement, the Option may not be exercised in whole or in part if the issuance of the Shares would constitute a violation of any applicable federal or state securities law or other applicable laws, rules or regulations. As a condition to the exercise of the Option, the Company may require the person exercising the Option to make any representation or warranty to the Company as may be required by any applicable law or regulation. 6. Method of Exercise of Options. The Participant may exercise the Option, to the extent it is vested, in whole or in part, at any time during the Option Period, by giving written notice to the Company of exercise on a form provided by the Committee for such purpose. Such notice must specify the number of Shares subject to the Option to be purchased and must be accompanied by payment in full of the total Exercise Price by cash or cashier's check. 7. Early Termination of Option. (a) In General. All rights to exercise the Option will terminate on the effective date of the Participant's Termination of Service, except that such Option, to the extent then exercisable at the time of such Termination of Service, may be exercised until the expiration of the thirty (30) consecutive day period commencing on the date of such Termination of Service, but no later than the date the Option expires pursuant to its terms, unless the termination is for Cause or on account of the death, Disability or Retirement of the Participant. Transfer from the Company to an Affiliate or vice versa, or from one Affiliate to another, will not be deemed a Termination of Service. (b) For Cause Termination. If the Participant's Termination of Service is for Cause, the Option will terminate effective on the date the Participant receives notice of his/her Termination of Service for Cause unless the Committee determines otherwise in its sole discretion, in which case the Option will expire at the time prescribed in Subsection (a). For purposes of this Agreement, Cause means (A) an action by the Participant which involves misconduct or gross negligence materially injurious to the Company, (B) the requirement or direction imposed on the Company by a federal or state regulatory agency which has jurisdiction over the Company to terminate the employment of the Participant, or (C) the conviction of the Participant of the commission of any criminal offense involving dishonesty or breach of trust, or, (D) any intentional breach by the Participant of a material term, condition or covenant of any written agreement between the Participant and the Company or one of its Affiliates. Notwithstanding the foregoing, the Participant will not be deemed to have incurred a Termination for Cause unless there is delivered to the Participant a copy of a notice of termination from the Company accompanied by a resolution duly adopted by a majority of the Board then in office finding that, in the good faith opinion of the Board, the termination of the Participant's employment is for Cause, specifying the particulars thereof in detail, and granting an opportunity, following a reasonable period of time, for the Participant, together with his counsel, to be heard before the Board. (c) Exercise on Death, Disability or Retirement. If a Participant's Termination of Service is due to death, Disability or Retirement, any unexercised Options held by such Participant will thereafter be fully exercisable until the expiration of the Option Period. (d) Change in Control of the Company. In the event of a Change in Control of the Company, all outstanding Options that are not then exercisable or are subject to any restrictions will become 3 immediately exercisable and all restrictions 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 Option. 8. Participant's Representations. The Participant represents to the Company that: (a) the terms and arrangements relating to the grant of the Option and the Shares to which it relates, and the offer thereof, have been arrived at or made through direct communication with the Company or person acting in its behalf and such Participant; (b) he/she has received a balance sheet and income statement of the Company and as an officer or key employee of the Company or its Affiliates: (i) is thoroughly familiar with its business affairs and financial condition and (ii) has been provided with or has access to such information (and has enough knowledge and experience in financial and business matters that he/she is capable of utilizing such information) as is necessary to evaluate the risks, and make an informed investment decision with respect to, this right and the Shares to which it relates; (c) he/she has sufficient financial resources so that he/she is able to bear the economic risks of his/her investment in the Shares to which the Option relates; and (d) he/she represents the Option is being acquired in good faith for investment purposes and not with a view to, or for sale in connection with, any distribution thereof. 9. Mitigation of Excise Tax. The Participant acknowledges that all Awards and the exercise of all Options hereunder are subject to reduction by the Committee for reasons specified in Section 14.10 of the Plan. 10. Indemnity. The Participant hereby agrees to indemnify and hold harmless the Company and its Affiliates (and their respective directors, officers and employees), and the Committee, from and against any and all losses, claims, damages, liabilities and expenses based upon or arising out of the incorrectness or alleged incorrectness of any representation made by him/her to the Company or any failure on the part of him/her to perform any agreements contained herein. The Participant hereby further agrees to release and hold harmless the Company and its Affiliates (and their respective directors, officers and employees) from and against any tax liability, including without limitation, interest and penalties, incurred by the Participant in connection with his/her participation in the Plan. 11. Financial Information. The Company hereby undertakes to deliver to the Participant, at such time as they become available and so long as the Option is in effect and is unexercised in whole or in part, a balance sheet and income statement of the Company with respect to any fiscal year of the Company ending on or after the date of this agreement. 12. Conditions Precedent. In no event will the Company be obligated to issue Shares pursuant to the Option until it is satisfied that all conditions precedent to the issuance of the Shares, as provided in the Plan and this agreement, have been performed and completed. 13. Changes in Shares. In the event of any change in the Shares, as described in Section 4.5 of the Plan, the Committee will make appropriate adjustment or substitution in the number, kind and price of Shares under the Option, all as provided in the Plan. The Committee's determination in this respect will be final and conclusive upon all parties. 14. Effect of Headings. The descriptive headings of the Sections and, where applicable, subsections, of this agreement are inserted for convenience and identification only and do not constitute a part of this agreement for purposes of interpretation. 4 15. Controlling Laws. Except to the extent superseded by the laws of the United States, the laws of the State of Indiana, without reference to the choice of law principles thereof, shall be controlling in all matters relating to this agreement. 16. Counterparts. This agreement may be executed in two (2) or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument. IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and the Participant, have caused this Stock Option Award Agreement to be executed as of the day and year first above written, which is the date on which the Option is granted. Accepted by: ______________________________ Date: ______________ Executive's Name Printed Name: _____________________________ OLD NATIONAL BANCORP By:_____________________________________ Allen R. Mounts SVP, Director of Human Resources Old National Bancorp Evansville, IN 47708 5 EX-31.1 6 c89585exv31w1.txt 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Exhibit 31.1 FORM OF SECTION 302 CERTIFICATION I, Robert G. Jones, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reported based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 9, 2004 By: /s/ Robert G. Jones --------------------------- Robert G. Jones President and Chief Executive Officer (Principal Executive Officer) EX-31.2 7 c89585exv31w2.txt 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Exhibit 31.2 FORM OF SECTION 302 CERTIFICATION I, John S. Poelker, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this reported based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 9, 2004 By: /s/ John S. Poelker ------------------------ John S. Poelker Executive Vice President and Chief Financial Officer EX-32.1 8 c89585exv32w1.txt 906 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Old National Bancorp (the "Company") on Form 10-Q for the quarter ending September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert G. Jones, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Robert G. Jones ---------------------------------- President and Chief Executive Officer (Principal Executive Officer) November 9, 2004 EX-32.2 9 c89585exv32w2.txt 906 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Old National Bancorp (the "Company") on Form 10-Q for the quarter ending September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John S. Poelker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ John S. 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